As filed with the Securities and Exchange Commission on May 25, 1994
Registration No.
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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PECO Energy Company PECO Energy Capital, L.P.
(Exact name of registrant (Exact name of registrant as specified
as specified in charter) in Limited Partnership Agreement)
Pennsylvania Delaware
(State or other jurisdiction of incorporation or organization)
23-0970240 51-0355322
(I.R.S. Employer Identification No.)
P.O. Box 8699 1013 Centre Road
2301 Market Street Suite 350F
Philadelphia, PA 19101 Wilmington, DE 19805
(215) 841-4000 (302) 998-0592
(Address, including zip code, and telephone number, including area
code, of registrants' principal executive offices)
M. W. Rimerman M. W. Rimerman
Vice President-Finance and Treasurer Director
P.O. Box 8699 P.O. Box 8699
2301 Market Street 2301 Market Street
Philadelphia, PA 19101 Philadelphia, PA 19101
(215) 841-4000 (215) 841-4000
(Name, address, including zip code, and telephone number, including
area code, of agents for service)
with copies to:
James W. Durham, Esq.
Senior Vice President and General Counsel
P.O. Box 8699
2301 Market Street, Philadelphia, PA 19101
Robert C. Gerlach, Esq. Robert M. Jones, Jr., Esq.
Ballard Spahr Andrews & Ingersoll Drinker Biddle & Reath
1735 Market Street 1100 Philadelphia National Bank Bldg.
Philadelphia, PA 19103-7599 Philadelphia, PA 19107
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: After
the Registration Statement becomes effective, as determined by market
conditions and other factors.
---------------
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, please check the following
box. / X /
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CALCULATION OF REGISTRATION FEE
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PROPOSED
MAXIMUM PROPOSED
TITLE OF OFFERING MAXIMUM
EACH CLASS OF PRICE AGGREGATE AMOUNT OF
CLASS OF SECURITIES AMOUNT TO BE PER UNIT OFFERING REGISTRATION
TO BE REGISTERED REGISTERED (1) (2)(3) PRICE (2)(3) FEE (4)
------------------- -------------- -------- ------------ ------------
- - - - ------------------------------------------------------------------------------
PECO Energy Capital, L.P.
Cumulative Monthly
Income Preferred
Securities ............
- - - - ------------------------------------------------------------------------------
PECO Energy Company
Guarantees with respect
to PECO Energy Capital,
L.P. Preferred
Securities ............
- - - - ------------------------------------------------------------------------------
PECO Energy Company
Subordinated Debentures
- - - - ------------------------------------------------------------------------------
Total ................... $350,000,000 100% $350,000,000 $120,689.65
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(1) There are being registered hereunder a presently indeterminate number
of Preferred Securities of PECO Energy Capital, L.P. with an aggregate
initial offering price not to exceed $350,000,000 and related
Guarantees and Subordinated Debentures of PECO Energy Company for which
no separate consideration will be received.
(2) Estimated solely for the purpose of determining the registration fee.
(3) Exclusive of accrued interest and dividends, if any.
(4) Pursuant to Rule 457(n) and (o), the registration fee is calculated on
the basis of the proposed maximum offering price of the Preferred
Securities.
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THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE
REGISTRANTS 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.
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<PAGE>
SUBJECT TO COMPLETION, DATED MAY , 1994
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED , 1994
PREFERRED SECURITIES
PECO ENERGY CAPITAL
% CUMULATIVE MONTHLY INCOME PREFERRED SECURITIES (MIPS*), SERIES A
(LIQUIDATION PREFERENCE $25 PER PREFERRED SECURITY) GUARANTEED TO THE
EXTENT SET FORTH HEREIN BY
PECO ENERGY COMPANY
---------------
The % Cumulative Monthly Income Preferred Securities, Series A (the
"Series A Preferred Securities"), representing the limited partner
interests offered hereby, are being issued by PECO Energy Capital, L.P., a
limited partnership formed under the laws of the State of Delaware ("PECO
Energy Capital"). The general partner of PECO Energy Capital is PECO
Energy Capital Corp. (the "General Partner"), which is a wholly owned
subsidiary of PECO Energy Company ("PECO Energy"). PECO Energy Capital
exists for the sole purpose of issuing partner interests and lending the
proceeds thereof to PECO Energy. The limited partner interests represented
by the Series A Preferred Securities will have a preference with respect to
cash distributions and amounts payable on liquidation over the General
Partner's interest in PECO Energy Capital.
Holders of the Series A Preferred Securities will be entitled to
receive cumulative preferential cash distributions("Dividends"), at an
annual rate of % of the stated liquidation preference of $25 per Series A
Preferred Security, accruing from the date of original issuance and payable
monthly in arrears on the last day of each calendar month of each year,
commencing _______, 1994. The payment of Dividends and payments in
liquidation or redemption with respect to the Series A Preferred
Securities, in each case out of funds legally available therefor held by
PECO Energy Capital, are guaranteed by PECO Energy to the extent described
herein and in the accompanying Prospectus. See "Description of the
Guarantee" in the accompanying Prospectus. If PECO Energy fails to make
interest payments on its __% Subordinated Debentures, Series A purchased by
PECO Energy Capital with the proceeds of the Series A Preferred Securities,
PECO Energy Capital will not have sufficient funds to pay Dividends on the
Series A Preferred Securities. The Guarantee does not cover payment of
Dividends when PECO Energy Capital does not have sufficient funds to pay
such Dividends. In such event, the remedy of a holder of Series A
Preferred Securities is to enforce the rights of PECO Energy Capital under
the Series A Subordinated Debentures. See "Certain Terms of the Series A
Subordinated Debentures" herein and "Description of the Subordinated
Debentures" in the accompanying Prospectus.
The Series A Preferred Securities are subject to optional redemption in
whole or in part, from time to time, on or after June 30, 1999, at $25 per
Series A Preferred Security plus accumulated and unpaid Dividends to the
date fixed for redemption (the "Redemption Price"), and will be redeemed at
such price from the proceeds of any redemption or payment at maturity of
the Series A Subordinated Debentures. See "Certain Terms of the Series A
Preferred Securities_Optional Redemption" and "_Mandatory Redemption." In
addition, the Series A Preferred Securities will be subject to redemption
upon the occurrence of certain events described under "Certain Terms of the
Series A Preferred Securities_Optional Redemption" and "_Special Event
Redemptions" herein.
In the event of the liquidation of PECO Energy Capital, holders of
Series A Preferred Securities will be entitled to receive for each Series A
Preferred Security, a liquidation preference of $25 plus accumulated and
unpaid Dividends to the date of payment. See "Description of the Preferred
Securities -- Liquidation Distribution" in the accompanying Prospectus.
See "Certain Investment Considerations" for certain information
relevant to an investment in the Series A Preferred Securities, including
circumstances under which payment of Dividends on the Series A Preferred
Securities may be deferred.
Application has been made to list the Series A Preferred Securities on
the New York Stock Exchange.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS
SUPPLEMENT OR THE PROSPECTUS TO WHICH IT RELATES. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
INITIAL PUBLIC UNDERWRITING PROCEEDS TO PECO
OFFERING PRICE COMMISSION(1) ENERGY CAPITAL(2)(3)
-------------- ------------- --------------------
Per Series A
Preferred Security ....$ (2) $
Total ...................$ (2) $
- - - - ----------
(1) PECO Energy Capital and PECO Energy have agreed to indemnify the
several Underwriters against certain liabilities, including liabilities
under the Securities Act of 1933, as amended. See "Underwriting."
(2) As the proceeds of the sale of the Series A Preferred Securities
will be loaned to PECO Energy, under the Underwriting Agreement PECO Energy
has agreed to pay to the Underwriters $ per Series A Preferred
Security (or $ in the aggregate); provided that such compensation
will be $ per Series A Preferred Security sold to certain
institutions. Therefore, to the extent that Series A Preferred Securities
are sold to such institutions, the actual amount of Underwriters'
compensation will be less than the amount specified above. See
"Underwriting."
(3) Expenses of the offering, excluding underwriting commissions which
are payable by PECO Energy, are estimated to be $ .
--------------------
The Series A Preferred Securities offered hereby are offered severally
by the Underwriters, as specified herein, subject to receipt and acceptance
by them and subject to their right to reject any order in whole or in part.
It is expected that delivery of the Series A Preferred Securities will be
made only in book-entry form through the facilities of The Depository Trust
Company on or about , 1994.
- - - - ---------------
*An application has been filed by Goldman, Sachs & Co. with the United
States Patent and Trademark Office for the registration of the MIPS
servicemark.
GOLDMAN, SACHS & CO.
SMITH BARNEY SHEARSON INC.
DEAN WITTER REYNOLDS INC.
A. G. EDWARDS & SONS, INC.
KIDDER, PEABODY & CO.
INCORPORATED
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES
INCORPORATED
---------------
The date of this Prospectus Supplement is , 1994.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus supplement shall not constitute an
offer to sell or the solicitation of an offer to buy nor shall there be any
sale of these securities in any state in which such offer, solicitation or
sale would be unlawful prior to registration or qualification under the
securities laws of any such state.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE
SERIES A PREFERRED SECURITIES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE
PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW
YORK STOCK EXCHANGE, IN THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
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<PAGE>
The following information supplements and should be read in conjunction
with the information contained in the accompanying Prospectus. Each of the
capitalized terms used in this Prospectus Supplement has the meaning set
forth in this Prospectus Supplement or in the accompanying Prospectus.
CERTAIN INVESTMENT CONSIDERATIONS
Prospective purchasers of the Series A Preferred Securities should
carefully review the information contained elsewhere in this Prospectus
Supplement and in the accompanying Prospectus and should particularly
consider the following matters:
SUBORDINATE OBLIGATIONS UNDER THE GUARANTEE AND THE SERIES A
SUBORDINATED DEBENTURES
PECO Energy's obligations under the Guarantee are subordinate and
junior in right of payment to all general liabilities of PECO Energy and
its obligations under the Series A Subordinated Debentures are subordinate
and junior in right of payment to all Senior Indebtedness (as defined in
the accompanying Prospectus) of PECO Energy. At March 31, 1994, the Senior
Indebtedness of PECO Energy aggregated $5,402,096,000. There are no terms
in the Series A Preferred Securities, the Series A Subordinated Debentures
or the Guarantee that limit PECO Energy's ability to incur additional
indebtedness, including indebtedness that ranks senior to the Series A
Subordinated Debentures and the Guarantee. The Guarantee guarantees
payment to the holders of the Series A Preferred Securities of accumulated
and unpaid monthly dividends, amounts payable on redemption, and amounts
payable on liquidation of PECO Energy Capital, in each case, however, only
to the extent that PECO Energy Capital has funds on hand legally available
therefor and payment thereof does not otherwise violate applicable law. If
PECO Energy were to default in its obligation to pay interest or amounts
payable on redemption or maturity of the % Subordinated Debentures,
Series A (the "Series A Subordinated Debentures") PECO Energy
Capital would lack legally available funds for the payment of
dividends or amounts payable on redemption of the Series A Preferred
Securities, and in such event holders of the Series A Preferred Securities
would not be able to rely upon the Guarantee for payment of such amounts.
Instead, holders of the Series A Preferred Securities would be required to
seek enforcement of PECO Energy Capital's rights against PECO Energy
pursuant to the terms of the Indenture. See "Description of the Guarantee
- - - - -- Status of the Guarantee" and "Description of the Subordinated Debentures
- - - - -- Subordination" in the accompanying Prospectus.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
PECO Energy has the right under the Indenture to extend interest
payment periods on the Series A Subordinated Debentures to up to 60
consecutive months, and, as a consequence, monthly Dividends on the Series
A Preferred Securities can be deferred by PECO Energy Capital during any
such extended interest payment period. Dividends in arrears after the
monthly payment date therefor will accumulate additional distributions
thereon at the rate per annum of % thereof. The term "Dividends" as used
herein includes, as applicable, monthly distributions, distributions on
monthly distributions in arrears and Additional Amounts (as defined below).
In the event PECO Energy exercises its right to extend the interest payment
periods on the Series A Subordinated Debentures, PECO Energy may not
declare dividends on any shares of its capital stock during such extension
period. PECO Energy Capital and PECO Energy currently believe that the
extension of an interest payment period is unlikely. See "Description of
the Subordinated Debentures -- Option to Extend Interest Payment Period" in
the accompanying Prospectus.
Should an extended interest payment period occur, PECO Energy Capital
will continue to accrue income for United States federal income tax
purposes which will be allocated, but not distributed, to owners of the
Series A Preferred Securities. As a result, the owner will include such
interest in gross income for United States federal income tax purposes in
advance of the receipt of cash, and will not receive the cash related to
such income if the owner disposes of the Series A Preferred Securities
prior to the record date for payment of Dividends. See "United States
Taxation -- Potential Extension of Interest Payment Period."
PECO ENERGY CAPITAL
PECO Energy Capital is a limited partnership formed under the laws of
the State of Delaware. All of its general partner interests are owned by
the General Partner, which is a wholly owned special purpose subsidiary of
PECO Energy. As a limited partnership, all of the business and affairs of
PECO Energy Capital will be managed by the General Partner. PECO Energy
Capital has been created solely for the purpose of issuing partner
interests, including the Preferred Securities, and lending the proceeds
thereof to PECO Energy. Such
S-3
<PAGE>
loans will be evidenced by the Subordinated Debentures issued by PECO
Energy under an Indenture dated as of , 1994 (the "Indenture") between
PECO Energy and Meridian Trust Company, as trustee (the "Trustee"), including
the Series A Subordinated Debentures to be issued concurrently with the
issuance of the Series A Preferred Securities. The Subordinated Debentures
will be the only assets of PECO Energy Capital and the only revenues of
PECO Energy Capital will be the interest on the Subordinated Debentures.
PECO ENERGY
PECO Energy, incorporated in Pennsylvania in 1929, is an operating
utility which provides electric and gas service to the public in
southeastern Pennsylvania. Two subsidiaries own, and a third subsidiary
operates, the Conowingo Hydro-Electric Project ("Conowingo Project"), and
one distribution subsidiary provides electric service to the public in
certain areas of northeastern Maryland adjacent to the Conowingo Project.
PECO Energy and its subsidiaries had 9,391 employees at December 31, 1993.
The total area served by PECO Energy and its subsidiaries covers 2,475
square miles. Electric service is supplied in an area of 2,340 square
miles with a population of about 3,700,000, including 1,600,000 in the City
of Philadelphia. Approximately 95% of the electric service area and 64% of
retail kilowatthour sales are in the suburbs around Philadelphia and in
northeastern Maryland, and 5% of the service area and 36% of such sales are
in the City of Philadelphia. In 1993, approximately 60% of PECO Energy's
electric output was generated from nuclear sources. PECO Energy estimates
for 1994 that 59% of its electric output will come from nuclear sources.
Natural gas service is supplied in a 1,475-square-mile area of southeastern
Pennsylvania adjacent to Philadelphia with a population of 1,900,000. PECO
Energy and its subsidiaries hold franchises to the extent necessary to
operate in the areas served.
CERTAIN TERMS OF THE SERIES A PREFERRED SECURITIES
DIVIDENDS
The Series A Preferred Securities will be entitled to Dividends out of
funds on hand legally available therefor held by PECO Energy Capital at the
annual rate of % of the stated liquidation preference of $25, payable
monthly in arrears on the last day of each calendar month. The General
Partner may make distributions on the general partner interests of PECO
Energy Capital only after payment in full of all Dividends accrued on the
Series A Preferred Securities and any other outstanding Preferred
Securities of PECO Energy Capital. The first Dividend payment date for the
Series A Preferred Securities will be , 1994, and such Dividends will
be cumulative from the date of original issue.
The Series A Preferred Securities will rank pari passu with all other
series of Preferred Securities which may be issued by PECO Energy Capital.
No other series of Preferred Securities have been issued by PECO Energy
Capital.
PECO Energy has the right under the Indenture to extend the interest
payment period from time to time on the Series A Subordinated Debentures to
a period not exceeding 60 consecutive months; provided that such extended
interest period shall not extend beyond the stated maturity date or
redemption date of the Series A Subordinated Debentures. As a consequence,
monthly Dividends on the Series A Preferred Securities would be deferred
(but would continue to accumulate with Dividends thereon) by PECO Energy
Capital during any such extended interest payment period. In the event
that PECO Energy exercises its right to extend the interest payment period
on the Series A Subordinated Debentures, PECO Energy may not declare or pay
dividends on, or redeem, purchase or acquire, any of its capital stock
during the extension period. PECO Energy Capital and PECO Energy currently
believe that the extension of an interest payment period is unlikely.
Prior to the termination of any such extension period, PECO Energy may
further extend the interest payment period, provided that such extension
period together with all such previous and further extensions thereof may
not exceed 60 consecutive months. Upon the termination of any extension
period and the payment of all amounts then due on the Series A Subordinated
Debentures, PECO Energy may elect to extend the interest payment period
again, subject to the above requirements. See "Description of the
Subordinated Debentures -- Option to Extend Interest Payment Period" in the
accompanying Prospectus. Payments received by PECO Energy Capital with
respect to the Series A Subordinated Debentures and other series of PECO
Energy's Subordinated Debentures will not be segregated by PECO Energy
Capital for the benefit of the holders of the Series A Preferred Securities
or holders of any other particular series of Preferred Securities.
S-4
<PAGE>
OPTIONAL REDEMPTION
The Series A Preferred Securities are subject to redemption, at the
option of the General Partner, in whole or in part, from time to time, on or
after , 1999, at $25 per Series A Preferred Security, plus accumulated
and unpaid Dividends, if any, to the date fixed for redemption (the
"Redemption Price").
If at any time after the issuance of the Series A Preferred Securities,
PECO Energy Capital is or would be required to pay Additional Amounts as
described below or PECO Energy is or would be required to pay Additional
Interest on the Series A Subordinated Debentures, as described under
"Description of the Subordinated Debentures -- Additional Interest" in the
accompanying Prospectus, then the Series A Preferred Securities will be
subject to redemption, at the option of the General Partner, in whole or,
if such requirement relates only to certain of the Series A Preferred
Securities, in part as to that portion of the Series A Preferred Securities
subject to such requirement, in each case at any time thereafter at the
Redemption Price.
MANDATORY REDEMPTION
If at any time PECO Energy redeems the Series A Subordinated Debentures
or pays the Series A Subordinated Debentures at maturity as described under
"Description of the Subordinated Debentures" in the accompanying
Prospectus, the Series A Preferred Securities will be subject to mandatory
redemption at the Redemption Price.
The Series A Preferred Securities will not be entitled to any sinking
fund.
SPECIAL EVENT REDEMPTIONS
If a Tax Event (as defined below) shall occur and be continuing, the
Series A Preferred Securities will be subject to redemption, at the option
of the General Partner, in whole or in part at the Redemption Price within
90 days following the occurrence of such Tax Event. "Tax Event" means that
PECO Energy Capital shall have received an opinion of counsel (which may be
regular counsel to PECO Energy or an affiliate but not an employee thereof)
experienced in such matters to the effect that, as a result of any
amendment to, or change (including any announced prospective change) in,
the laws (or any regulations thereunder) of the United States or any
political subdivision or taxing authority thereof or therein affecting
taxation, or as a result of any official administrative pronouncement or
judicial decision interpreting or applying such laws or regulations, which
amendment or change is effective or such interpretation or pronouncement is
announced on or after the date of issuance of the Series A Preferred
Securities, there is more than an insubstantial risk that (i) PECO Energy
Capital is subject to United States federal income tax with respect to
interest received on the Series A Subordinated Debentures, (ii) interest
payable by PECO Energy on the Series A Subordinated Debentures will not be
deductible for United States federal income tax purposes or the
Partnership will otherwise not be taxed as a partnership or (iii) PECO
Energy Capital is subject to more than a de minimis amount of other taxes,
duties or other governmental charges.
If an Investment Company Act Event (as defined below) shall occur and
be continuing, the Series A Preferred Securities will be subject to
mandatory redemption in whole at the Redemption Price within 90 days
following the occurrence of such Investment Company Act Event. "Investment
Company Act Event" means the occurrence of a change in law or regulation or
a change in official interpretation of law or regulation by any legislative
body, court, governmental agency or regulatory authority (a "Change in 1940
Act Law") to the effect that PECO Energy Capital is or will be considered
an "investment company" which is required to be registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), which Change
in 1940 Act Law becomes effective on or after the date of issuance of the
Series A Preferred Securities; provided, that no Investment Company Act
Event shall be deemed to have occurred if PECO Energy Capital has received
an opinion of counsel (which may be regular counsel to PECO Energy or any
affiliate but not an employee thereof) experienced in such matters, to the
effect that PECO Energy Capital and/or PECO Energy has taken reasonable
measures, in its discretion, to avoid such Change in 1940 Act Law so that
notwithstanding such Change in 1940 Act Law, PECO Energy Capital is not
required to be registered as an "investment company" within the meaning of
the 1940 Act.
ADDITIONAL AMOUNTS
If, as a result of (i) the Series A Subordinated Debentures not being
treated as indebtedness for United
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<PAGE>
States federal income tax purposes or (ii) PECO Energy Capital not
being treated as a partnership for United States federal income tax
purposes, PECO Energy Capital is required to withhold or deduct from
payments on the Series A Preferred Securities for or on account of any
present or future taxes imposed by the United States which would not
otherwise be required to be withheld or deducted, PECO Energy Capital will
pay such additional amounts as may be necessary in order that the net
amounts received by the holders of the Series A Preferred Securities after
such withholding or deduction will equal the amounts which would have been
received in respect of such Series A Preferred Securities in the absence of
such withholding or deduction ("Additional Amounts"), except that no such
Additional Amounts will be payable to a holder of Series A Preferred
Securities (or a third party on such holder's behalf) with respect to
Series A Preferred Securities if:
(a) such holder is liable for such taxes by reason of such holder
having a connection with the United States, other than being a holder
of Series A Preferred Securities; or
(b) PECO Energy Capital has notified such holder of the obligation
to withhold or deduct taxes and requested but not received from such
holder a valid declaration of non-residence, a valid taxpayer
identification number or other claim for exemption in such form or
content as may be required by the United States Internal Revenue
Service (the "IRS") and such withholding or deduction would not have
been required had such declaration, taxpayer identification number or
claim been received.
LIQUIDATION VALUE
The amount per share payable on the Series A Preferred Securities in
the event of any voluntary or involuntary liquidation of PECO Energy
Capital is $25 plus accumulated and unpaid Dividends.
CERTAIN TERMS OF THE SERIES A SUBORDINATED DEBENTURES
In exchange for, and to evidence the loan of, the proceeds of the sale
of the Series A Preferred Securities and the General Partner's related
investment in PECO Energy Capital, PECO Energy will issue the Series A
Subordinated Debentures to PECO Energy Capital in the principal amount of
$ and with interest payment and redemption and maturity provisions which
correspond to the distribution and redemption provisions of the Series A
Preferred Securities. In addition, the Series A Subordinated Debentures
will be subject to mandatory redemption upon the dissolution of PECO Energy
Capital. The Series A Subordinated Debentures will mature on , 2043.
The Series A Subordinated Debentures will rank junior and be
subordinate in right of payment to all Senior Indebtedness of PECO Energy.
See "Description of the Subordinated Debentures -- Subordination" in the
accompanying Prospectus.
UNITED STATES TAXATION
GENERAL
This section is a summary of certain United States federal income tax
considerations that may be relevant to prospective purchasers of Series A
Preferred Securities and represents the opinion of Ballard Spahr Andrews &
Ingersoll, counsel to PECO Energy and PECO Energy Capital, insofar as it
relates to matters of law and legal conclusions. This section is based
upon current provisions of the Internal Revenue Code of 1986, as amended
(the "Code"), existing and proposed regulations thereunder and current
administrative rulings and court decisions, all of which are subject to
change. Subsequent changes may cause tax consequences to vary
substantially from the consequences described below.
No attempt has been made in the following discussion to comment on all
United States federal income tax matters affecting purchasers of Series A
Preferred Securities. Moreover, the discussion focuses on holders of
Series A Preferred Securities who are individual citizens or residents of
the United States who are owners of Series A Preferred Securities for
United States federal tax purposes and has only limited application to
corporations, estates, trusts or non-resident aliens. Accordingly, each
prospective purchaser of Series A Preferred Securities should consult, and
should depend on, his or her own tax adviser in analyzing the federal,
state, local and foreign tax consequences of the purchase, ownership or
disposition of Series A Preferred Securities.
In April 1994, the IRS issued certain notices generally addressing the
characteristics which distinguish debt from equity for various purposes
under United States federal income tax laws. In these notices, the IRS
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<PAGE>
indicated that transactions involving securities that, like the Series
A Preferred Securities, have both debt and equity characteristics would be
reviewed with scrutiny to determine how they would be treated for tax
purposes. Based upon the advice of its tax counsel, PECO Energy believes
that interest on the Series A Subordinated Debentures will be deductible
under the tests referred to in these notices. If, however, the IRS should
subsequently issue a further official pronouncement, or should there be a
judicial decision, pursuant to which interest on the Series A Subordinated
Debentures would not be deductible, the Series A Preferred Securities would
be subject to redemption at the option of PECO Energy Capital, as described
herein.
INCOME FROM SERIES A PREFERRED SECURITIES
In the opinion of Ballard Spahr Andrews & Ingersoll, PECO Energy
Capital will be treated as a partnership for United States federal income
tax purposes. Accordingly, each owner of Series A Preferred Securities
will be required to include in gross income such owner's distributive share
of the net income of PECO Energy Capital. Such income should not exceed
distributions received on such Series A Preferred Securities, except in
limited circumstances as described below under "Potential Extension of
Interest Payment Period." No portion of such income will be eligible for
the dividends received deduction.
DISPOSITION OF SERIES A PREFERRED SECURITIES
Gain or loss will be recognized on a sale, including a redemption for
cash, of Series A Preferred Securities in an amount equal to the difference
between the amount realized and the tax basis of the owner of the Series A
Preferred Security for the Series A Preferred Securities sold. Gain or
loss recognized by an owner of the Series A Preferred Security on the sale
or exchange of a Series A Preferred Security held for more than one year
will generally be taxable as long-term capital gain or loss except that
ordinary income may be recognized to the extent of such owner's pro rata
share of accrued but unallocated income of PECO Energy Capital.
PECO ENERGY CAPITAL INFORMATION RETURNS AND AUDIT PROCEDURES
The General Partner will furnish each owner of a Series A Preferred
Security with a schedule K-1 each year setting forth such owner's allocable
share of income for the prior calendar year. The General Partner is
required to furnish such schedules as soon as practicable following the end
of the year, but in any event prior to March 31.
Any person who holds Series A Preferred Securities as a nominee for
another person is required to furnish to PECO Energy Capital (a) the name,
address and taxpayer identification number of the beneficial owner and the
nominee; (b) information as to whether the beneficial owner is (i) a person
that is not a United States person, (ii) a foreign government, an
international organization or any wholly owned agency or instrumentality of
either of the foregoing, or (iii) a tax-exempt entity; (c) the amount and
description of Series A Preferred Securities held, acquired or transferred
for the beneficial owner; and (d) certain information including the dates
of acquisitions and transfers, means of acquisitions and transfers, and
acquisition cost for purchases, as well as the amount of net proceeds from
sales. Brokers and financial institutions are required to furnish
additional information, including whether they are United States persons,
and certain information on Series A Preferred Securities they acquire, hold
or transfer for their own accounts. A penalty of $50 per failure (up to a
maximum of $100,000 per calendar year) is imposed by the Code for failure
to report such information to PECO Energy Capital. The nominee is required
to supply the beneficial owners of the Series A Preferred Securities with
the information furnished to PECO Energy Capital.
POTENTIAL EXTENSION OF INTEREST PAYMENT PERIOD
Under the terms of the Indenture, PECO Energy will be permitted to
extend the interest payment period on the Series A Subordinated Debentures
up to 60 consecutive months. In the event that PECO Energy exercises this
right, PECO Energy may not declare dividends on any of its capital stock
during such extended interest period. PECO Energy Capital and PECO Energy
currently believe that the extension of an interest payment period is
unlikely. In the event that the interest payment period is extended, PECO
Energy Capital will continue to accrue income, generally equal to the
amount of the interest payment due at the end of the extended interest
payment period, over the length of the extended interest payment period.
Accrued income will be allocated, but not distributed, to holders of
record on the Business Day preceding
S-7
<PAGE>
the last day of each calendar month. As a result, owners of Series A
Preferred Securities during an extended interest payment period will be
required to include interest in gross income in advance of the receipt of
cash, and any such persons who dispose of Series A Preferred Securities
prior to the record date for the payment of Dividends following such
extended interest payment period will include interest in gross income but
will not receive any cash related thereto. The tax basis of a Series A
Preferred Security will be increased by the amount of any interest that is
included in income without a receipt of cash, and will be decreased again
when and if such cash is subsequently received from PECO Energy Capital.
The subsequent receipt of such cash will not be included in gross income.
UNITED STATES ALIEN HOLDERS
For purposes of this discussion, a "United States Alien Holder" is any
holder or beneficial owner who or which is (i) a nonresident alien
individual or (ii) a foreign corporation, partnership or estate or trust,
in either case not subject to United States federal income tax on a net
income basis in respect of a Series A Preferred Security.
Under present United States federal income tax law, subject to the
discussion below with respect to backup withholding, and assuming
satisfaction by PECO Energy Capital of its withholding tax obligations, if
any:
(i) Payments by PECO Energy Capital or any of its paying agents to
any United States Alien Holder will not be subject to United States
federal withholding tax provided that (a) the beneficial owner of the
Series A Preferred Security does not actually or constructively own 10%
or more of the total combined voting power of all classes of stock of
PECO Energy, (b) the beneficial owner of the Series A Preferred
Security is not a controlled foreign corporation that is related to
PECO Energy through stock ownership, and (c) either (A) the beneficial
owner of the Series A Preferred Security certifies to PECO Energy
Capital or its agent, under penalties of perjury, that it is a United
States Alien Holder and provides its name and address or (B) the holder
of the Series A Preferred Security is 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 such holder certifies to PECO Energy
Capital or its agent under penalties of perjury that such statement has
been received from the beneficial owner by it or by a financial
institution between it and the beneficial owner and furnishes the payor
with a copy thereof; and
(ii) a United States Alien Holder of a Series A Preferred Security
will generally not be subject to United States federal income or
withholding tax on any gain realized on the sale or exchange of a
Series A Preferred Security unless such person is present in the United
States for 183 days or more in the taxable year of sale and such person
has a "tax home" in the United States or certain other requirements are
met.
BACKUP WITHHOLDING AND INFORMATION REPORTING
In general, information reporting requirements will apply to payments
to noncorporate United States holders of the proceeds of the sale of Series
A Preferred Securities within the United States and "backup withholding" at
a rate of 31% will apply to such payments if the seller fails to provide a
correct taxpayer identification number.
Payments of the proceeds from the sale by a United States Alien Holder
of Series A Preferred Securities made to or through a foreign office of a
broker will not be subject to information reporting or backup withholding,
except that, if the broker 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 may
apply to such payments. Payments of the proceeds from the sale of Series A
Preferred Securities to or through the United States office of a broker is
subject to information reporting and backup withholding unless the holder
or beneficial owner certifies as to its non-United States status or
otherwise establishes an exemption from information reporting and backup
withholding.
S-8
<PAGE>
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement among
PECO Energy Capital, PECO Energy and the underwriters named below (the
"Underwriters"), for whom Goldman, Sachs & Co., Smith Barney Shearson Inc.,
Dean Witter Reynolds Inc., A. G. Edwards & Sons, Inc., Kidder, Peabody &
Co. Incorporated, PaineWebber Incorporated and Prudential Securities
Incorporated are acting as Representatives, PECO En ergy Capital has agreed
to sell to each of the Underwriters and each of the Underwriters has
severally agreed to purchase from PECO Energy Capital the respective number
of Series A Preferred Securities set forth opposite its name below:
NUMBER OF SERIES A
UNDERWRITER PREFERRED SECURITIES
--------------- ------------------------
Goldman, Sachs & Co.
Smith Barney Shearson Inc.
Dean Witter Reynolds Inc.
A. G. Edwards & Sons, Inc.
Kidder, Peabody & Co. Incorporated
PaineWebber Incorporated
Prudential Securities Incorporated
----------
Total
==========
Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and pay for all such Series A Preferred
Securities offered hereby, if any are taken.
The Underwriters propose to offer the Series A Preferred Securities in
part directly to the public 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 of $ per Series A
Preferred Security. The Underwriters may allow, and such dealers may
reallow, a concession not in excess of $ per Series A Preferred Security
to certain brokers and dealers. After the Series A Preferred Securities are
released for sale to the public, the offering price and other selling terms
may from time to time be varied by the Representatives.
In view of the fact that the proceeds from the sale of the Series A
Preferred Securities will be loaned to PECO Energy under the Underwriting
Agreement, PECO Energy has agreed to pay to the Underwriters $ per
Series A Preferred Security ($ per Series A Preferred Security sold to
certain institutions) for the accounts of the several Underwriters.
Prior to this offering, there has been no public market for the Series
A Preferred Securities. In order to meet one of the requirements for
listing the Series A Preferred Securities on the New York Stock Exchange,
the Underwriters have undertaken to sell the Series A Preferred Securities
to a minimum of 400 beneficial holders.
PECO Energy and PECO Energy Capital have agreed to indemnify the
several Underwriters against certain liabilities, including liabilities
under the Securities Act of 1933, as amended.
PECO Energy and PECO Energy Capital have agreed, during the period
beginning on the date of the Underwriting Agreement and continuing to and
including the earlier of (i) the date, after the closing date, on which the
distribution of the Series A Preferred Securities ceases, as determined by
Goldman, Sachs & Co., or (ii) 30 days after the closing date, not to offer,
sell, contract to sell, or otherwise dispose of any Series A Preferred
Securities, any limited partner interests of PECO Energy Capital, or any
preferred stock or any other securities of PECO Energy Capital or PECO
Energy which are substantially similar to the Series A Preferred
Securities, including the related Guarantee, or any securities convertible
into or exchangeable for Series A Preferred Securities, limited partner
interests, preferred stock or other substantially similar securities of
either PECO Energy Capital or PECO Energy, without the prior written
consent of Goldman, Sachs & Co.
S-9
<PAGE>
SUBJECT TO COMPLETION, DATED , 1994
PROSPECTUS
PECO ENERGY CAPITAL
CUMULATIVE MONTHLY INCOME PREFERRED SECURITIES (MIPS*)
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
PECO ENERGY COMPANY
---------------
PECO Energy Capital, L.P. ("PECO Energy Capital"), a Delaware special
purpose limited partnership in which a subsidiary of PECO Energy Company
("PECO Energy") is the general partner, may offer from time to time, in one
or more series, its monthly income preferred securities representing
limited partner interests ("Preferred Securities"). The payment of
periodic cash distributions ("Dividends") with respect to the Preferred
Securities of each series and payments on liquidation or redemption with
respect to such Preferred Securities, in each case out of funds on hand
legally available therefor held by PECO Energy Capital, are guaranteed by
PECO Energy to the extent described herein (the "Guarantee"). The
obligations of PECO Energy under the Guarantee will be subordinate and
junior in right of payment to all general liabilities of PECO Energy.
Concurrently with the issuance of each series of Preferred Securities, PECO
Energy Capital will loan the proceeds thereof to PECO Energy and to
evidence such loan PECO Energy will issue and deliver to PECO Energy
Capital a series of PECO Energy's subordinated debentures (the
"Subordinated Debentures") with terms corresponding to that series of
Preferred Securities. The Subordinated Debentures will be unsecured and
subordinate and junior in right of payment to Senior Indebtedness (as
defined herein) of PECO Energy. The Subordinated Debentures will be the
sole asset of PECO Energy Capital and the interest on the Subordinated
Debentures will be the only revenue of PECO Energy Capital.
The Preferred Securities may be offered in amounts, at prices and on
terms to be determined at the time of offering, provided, however, that the
aggregate initial public offering price of all Preferred Securities issued
under the Registration Statement of which this Prospectus forms a part
shall not exceed $350,000,000. Certain specific terms of the particular
series of Preferred Securities in respect of which this Prospectus is being
delivered will be set forth in an accompanying Prospectus Supplement (the
"Prospectus Supplement"), including where applicable and to the extent not
set forth herein, the specific title, the aggregate amount, Dividend rate
(or the method for determining the rate), the stated liquidation
preference, redemption provisions, other rights, the initial public
offering price, and any other special terms, as well as any planned listing
of the Preferred Securities on a securities exchange.
The Preferred Securities may be sold for public offering to or through
underwriters or dealers designated from time to time. See "Plan of
Distribution." The names of any such underwriters or dealers involved in
the sale of the Preferred Securities of the particular series in respect of
which this Prospectus is being delivered, the number of Preferred
Securities to be purchased by any such underwriters or dealers and any
applicable commissions or discounts will be set forth in the Prospectus
Supplement. The net proceeds to PECO Energy Capital will also be set forth
in the Prospectus Supplement.
The Prospectus Supplement will contain information concerning United
States federal income tax considerations, if applicable, and the Preferred
Securities offered.
- - - - ---------------
*An application has been filed by Goldman, Sachs & Co. with the United
States Patent and Trademark Office for the registration of the MIPS
servicemark.
---------------
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.
---------------
The date of this Prospectus is , 1994.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus supplement shall not constitute an
offer to sell or the solicitation of an offer to buy nor shall there be any
sale of these securities in any state in which such offer, solicitation or
sale would be unlawful prior to registration or qualification under the
securities laws of any such state.
<PAGE>
STATEMENT OF AVAILABLE INFORMATION
PECO Energy is subject to the information requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy and information statements and
other information with the Securities and Exchange Commission (the "SEC").
Such reports, proxy and other information filed by PECO Energy may be
inspected and copied at the public reference facilities maintained by the
SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, and at certain of
its regional offices at Suite 1400, 500 West Madison Street, Chicago, IL
60661-2511 and Suite 1300, 7 World Trade Center, New York, NY 10048.
Copies of such material may also be obtained from the Public Reference
Section of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates. Securities of PECO Energy are listed on the New York and
Philadelphia Stock Exchanges, where reports, proxy material and other
information concerning PECO Energy may be inspected.
No separate financial statements of PECO Energy Capital have been
included herein. PECO Energy and PECO Energy Capital do not consider that
such financial statements would be material to holders of Preferred
Securities offered hereby because PECO Energy Capital is a newly formed
special purpose entity, has no operating history and no independent
operations and is not engaged in, and does not propose to engage in, any
activity other than as set forth below. See "PECO Energy Capital."
---------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the SEC pursuant to Section 13 of
the Exchange Act by PECO Energy (File No. 1-1401) are incorporated herein
by reference:
1. PECO Energy's Annual Report on Form 10-K for the year ended December
31, 1993;
2. PECO Energy's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1994; and
3. PECO Energy's Current Reports on Form 8-K dated March 18, 1994 and
April 14, 1994.
Each document filed subsequent to the date of this Prospectus pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act and prior to the
termination of the offering shall be deemed to be incorporated by reference
in this Prospectus and shall be a part hereof from the date of filing of
such document. Any statement contained herein or in a document all or a
portion of which is incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated
by reference herein or in a Prospectus Supplement 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.
PECO ENERGY UNDERTAKES TO PROVIDE WITHOUT CHARGE TO EACH PERSON,
INCLUDING ANY BENEFICIAL OWNER, TO WHOM A PROSPECTUS IS DELIVERED, UPON
WRITTEN OR ORAL REQUEST OF SUCH PERSON, A COPY OF ANY OR ALL DOCUMENTS
DESCRIBED ABOVE UNDER "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE,"
OTHER THAN EXHIBITS TO SUCH DOCUMENTS. SUCH REQUESTS SHOULD BE DIRECTED TO
PECO ENERGY COMPANY, FINANCIAL DIVISION, S21-1, P.O. BOX 8699,
PHILADELPHIA, PA 19101, (215) 841-5741.
PECO ENERGY CAPITAL
PECO Energy Capital is a limited partnership formed under the laws of
the State of Delaware. All of its general partner interests are owned by
PECO Energy Capital Corp., a Delaware corporation (the "General Partner"),
which is a wholly owned subsidiary of PECO Energy. As a limited
partnership, all of the business and affairs of PECO Energy Capital will be
managed by the General Partner. PECO Energy Capital has been created
solely for the purpose of issuing partner interests, including the
Preferred Securities, and lending the proceeds thereof to PECO Energy.
Such loans will be evidenced by the Subordinated Debentures issued by PECO
Energy under an Indenture dated as of , 1994 (the "Indenture")
between PECO Energy and Meridian Trust Company, as trustee (the "Trustee").
The Subordinated Debentures will be the only assets of PECO Energy Capital
and the only revenues of PECO Energy Capital will be the interest on the
Subordinated
2
<PAGE>
Debentures. The General Partner will pay all of PECO Energy Capital's
operating expenses and will have general liability for all of PECO Energy
Capital's obligations.
PECO Energy Capital has been advised by its special Delaware counsel
that, assuming a holder of Preferred Securities acts in conformity with the
Amended and Restated Limited Partnership Agreement of PECO Energy Capital
(the "Limited Partnership Agreement"), such holder (other than the General
Partner) will not be liable for the debts, obligations and liabilities of
PECO Energy Capital, whether arising in contract, tort or otherwise, solely
by reason of being a limited partner of PECO Energy Capital, subject to the
obligation of a limited partner to repay any funds wrongfully distributed
to it.
The place of business of PECO Energy Capital is the principal executive
offices of the General Partner at 1013 Centre Road, Suite 350F, Wilmington,
DE 19805 and its telephone number is (302) 998-0592.
PECO ENERGY
PECO Energy, incorporated in Pennsylvania in 1929, is an operating
utility which provides electric and gas service to the public in
southeastern Pennsylvania. Two subsidiaries own, and a third subsidiary
operates, the Conowingo Hydro-Electric Project ("Conowingo Project"), and
one distribution subsidiary provides electric service to the public in
certain areas of northeastern Maryland adjacent to the Conowingo Project.
PECO Energy and its subsidiaries had 9,391 employees at December 31, 1993.
The total area served by PECO Energy and its subsidiaries covers 2,475
square miles. Electric service is supplied in an area of 2,340 square
miles with a population of about 3,700,000, including 1,600,000 in the City
of Philadelphia. Approximately 95% of the electric service area and 64% of
retail kilowatthour sales are in the suburbs around Philadelphia and in
northeastern Maryland, and 5% of the service area and 36% of such sales are
in the City of Philadelphia. In 1993, approximately 60% of PECO Energy's
electric output was generated from nuclear sources. PECO Energy estimates
for 1994 that 59% of its electric output will come from nuclear sources.
Natural gas service is supplied in a 1,475-square-mile area of southeastern
Pennsylvania adjacent to Philadelphia with a population of 1,900,000. PECO
Energy and its subsidiaries hold franchises to the extent necessary to
operate in the areas served.
The principal executive offices of PECO Energy are located at 2301
Market Street, Philadelphia, PA 19103. Its mailing address is P.O. Box
8699, Philadelphia, PA 19101 and its telephone number is (215) 841-4000.
COVERAGE RATIOS
PECO Energy's Ratio of Earnings to Fixed Charges for each of the
periods indicated was as follows:
YEARS ENDED DECEMBER 31, 3 MONTHS ENDED MARCH 31,
------------------------------------ ------------------------
1989 1990 1991 1992 1993 1993 1994
---- ---- ---- ---- ---- ---- ----
2.08 1.31* 2.55 2.43 3.15 3.16 3.58
The Ratio of Earnings to Fixed Charges represents, on a pre-tax basis,
the number of times earnings cover fixed charges. Earnings consist of net
income to which has been added fixed charges and taxes based on income of
PECO Energy. Fixed charges consist of interest on funded indebtedness,
other interest, amortization of net gain on reacquired debt and net
discount on debt and the interest portion of all rentals charged to income.
PECO Energy's Ratio of Earnings to Combined Fixed Charges and Preferred
Stock Dividends for each of the periods indicated was as follows:
YEARS ENDED DECEMBER 31, 3 MONTHS ENDED MARCH 31,
------------------------------------ ------------------------
1989 1990 1991 1992 1993 1993 1994
---- ---- ---- ---- ---- ---- ----
1.77 1.04* 2.14 2.06 2.67 2.75 3.05
- - - - ---------------
*Reflects the one-time, after-tax charge against income of approximately
$250 million associated with various disallowances made by the
Pennsylvania Public Utility Commission in the Limerick Unit No. 2 rate
order and the one-time, after-tax charge against income of
approximately $150 million associated with PECO Energy's 1990 early
retirement plan.
3
<PAGE>
The Ratio of Earnings to Combined Fixed Charges and Preferred Stock
Dividends represents, on a pre-tax basis, the number of times earnings
cover fixed charges and preferred stock dividends. Earnings consist of net
income to which has been added fixed charges and taxes based on income of
PECO Energy. Combined fixed charges and preferred stock dividends consist
of interest on funded indebtedness, other interest, amortization of net
gain on reacquired debt and net discount on debt, preferred stock dividends
(increased to reflect the pre-tax earnings required to cover such dividend
requirements) and the interest portion of all rentals charged to income.
USE OF PROCEEDS
The proceeds to be received by PECO Energy Capital from the sale of the
Preferred Securities offered hereby will be loaned to PECO Energy and will
be applied by PECO Energy to the redemption or payment at maturity of
outstanding securities.
DESCRIPTION OF THE PREFERRED SECURITIES
The following is a summary of certain terms and provisions of the
Preferred Securities and the Limited Partnership Agreement. The summary is
subject to, and qualified in its entirety by reference to, the Limited
Partnership Agreement and the Delaware Revised Uniform Limited Partnership
Act. The Limited Partnership Agreement is filed as an exhibit to the
Registration Statement of which this Prospectus forms a part.
GENERAL
Under the Limited Partnership Agreement, PECO Energy Capital is
authorized to issue two classes of partner interests, the Preferred
Securities representing limited partner interests, including the Preferred
Securities offered hereby, and general partner interests. All of the
general partner interests of PECO Energy Capital are owned by the General
Partner, which is a wholly owned subsidiary of PECO Energy. All of the
Preferred Securities will be of equal rank in participation in the profits
and assets and income of PECO Energy Capital. The Limited Partnership
Agreement authorizes the General Partner to establish series of Preferred
Securities having such designations, rights, privileges, restrictions and
other terms and provisions as the General Partner may determine. Dividends
on all series of Preferred Securities must be paid in full before the
General Partner may participate in the profits or assets of PECO Energy
Capital.
DIVIDENDS
Dividends on each series of Preferred Securities will be cumulative,
will accrue from the date of issuance and will be payable monthly in
arrears on the last day of each calendar month of each year, except as
otherwise described below. The Dividends payable on a series of Preferred
Securities offered hereby will be specified in a Prospectus Supplement
related thereto. The amount of Dividends payable for any period will be
computed on the basis of twelve 30-day months and a 360-day year and, for
any period shorter than a full monthly distribution period, will be
computed on the basis of the actual number of days elapsed in such period.
PECO Energy has the right under the Indenture to extend the interest
payment period from time to time on the Subordinated Debentures to a period
not exceeding 60 consecutive months; provided that such extended interest
period shall not extend beyond the stated maturity date or redemption date
of any series of Subordinated Debentures (an "Extension Period"). As a
consequence, monthly Dividends on the Preferred Securities would be
deferred by PECO Energy Capital during any Extension Period. Dividends in
arrears after the monthly payment date therefor will accumulate additional
distributions thereon at the rate per annum of % thereof. The term
"Dividends" as used herein includes, as applicable, monthly distributions,
distributions on monthly distributions in arrears and Additional Amounts
(as defined below). In the event that PECO Energy exercises this right,
neither PECO Energy nor any majority-owned subsidiary of PECO Energy may
declare or pay dividends on or redeem, purchase or acquire, any of its
capital stock (other than dividends by a wholly owned subsidiary) during
any Extension Period. Prior to the termination of any such Extension
Period, PECO Energy may further extend the interest payment period,
provided that such Extension Period together with all such previous and
further extensions thereof may not exceed 60 consecutive months. Upon the
termination of any Extension Period and the payment of all amounts then
due, PECO Energy may elect to extend the interest payment period again,
subject to the above requirements. See "Description of the Subordinated
Debentures -- Option to Extend Interest Payment Period."
4
<PAGE>
Dividends on the Preferred Securities must be paid by PECO Energy
Capital in any calendar year or portion thereof to the extent PECO Energy
Capital has funds on hand legally available therefor. It is anticipated
that PECO Energy Capital's earnings will be limited to interest payments on
the Subordinated Debentures issued by PECO Energy to PECO Energy Capital.
See "Description of the Subordinated Debentures."
Dividends on the Preferred Securities will be payable to the holders
thereof as they appear on the books and records of PECO Energy Capital on
the relevant record dates, which will be one Business Day prior to the
relevant payment dates. Subject to any applicable laws and regulations and
the provisions of the Limited Partnership Agreement, each such payment will
be made as described under "Book-Entry-Only Issuance -- The Depository Trust
Company" below. In the event that any date on which Dividends are payable
on the Preferred Securities is not a Business Day, then payment of the
Dividend payable on such date will be made on the next succeeding day which
is a Business Day (and without any interest or other payment in respect of
any such delay) except that, if such Business Day is in the next succeeding
calendar year, such payment shall be made on the immediately preceding
Business Day, in each case with the same force and effect as if made on
such date. A "Business Day" shall mean any day other than a day on which
banking institutions in The City of New York or Delaware are authorized or
required by law to close.
CERTAIN RESTRICTIONS ON PECO ENERGY CAPITAL
If dividends have not been paid in full on any series of Preferred
Securities, PECO Energy Capital shall not:
(i) pay any Dividends on any other series of Preferred Securities,
unless the amount of any Dividends paid on any Preferred Securities is
paid on all Preferred Securities then outstanding on a pro rata basis
in proportion to the full Dividends to which each series of Preferred
Securities would be entitled if paid in full;
(ii) pay any distribution on the general partner interests; or
(iii) redeem, purchase or otherwise acquire any Preferred
Securities or the general partner interests;
until, in each case, such time as all accumulated and unpaid Dividends
on all series of Preferred Securities shall have been paid in full for all
prior distribution periods. As of the date of this Prospectus, there are
no Preferred Securities outstanding.
REDEMPTION PROVISIONS
The redemption provisions with respect to each series of the Preferred
Securities offered hereby will be set forth in the Prospectus Supplement
related thereto.
PECO Energy Capital may not redeem any Preferred Securities unless all
accumulated and unpaid Dividends have been paid on all Preferred Securities
for all monthly distribution periods terminating on or prior to the date of
redemption. If a partial redemption would result in a delisting of such
series of Preferred Securities from any national securities exchange on
which such series of Preferred Securities is then listed, PECO Energy
Capital may only redeem such series of Preferred Securities in whole.
Notice of any redemption of the Preferred Securities will be given not
less than 30 days nor more than 60 days prior to the redemption date to the
record owners thereof. So long as The Depository Trust Company ("DTC") or
its nominee is the sole record holder of the Preferred Securities of any
series, any failure on the part of DTC or a participant in the book entry
system to notify a beneficial owner of such Preferred Securities of such
redemption shall not affect the validity of the redemption. See
"Book-Entry-Only Issuance -- The Depository Trust Company" below. If notice
of redemption shall have been given and payment shall have been made by
PECO Energy Capital to DTC, then, upon the date of such payment all rights
of beneficial owners of the Preferred Securities so called for redemption
will cease. In the event that any date fixed for redemption of Preferred
Securities is not a Business Day, then payment of the Redemption Price
payable on such date will be made on the next succeeding day which is a
Business Day (and without any interest or other payment in respect of any
such delay), except that if such Business Day falls in the next succeeding
calendar year, such payment will be made on the immediately preceding
Business Day (in each case with the same force and effect as if made on
such day).
5
<PAGE>
Subject to applicable law and except as provided under "Description of
the Subordinated Debentures-Certain Covenants of PECO Energy," PECO Energy
or its subsidiaries may at any time and from time to time purchase
outstanding Preferred Securities by tender, in the open market or by
private agreement.
LIQUIDATION DISTRIBUTION
In the event of any voluntary or involuntary dissolution and winding up
of PECO Energy Capital, the holders of the Preferred Securities at the time
outstanding will be entitled to receive out of the assets of PECO Energy
Capital after satisfaction of liabilities to creditors as required by
Delaware law and before any distribution of assets is made to holders of
its general partner interests, the aggregate of the stated liquidation
preference and all accumulated and unpaid Dividends to the date of payment
(the "Liquidation Distribution"). All assets of PECO Energy Capital
remaining after payment of the Liquidation Distribution will be distributed
to the General Partner.
If, upon such liquidation, the Liquidation Distribution can be paid
only in part because PECO Energy Capital has insufficient assets available
to pay in full the aggregate Liquidation Distribution on all Preferred
Securities, then the amounts payable on each series of Preferred Securities
shall be paid on a pro rata basis, in proportion to the full Liquidation
Distribution to which each series of Preferred Securities would be
entitled.
Pursuant to the Limited Partnership Agreement, PECO Energy Capital
shall be dissolved and its affairs shall be wound up upon the occurrence of
any of the following events: (i) upon the expiration of the term of PECO
Energy Capital, which is 99 years, (ii) upon the retirement, resignation,
expulsion, bankruptcy or dissolution of the General Partner or the
occurrence of any other event that under applicable law causes PECO Energy
Capital Corp. to cease to be the General Partner, except for a transfer to
a permitted successor of the General Partner as set forth in the Limited
Partnership Agreement, (iii) the entry of a decree of judicial dissolution,
or (iv) the written consent of the General Partner and all of the holders
of the Preferred Securities. Upon such dissolution, PECO Energy is
required to redeem the Subordinated Debentures to fund the Liquidation
Distribution.
MERGER, CONSOLIDATION, ETC. OF PECO ENERGY CAPITAL
PECO Energy Capital may not consolidate, amalgamate, merge with or
into, or be replaced by, or convey, transfer or lease its properties and
assets substantially as an entirety to any corporation or other entity,
except with the approval of the General Partner and the holders of 66-2/3%
in aggregate stated liquidation preference of the outstanding Preferred
Securities or as otherwise described below. The General Partner may,
without the consent of the holders of the Preferred Securities, cause PECO
Energy Capital to consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to, a corporation, a limited liability company
or a limited partnership, a trust or other entity organized as such under
the laws of any state of the United States of America or the District of
Columbia, provided that (i) such successor entity either (x) expressly
assumes all of the obligations of PECO Energy Capital under the Preferred
Securities or (y) substitutes for the Preferred Securities other securities
having substantially the same terms as the Preferred Securities (the
"Successor Securities") so long as the Successor Securities rank, as
regards participation in the profits and assets of the successor entity, at
least as high as the Preferred Securities rank, as regards participation in
the profits and assets of PECO Energy Capital, (ii) PECO Energy confirms
its obligations under the Guarantee with regard to the Successors
Securities, if any, (iii) such consolidation, amalgamation, merger,
replacement, conveyance, transfer or lease does not cause any series of
Preferred Securities or Successor Securities to be delisted by any national
securities exchange on which such series of Preferred Securities is then
listed, (iv) such consolidation, amalgamation, merger, replacement,
conveyance, transfer or lease does not cause the Preferred Securities or
Successor Securities to be downgraded by any "nationally recognized
statistical rating organization," as that term is defined by the SEC for
purposes of Rule 436(g)(2) under the Securities Act of 1933, (v) such
consolidation, amalgamation, merger, replacement, conveyance, transfer or
lease does not adversely affect the powers, preferences and other special
rights of holders of Preferred Securities or Successor Securities in any
material respect, (vi) such successor entity has a purpose substantially
identical to that of PECO Energy Capital, (vii) prior to such
consolidation, amalgamation, merger, replacement, conveyance, transfer or
lease, PECO Energy has received an opinion of counsel (which may be regular
tax or other counsel to PECO Energy or an affiliate, but not an employee
thereof) to the
6
effect that (w) holders of outstanding Preferred Securities will not
recognize any gain or loss for United States federal income tax purposes as
a result of the consolidation, amalgamation, merger, replacement,
conveyance, transfer or lease, (x) such successor entity will be treated as
a partnership for United States federal income tax purposes, (y) following
such consolidation, amalgamation, merger, replacement, conveyance, transfer
or lease, PECO Energy and such successor entity will be in compliance with
the Investment Company Act of 1940 (the "1940 Act") without registering
thereunder as an investment company, and (z) such consolidation,
amalgamation, merger, replacement, conveyance, transfer or lease will not
adversely affect the limited liability of holders of Preferred Securities
or Successor Securities.
VOTING RIGHTS
Except as provided below and under "Description of the
Guarantee -- Amendments" and "Merger, Consolidation, etc. of PECO Energy
Capital", and as otherwise required by law and the Limited Partnership
Agreement, the holders of the Preferred Securities will have no voting
rights.
If (i) PECO Energy Capital fails to pay Dividends in full on the
Preferred Securities for 18 consecutive monthly distribution periods, (ii)
an Event of Default (as defined in the Indenture) occurs and is continuing,
or (iii) PECO Energy is in default on any of its payment obligations under
the Guarantee, then the holders of the Preferred Securities, acting as a
single class, will be entitled by a vote of the majority of the aggregate
stated liquidation preference of the outstanding Preferred Securities to
appoint a special representative (the "Special Representative") to enforce
PECO Energy Capital's rights against PECO Energy under the Subordinated
Debentures and the Indenture and the obligations undertaken by PECO Energy
under the Guarantee, including, after failure to pay Dividends for 60
consecutive monthly distribution periods on the Preferred Securities, the
payment of Dividends on the Preferred Securities. The Special
Representative shall not be admitted as a partner of PECO Energy Capital or
otherwise be deemed a partner of PECO Energy Capital and shall have no
liability for the debts, obligations or liabilities of PECO Energy Capital.
For purposes of determining whether PECO Energy Capital has failed to
pay Dividends in full for 18 consecutive monthly distribution periods,
Dividends shall be deemed to remain in arrears, notwithstanding any
payments in respect thereof, until full cumulative Dividends on all
Preferred Securities have been or contemporaneously are paid with respect
to all monthly distribution periods terminating on or prior to the date of
payment of such full cumulative Dividends. Subject to the requirements of
applicable law, not later than 30 days after such right to appoint the
Special Representative, the General Partner will convene a general meeting
for the above purpose. If the General Partner fails to convene such
meeting within such 30-day period, the holders of 10% of the aggregate
stated liquidation preference of the Preferred Securities will be entitled
to convene such meeting. The provisions of the Limited Partnership
Agreement relating to the convening and conduct of the general meetings of
security holders will apply with respect to any such meeting. Any Special
Representative so appointed shall vacate office immediately if PECO Energy
Capital (or PECO Energy pursuant to the Guarantee) shall have paid in full
all accumulated and unpaid Dividends on the Preferred Securities or such
default or breach, as the case may be, shall have been cured.
Notwithstanding the appointment of any such Special Representative, PECO
Energy retains all rights under the Indenture, including the right to
extend the interest payment period as provided under "Description of the
Subordinated Debentures -- Option to Extend Interest Payment Period."
If any proposed amendment to the Limited Partnership Agreement provides
for, or the General Partner otherwise proposes to effect, any action which
would materially adversely affect the powers, preferences or special rights
attached to any series of Preferred Securities, whether by way of amendment
to the Limited Partnership Agreement or otherwise, then the holders of such
series of Preferred Securities will be entitled to vote on such amendment
or action of the General Partner (but not on any other amendment or action)
and, in the case of an amendment or action which would equally adversely
affect the rights or preferences of any other Preferred Securities, such
Preferred Securities shall vote together as a class on such amendment or
action of the General Partner (but not on any other amendment or action),
and such amendment or action shall not be effective except with the
approval of the holders of not less than 66-2/3% of the aggregate stated
liquidation preference of such series of Preferred Securities. Except in
certain circumstances described under "Liquidation Distribution," PECO
Energy Capital will be dissolved and wound up only with the consent of the
holders of all Preferred Securities then outstanding.
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The powers, preferences or special rights attached to any Preferred
Securities will be deemed not to be adversely affected by the creation or
issue of, and no vote will be required for the creation or issue of, any
additional series of Preferred Securities or additional general partner
interests. Holders of Preferred Securities have no preemptive rights.
So long as any Subordinated Debentures are held by PECO Energy Capital,
the General Partner, unless so directed by the Special Representative,
shall not (i) direct the time, method and place of conducting any
proceeding for any remedy available to the holders of the Subordinated
Debentures or the Trustee under the Indenture, or executing any trust or
power conferred on the Trustee, (ii) waive any past default which is
available under the Indenture, (iii) exercise any right to rescind or annul
a declaration that the principal of all the Subordinated Debentures shall
be due and payable or (iv) consent to any amendment, modification or
termination of the Indenture, where such consent shall be required,
without, in each case, obtaining the prior approval of the holders of at
least 66-2/3% in aggregate stated liquidation preference of all series of
Preferred Securities affected thereby, acting as a single class; provided,
however, that where a consent under the Indenture would require the consent
of each holder affected thereby, no such consent shall be given by the
General Partner without the prior consent of each holder of all series of
Preferred Securities affected thereby. The General Partner shall not
revoke any action previously authorized or approved by a vote of any series
of Preferred Securities. The General Partner shall notify all holders of
the Preferred Securities of any notice of default received from the Trustee
with respect to the Subordinated Debentures.
Any required approval of holders of Preferred Securities may be given
at a separate meeting of such holders convened for such purposes, at a
meeting of all partners of PECO Energy Capital or pursuant to written
consent. PECO Energy Capital will cause a notice of any meeting at which
holders of any series of Preferred Securities are entitled to vote, or of
any matter upon which action by written consent of such holders is to be
taken, to be mailed to each holder of record of such series of Preferred
Securities. Each such notice will include a statement setting forth (i)
the date of such meeting or the date by which such action is to be taken,
(ii) a description of any resolution proposed for adoption at such meeting
on which such holders are entitled to vote or of such matter upon which
written consent is sought, and (iii) instructions for the delivery of
proxies or consents.
No vote or consent of the holders of the Preferred Securities will be
required for PECO Energy Capital to redeem and cancel Preferred Securities
in accordance with the Limited Partnership Agreement.
Notwithstanding that holders of Preferred Securities are entitled to
vote or consent under any of the circumstances described above, any of the
Preferred Securities that are owned by PECO Energy or any entity owned more
than 50% by PECO Energy, either directly or indirectly, shall not be
entitled to vote or consent and shall, for the purposes of such vote or
consent, be treated as if they were not outstanding.
The holders of the Preferred Securities will have no rights to remove
or replace the General Partner.
BOOK-ENTRY-ONLY ISSUANCE -- THE DEPOSITORY TRUST COMPANY
The Depository Trust Company will act as securities depository for the
Preferred Securities offered hereby. Each series of Preferred Securities
offered hereby will be issued only as fully registered securities
registered in the name of Cede & Co. (DTC's nominee). One or more fully
registered global Preferred Security certificates will be issued,
representing in the aggregate the total number of Preferred Securities of
each series, and will be deposited with DTC.
DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code,
and a "clearing agency" registered pursuant to the provisions of Section
17A of the Exchange Act. DTC holds securities that its participants
("Participants") deposit with DTC. DTC also facilitates the settlement
among Participants of securities transactions, such as transfers and
pledges, in deposited securities through electronic computerized book-entry
changes in Participants' accounts, thereby eliminating the need for
physical movement of securities certificates. Direct Participants include
securities brokers and dealers, banks, trust companies, clearing
corporations, and certain other organizations ("Direct Participants"). DTC
is owned by a number of its Direct Participants and by the
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New York Stock Exchange, Inc., the American Stock Exchange, Inc., and
the National Association of Securities Dealers, Inc. Access to the DTC
system is also available to others such as securities brokers and dealers,
banks and trust companies that clear through or maintain a custodial
relationship with a Direct Participant, either directly or indirectly
("Indirect Participants"). The rules applicable to DTC and its
Participants are on file with the SEC.
Purchases of Preferred Securities under the DTC system must be made by
or through Direct Participants, which will receive a credit for the
Preferred Securities on DTC's records. The ownership interest of each
actual purchaser of each Preferred Security ("Beneficial Owner") is in turn
to be recorded on the Direct and Indirect Participants' records.
Beneficial Owners will not receive written confirmation from DTC of their
purchases, but Beneficial Owners are expected to receive written
confirmations providing details of the transactions, as well as periodic
statements, of their holdings, from the Direct or Indirect Participants
through which the Beneficial Owners purchased Preferred Securities.
Transfers of ownership interests in the Preferred Securities are to be
accomplished by entries made on the books of Participants acting on behalf
of Beneficial Owners. Beneficial Owners will not receive certificates
representing their ownership interests in Preferred Securities, except in
the event that use of the book-entry system for the Preferred Securities is
discontinued.
DTC has no knowledge of the actual Beneficial Owners of the Preferred
Securities. DTC's records reflect only the identity of the Direct
Participants to whose accounts such Preferred Securities are credited,
which may or may not be the Beneficial Owners. The Participants will
remain responsible for keeping account of their holdings on behalf of their
customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by
Direct Participants and Indirect Participants to Beneficial Owners will be
governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Redemption notices shall be sent to Cede & Co. If less than all of a
series of Preferred Securities are being redeemed, DTC's practice is to
determine by lot the amount of the interest of each Direct Participant in
such series to be redeemed.
Although voting with respect to the Preferred Securities is limited, in
those cases where a vote is required, neither DTC nor Cede & Co. will
consent or vote with respect to Preferred Securities. Under its usual
procedure, DTC would mail an Omnibus Proxy to PECO Energy Capital as soon
as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s
consenting or voting rights to those Direct Participants to whose accounts
the Preferred Securities are credited on the record date (identified in a
listing attached to the Omnibus Proxy).
Payments on the Preferred Securities will be made to DTC. DTC's
practice is to credit Direct Participants' accounts on the relevant payment
date in accordance with their respective holdings shown on DTC's records
unless DTC has reason to believe that it will not receive payments on such
payment date. Payments by Participants to Beneficial Owners will be
governed by standing instructions and customer practices and will be the
responsibility of such Participant and not of DTC, PECO Energy Capital, the
General Partner or PECO Energy, subject to any statutory or regulatory
requirements as may be in effect from time to time. Payment of
distributions to DTC is the responsibility of PECO Energy Capital,
disbursement of such payments to Direct Participants is the responsibility
of DTC, and disbursement of such payments to the Beneficial Owners is the
responsibility of Direct and Indirect Participants.
The information in this section concerning DTC and DTC's book-entry
system has been obtained from sources that PECO Energy and PECO Energy
Capital believe to be reliable, but neither PECO Energy nor PECO Energy
Capital takes responsibility for the accuracy thereof.
DTC may discontinue providing its services as securities depository
with respect to any series of the Preferred Securities at any time by
giving reasonable notice to PECO Energy Capital. Under such circumstances,
in the event that a successor securities depository is not obtained,
Preferred Security certificates are required to be printed and delivered.
Additionally, the General Partner may decide to discontinue use of the
system of book-entry transfers through DTC (or a successor depository),
including for the purpose of effectuating a partial redemption of a series
of Preferred Securities in which only the Preferred Securities of certain
holders will be redeemed.
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In the event that the book entry only system is discontinued, the
General Partner will appoint a registrar, transfer agent and paying agent
for the Preferred Securities. Registration of transfers of Preferred
Securities will be effected without charge by or on behalf of PECO Energy
Capital, but upon payment of any tax or other governmental charges which
may be imposed in relation to it. PECO Energy Capital will not be required
to register or cause to be registered the transfer of Preferred Securities
after such Preferred Securities have been called for redemption.
MISCELLANEOUS
The General Partner is authorized and directed to use its best efforts
to manage the affairs of PECO Energy Capital in such a way that PECO Energy
Capital would not be deemed to be an "investment company" required to be
registered under the 1940 Act or taxed as a corporation for United States
federal income tax purposes and so that the Subordinated Debentures will be
treated as indebtedness of PECO Energy for federal income tax purposes. In
this connection, the General Partner is authorized to take any action not
inconsistent with applicable law, the Certificate of Limited Partnership of
PECO Energy Capital or the Limited Partnership Agreement, and that does not
materially adversely affect the interests of holders of Preferred
Securities, that the General Partner determines in its discretion to be
necessary or desirable for such purposes.
PECO Energy Capital may not borrow money or issue debt or mortgage or
pledge any of its assets.
DESCRIPTION OF THE GUARANTEE
The following is a summary of certain provisions of the Guarantee which
will be executed and delivered by PECO Energy concurrently with the
issuance of each series of Preferred Securities offered hereby for the
benefit of the holders from time to time of that series of the Preferred
Securities. The summary is subject to, and qualified by reference to the
Payment and Guarantee Agreement, which is filed as an exhibit to the
Registration Statement of which this Prospectus forms a part. Reference in
the summary to Preferred Securities means the series of the Preferred
Securities to which a Guarantee relates.
GENERAL
PECO Energy will irrevocably and unconditionally agree, to the extent
set forth herein, to pay in full, to the holders of the Preferred
Securities, the Guarantee Payments (as defined below) (except to the extent
paid by PECO Energy Capital), as and when due, regardless of any defense,
right of set-off or counterclaim which PECO Energy Capital may have or
assert. The following payments, to the extent not paid by PECO Energy
Capital (the "Guarantee Payments"), will be subject to the Guarantee
(without duplication): (i) any accumulated and unpaid Dividends on the
Preferred Securities to the extent that PECO Energy Capital has funds on
hand legally available therefor, (ii) the redemption price with respect to
any Preferred Securities called for redemption to the extent that PECO
Energy Capital has funds on hand legally available therefor, (iii) upon a
liquidation of PECO Energy Capital, the lesser of (a) the Liquidation
Distribution and (b) the amount of assets of PECO Energy Capital legally
available for distribution to holders of Preferred Securities and (iv) any
additional amounts payable with respect to a particular series of Preferred
Securities. PECO Energy's obligation to make a Guarantee Payment may be
satisfied by direct payment of the required amounts by PECO Energy to the
holders of Preferred Securities or by causing PECO Energy Capital to pay
such amounts to such holders.
STATUS OF THE GUARANTEE
The Guarantee will constitute an unsecured obligation of PECO Energy
and will rank subordinate and junior in right of payment to all general
liabilities of PECO Energy. The Limited Partnership Agreement provides
that each holder of Preferred Securities by acceptance thereof agrees to
the subordination provisions and other terms of the Guarantee.
The Guarantee will constitute a guarantee of payment and not of
collection. The Guarantee will be held for the benefit of the holders of
the Preferred Securities. In the event of the appointment of a Special
Representative, the Special Representative may enforce the Guarantee. If
no Special Representative has been appointed to enforce the Guarantee, the
General Partner has the right to enforce the Guarantee on behalf of the
holders of the Preferred Securities. The holders of not less than 10% in
aggregate stated liquidation preference of the Preferred Securities have
the right to direct the time, method and place of conducting any
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proceeding to enforce the Guarantee, including the giving of directions
to the General Partner or the Special Representative, as the case may be.
If the General Partner or the Special Representative fails to enforce the
Guarantee as above provided, any holder of Preferred Securities may
institute a legal proceeding directly against PECO Energy to enforce its
rights under the Guarantee without first instituting a legal proceeding
against PECO Energy Capital or any other person or entity. The Guarantee
will not be discharged except by payment of the Guarantee Payments in full
to the extent not paid by PECO Energy Capital.
CERTAIN COVENANTS OF PECO ENERGY
Under the Guarantee, PECO Energy will covenant that, so long as any
Preferred Securities remain outstanding, neither PECO Energy nor any
majority-owned subsidiary of PECO Energy shall declare or pay any dividend
on, or redeem, purchase, acquire or make a liquidation payment with respect
to, any of its capital stock (other than dividends by a wholly owned
subsidiary) if at such time PECO Energy shall be in default with respect to
its payment obligations under the Guarantee or there shall have occurred
any event that, with giving of notice or the lapse of time or both, would
constitute an Event of Default under the Indenture.
AMENDMENTS
Except with respect to any changes which do not materially adversely
affect the rights of holders of Preferred Securities (in which case no vote
will be required), the Guarantee may be changed only with the prior
approval of the holders of not less than 66-2/3% of the aggregate stated
liquidation preference of the outstanding Preferred Securities. The manner
of obtaining any such approval of holders of the Preferred Securities will
be as set forth under "Description of the Preferred Securities -- Voting
Rights."
MERGER OF PECO ENERGY
So long as any Preferred Securities remain outstanding, PECO Energy
will maintain its corporate existence; provided that PECO Energy may
consolidate with or merge with or into any other person or sell, convey,
transfer or lease its properties and assets substantially as an entirety to
any person if the successor person shall be organized and existing under
the laws of the United States or any state thereof or the District of
Columbia and shall expressly assume the obligations of PECO Energy under
the Guarantee.
TERMINATION OF THE GUARANTEE
The Guarantee will terminate and be of no further force and effect upon
full payment of the redemption price of the Preferred Securities or upon
full payment of the amounts payable upon liquidation of PECO Energy
Capital. The Guarantee will continue to be effective or will be
reinstated, as the case may be, if at any time any holder of Preferred
Securities must restore payment of any sums paid under the Preferred
Securities or the Guarantee.
DESCRIPTION OF THE SUBORDINATED DEBENTURES
The following is a summary of certain terms and provisions of the
Subordinated Debentures and the Indenture. The summary is subject to, and
is qualified by reference to the Indenture, which is filed as an exhibit to
the Registration Statement of which this Prospectus forms a part.
GENERAL
Concurrently with the issuance of each series of the Preferred
Securities, PECO Energy Capital will loan the proceeds thereof and the
General Partner's concurrent investment in PECO Energy Capital to PECO
Energy. The loan will be evidenced by a separate series of Subordinated
Debentures issued by PECO Energy to PECO Energy Capital. The Subordinated
Debentures will be unsecured subordinated obligations of PECO Energy issued
under the Indenture. Each series of Subordinated Debentures will be in the
principal amount equal to the aggregate stated liquidation preference of
the related series of Preferred Securities plus the General Partner's
concurrent investment in PECO Energy Capital, will bear interest at a rate
equal to the Dividend rate on such series of Preferred Securities payable
on the Dividend dates, will have maturity and redemption provisions
corresponding to the redemption provisions of such series of Preferred
Securities and will be subject to mandatory redemption upon the dissolution
and winding up of PECO Energy Capital.
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OPTION TO EXTEND INTEREST PAYMENT PERIOD
Under the Indenture, PECO Energy shall have the right at any time so
long as PECO Energy is not in default in the payment of interest on any
series of Subordinated Debentures, to extend the interest payment period
for all Subordinated Debentures for up to 60 consecutive months; provided
that no Extension Period shall extend beyond the stated maturity date or
date of mandatory redemption of any series of Subordinated Debentures. At
the end of the Extension Period, PECO Energy shall pay all interest then
accrued and unpaid (together with interest thereon compounded daily to the
extent permitted by applicable law). During any such Extension Period,
neither PECO Energy nor any majority-owned subsidiary of PECO Energy shall
declare or pay any dividend on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its capital stock (other than
dividends by wholly owned subsidiaries). Prior to the termination of any
such Extension Period, PECO Energy may further extend the interest payment
period, provided that such Extension Period together with all such further
extensions thereof may not exceed 60 consecutive months. Upon the
termination of any Extension Period and the payment of all amounts then
due, PECO Energy may select a new Extension Period subject to the above
requirements. PECO Energy shall give PECO Energy Capital notice of its
selection of such extended interest payment period one Business Day prior
to the earlier of (i) the date the Dividends on the Preferred Securities
are payable or (ii) the date PECO Energy Capital is required to give notice
to any national securities exchange on which any series of the Preferred
Securities is listed or other applicable self-regulatory organization or to
holders of the Preferred Securities of the record date or the date such
Dividend is payable, but in any event not less than two Business Days prior
to such record date. PECO Energy shall cause PECO Energy Capital to give
such notice of PECO Energy's selection of such extended interest payment
period to the holders of the Preferred Securities.
ADDITIONAL INTEREST
If any time PECO Energy Capital shall be required to pay any Additional
Amounts in respect of the Preferred Securities pursuant to the terms
thereof, then PECO Energy will pay as interest ("Additional Interest") an
amount equal to such Additional Amounts on the Subordinated Debentures. In
addition, if PECO Energy Capital would be required to pay any taxes,
duties, assessments or governmental charges of whatever nature (other than
withholding taxes) imposed by the United States, or any other taxing
authority, then, in any such case, PECO Energy also will pay as Additional
Interest such amounts as shall be required so that the net amounts received
and retained by PECO Energy Capital after paying any such taxes, duties,
assessments or governmental charges will not be less than the amounts PECO
Energy Capital would have received had no such taxes, duties, assessments
or governmental charges been imposed.
SUBORDINATION
The Indenture provides that all payments by PECO Energy in respect of
the Subordinated Debentures shall be subordinated to the prior payment in
full of all amounts payable on Senior Indebtedness. The term "Senior
Indebtedness" means (i) the principal of and premium in respect of (A)
indebtedness of PECO Energy for money borrowed and (B) indebtedness
evidenced by securities, debentures, bonds or other similar instruments
issued by PECO Energy; (ii) all capital lease obligations of PECO Energy;
(iii) all obligations of PECO Energy issued or assumed as the deferred
purchase price of property, all conditional sale obligations of PECO Energy
and all obligations of PECO Energy under any title retention agreement (but
excluding trade accounts payable arising in the ordinary course of
business); (iv) certain obligations of PECO Energy for the reimbursement of
any obligor on any letter of credit, banker's acceptance, security purchase
facility or similar credit transaction entered into in the ordinary course
of business of PECO Energy; (v) all obligations of the type referred to in
clauses (i) through (iv) of other persons and all dividends of other
persons (other than Preferred Securities) for the payment of which, in
either case, PECO Energy is responsible or liable as obligor, guarantor or
otherwise; and (vi) all obligations of the type referred to in clauses (i)
through (v) of other persons secured by any lien on any property or asset
of PECO Energy (whether or not such obligation is assumed by PECO Energy),
except for any such indebtedness that is by its terms subordinated to or
pari passu with the Subordinated Debentures.
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Upon any payment or distribution of assets or securities of PECO
Energy, upon any dissolution or winding up or total or partial liquidation
or reorganization of PECO Energy, whether voluntary or involuntary, or in
bankruptcy, insolvency, receivership or other proceedings, all amounts
payable on Senior Indebtedness (including any interest accruing on such
Senior Indebtedness subsequent to the commencement of a bankruptcy,
insolvency or similar proceeding) shall first be paid in full before PECO
Energy Capital or any Special Representative appointed by the holders of
the Preferred Securities shall be entitled to receive from PECO Energy any
payment of principal of or interest on or any other amounts in respect of
the Subordinated Debentures.
No direct or indirect payment by or on behalf of PECO Energy of
principal of or interest on the Subordinated Debentures, whether pursuant
to the terms of the Subordinated Debentures or upon acceleration or
otherwise, shall be made if, at the time of such payment, there exists (i)
a default in the payment of all or any portion of any Senior Indebtedness
or (ii) any other default pursuant to which the maturity of Senior
Indebtedness has been accelerated and, in either case, requisite notice has
been given to PECO Energy and the Trustee and such default shall not have
been cured or waived by or on behalf of the holders of such Senior
Indebtedness.
If the Trustee, PECO Energy Capital, as holder of the Subordinated
Debentures or any Special Representative appointed by the holders of the
Preferred Securities, shall have received any payment on account of the
principal of or interest on the Subordinated Debentures when such payment
is prohibited and before all amounts payable on Senior Indebtedness are
paid in full, then such payment shall be received and held in trust for the
holders of Senior Indebtedness and shall be paid over or delivered first to
the holders of the Senior Indebtedness remaining unpaid to the extent
necessary to pay such Senior Indebtedness in full.
Nothing in the Indenture shall limit the right of PECO Energy Capital
or the Special Representative to take any action to accelerate the maturity
of the Subordinated Debentures or to pursue any rights or remedies against
PECO Energy; provided that all Senior Indebtedness shall first be paid
before PECO Energy Capital is entitled to receive any payment from PECO
Energy of principal of or interest on the Subordinated Debentures.
Upon the payment in full of all Senior Indebtedness, PECO Energy
Capital (and any Special Representative appointed by such holders) shall be
subrogated to the rights of the holders of such Senior Indebtedness to
receive payments or dividends of assets of PECO Energy made on such Senior
Indebtedness until all accrued interest on and principal of the
Subordinated Debentures shall be paid in full.
The Indenture does not limit the aggregate amount of Senior
Indebtedness which PECO Energy may issue.
CERTAIN COVENANTS OF PECO ENERGY
PECO Energy will covenant that it and any majority-owned subsidiary
will not declare or pay any dividend on, or redeem, purchase, acquire or
make a liquidation payment with respect to, any of its capital stock (other
than dividends by wholly owned subsidiaries) (i) during an Extension
Period, (ii) if there shall have occurred any event that, with the giving
of notice or the lapse of time or both, would constitute an Event of
Default under the Indenture or (iii) if PECO Energy shall be in default
with respect to its payment obligations under the Guarantee. PECO Energy
will also covenant (i) to maintain direct or indirect 100% ownership of the
General Partner and will cause the General Partner to maintain 100%
ownership of the general partner interests of PECO Energy Capital, (ii) to
cause at least 10% of the total value of PECO Energy Capital and at least
3% of all interests in the capital, income, gain, loss, deduction and
credit of PECO Energy Capital to be represented by general partner
interests, (iii) to timely cause the General Partner to perform all of its
duties as general partner of PECO Energy Capital (including the duty to pay
Dividends on the Preferred Securities), and (iv) to use its reasonable
efforts to cause PECO Energy Capital to remain a limited partnership and
otherwise continue to be treated as a partnership for United States federal
income tax purposes.
PECO Energy Capital may not waive compliance or waive any default in
compliance by PECO Energy with any covenant or other term in the Indenture
without the approval of the Special Representative or without the direction
of the holders of 66-2/3% of the aggregate stated liquidation preference of
the Preferred Securities.
13
<PAGE>
MODIFICATION OF THE INDENTURE
The Indenture contains provisions permitting PECO Energy and the
Trustee, with the consent of the Special Representative or PECO Energy
Capital at the direction of the holders of not less than 66-2/3% of the
aggregated stated liquidation preference of the Preferred Securities
related to the Subordinated Debentures which are affected by the
modification, to modify the Indenture or any supplemental indenture or the
rights of the holders of the Subordinated Debentures issued under the
Indenture; provided that no such modification may, (a) change the stated
maturity date of the principal of, or any installment of principal of or
interest, if any, on, any Subordinated Debenture, (b) reduce the principal
amount of, or premium or rate of interest, if any, on, any Subordinated
Debenture, (c) reduce the amount of principal of an original issue discount
Subordinated Debenture payable upon acceleration of the maturity thereof,
(d) change the place or currency of payment of principal of, or premium or
interest, if any, on, any Subordinated Debenture or (e) impair the right to
institute suit for the enforcement of any payment on or with respect to any
Subordinated Debenture, or change the amendment provisions of the
Indenture.
EVENTS OF DEFAULT
The following are Events of Default under the Indenture: (i) default
for 10 days in payment of any interest (including Additional Interest) on
the Subordinated Debentures (other than the payment of interest during an
Extension Period); (ii) default in payment of principal of (or premium, if
any, on) the Subordinated Debentures; (iii) default for 60 days after
notice in the performance of any other covenant in the Indenture or (iv)
certain events of bankruptcy, insolvency or reorganization of PECO Energy.
In case an Event of Default under the Indenture shall occur and be
continuing other than an Event of Default relating to bankruptcy of PECO
Energy, in which case principal and interest on all of the Subordinated
Debentures shall become immediately due and payable, the Trustee or the
Special Representative may declare the principal of all the Subordinated
Debentures to be due and payable. Under certain circumstances, any
declaration of acceleration with respect to Subordinated Debentures may be
rescinded and past defaults (except, unless theretofore cured, a default in
the payment of principal of or interest on the Subordinated Debentures) may
be waived only by the Special Representative or by PECO Energy Capital at
the direction of the holders of 66-2/3% in aggregate stated liquidation
preference of Preferred Securities.
PECO Energy is required to furnish to the Trustee annually a statement
as to the performance by PECO Energy of its obligations under the Indenture
and as to any default in such performance.
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
The Indenture provides that PECO Energy may not consolidate with or
merge with or into any other person or sell, convey, transfer or lease its
properties and assets substantially as an entirety to any person, unless
(i) the successor person shall be organized and existing under the laws of
the United States or any state thereof or the District of Columbia, and
shall expressly assume by a supplemental indenture all of the obligations
of PECO Energy under the Subordinated Debentures and the Indenture and (ii)
immediately after giving effect to such transaction, no Event of Default,
and no event which, after notice or lapse of time or both, would become an
Event of Default, shall have happened and be continuing.
DEFEASANCE AND DISCHARGE
Under the terms of the Indenture, PECO Energy will be discharged from
any and all obligations in respect of the Subordinated Debentures of any
series if PECO Energy deposits with the Trustee, in trust, (i) money and/or
(ii) United States Government Securities (as defined in the Indenture),
which through the payment of interest thereon and principal thereof in
accordance with their terms will provide money in an amount sufficient to
pay all the principal of, and interest on, the Subordinated Debentures of
such series on the dates such payments are due in accordance with the terms
of such Subordinated Debentures.
14
<PAGE>
INFORMATION CONCERNING THE TRUSTEE
Subject to the provisions of the Indenture relating to its duties, the
Trustee will be under no obligation to exercise any of its rights or powers
under the Indenture at the request, order or direction of any of the
holders thereunder, unless such holders shall have offered to the Trustee
reasonable indemnity. Subject to such provision for indemnification, the
holders of a majority in principal amount of the Subordinated Debentures
then outstanding thereunder or the Special Representative will have the
right to direct the time, method and place of conducting any proceeding for
any remedy available to the Trustee thereunder, or exercising any trust or
power conferred on the Trustee.
The Indenture contains limitations on the right of the Trustee, as a
creditor of PECO Energy, to obtain payment of claims in certain cases, or
to realize on certain property received in respect of any such claim as
security or otherwise. In addition, the Trustee may be deemed to have a
conflicting interest and may be required to resign as Trustee if at the
time of default under the Indenture it is a creditor of PECO Energy.
An affiliate of Meridian Trust Company, the Trustee under the
Indenture, has from time to time engaged in transactions with, or performed
services for, PECO Energy and its affiliates in the ordinary course of
business.
Mr. Joseph F. Paquette, Jr. is Chairman of the Board and a Director of
PECO Energy and a Director of Meridian Bancorp, Inc., the parent
corporation of the Trustee.
PLAN OF DISTRIBUTION
PECO Energy Capital may offer or sell Preferred Securities offered
hereby to one or more underwriters for public offering and sale by them.
PECO Energy Capital may sell Preferred Securities as soon as practicable
after effectiveness of the Registration Statement. Any such underwriter
involved in the offer and sale of the Preferred Securities will be named in
an applicable Prospectus Supplement.
Underwriters may offer and sell the Preferred Securities at a fixed
price or prices, which may be changed, or from time to time at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices or at negotiated prices. In connection with the sale of
Preferred Securities, underwriters may be deemed to have received
compensation from PECO Energy and/or PECO Energy Capital in the form of
underwriting discounts or commissions and may also receive commissions.
Underwriters may sell Preferred Securities to or through dealers, and such
dealers may receive compensation in the form of discounts, concessions or
commissions from the underwriters.
Any underwriting compensation paid by PECO Energy and/or PECO Energy
Capital to underwriters in connection with the offering of Preferred
Securities, and any discounts, concessions or commissions allowed by
underwriters to participating dealers, will be set forth in an applicable
Prospectus Supplement. Underwriters and dealers participating in the
distribution of the Preferred Securities may be deemed to be underwriters,
and any discounts and commissions received by them and any profit realized
by them on resale of the Preferred Securities may be deemed to be
underwriting discounts and commissions, under the Securities Act.
Underwriters and dealers may be entitled, under agreement with PECO Energy
and PECO Energy Capital, to indemnification against and contribution toward
certain civil liabilities, including liabilities under the Securities Act,
and to reimbursement by PECO Energy for certain expenses.
Underwriters and dealers may engage in transactions with, or perform
services for, PECO Energy and/or PECO Energy Capital and/or any of their
affiliates in the ordinary course of business.
Each series of Preferred Securities will be a new issue of securities
and will have no established trading market. Any underwriters to whom
Preferred Securities are sold by PECO Energy Capital for public offering
and sale may make a market in such Preferred Securities, but such
underwriters will not be obligated to do so and may discontinue any market
making at any time without notice. The Preferred Securities may or may not
be listed on a national securities exchange. No assurance can be given as
to the liquidity of or the trading markets for any Preferred Securities.
15
<PAGE>
LEGAL MATTERS
Certain matters of Delaware law relating to the validity of the
Preferred Securities, the validity of the Limited Partnership Agreement and
the formation of PECO Energy Capital are being passed upon by Richards,
Layton & Finger, P.A., special Delaware counsel to PECO Energy Capital.
The validity of the Guarantee and the Subordinated Debentures will be
passed upon on behalf of PECO Energy by Ballard Spahr Andrews & Ingersoll.
Certain legal matters will be passed upon on behalf of the Underwriters by
Drinker Biddle & Reath, counsel to the Underwriters. Ballard Spahr Andrews
& Ingersoll and Drinker Biddle & Reath will rely on Richards, Layton &
Finger, P.A. as to certain matters of Delaware law.
EXPERTS
The consolidated financial statements and schedules of PECO Energy
incorporated by reference in this Prospectus have been audited by Coopers &
Lybrand, independent accountants, for the periods indicated in their report
thereon which is included in the Annual Report on Form 10-K for the year
ended December 31, 1993. The consolidated financial statements and
schedules audited by Coopers & Lybrand have been incorporated herein by
reference in reliance on their report given on their authority as experts
in accounting and auditing.
16
<PAGE>
====================================== =======================================
No person has been authorized to
give any information or to make any PREFERRED SECURITIES
representations other than those
contained in this Prospectus PECO ENERGY CAPITAL
Supplement or the Prospectus and,
if given or made, such information
or representations must not be % CUMULATIVE
relied upon as having been MONTHLY INCOME PREFERRED
authorized. This Prospectus SECURITIES, SERIES A
Supplement and the Prospectus do
not constitute an offer to sell or
the solicitation of any offer to GUARANTEED TO THE EXTENT SET FORTH
buy any securities other than the HEREIN BY
securities described in this
Prospectus Supplement and the
Prospectus or an offer to sell or PECO ENERGY COMPANY
the solicitation of an offer to buy
such securities in any
circumstances 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 the information
contained herein or therein is
correct as of any time subsequent
to the date of such information.
---------- ----------
TABLE OF CONTENTS PROSPECTUS SUPPLEMENT
PROSPECTUS SUPPLEMENT ----------
PAGE
----
Certain Investment
Considerations ............. S-3
PECO Energy Capital .......... S-3
PECO Energy .................. S-4
Certain Terms of the
Series A Preferred
Securities ................. S-4
Certain Terms of the
Series A Subordinated
Debentures ................. S-6
United States Taxation ....... S-6 GOLDMAN, SACHS & CO.
Underwriting ................. S-9
SMITH BARNEY SHEARSON INC.
PROSPECTUS
DEAN WITTER REYNOLDS INC.
Statement of Available
Information ................ 2 A.G. EDWARDS & SONS, INC.
Incorporation of Certain
Documents by Reference ..... 2 KIDDER, PEABODY & CO.
PECO Energy Capital .......... 2 INCORPORATED
PECO Energy .................. 3
Coverage Ratios .............. 3 PAINEWEBBER INCORPORATED
Use of Proceeds ............. 4
Description of the Preferred PRUDENTIAL SECURITIES
Securities ................. 4 INCORPORATED
Description of the Guarantee.. 10
Description of the REPRESENTATIVES OF THE UNDERWRITERS
Subordinated Debentures .... 11
Plan of Distribution ......... 15
Legal Matters ................ 16
Experts ...................... 16
====================================== =======================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.*
Filing fees - Securities and Exchange Commission ...... $120,690
Printing and engraving ................................ 50,000
New York Stock Exchange listing fee ................... 75,000
Legal fees and Blue Sky fees and expenses ............. 200,000
Accounting fees ....................................... 50,000
Indenture Trustee fees and expenses ................... 25,000
Rating agencies fees and expenses ..................... 125,000
Miscellaneous ......................................... 10,310
--------
Total ............................................. $656,000
========
*Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
PECO Energy's Bylaws provide that PECO Energy is obligated to indemnify
directors and officers and other persons designated by the Board of
Directors against any liability including any damage, judgment, amount paid
in settlement, fine, penalty, cost or expense (including, without
limitation, attorneys' fees and disbursements) incurred in connection with
any proceeding. The Bylaws provide that no indemnification shall be made
where the act or failure to act giving rise to the claim for
indemnification is determined by arbitration or otherwise to have
constituted willful misconduct or recklessness or attributable to receipt
from PECO Energy of a personal benefit to which the recipient is not
legally entitled.
Section 518 of the Pennsylvania Business Corporation Law of 1988
provides that indemnification pursuant to a bylaw may be granted for any
action taken or any failure to take any action, absent a court
determination of willful misconduct or recklessness, and may be made
whether or not the corporation would have the power to indemnify the person
under any other provision of law.
Pursuant to the Pennsylvania Business Corporation Law of 1988, the
Company's Bylaws provide that directors generally will not be liable for
monetary damages in any action whether brought by shareholders directly or
in the right of PECO Energy or by third parties unless they fail in the
good faith performance of their duties as fiduciaries (the standard of care
established by the Pennsylvania Business Corporation Law of 1988), and such
failure constitutes self-dealing, willful misconduct or recklessness.
Pursuant to the Limited Partnership Agreement, to the fullest extent
permitted by applicable law, PECO Energy Capital shall indemnify and hold
harmless the General Partner or any Special Representative, any affiliate
of the General Partner or any Special Representative or any officers,
directors, shareholders, partners, employees, representatives or agents of
the General Partner or any Special Representative, or any employee or agent
of PECO Energy Capital or its affiliates (each, an "Indemnified Person")
from and against any loss, damage or claim incurred by such Indemnified
Person by reason of any act or omission performed or omitted by such
Indemnified Person in good faith on behalf of PECO Energy Capital and in a
manner reasonably believed to be within the scope of authority conferred on
such Indemnified Person by the Limited Partnership Agreement, except that
no Indemnified Person shall be entitled to be indemnified in respect of any
loss, damage or claim incurred by such Indemnified Person by reason of
gross negligence, willful misconduct or fraud with respect to such acts or
omissions; provided, however, that any such indemnity shall be provided out
of and to the extent of PECO Energy Capital's assets only, and no General
Partner or limited partner (collectively, "Partners"), any affiliate of a
Partner or any officers, directors, shareholders, partners, employees,
representatives or agents of a Partner or its respective affiliates, or any
employee or agent of PECO Energy Capital or its affiliates or any Special
Representative shall have any personal liability on account thereof. To
the fullest extent permitted by applicable law, expenses (including legal
fees) incurred by an Indemnified Person in defending any claim, demand,
action, suit or proceeding shall, from time to time, be advanced by PECO
Energy Capital
II-1
<PAGE>
prior to the final disposition of such claim, demand, action, suit or
proceeding shall, from time to time, be advanced by PECO Energy Capital of
an undertaking by or on behalf of the Indemnified Person to repay such
amount if it shall be determined that the Indemnified Person is not
entitled to be indemnified.
The Underwriting Agreement provides for the Underwriters to indemnify
the directors and officers of PECO Energy and PECO Energy Capital against
certain liabilities as set forth in Section 8 of the Underwriting Agreement
(see Exhibit 1-1).
PECO Energy has purchased directors' and officers' liability insurance.
ITEM 16. EXHIBITS
EXHIBIT
NUMBERS
- - - - -------
1-1 Form of Underwriting Agreement.
4-1 Certificate of Limited Partnership of PECO Energy Capital, L.P.
4-2 Form of Amended and Restated Limited Partnership Agreement of PECO
Energy Capital, L.P.
4-3 Form of Action of General Partner creating Series A Preferred
Securities.
4-4 Form of Preferred Security Certificate (included in Exhibit 4-2 above).
4-5 Form of Subordinated Debenture Indenture.
4-6 Form of Subordinated Debenture (included in Exhibit 4-5 above).
4-7 Form of Payment and Guarantee Agreement.
5-1 Opinion of Ballard Spahr Andrews & Ingersoll relating to the
legality of the Subordinated Debentures and Guarantees, including
consent.
5-2 Opinion of Richards, Layton & Finger, P.A., relating to the
legality of the Preferred Securities, including consent.
8 Opinion of Ballard Spahr Andrews & Ingersoll as to tax matters.
12-1 Computations of PECO Energy's Ratio of Earnings to Fixed Charges and
Ratio of Earnings to Combined Fixed Charges and Preferred Stock
Dividend Requirements for the years ended December 31, 1989-1993
and for the three-months ended March 31, 1993 and March 31, 1994
(incorporated by reference to Exhibits 12-1 and 12-2, respectively, of
PECO Energy's 1993 Form 10-K, File No. 1-1401 and PECO Energy's
Quarterly Reports on Form 10-Q for the quarters ended March 31,
1993 and March 31, 1994).
23-1 Consent of Independent Accountants.
23-2 Consent of Ballard Spahr Andrews & Ingersoll (included in Exhibit
5-1).
23-3 Consent of Richards, Layton & Finger, P.A. (included in Exhibit
5-2).
24 Powers of Attorney.
25 Statement of Eligibility under the Trust Indenture Act of 1939 of
a Corporation designated to act as Trustee.
ITEM 17. UNDERTAKINGS
A. TO UPDATE ANNUALLY
The Registrants hereby undertake (1) to file, during any period in
which offers or sales are being made, a post-effective amendment to this
registration statement: (i) to include any prospectus required by Section
10(a)(3) of the Securities Act of 1933; (ii) 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; (iii) to
II-2
<PAGE>
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 paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by PECO Energy pursuant
to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that
are incorporated by reference in the 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 thereof; and (3) 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. INCORPORATION BY REFERENCE
The Registrants hereby undertake that, for purposes of determining any
liability under the Securities Act of 1933, each filing of PECO Energy's
annual report pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in the registration
statement 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 thereof.
C. INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons
of the Registrants, the Registrants have been advised that in the opinion
of the SEC 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 Registrants of expenses incurred or paid by a director,
officer or controlling person of the Registrants in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrants 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 such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant, PECO Energy Company, certifies that it has reasonable grounds
to believe 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 Philadelphia,
Commonwealth of Pennsylvania, on the 25th day of May, 1994.
PECO Energy Company
/s/ J. F. Paquette, Jr.
By -----------------------
J. F. PAQUETTE, JR.
Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ J. F. Paquette, Jr. Chairman of the Board and Director May 25, 1994
- - - - ------------------------ (Principal Executive Officer)
J. F. PAQUETTE, JR.
/s/ C. A. McNeill, Jr. President and Director May 25, 1994
- - - - ------------------------ (Principal Operating Officer)
C. A. MCNEILL, JR.
/s/ K. G. Lawrence Senior Vice President--Finance May 25, 1994
- - - - ------------------------ (Principal Financial and
K. G. LAWRENCE Accounting Officer)
This registration statement has also been signed by K.G. Lawrence,
Attorney-in-Fact, on behalf of the following Directors on the date
indicated:
Susan W. Catherwood Joseph C. Ladd
M. Walter D'Alessio Edithe J. Levit
Richard G. Gilmore Kinnaird R. McKee
Richard H. Glanton Joseph J. McLaughlin
James A. Hagen John M. Palms
Nelson G. Harris Ronald Rubin
/s/ K. G. Lawrence
By ---------------------------- May 25, 1994
K. G. LAWRENCE
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant, PECO Energy Capital, L.P., certifies that it has reasonable
grounds to believe 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 Philadelphia,
Pennsylvania, on the 25th day of May, 1994.
PECO Energy Capital, L.P.
By: PECO Energy Capital Corp.,
its general partner
/s/ J. B. Mitchell
By --------------------------------
J. B. MITCHELL
President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ J. B. Mitchell President and Director May 25, 1994
- - - - ------------------------ (Principal Executive Officer and
J. B. MITCHELL Principal Financial and Accounting
Officer)
/s/ M. W. Rimerman Director May 25, 1994
- - - - ------------------------
M. W. RIMERMAN
/s/ K. G. Lawrence Director May 25, 1994
- - - - ------------------------
K. G. LAWRENCE
II-5
<PAGE>
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION PAGE
------- ----------- ----
1-1 Form of Underwriting Agreement.
4-1 Certificate of Limited Partnership of PECO
Energy Capital, L.P.
4-2 Form of Amended and Restated Limited Partnership
Agreement of PECO Energy Capital, L.P.
4-3 Form of Action of General Partner creating Series A
Preferred Securities.
4-4 Form of Preferred Security Certificate
(included in Exhibit 4-2 above).
4-5 Form of Subordinated Debenture Indenture.
4-6 Form of Subordinated Debenture (included in
Exhibit 4-5 above).
4-7 Form of Payment and Guarantee Agreement.
5-1 Opinion of Ballard Spahr Andrews & Ingersoll relating
to the legality of the Subordinated Debentures and
Guarantees, including consent.
5-2 Opinion of Richards, Layton & Finger, P.A., relating
to the legality of the Preferred Securities, including
consent.
8 Opinion of Ballard Spahr Andrews & Ingersoll as to
tax matters.
12-1 Computations of PECO Energy's Ratio of Earnings to
Fixed Charges and Ratio of Earnings to Combined
Fixed Charges and Preferred Stock Dividend
Requirements for the years ended December 31,
1989-1993 and for the three-months ended March
31, 1993 and March 31, 1994 (incorporated by
reference to Exhibits 12-1 and 12-2,
respectively, of PECO Energy's 1993 Form 10-K,
File No. 1-1401 and PECO Energy's Quarterly
Reports on Form 10-Q for the quarters ended March
31, 1993 and March 31, 1994).
23-1 Consent of Independent Accountants.
23-2 Consent of Ballard Spahr Andrews & Ingersoll
(included in Exhibit 5-1).
23-3 Consent of Richards, Layton & Finger, P.A.
(included in Exhibit 5-2).
24 Powers of Attorney.
25 Statement of Eligibility under the Trust Indenture
Act of 1939 of a Corporation designated to act as
Trustee.
PECO ENERGY CAPITAL, L.P.
PECO ENERGY COMPANY
UNDERWRITING AGREEMENT
May __, 1994
Goldman, Sachs & Co.
Smith Barney Shearson Inc.
Dean Witter Reynolds Inc.
A.G. Edwards & Sons, Inc.
Kidder, Peabody & Co. Incorporated
PaineWebber Incorporated
Prudential Securities Incorporated
As Representatives of the Several
Underwriters Named in Schedule I
c/o Goldman, Sachs & Co.
85 Broad Street, 22nd Floor
New York, NY 10004
Dear Sirs:
PECO Energy Capital, L.P., a limited partnership organized
under the laws of Delaware (the "Company"), and PECO Energy
Company, a Pennsylvania corporation, as guarantor and provider of
certain undertakings (the "Guarantor"), propose, subject to the
terms and conditions stated herein, that the Company issue and sell
to the Underwriters named in Schedule I hereto (the "Underwriters")
an aggregate of _______ of the Company's ___% Cumulative Monthly
Income Preferred Securities, Series A (liquidation preference $25
per share) (the "Series A Preferred Securities"), guaranteed by the
Guarantor on a limited basis as to the payment of accumulated and
unpaid monthly distributions and as to payments on liquidation or
redemption and benefiting from certain additional undertakings of
the Guarantor pursuant to a certain Payment and Guaranty Agreement
entered into by the Guarantor dated ___ 1994. Such guarantee and
undertakings are herein referred to collectively as the
"Guarantee"; the Guarantee and Series A Preferred Securities are
herein referred to collectively as the "Securities". Concurrently
with the issuance of the Series A Preferred Securities, the Company
will loan the proceeds thereof to the Guarantor and to evidence
such loan the Guarantor will issue and deliver to the Company the
Guarantor's ___% Subordinated Debentures, Series A due 2043 (the
"Subordinated Debentures").
1. Each of the Company and the Guarantor jointly and
severally represents and warrants to, and agrees with, each of the
Underwriters that:
<PAGE>
(a) A registration statement on Form S-3 (File No. 33-
____) in respect of the Securities has been filed with the
Securities and Exchange Commission (the "Commission"); such
registration statement and any post-effective amendment thereto,
each in the form heretofore delivered to you, and, excluding
exhibits thereto but including all documents incorporated by
reference in the prospectus included therein, to you for each of
the other Underwriters, have been declared effective by the
Commission in such form; no other document with respect to such
registration statement or document incorporated by reference
therein has heretofore been filed with the Commission; and no stop
order suspending the effectiveness of such registration statement
has been issued and no proceeding for that purpose has been
initiated or threatened by the Commission (any preliminary
prospectus included in such registration statement or filed with
the Commission pursuant to Rule 424(b) of the rules and regulations
of the Commission under the Securities Act of 1933, as amended (the
"Act"), being hereinafter called a "Preliminary Prospectus"; the
various parts of such registration statement, including all
exhibits thereto and the documents incorporated by reference in the
prospectus contained in the registration statement at the time such
part of the registration statement became effective, each as
amended at the time such part of the registration statement became
effective, being hereinafter called the "Registration Statement";
such final prospectus, in the form first filed pursuant to Rule
424(b) under the Act, being hereinafter called the "Prospectus";
any reference herein to any Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to Item 12 of Form S-3
under the Act, as of the date of such Preliminary Prospectus or
Prospectus, as the case may be; and any reference to any amendment
or supplement to the Registration Statement, any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and
include any documents filed after the effective date of the
Registration Statement or the date of such Preliminary Prospectus
or Prospectus, as the case may be, under the Securities and
Exchange Act of 1934, as amended (the "Exchange Act"), and
incorporated by reference in such Registration Statement,
Preliminary Prospectus or Prospectus, as the case may be);
(b) No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission, and each
Preliminary Prospectus, at the time of filing thereof, conformed in
all material respects to the requirements of the Act and the rules
and regulations of the Commission thereunder, and did not contain
an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which
they were made, not misleading, provided, however, that this
representation and warranty shall not apply to any statement or
omission made in reliance upon and in conformity with information
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regarding any Underwriter or the arrangements with respect to the
underwriting of the offering of the Securities contemplated hereby
furnished in writing to the Company or the Guarantor by an
Underwriter through you expressly for use therein;
(c) The Registration Statement conforms, and the
Prospectus and any further amendments or supplements to the
Registration Statement or the Prospectus will conform, in all
material respects to the requirements of the Act and the rules and
regulations of the Commission thereunder; the Registration
Statement does not and will not, as of the applicable effective
date as to the Registration Statement and any amendment thereto,
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make
the statements therein not misleading; and the Prospectus does not
and will not, as of the applicable filing date as to the Prospectus
and any amendment or supplement thereto, contain an untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided,
however, that this representation and warranty shall not apply to
any statements or omissions made in reliance upon and in conformity
with information regarding any Underwriter or the arrangements with
respect to the underwriting of the offering of the Securities
contemplated hereby furnished in writing to the Company or the
Guarantor by an Underwriter through you expressly for use therein;
(d) The documents incorporated by reference in the
Registration Statement and the Prospectus, when they became
effective or were filed (or, if an amendment with respect to any
such document was filed or became effective, when such amendment
was filed or became effective) with the Commission, as the case may
be, conformed in all material respects to the requirements of the
Exchange Act and the rules and regulations thereunder, and any
further documents so filed and incorporated by reference will, when
they become effective or are filed with the Commission, as the case
may be, conform in all material respects to the requirements of the
Exchange Act and the rules and regulations thereunder; none of such
documents, when it became effective or was filed (or, if an
amendment with respect to any such documents was filed or became
effective, when such amendment was filed or became effective)
contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under
which they were made, not misleading; and no such further document,
when it becomes effective or is filed, will contain an untrue
statement of a material fact or will omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made,
not misleading;
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(e) Coopers & Lybrand are independent certified public
accountants as required by the Act and the rules and regulations of
the Commission thereunder;
(f) The Company is a validly existing limited
partnership in good standing under the laws of the State of
Delaware. The Company has all requisite power and authority to
issue the Series A Preferred Securities and lend the proceeds
thereof to the Guarantor as described in the Prospectus;
(g) The Company has no subsidiaries;
(h) The Guarantor is a validly existing corporation in
good standing under the laws of the Commonwealth of Pennsylvania.
Each of the Guarantor's subsidiaries ("Subsidiaries") which
constitutes a "gas utility company" or an "electric utility
company," as defined in the Public Utility Holding Company Act of
1935, as amended (a "Utility Subsidiary"), is a validly existing
corporation under the laws of its jurisdiction of incorporation.
The Guarantor and each Utility Subsidiary have all requisite power
and authority to own and occupy their respective properties and
carry on their respective businesses as presently conducted and as
described in the Prospectus and are duly qualified as foreign
corporations to do business and in good standing in every
jurisdiction in which the nature of the business conducted or
property owned by them makes such qualification necessary and in
which the failure to so qualify would have a materially adverse
effect on the Guarantor;
(i) The Guarantee has been duly authorized and executed
by the Guarantor, and when issued and delivered will constitute a
legal, valid and binding obligation of the Guarantor, enforceable in
accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditor's rights
and to general equity principles;
(j) The Subordinated Debentures have been duly
authorized and when issued and delivered to the Company will
constitute the legal, valid and binding obligations of the
Guarantor, enforceable in accordance with their terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or
affecting creditor's rights and to general equity principles;
(k) The Series A Preferred Securities have been duly
authorized by the Company and will conform to the description
thereof in the Prospectus; and when the Series A Preferred
Securities are executed and delivered to the Underwriters and are
paid for by the Underwriters in accordance with the terms of this
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<PAGE>
Agreement, the Series A Preferred Securities will be duly issued,
fully paid and non-assessable, and free of preemptive rights;
(l) The issue and sale of the Securities by the Company,
the issue of the Subordinated Debentures by the Guarantor, the
compliance by the Company and the Guarantor with all of the
provisions of this Agreement, the execution, delivery and
performance by the Guarantor of the Guarantee, and the consummation
of the transactions herein and therein contemplated will not
conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Guarantor, the Company or any
other Subsidiary is a party or by which the Guarantor, the Company
or any other Subsidiary is bound or to which any of the property or
assets of the Guarantor, the Company or any other Subsidiary is
subject, which breach, violation or default would be material to
the issue and sale of the Securities or would have a material
adverse effect on the general affairs, management, prospectus,
financial position, stockholders' equity (or partnership net worth,
as applicable) or results of operations of the Company or the
Guarantor and its Subsidiaries taken as a whole, nor will such
action result in any violation of the provisions of the Articles of
Incorporation or Bylaws of the Guarantor or the Certificate of
Limited Partnership or Limited Partnership Agreement of the Company
or any statute, order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Guarantor,
the Company or any other Subsidiary or any of their properties;
(m) Except (i) for the orders of the Commission making
the Registration Statement effective, (ii) for the Notice of
Registration of a Securities Certificate issued by the Guarantor in
respect of the issuance of its Subordinated Debentures and
Guarantee in connection with the issuance of an aggregate principal
amount of up to $350,000,000 (liquidation value) of preferred
interests by a special purpose subsidiary of the Guarantor
permitting the Company to issue the Series A Preferred Securities
as contemplated by this Agreement, (iii) for permits and similar
authorizations required under the securities or "Blue Sky" laws of
any jurisdiction, (iv) for an application filed with the
Pennsylvania Public Utilities Commission under Section 1102(a)(4)
(the "Section 1102 Application") of the Pennsylvania Public Utility
Code, as amended, for authorization to acquire an interest in PECO
Energy Capital Corp., the general partner of the Company, and/or
the Company, (v) for an application for the qualification of an
indenture (the "Indenture") between the Guarantor and Meridian
Trust Company, as trustee, under the Trust Indenture Act of 1939,
as amended (the "Trust Indenture Act"), and (vi) to the extent, if
any, required pursuant to the undertakings set forth under Item 17
of Part II of the Registration Statement, no consent, approval,
authorization or other order of any governmental authority is
5
<PAGE>
legally required for the execution, delivery and performance of
this Agreement by the Company and Guarantor and the consummation of
the transactions contemplated hereby;
(n) This Agreement has been duly authorized, executed
and delivered by the Company and by the Guarantor; and
(o) All of the issued partnership interests of the
Company have been duly and validly authorized and issued and are
fully paid and non-assessable and are owned by the Guarantor or a
wholly-owned subsidiary of the Guarantor and free of preemptive
rights.
2. (a) Subject to the terms and conditions herein set
forth, the Company agrees to issue and sell to each of the
Underwriters, and each of the Underwriters agrees, severally and
not jointly, to purchase from the Company, at a purchase price per
Series A Preferred Security of $25.00, the number of Series A
Preferred Securities set forth opposite the name of such
Underwriter in Schedule I hereto. The Guarantor hereby guarantees
the timely performance by the Company of its obligation to issue
and sell the Series A Preferred Securities as aforesaid.
(b) The Guarantor agrees to execute and deliver to the
Company the Guarantee concurrently with the issue and sale of the
Series A Preferred Securities as contemplated herein.
(c) As compensation to the Underwriters for their
commitments hereunder, and in light of the fact that the proceeds
of the sale of the Series A Preferred Securities will be loaned by
the Company to the Guarantor, the Guarantor, has agreed to pay at
the Time of Delivery (as defined in Section 4 hereof) to Goldman,
Sachs & Co., for the accounts of the several Underwriters, an
amount equal to $___ per Series A Preferred Security; provided,
however, that such compensation will be an amount equal to $.__ per
Series A Preferred Security for Series A Preferred Securities sold
to certain institutions. The Underwriters shall inform the
Guarantor in writing at the Time of Delivery of the number of
Series A Preferred Securities sold to such institutions.
3. Upon the authorization by you of the release of the
Series A Preferred Securities, the several Underwriters propose to
offer the Series A Preferred Securities for sale upon the terms and
conditions set forth in the Prospectus.
4. (a) Certificates, on original issuance, will be issued
in the form of a typewritten certificate or certificates
representing the Series A Preferred Securities to be purchased by
each Underwriter hereunder, and in such denominations and
registered in such names as Goldman, Sachs & Co. may request upon
at least forty-eight hours prior notice to the Company. Such
6
<PAGE>
certificates shall be delivered by or on behalf of the Company to
you for the account of such Underwriter, against payment by such
Underwriter or on its behalf of the purchase price therefor by
certified or official bank check or checks, payable to the order of
the Company in Philadelphia Clearing House (next day) funds, all at
the office of the Guarantor or, in the case of delivery of the said
certificates at such other place or places as shall be agreed upon
by the Guarantor and Goldman, Sachs & Co. The time and date of
such delivery and payment shall be 9:30 a.m., Philadelphia time, on
________, 1994, or at such other time and date as you and the
Company may agree upon in writing. Such time and date for delivery
of the Series A Preferred Securities is herein called (the "Time of
Delivery") and the date thereof is herein called (the "Closing
Date"). Such certificates will be made available for checking and
packaging at least twenty-four hours prior to the Time of Delivery
at the office of The Depository Trust Company, 55 Water Street, New
York, New York 10004.
(b) At the Time of Delivery, the Guarantor will pay, or
cause to be paid, the commission payable to the Underwriters under
Section 2 hereof by certified or official bank check or checks,
payable to the order of Goldman, Sachs & Co. in New York Clearing
House (next day) funds.
5. Each of the Company and the Guarantor jointly and
severally agrees with each of the Underwriters:
(a) To complete the Prospectus in a form approved by you
and to file the Prospectus pursuant to Rule 424(b) under the Act
not later than the Commission's close of business on the second
business day following the execution and delivery of this
Agreement; to furnish you, without charge, three signed copies of
the Registration Statement (or copies thereof), including exhibits,
and, during the period mentioned in paragraph (d) below, as many
copies of the Prospectus and any supplements and amendments thereto
as you may reasonably request.
(b) Other than pursuant to filings under the Exchange
Act incorporated in the Registration Statement and the Prospectus
by reference, before amending or supplementing the Registration
Statement or the Prospectus, to furnish to you a copy of each such
proposed amendment or supplement and not to file any such proposed
amendment or supplement to which you reasonably object in writing.
(c) As soon as the Company and the Guarantor are advised
thereof, to promptly advise you orally, and (if requested by you)
to confirm such advice in writing, (i) when any amendment to the
Registration Statement has become effective or any amendment or
supplement to the Prospectus has been filed, (ii) when any stop
order has been issued under the Act with respect to the
Registration Statement or any proceedings therefor have been
7
<PAGE>
instituted or are threatened; and to make every reasonable effort
to secure the prompt removal of any stop order, if issued, (iii) of
the suspension of the Securities for offering or sale in any
jurisdiction, and (iv) of the happening of any event during the
period mentioned in subparagraph (d) below which in the judgment of
the Company and the Guarantor makes any statement made in the
Registration Statement or the Prospectus untrue and which requires
the making of any changes in the Registration Statement or the
Prospectus in order to make the statements therein not misleading.
(d) If, during such period after the first date of the
public offering of the Securities (not exceeding nine months) as in
the opinion of your counsel the Prospectus is required by law to be
delivered in connection with sales by an Underwriter or dealer, any
event shall occur as a result of which it is necessary to amend or
supplement the Prospectus in order to make the statements therein,
in the light of the circumstances when the Prospectus is delivered
to a purchaser, not misleading, or if it is necessary to amend or
supplement the Prospectus to comply with law, forthwith to prepare
and duly file with the Commission an appropriate supplement or
amendment thereto, and furnish, at its own expense, to you such
reasonable number of copies thereof as you shall reasonably
request. If any Underwriter is required to deliver a Prospectus
after the expiration of the aforesaid period, the Company and
Guarantor will, if requested by such Underwriter and in each case
at the expense of such Underwriter, furnish Prospectuses and
supplements and amendments thereto, as aforesaid, or furnish a
reasonable quantity of a supplemented prospectus or of supplements
to the Prospectus complying with Section 10(a)(3) of the Act.
(e) To cooperate with you and Counsel for the
Underwriters to qualify the Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions as you shall
reasonably request, provided that neither the Company nor the
Guarantor shall be required to qualify as a foreign corporation in
any jurisdiction where it is not now so qualified or to take any
action which would subject it to general service of process in any
jurisdiction where it is not now so subject, and to pay all
expenses (including fees and disbursements of counsel) in
connection therewith as well as all fees payable in connection with
the review (if any) of the offering of the Securities by the
National Association of Securities Dealers, Inc.
(f) In the case of the Guarantor, to make generally
available to the Guarantor's security holders a consolidated
earnings statement (which need not be audited) for the first full
twelve consecutive months ended after the date deemed to be the
effective date of the Registration Statement pursuant to Rule 158
promulgated under the Securities Act, or successor provision of
law, rule or regulation, as soon as is reasonably practicable after
8
<PAGE>
the end of such period, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act.
(g) During the period beginning from the date hereof and
continuing to and including the earlier of (i) the date, after the
Time of Delivery, on which the distribution of the Securities
ceases, as determined by Goldman, Sachs & Co. or (ii) the date
which is 30 days after the Time of Delivery, not to offer, sell,
contract to sell or otherwise dispose of any Securities, any
preferred stock or any other securities (including any undertakings
relating to any securities substantially similar to the Series A
Preferred Securities) of the Company or the Guarantor which are
substantially similar to the Series A Preferred Securities or the
Guarantee, any securities convertible into or exchangeable for
Series A Preferred Securities, the Guarantee, preferred stock or
such substantially similar securities of either the Company or the
Guarantor (other than pursuant to employee stock option plans of
the Guarantor existing, or on the conversion of convertible
securities outstanding, on the date of this Agreement), without the
prior written consent of Goldman, Sachs & Co.
(h) To furnish to the holders of the Series A Preferred
Securities as soon as practicable after the end of each fiscal year
an annual report (including a balance sheet and statements of
income, stockholders' equity and cash flows of the Guarantor and
its consolidated Subsidiaries certified by independent public
accounts) and, as soon as practicable after the end of each of the
first three quarters of each fiscal year (beginning with the fiscal
quarter ending after the effective date of the Registration
Statement), consolidated summary financial information of the
Guarantor and its Subsidiaries for such quarter in reasonable
detail.
(i) During a period of five years from the effective
date of the Registration Statement, to furnish to the
representatives of the Underwriters copies of all reports or other
communications (financial or other) furnished to all stockholders
of the Company or the Guarantor, and deliver to you (i) as soon as
they are available, copies of any reports and financial statements
furnished to or filed with the Commission or any national
securities exchange on which any class of securities of the
Guarantor or the Company is listed; and (ii) such additional
information concerning the business and financial condition of the
Guarantor and the Company as you may from time to time reasonably
request (such financial statements to be on a consolidated basis to
the extent the accounts of the Guarantor and its Subsidiaries are
consolidated in reports furnished to its stockholders generally or
to the Commission).
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(j) To use its best efforts to list, subject to notice
of issuance, the Series A Preferred Securities on the New York
Stock Exchange.
6. The Company and the Guarantor jointly and severally
covenant and agree with the several Underwriters that the Company
and the Guarantor will pay or cause to be paid the following: (i)
the fees, disbursements and expenses of the Company's and the
Guarantor's counsel and accountants in connection with the
registration of the Securities under the Act and other expenses in
connection with the preparation, printing and filing of the
Registration Statement, any Preliminary Prospectus and the
Prospectus and amendments and supplements thereto and the mailing
and delivering of copies thereof to the Underwriters and dealers;
(ii) the cost of printing or producing any Agreement among the
Underwriters, this Agreement, the Blue Sky and Legal Investment
Memoranda, if any, and any other documents in connection with the
offering, purchase, sale and delivery of the Securities; (iii) all
expenses in connection with the qualification of the Securities for
offering and sale under state securities and insurance securities
laws as provided in Section 5(e) hereof, including the fees and
disbursements of counsel for the Underwriters in connection with
such qualification and in connection with the Blue Sky and Legal
Investment Memoranda; (iv) any fees charged by securities rating
services for rating the Securities; (v) the cost of preparing
definitive certificates for the Series A Preferred Securities; (vi)
the cost and charges of any transfer agent or registrar; (vii) the
cost of qualifying the Securities with The Depository Trust
Company; (viii) listing fees; and (ix) all other costs and expenses
incident to the performance of its obligations hereunder which are
not otherwise specifically provided for in this Section. It is
understood, however, that, except as provided in this Section,
Section 8 and Section 11 hereof, the Underwriters will pay all of
their own costs and expenses, including the fees of their counsel,
transfer taxes on resale of any of the Series A Preferred
Securities by them, and any advertising expenses in connection with
offers they may make.
7. (a) The several obligations of the Underwriters
hereunder are subject to the following conditions:
(i) At the Time of Delivery, there shall be in
full force and effect a Notice of Registration of a Securities
Certificate of the Guarantor in respect to the issuance of its
Subordinated Debentures and Guarantee(s) in connection with the
issuance of an aggregate principal amount of up to $350,000,000
(liquidation value) of preferred interests by a special purpose
subsidiary of the Guarantor permitting the issuance of the Series
A Preferred Securities and the transactions relating thereto
substantially in accordance with the terms and conditions herein
set forth and containing no provision unacceptable to you, it being
10
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understood that the Notice in effect as of the date of this
Agreement (a copy of which has been delivered to you) does not
contain any such unacceptable provision, and that no subsequent
Notice shall be deemed to contain any such unacceptable provision,
unless you, within 24 hours after receiving a copy thereof from the
Guarantor, shall give notice to the Guarantor to the effect that
such Notice contains an unacceptable provision.
(ii) At the Time of Delivery, approval shall
have been given by the Pennsylvania Public Utilities Commission of
the Section 1102 Application, and such approval shall be in full
force and effect.
(iii) At the Time of Delivery:
(A) no stop order suspending the effectiveness
of the Registration Statement shall be in effect, and no
proceedings for that purpose shall be pending before, or
threatened by, the Commission;
(B) the Indenture shall have become and be
qualified under the Trust Indenture Act.
(C) subsequent to the date of the most recent
financial statements incorporated by reference in the
Prospectus as of the date of this Agreement, there shall
have been no material adverse change or development which
it is reasonable to believe will result in
a prospective material adverse change in the financial
condition, business or results of operations of the
Company or the Guarantor and its Subsidiaries, considered
as a whole, except as set forth in the Registration
Statement and the Prospectus, including the documents
incorporated by reference therein, as of the effective
date of this Agreement;
(D) the Company and the Guarantor shall have
performed all agreements contained herein to be performed
by them at or prior to such date, including delivery of
the Securities; and
(E) the representations and warranties of the
Company and the Guarantor contained herein shall be true
and correct in all material respects.
(iv) At the Time of Delivery and simultaneously with
the issuance and sale of the Series A Preferred Securities, you
shall be furnished with each of the following opinions or letters:
(A) a favorable opinion, dated the Closing
Date, of Ballard Spahr Andrews & Ingersoll (Counsel
for the Company and the Guarantor) in form and
substance reasonably satisfactory to you;
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(B) a favorable opinion, dated the Closing
Date, of Richards, Layton & Finger (Delaware
Counsel for the Company and the Guarantor) in form
and substance reasonably satisfactory to you;
(C) a favorable opinion, dated the Closing
Date, of corporate counsel for the Guarantor in form
and substance reasonably satisfactory to you; and
(D) a favorable opinion, dated the Closing
Date, of Drinker Biddle & Reath (Counsel for the
Underwriters), in form and substance reasonably
satisfactory to you.
(v) At the time that this Agreement is signed and
at the Closing Date, Coopers & Lybrand shall have furnished to you
a letter or letters, dated the respective date of delivery thereof,
in form and substance reasonably satisfactory to you.
(vi) At the Time of Delivery, the Series A
Preferred Securities shall have been duly approved for listing,
subject to notice of issuance, on the New York Stock Exchange;
(vii) The Guarantor shall have furnished or
caused to be furnished to you at the Time of Delivery certificates
of officers of the Guarantor satisfactory to you as to the accuracy
of the representations and warranties of the Company and the
Guarantor herein at and as of the Time of Delivery, as to the
performance by the Company and the Guarantor of all of their
obligations hereunder to be performed at or prior to the Time of
Delivery, as to the matters set forth in this subsection (a) of
this Section 7 and as to such other matters as you may reasonably
request; and
(viii) after the execution and delivery of this
Agreement and prior to the Time of Delivery (A) trading generally
shall not have been suspended or materially limited on or by, as
the case may be, the New York Stock Exchange or the National
Association of Securities Dealers, Inc., (B) trading of any
security issued by the Company or the Guarantor shall not have been
suspended on any exchange or in any other over-the-counter market,
(C) there shall not have occurred any downgrading and no notice
shall have been given of "Credit Watch with Negative Implications"
in the rating accorded the Series A Preferred Securities by Moody's
Investors Services, Inc. or Standard & Poor's Corporation, (D) a
general moratorium on commercial banking activities in New York or
Pennsylvania shall not have been declared by either Federal or New
York State or Pennsylvania authorities, and (E) there shall not
have occurred any outbreak or escalation of hostilities or any
calamity or crisis of comparable magnitude that, in your judgment,
is material and adverse and, in the case of any of the events
specified in clauses (A) through (E), singly or together with any
other such event makes it, in your reasonable judgment,
impracticable or inadvisable to market the Series A Preferred
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Securities on the terms and in the manner contemplated in the
Prospectus.
(b) The obligations of the Company and Guarantor to
deliver the Securities are subject to the following conditions:
(i) At the Time of Delivery, no stop order
suspending the effectiveness of the Registration Statement shall be
in effect and no proceedings for that purpose shall be pending
before, or threatened by, the Commission.
(ii) At the Time of Delivery, there shall be in
full force and effect a Notice of Registration of a Securities
Certificate of the Guarantor in respect of the issuance of its
Subordinated Debentures and Guarantee(s) in connection with the
issuance of an aggregate principal amount of up to $350,000,000
(liquidation value) of preferred interests by a special purpose
subsidiary of the Guarantor permitting the issuance of the Series
A Preferred Securities and the transactions relating thereto
substantially in accordance with the terms and conditions herein
set forth and containing no provision unacceptable to the
Guarantor, it being understood that the Notice in effect as of the
date of this Agreement does not contain any such unacceptable
provision, and that no subsequent Notice shall be deemed to contain
any such unacceptable provision, unless the Guarantor, within 24
hours after receiving a copy thereof, shall have given notice to
you to the effect that such Notice contains an unacceptable
provision;
(iii) At the Time of Delivery, approval shall have
been given by the Pennsylvania Public Utilities Commission of the
Section 1102 Application, and such approval shall be in full force
and effect; and
(iv) At the Time of Delivery, the Company shall
receive payment for the Series A Preferred Securities.
8. (a) The Company and the Guarantor agree jointly and
severally to indemnify and hold harmless each Underwriter and each
person, if any, who controls any Underwriter within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act from and
against any and all losses, claims, damages, liabilities and
expenses based upon (x) any untrue statement or alleged untrue
statement of a material fact contained in the Registration
Statement (including the Prospectus contained therein and including
any amendment or supplement to any thereof) or any omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
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misleading or, (y) to the extent not covered by clause (x), any
untrue statement of a material fact contained in any Preliminary
Prospectus, the Prospectus or any amendment or supplement thereto
or any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading all in light of the circumstances
under which they were made, except in either case insofar as such
losses, claims, damages, liabilities or expenses are caused by (i)
any such untrue statement or omission or alleged untrue statement
or omission based upon information furnished in writing to the
Company or Guarantor by any Underwriter expressly for use therein,
or (ii) the failure of any Underwriter to send to any purchaser to
whom it had sent a Preliminary Prospectus an amended prospectus as
shall have been furnished by the Company or the Guarantor for such
purpose (excluding documents incorporated therein by reference), if
required by the Act, to the extent that the amended prospectus
would have cured the defect in the Preliminary Prospectus giving
rise to such losses, claims, damages or liabilities, or (iii) any
use of the Prospectus by any Underwriter after the expiration of
that period, if any, during which the Underwriter is required by
law to deliver a prospectus, unless the Company and Guarantor shall
have been advised in writing of such intended use.
(b) Each Underwriter agrees to indemnify and hold
harmless the Company and its controlling persons and partners and
the Guarantor and its controlling persons, directors, and officers
to the same extent as the foregoing indemnity from the Company and
Guarantor to each Underwriter, but only with respect to any untrue
statement or omission or alleged untrue statement or omission based
upon information furnished in writing to the Company or the
Guarantor by such Underwriter expressly for use in such
Registration Statement or Preliminary Prospectus or Prospectus. In
case any action shall be brought against the Company or Guarantor
or any such controlling person, partner, director or officer in
respect of which he or it may seek indemnity or reimbursement from
any Underwriter on account of the agreement of such Underwriter
contained in this subsection (b), the Underwriter shall have the
rights and duties given to the Company and Guarantor, and the
Company and Guarantor and any such controlling person, partner,
director, or officer shall have the rights and duties given to the
Underwriter, by subsection (c) below.
(c) Each Underwriter agrees that, promptly upon the
receipt of notice of the commencement of any action or proceeding
(including any governmental action) against such Underwriter or
against any person so controlling such Underwriter in respect of
which indemnity or reimbursement may be sought from the Company or
Guarantor on account of its agreement in the next preceding
subsection (a), timely notice will be given to the Company and the
Guarantor of the commencement thereof. Thereupon the Company and
the Guarantor shall be entitled to participate in (and, to the
14
<PAGE>
extent that it shall desire, including the selection of counsel
reasonably satisfactory to such Underwriter or controlling person,
to direct) the defense thereof and shall in any event be liable to
pay all fees and expenses thereof. Any Underwriter or any such
controlling person shall have the right to employ separate counsel,
but if the Company or Guarantor has selected counsel in any such
case, such employment by an Underwriter or controlling person shall
be at its expense unless (i) the employment of such separate
counsel has been authorized in writing by the Company and Guarantor
and the Company and Guarantor shall have agreed to pay such expense
or (ii) the Underwriter or controlling person shall have been
advised by its counsel that there may be one or more legal defenses
available to it which are different from or additional to those
available to the Company or the Guarantor and in the reasonable
judgment of such counsel it is advisable for such indemnified party
to employ separate counsel. It is understood that the Company and
Guarantor shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the fees and
expenses of more than one separate firm (in addition to any local
counsel) for all Underwriters and controlling persons, and that all
such fees and expenses shall be reimbursed as they are incurred.
Such counsel shall be designated in writing by Goldman, Sachs & Co.
and consented to by the Company and Guarantor, which consent shall
not be unreasonably withheld. The Company and Guarantor shall not
be liable for any settlement of any such action or proceeding
effected without its written consent, but if settled with its
written consent, or if there be a final judgment for the plaintiff
in any such action or proceeding, the Company and Guarantor agree
jointly and severally to indemnify and hold harmless each
Underwriter and each such controlling person, if any, from and
against any loss or liability by reason of such settlement or
judgment. The Company and Guarantor shall not, without the prior
written consent of any such Underwriter or controlling person,
effect any settlement of any pending or threatened proceeding in
respect of which any such Underwriter or controlling person is or
could have been a party and indemnity could have been sought
hereunder by any such Underwriter or controlling person, unless
such settlement includes an unconditional release of any such
Underwriter or controlling person from all liability on claims that
are the subject matter of such proceeding.
(d) In order to provide for just and equitable
contribution in circumstances in which any indemnity provision
provided for in this Section 8 is for any reason held to be
unenforceable by the indemnified parties although applicable in
accordance with its terms (including the requirements of subsection
(c) of this Section 8), each indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of the
losses, liabilities, claims, damages and expenses of the nature
contemplated in said indemnity provision in such proportion as is
15
<PAGE>
equitable and as shall reflect both the relative benefit received
by the Company and the Guarantor on the one hand and the
Underwriter or Underwriters, as the case may be, on the other hand
from the offering of the Securities, and the relative fault, if
any, of the Company and Guarantor on the one hand and of the
Underwriter or Underwriters, as the case may be, on the other hand
in connection with the statements or omissions which resulted in
such losses, liabilities, claims, damages or expenses, as well as
any other relevant equitable considerations. The relative benefit
received by the Company and Guarantor on the one hand and the
Underwriter or Underwriters, as the case may be, on the other hand
in connection with the offering of the Securities shall be deemed
to be in the same proportion as the total net proceeds from the
offering of the Securities (before deducting expenses) received by
the Company and the Guarantor bear to the total commissions,
concessions and discounts received by the Underwriter or
Underwriters, as the case may be. The relative fault shall be
determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information
supplied by the Company or the Guarantor on the one hand or the
Underwriter or Underwriters, as the case may be, on the other hand
and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
The Company, the Guarantor and the Underwriters agree that it would
not be just and equitable if contribution pursuant to this
subsection (d) were determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any
other method of allocation which does not take account of the
equitable considerations referred to hereinabove. The amount paid
or payable by an indemnified party as a result of the losses,
liabilities, claims, damages and expenses referred to hereinabove
shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating
or defending any such action or claim. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f)
of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. No
Underwriter or person controlling such Underwriter shall be
obligated to make contribution hereunder which in the aggregate
exceeds the total public offering price of the Securities purchased
by such Underwriter under this Agreement, less the aggregate amount
of any damages which such Underwriter and its controlling persons
have otherwise been required to pay in respect of the same claim or
any substantially similar claim. The Underwriters' obligations to
contribute are several in proportion to their respective purchasing
obligations and not joint.
9. If any one or more of the Underwriters shall default in
its obligation to purchase the amount of Series A Preferred
Securities set forth opposite its name in Schedule I, in accordance
16
<PAGE>
with the terms hereof, and the aggregate number of Series A
Preferred Securities which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase is not more
than one-eleventh of the aggregate number of Series A Preferred
Securities to be purchased on such date, the other Underwriters
shall be obligated severally in the proportions that the number of
Series A Preferred Securities set forth opposite their respective
names in Schedule I bears to the aggregate number of Series A
Preferred Securities set forth opposite the names of all such
non-defaulting Underwriters, or in such other proportions as you
may specify, to purchase the Series A Preferred Securities which
such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase on such date; provided that in no event shall
the number of Series A Preferred Securities that any Underwriter
has agreed to purchase as set forth in Schedule I be increased
pursuant to this Section 9 by an amount in excess of one-tenth of
such number of Series A Preferred Securities without the written
consent of such Underwriter. If any Underwriter or Underwriters
shall fail or refuse to purchase any Series A Preferred Securities
and the aggregate number of Series A Preferred Securities which
such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase exceeds one-eleventh of the aggregate number of
Series A Preferred Securities to be purchased by all Underwriters
hereunder and arrangements satisfactory to you, the Company and
Guarantor for the purchase of such Series A Preferred Securities
are not made within 48 hours after such default, this Agreement
will terminate without liability on the part of any non-defaulting
Underwriter or the Company and Guarantor for the purchase or sale
of any Series A Preferred Securities under this Agreement. Any
action taken under this Section 9 shall not relieve any defaulting
Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
10. The respective indemnities, agreements, representations,
warranties and other statements of the Company, the Guarantor and
the several Underwriters, as set forth in this Agreement or made by
or on behalf of them, respectively, pursuant to this Agreement,
shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by
or on behalf of any Underwriter or any controlling person of any
Underwriter, or the Company, the Guarantor or any officer or
director or controlling person of the Company or the Guarantor, and
shall survive delivery of and payment for the Series A Preferred
Securities.
11. If this Agreement shall be terminated pursuant to Section
9 hereof, the Company and the Guarantor shall not then be under any
liability to any Underwriter except as provided in Section 6 and
Section 8 hereof; but if, for any other reason, any Securities are
not delivered by or on behalf of the Company or the Guarantor as
provided herein, the Company and the Guarantor jointly and
17
<PAGE>
severally will reimburse the Underwriters through you for all out-
of-pocket expenses approved in writing by you, including fees and
disbursements of counsel, reasonably incurred by the Underwriters
in making preparations for the purchase, sale and delivery of the
Securities not so delivered, but the Company and the Guarantor
shall then be under no further liability to any Underwriter except
as provided in Section 6 and Section 8 hereof.
12. In all dealings hereunder, you shall act on behalf of
each of the Underwriters, and the parties hereto shall be entitled
to act and rely upon any statement, request, notice or agreement on
behalf of any Underwriter made or given by you jointly or by
Goldman, Sachs & Co. on behalf of you as the Underwriters.
All statements requests, notices and agreements hereunder
shall be in writing, and if to the Underwriters shall be delivered
or sent by mail, telex or facsimile transmission to the
Underwriters in care of Goldman, Sachs & Co., at 85 Broad Street,
New York, New York 10004, Attention: Registration Department:
and if to the Company or the Guarantor shall be delivered or sent
by mail, telex or facsimile transmission to the address of the
Guarantor set forth in the Registration Statement, Attention:
Secretary; provided, however, that any notice to an Underwriter
pursuant to Section 8(c) hereof shall be delivered or sent by mail,
telex or facsimile transmission to such Underwriter at its address
set forth in its Underwriters' Questionnaire, or telex constituting
such Questionnaire, which address will be supplied to the Company
or the Guarantor by you upon request. Any such statements,
requests, notices or agreements shall take effect upon receipt
thereof.
13. This Agreement shall be binding upon, and inure solely to
the benefit of, the Underwriters, the Company, the Guarantor and,
to the extent provided in Section 8 and Section 10 hereof, the
officers and directors of the Company and the Guarantor and each
person who controls the Company, the Guarantor or any Underwriter,
and their respective heirs, executors, administrators, successors
and assigns, and no other person shall acquire or have any right
under or by virtue of this Agreement. No purchaser of any of the
Series A Preferred Securities from any Underwriter shall be deemed
a successor or assign by reason merely of such purchase.
14. Time shall be of the essence of this Agreement. As used
herein, the term "business day" shall mean any day when the
Commission's office in Washington, D.C. is open for business.
15. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
16. This Agreement may be executed by any one or more of the
parties hereto in any number of counterparts, each of which shall
be deemed to be an original, but all such respective counterparts
shall together constitute one and the same instrument.
18
<PAGE>
If the foregoing is in accordance with your understanding,
please sign and return to us five counterparts hereof, and upon the
acceptance hereof by you, on behalf of each of the Underwriters,
this letter and such acceptance hereof shall constitute a binding
agreement between each of the Underwriters, on the one hand, and
the Company and the Guarantor on the other. It is understood that
your acceptance of this letter on behalf of each of the
Underwriters is pursuant to the authority set forth in a form of
Agreement among Underwriters, the form of which shall be submitted
to the Company and the Guarantor for examination upon request, but
without warranty on your part as to the authority of the signers
thereof.
Very truly yours,
PECO Energy Capital, L.P.,
By: PECO Energy Capital Corp.,
General Partner
By:
------------------------------
PECO Energy Company
By:
------------------------------
Accepted, May ___, 1994
Goldman, Sachs & Co.
Smith Barney Shearson Inc.
Dean Witter Reynolds Inc.
A.G. Edwards & Sons, Inc.
Kidder, Peabody & Co. Incorporated
PaineWebber Incorporated
Prudential Securities Incorporated
Acting severally on behalf of themselves.
By Goldman, Sachs & Co.
By:
--------------------------------------
19
SCHEDULE I
Number of
Series A Preferred
Securities
Underwriters To Be Purchased
------------ ---------------
Goldman, Sachs & Co. . . . . . . . . . . ________
Smith Barney Shearson Inc. . . . . . . . ________
Dean Witter Reynolds Inc.. . . . . . . . ________
A.G. Edwards & Sons, Inc.. . . . . . . . ________
Kidder, Peabody & Co. Incorporated . . . ________
PaineWebber Incorporated.. . . . . . . . ________
Prudential Securities Incorporated.. . . ________
Total. . . . . . . . . . . . . . . .
20
CERTIFICATE OF LIMITED PARTNERSHIP
OF PECO ENERGY CAPITAL, L.P.
This Certificate of Limited Partnership of PECO Energy
Capital, L.P. (the "Partnership") is being duly executed and
filed by the undersigned general partner of the Partnership for
the purpose of forming a limited partnership pursuant to the
Delaware Revised Uniform Limited Partnership Act.
1. The name of the Partnership is PECO Energy
Capital, L.P.
2. The address of the registered office of the
Partnership in the State of Delaware is 1013
Center Road, Wilmington, County of New Castle,
Delaware, 19805. The Partnership's registered
agent at that address is The Corporation Service
Company.
3. The name and mailing address of the sole general
partner is:
NAME ADDRESS
---- -------
PECO Energy 1013 Center Road, Suite 350F
Capital Corp. Wilmington, DE 19805
IN WITNESS WHEREOF, the undersigned, constituting the
sole general partner of the Partnership, has caused this
Certificate of Limited Partnership to be duly executed as of the
23rd day of May, 1994.
PECO ENERGY CAPITAL CORP.,
as General Partner
By: /s/ J. Barry Mitchell
--------------------------------
J. Barry Mitchell
President
AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
OF PECO ENERGY CAPITAL, L.P.
----------------------------
This AMENDED AND RESTATED LIMITED PARTNERSHIP
AGREEMENT, dated as of __________, 1994, of PECO Energy Capital,
L.P., a Delaware limited partnership (the "Partnership"), is made
by and among PECO Energy Capital Corp., as General Partner, PECO
Energy Company, as Class A Limited Partner and the Persons (as
defined below) who become limited partners of the Partnership in
accordance with the provisions hereof.
WHEREAS, PECO Energy Capital Corp. and PECO Energy
Company have heretofore formed a limited partnership pursuant to
the Delaware Act, by filing a Certificate of Limited Partnership
(as defined below) with the Secretary of State of the State of
Delaware on May ___, 1994, and entering into a Limited
Partnership Agreement of the Partnership dated as of May ___,
1994 (the "Limited Partnership Agreement");
WHEREAS, the parties hereto desire to continue the
Partnership as a limited partnership under the Delaware Act and
to amend and restate the Limited Partnership Agreement in its
entirety.
NOW, THEREFORE, the parties hereto, intending to be
legally bound hereby, agree to amend and restate the Limited
Partnership Agreement in its entirety as follows:
ARTICLE I - DEFINITIONS
-----------------------
For purposes of this Agreement, each of the following
terms shall have the meaning set forth below (such meaning to be
equally applicable to both singular and plural forms of the terms
so defined).
"ACTION" shall have the meaning set forth in Section
13.01.(b).
"ADDITIONAL AMOUNTS" shall have the meaning set forth
in 13.01(b)(ix).
"AFFILIATE" shall mean, with respect to the Person to
which it refers, a Person that directly or indirectly through one
or more intermediaries, controls or is controlled by, or is under
common control with, such subject Person.
<PAGE>
"AGREEMENT" shall mean this Amended and Restated
Limited Partnership Agreement, as amended, modified, supplemented
or restated from time to time, including, without limitation, by
any Action establishing a series of Preferred Partner Interests.
"BOOK ENTRY INTERESTS" shall mean a beneficial interest
in the Certificates, ownership and transfers of which shall be
made through book entries by a Clearing Agency as described in
Section 14.04.
"BUSINESS DAY" shall mean any day other than a day on
which banking institutions in The City of New York or the State
of Delaware are authorized or required by law to close.
"CAPITAL ACCOUNT" shall have the meaning set forth in
Section 4.01.
"CERTIFICATE" shall mean a certificate substantially in
the form attached hereto as Exhibit A, evidencing a Preferred
Partner Interest.
"CERTIFICATE OF LIMITED PARTNERSHIP" shall mean the
Certificate of Limited Partnership of the Partnership and any and
all amendments thereto and restatements thereof filed with the
Secretary of State of the State of Delaware.
"CLASS A LIMITED PARTNER" shall mean PECO, in its
capacity as a limited partner of the Partnership.
"CLEARING AGENCY" shall mean an organization registered
as a "Clearing Agency" pursuant to Section 17A of the Exchange
Act.
"CLEARING AGENCY PARTICIPANT" shall mean a broker
dealer, bank, 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.
"CODE" shall mean the United States Internal Revenue
Code of 1986 and (unless the context requires otherwise) the
rules and regulations promulgated thereunder, as amended from
time to time.
"COMMISSION" shall mean the Securities and Exchange
Commission.
"COVERED PERSON" shall mean any Partner or the Special
Representative, any Affiliate thereof or any officers, directors,
shareholders, partners, members, employees, representatives or
agents of a Partner, the Special Representative or their
2
<PAGE>
respective Affiliates, or any employee or agent of the
Partnership or its Affiliates.
"DEFINITIVE CERTIFICATE" shall have the meaning set
forth in Section 14.04.
"DELAWARE ACT" shall mean the Delaware Revised Uniform
Limited Partnership Act, 6 Del.C. Section 17-101, et seq. as amended from
time to time or any successor statute thereto.
"ECONOMIC RISK OF LOSS" shall mean the "economic risk
of loss" that any Partner is treated as bearing under Treasury
Regulation Section 1.752-2 with respect to any Partnership
liability.
"EXCHANGE ACT" shall mean the Securities Exchange Act
of 1934, as amended.
"FISCAL YEAR" shall have the meaning set forth in
Section 7.01.
"GENERAL PARTNER" shall mean PECO Capital, in its
capacity as general partner of the Partnership, together with any
successor thereto that becomes a general partner of the
Partnership pursuant to the terms of this Agreement.
"GUARANTEE" shall mean the Payment and Guarantee
Agreement dated as of ______, 1994, as amended or supplemented
from time to time, of PECO and any additional Payment and
Guarantee Agreements entered into by PECO for the benefit of the
Partners.
"INDEMNIFIED PERSON" shall mean the General Partner or
the Special Representative, any Affiliate thereof or any
officers, directors, shareholders, partners, members, employees,
representatives or agents thereof, or any employee or agent of
the Partnership or its Affiliates.
"INDENTURE" shall mean the Indenture dated as of
____________, 1994, as amended or supplemented from time to time,
between PECO and Meridian Trust Company, as Trustee and any
additional Indentures entered into by PECO pursuant to which
Subordinated Debentures of PECO are to be issued.
"INTEREST" shall mean the entire partnership interest
of a Partner in the Partnership at any particular time, including
the right of such Partner to any and all benefits to which a
Partner may be entitled as provided in this Agreement, together
with the obligations of such Partner to comply with all of the
terms and provisions of this Agreement.
3
<PAGE>
"INVESTMENT COMPANY ACT EVENT" shall mean the
occurrence of a change in law or regulation or a change in
official interpretation of law or regulation by any legislative
body, court, governmental agency or regulatory authority (a
"Change in 40 Act Law") to the effect that the Partnership is or
will be considered an "investment company" which is required to
be registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), which Change in 40 Act Law becomes
effective on or after the date of issuance of any series of
Preferred Partner Interests; provided, that no Investment Company
Act Event shall be deemed to have occurred if the Partnership has
received an opinion of counsel (which may be regular counsel to
PECO or an Affiliate, but not an employee thereof) experienced in
such matters, to the effect that PECO and/or the Partnership has
taken reasonable measures, in its discretion, to avoid such
Change in 40 Act Law so that notwithstanding such Change in 40
Act Law, the Partnership is not required to be registered as an
"investment company" within the meaning of the 1940 Act.
"LIMITED PARTNERS" shall mean the Class A Limited
Partner, if any, and the Preferred Partners.
"LIQUIDATING DISTRIBUTIONS" shall mean distributions of
Partnership property made upon a liquidation and dissolution of
the Partnership as provided in Article XII.
"LIQUIDATING TRUSTEE" shall have the meaning set forth
in Section 12.01.
"LIQUIDATION DISTRIBUTION" shall mean the liquidation
preference of each series of Preferred Partner Interests as set
forth in the Action for such series.
"LOSS ITEMS" shall mean, with respect to any fiscal
period, items of gross Partnership loss, deduction or expense for
such period.
"NET INCOME" or "NET LOSS" shall mean, with respect to
any Fiscal Year, the sum of the Partnership's (a) net gain or
loss from the sale or exchange of the Partnership's capital
assets during such Fiscal Year, and (b) all other items of
income, gain, loss, deduction and expense for such Fiscal Year
that are not included in (a). Net Income or Net Loss shall be
determined in accordance with Federal tax accounting principles
rather than generally accepted accounting principles, except that
a distribution in kind of Partnership property shall be treated
as a taxable disposition of such property for its fair market
value (taking into account Section 7701(g) of the Code) on the
date of distribution. For purposes of determining the Capital
Accounts as set forth in Article IV, "Net Income" and "Net Loss"
shall be computed in the same manner as the Partnership computes
4
<PAGE>
its income for Federal income tax purposes, except that
adjustments shall be made in accordance with Treasury Regulation
Section 1.704-1(b)(2)(iv), which adjustments shall include any
income which is exempt from United States Federal income tax, all
Partnership losses and all expenses properly chargeable to the
Partnership, whether deductible or non-deductible and whether
described in Section 705(a)(2)(B) of the Code, treated as so
described pursuant to Treasury Regulations Section
1.704-1(b)(2)(iv)(i), or otherwise.
"1940 ACT" shall mean the Investment Company Act of
1940, as amended.
"PARTNERS" shall mean the General Partner and the
Limited Partners.
"PARTNERSHIP" shall mean PECO Energy Capital, L.P., a
limited partnership formed under the laws of the State of
Delaware.
"PECO" shall mean PECO Energy Company and its
successors.
"PECO CAPITAL" shall mean PECO Energy Capital Corp. and
its successors.
"PERSON" shall mean any individual, general
partnership, limited partnership, corporation, limited liability
company, joint venture, trust, business trust, cooperative or
association and the heirs, executors, administrators, legal
representatives, successors and assigns of such Person where the
context so admits.
"PREFERRED PARTNER" shall mean a limited partner of the
Partnership who holds one or more Preferred Partner Interests.
"PREFERRED PARTNER INTEREST OWNER" shall mean, with
respect to a Book Entry Interest, a Person who is the beneficial
owner of such Book Entry Interest, 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).
"PREFERRED PARTNER INTERESTS" shall mean the Interests
described in Article XIII.
"PURCHASE PRICE" shall mean the amount paid for each
Preferred Partner Interest.
5
<PAGE>
"REDEMPTION PRICE" shall have the meaning set forth in
Section 13.01(b)(v).
"SECURITIES ACT" shall mean the Securities Act of 1933,
as amended.
"SPECIAL EVENT" shall mean a Tax Event or an Investment
Company Act Event.
"SPECIAL REPRESENTATIVE" shall have the meaning set
forth in Section 13.02(d).
"SUBORDINATED DEBENTURES" shall mean the Subordinated
Debentures of PECO issued under the Indenture.
"TAX EVENT" shall mean that the Partnership shall have
received an opinion of counsel (which may be regular counsel to
PECO or an Affiliate, but not an employee thereof) experienced in
such matters to the effect that, as a result of any amendment to,
or change (including any announced prospective change) in, the
laws (or any regulations thereunder) of the United States or any
political subdivision or taxing authority thereof or therein
affecting taxation, or as a result of any official administrative
pronouncement or judicial decision interpreting or applying such
laws or regulations, which amendment or change is effective or
such interpretation or pronouncement is announced on or after the
date of issuance of any series of Preferred Partner Interests,
there is more than an insubstantial risk that (i) the Partnership
is subject to United States Federal income tax with respect to
interest received on the related Subordinated Debentures or the
Partnership will otherwise not be taxed as a Partnership or
(ii) interest payable by PECO to the Partnership on the related
Subordinated Debentures will not be deductible for United States
Federal income tax purposes or (iii) the Partnership is subject
to more than a de minimis amount of other taxes, duties or other
governmental charges.
"TAX MATTERS PARTNER" shall have the meaning set forth
in Section 7.05.
"TRANSFER" shall mean any transfer, sale, assignment,
gift, pledge, hypothecation or other disposition or encumbrance
of an interest in the Partnership.
"TREASURY REGULATIONS" shall mean the final and
temporary income tax regulations, as well as the procedural and
administrative regulations, promulgated by the United States
Department of the Treasury under the Code, as amended from time
to time.
6
<PAGE>
"TRUSTEE" shall mean the Meridian Trust Company or any
other trustee under the Indenture.
"UNDERWRITING AGREEMENT" shall mean the Underwriting
Agreement entered into on _____________, 1994 among the
Partnership, PECO and the underwriters named therein with regard
to the sale of Preferred Partner Interests and related securities
and any additional Underwriting Agreements entered into by the
Partnership and PECO with regard to the sale of additional
Preferred Partner Interests and related securities.
ARTICLE II - CONTINUATION; NAME; PURPOSES; TERM; DEFINITIONS
------------------------------------------------------------
SECTION 2.01. FORMATION. The parties hereto hereby
join together to continue a limited partnership which shall exist
under and be governed by the Delaware Act. The Partnership shall
make any and all filings or disclosures required under the laws
of Delaware or otherwise with respect to its continuation as a
limited partnership, its use of a fictitious name or otherwise as
may be required. The Partnership shall be a limited partnership
among the Partners solely for the purposes specified in Section
2.03 hereof, and this Agreement shall not be deemed to create a
partnership among the Partners with respect to any activities
whatsoever other than the activities within the business purposes
of the Partnership as specified in Section 2.03. No Partner
shall have any power to bind any other Partner with respect to
any matter except as specifically provided in this Agreement. No
Partner shall be responsible or liable for any indebtedness or
obligation of any other Partner incurred either before or after
the execution of this Agreement. The assets of the Partnership
shall be owned by the Partnership as an entity, and no Partner
individually shall own any direct interest in the assets of the
Partnership.
SECTION 2.02. NAME AND PLACE OF BUSINESS. The name of
the Partnership is "PECO Energy Capital, L.P." The Partnership
may operate under the name of "PECO Energy Capital" and such name
shall be used for no purposes other than those set forth herein.
The principal place of business of the Partnership shall be
________________________________________________, or at such
other place as may be selected by the General Partner in its sole
discretion.
SECTION 2.03. PURPOSES. The sole purposes of the
Partnership are to issue and sell Interests in the Partnership,
including, without limitation, Preferred Partner Interests, and
to use the proceeds of all sales of Interests in the Partnership
to purchase Subordinated Debentures issued by PECO pursuant to
the Indenture and to effect other similar arrangements permitted
by this Agreement, and to engage in any and all activities
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necessary, convenient, advisable or incidental thereto. The
Partnership shall not borrow money or issue debt or mortgage or
pledge any of its assets.
SECTION 2.04. TERM. The Partnership was formed on
May 23, 1994 and shall continue without dissolution through
April 30, 2093, unless sooner dissolved as provided in Article XI
hereof.
SECTION 2.05. QUALIFICATION IN OTHER JURISDICTIONS.
The General Partner shall cause the Partnership to be qualified,
formed or registered under assumed or fictitious name statutes or
similar laws in any jurisdiction in which the Partnership
transacts business. The General Partner shall execute, deliver
and file any certificates (and any amendments and/or restatements
thereof) necessary for the Partnership to qualify to do business
in any jurisdiction in which the Partnership may wish to conduct
business.
SECTION 2.06. ADMISSION OF PREFERRED PARTNERS.
Without execution of this Agreement, upon receipt by a Person of
a Certificate and payment for the Preferred Partner Interest
being acquired by such Person, which shall be deemed to
constitute a request by such Person that the books and records of
the Partnership reflect its admission as a Preferred Partner,
such Person shall be admitted to the Partnership as a Preferred
Partner and shall become bound by this Agreement.
SECTION 2.07. RECORDS. The name and mailing address
of each Partner and the amount contributed to the capital of the
Partnership shall be listed on the books and records of the
Partnership. The Partnership shall keep such other records as
are required by Section 17-305 of the Delaware Act. The General
Partner shall update the books and records from time to time as
necessary to accurately reflect the information therein.
SECTION 2.08. WITHDRAWAL OF CLASS A LIMITED PARTNER.
Upon the admission of at least one Preferred Partner as a limited
partner of the Partnership, the Class A Limited Partner shall be
deemed to have withdrawn from the Partnership as a limited
partner of the Partnership, and upon such withdrawal, the Class A
Limited Partner shall have its capital contribution returned to
it without any interest or deduction and shall have no further
interest in the Partnership.
ARTICLE III - CAPITAL CONTRIBUTIONS
-----------------------------------
SECTION 3.01. CAPITAL CONTRIBUTIONS. As of the date
of this Agreement, the General Partner has contributed the amount
of $___________ to the capital of the Partnership and shall make
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any further contributions required to satisfy its obligations
under Section 3.04. Each Preferred Partner, or its predecessor
in interest, will contribute to the capital of the Partnership
the amount of the Purchase Price for the Preferred Partner
Interests held by it.
SECTION 3.02. ADDITIONAL CAPITAL CONTRIBUTIONS. No
Partner shall be required to make any additional contributions or
advances to the Partnership except as provided in Section 3.04.
or by law. The General Partner may make additional capital
contributions in excess of the amounts required under this
Agreement at any time.
SECTION 3.03. NO INTEREST OR WITHDRAWALS. No interest
shall accrue on any capital contribution made by a Partner, and
no Partner shall have the right to withdraw or to be repaid any
portions of its capital contributions so made, except as
specifically provided in this Agreement.
SECTION 3.04. MINIMUM CAPITAL CONTRIBUTION OF GENERAL
PARTNER. Whenever any Limited Partner makes a capital
contribution, the General Partner shall immediately make the
capital contribution sufficient to cause the aggregate capital
contribution of the General Partner to equal 3% of the aggregate
capital contributed by all Partners. Any such additional
contributions shall constitute additional capital contributions
made by the General Partner.
SECTION 3.05. PARTNERSHIP INTERESTS. Unless otherwise
provided herein, the percentage interests of the Partners shall
be as determined in proportion to the capital contributions of
the Partners.
SECTION 3.06. INTERESTS. Each Partner's respective
Preferred Partner Interests shall be set forth on the books and
records of the Partnership. Each Partner hereby agrees that its
Interests shall for all purposes be personal property. No
Partner has an interest in specific Partnership property. The
Partnership shall not issue any additional interest in the
Partnership after the date hereof other than General Partner
Interests or Preferred Partner Interests.
ARTICLE IV - CAPITAL ACCOUNTS
-----------------------------
SECTION 4.01. CAPITAL ACCOUNTS. There shall be
established on the books of the Partnership a capital account
("Capital Account") for each Partner that shall consist of the
initial capital contribution to the Partnership made by such
Partner (or such Partner's predecessor in interest), increased
by: (a) any additional capital contributions made by such
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Partner, (b) the agreed value of any property subsequently
contributed to the capital of the Partnership by such Partner;
and (c) Net Income allocated to any Partner (or predecessor
thereof). A Partner's Capital Account shall be decreased by: (a)
Net Loss allocated to any Partner (or predecessor thereof); and
(b) any distributions made to such Partner. In addition to and
notwithstanding the foregoing, Capital Accounts shall be
otherwise adjusted in accordance with the tax accounting
principles set forth in Treasury Regulation Section
1.704-1(b)(2)(iv).
SECTION 4.02. COMPLIANCE WITH TREASURY REGULATIONS.
The foregoing provisions and the other provisions of this
Agreement relating to the maintenance of Capital Accounts are
intended to comply with Section 704(b) of the Code and Treasury
Regulation Section 1.704-1(b) and shall be interpreted and
applied in a manner consistent with such regulations. In the
event that the General Partner shall determine that it is prudent
to modify the manner in which the Capital Accounts, or any debits
or credits thereto, are determined in order to comply with such
regulations, the General Partner may make such modification.
ARTICLE V - ALLOCATIONS
-----------------------
SECTION 5.01. PROFITS AND LOSSES. Each fiscal period,
the Net Income of the Partnership shall be allocated (i) first,
to the Preferred Partners, pro rata in proportion to the number
of Preferred Partner Interests held by each Preferred Partner and
at the distribution rate specified in the Action for each series
of Preferred Partner Interests, in an amount equal to the excess
of (a) the distributions accrued on such Preferred Partner
Interests since their date of issuance through and including the
close of the current fiscal period (whether or not paid) over (b)
the amount of profits allocated to the Preferred Partners
pursuant to this Section 5.01(i) in all prior fiscal periods; and
(ii) thereafter, to the General Partner. The Net Losses of the
Partnership shall be allocated each year to the General Partner.
SECTION 5.02. ALLOCATION RULES. For purposes of
determining the profits, losses or any other items allocable to
any period, profits, losses and any such other items shall be
determined on a daily, monthly or other basis, as determined by
the General Partner in its sole and absolute discretion using any
method that is permissible under Section 706 of the Code and the
Treasury Regulations thereunder. The Partners are aware of the
income tax consequences of the allocations made by this Article V
and hereby agree to be bound by the provisions of this Article V
in reporting their shares of Partnership income and loss for
income tax purposes.
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SECTION 5.03. ADJUSTMENTS TO REFLECT CHANGES IN
INTERESTS. Notwithstanding the foregoing, with respect to any
Fiscal Year during which any Partner's percentage interest in the
Partnership changes, whether by reason of the admission of a
Partner, the withdrawal of a Partner, a non-pro rata contribution
of capital to the Partnership or any other event described in
Section 706(d)(1) of the Code and the Treasury Regulations issued
thereunder, allocations of the items of income, gain, loss and
deduction of the Partnership shall be adjusted appropriately to
take into account the varying interests of the Partners during
such Fiscal Year. The General Partner shall consult with the
Partnership's accountants and other tax advisors and shall select
the method of making such adjustments, which method shall be used
consistently thereafter.
SECTION 5.04. TAX ALLOCATIONS. For Federal, state and
local income tax purposes, Partnership income, gain, loss,
deduction or credit (or any item thereof) for each Fiscal Year
shall be allocated to and among the Partners in order to reflect
the allocations made pursuant to the provisions of this Article V
for such Fiscal Year (other than allocations of items which are
not deductible or are excluded from taxable income), taking into
account any variation between the adjusted tax basis and book
value of Partnership property in accordance with the principles
of Section 704(c) of the Code.
SECTION 5.05. QUALIFIED INCOME OFFSET. Notwithstanding
any other provision hereof, if any Partner unexpectedly receives
an adjustment, allocation or distribution described in Treasury
Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5), and (6) which
creates or increases a deficit in the Capital Account of such
Partner (and, for this purpose, the existence of a deficit shall
be determined by reducing the Partner's Capital Account by the
items described in Treasury Regulation Section 1.704-
1(b)(2)(ii)(d)(4), (5), and (6)), the next available gross income
of the Partnership shall be allocated to the Partners having such
deficit balances, in proportion to the deficit balances, until
such deficit balances are eliminated as quickly as possible. The
provisions of this Section 5.05 are intended to constitute a
"qualified income offset" within the meaning of Treasury
Regulation Section 1.704-1(b)(2)(ii)(d) and shall be interpreted
and implemented as therein provided.
SECTION 5.06. TAXPAYER INFORMATION. Any Person who
holds Preferred Partner Interests as a nominee for another Person
is required to furnish to the Partnership (a) the name, address
and taxpayer identification number of the beneficial owner and
the nominee; (b) information as to whether the beneficial owner
is (i) a Person that is not a United States Person, (ii) a
foreign government, an international organization or any wholly
owned agency or instrumentality of either of the foregoing, or
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(ii) a tax-exempt entity; (c) the amount and description of
Preferred Partner Interests held, acquired or transferred for the
beneficial owner; and (d) certain information including the dates
of acquisitions and transfers, means of acquisitions and
transfers, and acquisitions cost for purchases, as well as the
amount of net proceeds from sales.
ARTICLE VI - DISTRIBUTIONS
--------------------------
SECTION 6.01. DISTRIBUTIONS. Preferred Partners shall
receive periodic distributions, if any, in accordance with the
applicable terms of the Preferred Partner Interests, as and when
declared by the General Partner. Subject to the rights of the
holders of the Preferred Partner Interests, the General Partner
shall receive such distributions, if any, as may be declared from
time to time by the General Partner.
SECTION 6.02. CERTAIN DISTRIBUTIONS PROHIBITED.
Notwithstanding anything in this Agreement to the contrary, all
Partnership distributions shall be subject to the following
limitations:
(a) No distribution shall be made to any Partner if,
and to the extent that, such distribution would not be permitted
under Section 17-607 of the Delaware Act or other applicable law.
(b) No distribution shall be made to any Partner to
the extent that such distribution, if made, would create or
increase a deficit balance in the Capital Account of such
Partner.
(c) Other than Liquidating Distributions, no
distribution of Partnership property shall be made in kind.
Notwithstanding anything in the Delaware Act or this Agreement to
the contrary, in the event of a Liquidating Distribution, a
Partner may be compelled in accordance with Section 12.01 to
accept a distribution of cash or any other asset in kind from the
Partnership even if the percentage of the asset distributed to it
exceeds a percentage of that asset which is equal to the
percentage in which such Partner shares in distributions from the
Partnership.
ARTICLE VII - ACCOUNTING MATTERS; BANKING
-----------------------------------------
SECTION 7.01. FISCAL YEAR. The fiscal year ("Fiscal
Year") of the Partnership shall be the calendar year, or such
other year as is required by the Code.
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SECTION 7.02. CERTAIN ACCOUNTING MATTERS. (a) At all
times during the existence of the Partnership, the General
Partner shall keep, or cause to be kept, full books of account,
records and supporting documents, which shall reflect in
reasonable detail, each transaction of the Partnership. The
books of account shall be maintained on the accrual method of
accounting, in accordance with generally accepted accounting
principles, consistently applied. The Partnership shall use the
accrual method of accounting for United States Federal income tax
purposes. The books of account and the records of the
Partnership shall be examined by and reported upon as of the end
of each Fiscal Year by a firm of independent certified public
accountants selected by the General Partner.
(b) The General Partner shall cause to be prepared and
delivered to each of the Partners, within 90 days after the end
of each Fiscal Year of the Partnership, annual financial
statements of the Partnership, including a balance sheet of the
Partnership as of the end of such Fiscal Year and the related
statements of income or loss and a statement indicating such
Partner's share of each item of Partnership income, gain, loss,
deduction or credit for such Fiscal Year for income tax purposes.
(c) Notwithstanding anything in this Agreement to the
contrary, the General Partner may, to the maximum extent
permitted by applicable law, keep confidential from the Partners
for such period of time as the General Partner deems reasonable
any information which the General Partner reasonably believes to
be in the nature of trade secrets or other information the
disclosure of which the General Partner in good faith believes is
not in the best interest of the Partnership or could damage the
Partnership or which the Partnership or a third party is required
by law or by an agreement to keep confidential.
(d) The General Partner may make, or revoke, in its
sole and absolute discretion, any elections for the Partnership
that are permitted under tax or other applicable laws, including
elections under Section 704(c) of the Code, provided that the
General Partner shall not make any elections pursuant to Section
754 of the Code.
SECTION 7.03. BANKING. The Partnership shall maintain
one or more bank accounts in the name and for the sole benefit of
the Partnership. The sole signatories for such accounts shall be
designated by the General Partner. Reserve cash, cash held
pending the expenditure of funds for the business of the
Partnership or cash held pending a distribution to one or more of
the Partners may be invested in any manner at the sole and
absolute discretion of the General Partner.
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SECTION 7.04. RIGHT TO RELY ON AUTHORITY OF GENERAL
PARTNER. No Person that is not a Partner, in dealing with the
General Partner, shall be required to determine such General
Partner's authority to make any commitment or engage in any
undertaking on behalf of the Partnership, or to determine any
fact or circumstance bearing upon the existence of the authority
of the General Partner.
SECTION 7.05. TAX MATTERS PARTNER. The "tax matters
partner," as defined in Section 6231 of the Code, of the
Partnership shall be the General Partner (the "Tax Matters
Partner"). The Tax Matters Partner shall receive no compensation
from the Partnership for its services in that capacity. The Tax
Matters Partner is authorized to employ such accountants,
attorneys and agents as it, in its sole and absolute discretion
deems necessary or appropriate. Any Person who serves as Tax
Matters Partner shall not be liable to the Partnership or to any
Partner for any action it takes or fails to take as Tax Matters
Partner with respect to any administrative or judicial proceeding
involving "partnership items" (as defined in Section 6231 of the
Code) of the Partnership.
ARTICLE VIII - MANAGEMENT
-------------------------
SECTION 8.01. MANAGEMENT. (a) The General Partner
shall have full and exclusive authority with respect to all
matters concerning the conduct of the business and affairs of the
Partnership, including (without limitation) the power, without
the consent of the Limited Partners, to make all decisions it
deems necessary, advisable, convenient or appropriate to
accomplish the purposes of the Partnership. The acts of the
General Partner acting alone shall serve to bind the Partnership
and shall constitute the acts of the Partners.
(b) The Limited Partners in their capacity as such
shall not take part in the management, operation or control of
the business of the Partnership or transact any business in the
name of the Partnership. In addition, the Limited Partners, in
their capacity as such, shall not be agents of the Partnership
and shall not have the power to sign or bind the Partnership to
any agreement or document. The Limited Partners shall have the
right to vote only with respect to those matters specifically
provided for in this Agreement. Notwithstanding anything herein
to the contrary, the Preferred Partners may exercise all rights
provided to them, if any, under the Indenture and the Guarantee.
(c) The General Partner is authorized and directed to
use its best efforts to conduct the affairs of, and to operate,
the Partnership in such a way that the Partnership would not be
deemed to be an "investment company" required to be registered
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under the 1940 Act or taxed as a corporation for Federal income
tax purposes and so that the Subordinated Debentures will be
treated as indebtedness of PECO for Federal income tax purposes.
In this connection, the General Partner is authorized to take any
action not inconsistent with applicable law, the Certificate of
Limited Partnership or this Agreement that does not materially
adversely affect the interests of holders of Preferred Partner
Interests that the General Partner determines in its sole and
absolute discretion to be necessary, advisable or desirable for
such purposes.
SECTION 8.02 FIDUCIARY DUTY. (a) To the extent that,
at law or in equity, an Indemnified Person has duties (including
fiduciary duties) and liabilities relating thereto to the
Partnership or to any other Covered Person, an Indemnified Person
acting under this Agreement shall not be liable to the
Partnership or to any other Covered Person for its good faith
reliance on the provisions of this Agreement or the advice of
counsel selected by the Indemnified Person in good faith. The
provisions of this Agreement, to the extent that they restrict
the duties and liabilities of an Indemnified Person otherwise
existing at law or in equity, are agreed by the parties hereto to
replace such other duties and liabilities of such Indemnified
Person.
(b) Unless otherwise expressly provided herein,
(i) whenever a conflict of interest exists or arises between
Covered Persons, or (ii) whenever this Agreement or any other
agreement contemplated herein or therein provides that an
Indemnified Person shall act in a manner that is, or provides
terms that are, fair and reasonable to the Partnership or any
Partner, the Indemnified Person shall resolve such conflict of
interest, taking such action or providing such terms, considering
in each case the relative interest of each party (including its
own interest) to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such
interests, any customary or accepted industry practices, the
advice of counsel selected by the Indemnified Person in good
faith, and any applicable generally accepted accounting practices
or principles. In the absence of bad faith by the Indemnified
Person, the resolution, action or term so made, taken or provided
by the Indemnified Person shall not constitute a breach of this
Agreement or any other agreement contemplated herein or of any
duty or obligation of the Indemnified Person at law or in equity
or otherwise.
(c) Whenever in this Agreement an Indemnified Person
is permitted or required to make a decision (i) in its
"discretion" or under a grant of similar authority or latitude,
the Indemnified Person shall be entitled to consider only such
interests and factors as it desires, including its own interests,
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and shall have no duty or obligation to give any consideration to
any interest of or factors affecting the Partnership or any other
Person, or (ii) in its "good faith" or under another express
standard, the Indemnified Person shall act under such express
standard and shall not be subject to any other or different
standard imposed by this Agreement or other applicable law.
SECTION 8.03. SPECIFIC OBLIGATIONS OF THE GENERAL
PARTNER. The General Partner hereby undertakes:
(a) to devote to the affairs of the Partnership so
much of its time as shall be necessary to carry on properly the
Partnership's business and its responsibilities hereunder;
(b) to cause the Partnership to do or refrain from
doing such acts as shall be required by Delaware law in order to
preserve the valid existence of the Partnership as a Delaware
limited partnership and to preserve the limited liability of the
Limited Partners; and
(c) to pay directly all, and the Partnership shall not
be obligated to pay, directly or indirectly, any, of the costs
and expenses of the Partnership (including, without limitation,
costs and expenses relating to the organization of, and offering
of limited partner interests in, the Partnership and costs and
expenses relating to the operation of the Partnership, including
without limitation, costs and expenses of accountants, attorneys,
statistical or bookkeeping services and computing or accounting
equipment, paying agent(s), registrar(s), transfer agent(s),
duplicating, travel and telephone and costs and expenses incurred
in connection with the acquisition, financing, and disposition of
Partnership assets).
SECTION 8.04. POWERS OF THE GENERAL PARTNER. The
General Partner shall have the right, power and authority, in the
management of the business and affairs of the Partnership, to do
or cause to be done any and all acts deemed by the General
Partner to be necessary or appropriate to effectuate the
business, purposes and objectives of the Partnership. Without
limiting the generality of the foregoing, the General Partner
shall have the power and authority without any further act,
approval or vote of any Partner to:
(a) issue Interests, including Preferred Partner
Interests, and classes and series thereof, in accordance with
this Agreement;
(b) act as, or appoint another Person to act as,
registrar and transfer agent for the Preferred Partner Interests;
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(c) establish a record date with respect to all
actions to be taken hereunder that require a record date to be
established, including with respect to allocations, distributions
and voting rights and declare distributions and make all other
required payments on General Partner, Class A Limited Partner and
Preferred Partner Interests as the Partnership's paying agent;
(d) enter into and perform one or more Indentures
and one or more Underwriting Agreements and use the proceeds from
the issuance of the Interests to purchase the Subordinated
Debentures, in each case on behalf of the Partnership;
(e) bring and defend on behalf of the Partnership
actions and proceedings at law or in equity before any court or
governmental, administrative or other regulatory agency, body or
commission or otherwise;
(f) employ or otherwise engage employees and
agents (who may be designated as officers with titles) and
managers, contractors, advisors and consultants and pay
reasonable compensation for such services;
(g) redeem each series of Preferred Partner
Interests (which shall constitute a return of capital and not a
distribution of income) in accordance with its terms and/or to
the extent that the related series of Subordinated Debentures is
redeemed or reaches maturity; and
(h) execute all documents or instruments, perform
all duties and powers and do all things for and on behalf of the
Partnership in all matters necessary, convenient, advisable or
incidental to the foregoing.
The expression of any power or authority of the General
Partner in this Agreement shall not in any way limit or exclude
any other power or authority which is not specifically or
expressly set forth in, or precluded by, this Agreement.
SECTION 8.05. INDEPENDENT AFFAIRS. Any Partner or any
Affiliate thereof may engage in or possess an interest in any
other business venture of whatever nature and description,
independently or with others, wherever located and whether or not
comparable to or in competition with the Partnership or the
General Partner, or any Affiliate thereof, and neither the
Partnership nor any of the Partners shall, by virtue of this
Agreement, have any rights with respect to, or interests in, such
independent ventures or the income, profits or losses derived
therefrom. No Partner or Affiliate thereof shall be obligated to
present any particular investment opportunity to the Partnership
even if such opportunity is of a character that, if presented to
the Partnership, could be taken by the Partnership, and any
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Partner or Affiliate thereof shall have the right to take for its
own account (individually or as a partner or fiduciary) or to
recommend to others any such particular investment opportunity.
SECTION 8.06. MEETINGS OF THE PARTNERS. Meetings of
the Partners of any class or series or of all classes or series
of the Partnership's Interests may be called at any time by the
Partners holding 10% in liquidation preference of such class of
series of Interests, or of all classes or series of Interests, as
the case may be, or as provided in any Action establishing a
series of Preferred Partner Interests. Except to the extent
otherwise provided in any such Action, the following provisions
shall apply to meetings of Partners.
(a) Notice of any meeting shall be given to all
Partners not less than ten (10) business days nor more than sixty
(60) days prior to the date of such meeting. Partners may vote
in person or by proxy at such meeting. Whenever a vote, consent
or approval of Partners is permitted or required under this
Agreement, such vote, consent or approval may be given at a
meeting of Partners or by written consent.
(b) Each Partner may authorize any Person to act
for it by proxy on all matters in which a Partner is entitled to
participate, including waiving notice of any meeting, or voting
or participating at a meeting. Every proxy must be signed by the
Partner or its attorney-in-fact. No proxy shall be valid after
the expiration of eleven (11) months from the date thereof unless
otherwise provided in the proxy. Every proxy shall be revocable
at the pleasure of the Partner executing it.
(c) Each meeting of Partners shall be conducted
by the General Partner or by such other Person that the General
Partner may designate.
(d) Subject to the provisions of this Section
8.06, the General Partner, in its sole and absolute discretion,
shall establish all other provisions relating to meetings of
Partners, including notice of the time, place or purpose of any
meeting at which any matter is to be voted on by any Partners,
waiver of any such notice, action by consent without a meeting,
the establishment of a record date, quorum requirements, voting
in person or by proxy or any other matter with respect to the
exercise of any such right to vote; provided, however, that
unless the General Partner has established a lower percentage, a
majority of the Partners entitled to vote thereat shall
constitute a quorum at all meetings of the Partners.
SECTION 8.07. NET WORTH OF THE GENERAL PARTNER. By
execution of this Agreement, the General Partner represents and
covenants that (a) as of the date hereof and at all times during
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the existence of the Partnership it will maintain a fair market
value net worth of at least ten percent (10%) of the total
contributions less redemptions to the Partnership, throughout the
life of the Partnership, in accordance with Rev. Proc. 89-12,
1989-1 C.B. 798, or such other amount as may be required from
time to time pursuant to any amendment, modification or successor
to Rev. Proc. 89-12 (such net worth being computed excluding any
interest in, or receivable due from, the Partnership and
including any income tax liabilities that would become due by the
General Partner upon disposition by the General Partner of all
assets included in determining such net worth), and (b) it will
not make any voluntary dispositions of assets which would reduce
the net worth below the amount described in (a).
SECTION 8.08. RESTRICTIONS ON GENERAL PARTNER. So
long as any series of Subordinated Debentures are held by the
Partnership, the General Partner unless so directed by the
Special Representative, shall not (i) direct the time, method and
place of conducting any proceeding for any remedy available to
the Trustee, or executing any trust or power conferred on the
Trustee with respect to such series, (ii) waive any past default
which is available under the Indenture, (iii) exercise any right
to rescind or annul a declaration that the principal of all of a
series of Subordinated Debentures shall be due and payable or
(iv) consent to any amendment, modification or termination of the
Indenture, where such consent shall be required, without, in each
case, obtaining the prior approval of the holders of not less
than 66 2/3% of the aggregate stated liquidation preference of
all series of Preferred Partner Interests affected thereby,
acting as a single class; provided, however, that where a consent
under the Indenture would require the consent of each holder
affected thereby, no such consent shall be given by the General
Partner without the prior consent of each holder of all series of
Preferred Partner Interests affected thereby. The General
Partner shall not revoke any action previously authorized or
approved by a vote of any series of Preferred Partner Interests.
The General Partner shall notify all holders of such Preferred
Partner Interests of any notice of default received from the
Trustee with respect to such series of Subordinated Debentures.
ARTICLE IX - LIABILITY AND INDEMNIFICATION
------------------------------------------
SECTION 9.01. PARTNERSHIP EXPENSES AND LIABILITIES.
(a) Except as provided in the Delaware Act, the
General Partner shall have the liabilities of a partner in a
partnership without limited partners to Persons other than the
Partnership and the other Partners.
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(b) Except as otherwise expressly required by
law, a Limited Partner, in its capacity as such, shall have no
liability in excess of (i) the amount of its capital
contributions to the Partnership, (ii) its share of any assets
and undistributed profits of the Partnership, and (iii) the
amount of any distributions wrongfully distributed to it.
SECTION 9.02. NO LIABILITY. Except as otherwise
expressly provided in Section 9.01(a) or by the Delaware Act, no
Covered Person shall be liable to the Partnership or to any other
Partner for any act or omission performed or omitted pursuant to
the authority granted to it hereunder or by law, or from a loss
resulting from any mistake or error in judgment on its part or
from the negligence, dishonesty, fraud or bad faith of any
employee, independent contractor, broker or other agent of the
Partnership, provided that such act or omission, such mistake or
error in judgment or the selection of such employee, independent
contractor, broker or other agent, as the case may be, did not
result from the willful misconduct, gross negligence or fraud of
such Covered Person. Any Covered Person shall be fully protected
in relying in good faith upon the records of the Partnership and
upon such information, opinions, reports or statements presented
to the Partnership by any Person as to matters the Covered Person
reasonably believes are within such other Person's professional
or expert competence and who has been selected with reasonable
care by or on behalf of the Partnership, including information,
opinions, reports or statements as to the value and amount of the
assets, liabilities, profits, losses, or any other facts
pertinent to the existence and amount of assets from which
distributions to Partners might properly be paid.
SECTION 9.03. INDEMNIFICATION. To the fullest extent
permitted by applicable law, except as set forth in Section
8.03(c), an Indemnified Person shall be entitled to
indemnification from the Partnership for any loss, damage or
claim incurred by such Indemnified Person by reason of any act or
omission performed or omitted by such Indemnified Person in good
faith on behalf of the Partnership and in a manner reasonably
believed to be within the scope of authority conferred on such
Indemnified Person by this Agreement, except that no Indemnified
Person shall be entitled to be indemnified in respect of any
loss, damage or claim incurred by such Indemnified Person by
reason of willful misconduct, gross negligence or fraud with
respect to such acts or omissions; provided, however, that any
indemnity under this Section 9.03 shall be provided out of and to
the extent of Partnership assets only, and except as otherwise
provided by the Delaware Act, no Covered Person shall have any
personal liability on account thereof. To the fullest extent
permitted by applicable law, expenses (including legal fees)
incurred by an Indemnified Person in defending any claim, demand,
action, suit or proceeding shall, from time to time, be advanced
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by the Partnership prior to the final disposition of such claim,
demand, action, suit or proceeding upon receipt by the
Partnership of an undertaking by or on behalf of the Indemnified
Person to repay such amount if it shall be determined that the
Indemnified Person is not entitled to be indemnified as
authorized in this Section 9.03.
ARTICLE X - WITHDRAWAL; TRANSFER RESTRICTIONS
---------------------------------------------
SECTION 10.01. TRANSFER BY GENERAL PARTNER; ADMISSION
OF SUBSTITUTED GENERAL PARTNER. The General Partner may not
Transfer its Interest (in whole or in part) to any Person without
the consent of all other Partners, provided that the General
Partner may, without the consent of any Partner, Transfer its
Interest to PECO or any direct or indirect wholly owned
subsidiary of PECO. Notwithstanding anything else herein, the
General Partner may merge with or into another Person, may permit
another Person to merge with or into the General Partner and may
Transfer all or substantially all of its assets to another Person
if the General Partner is the survivor of such merger or the
Person into which the General Partner is merged or to which the
General Partner's assets are transferred is a Person organized
under the laws of the United States or any state thereof or the
District of Columbia and the General Partner shall have the right
to admit the assignee or transferee of its Interest which is
permitted hereunder as a substituted or additional general
partner of the Partnership, without the consent of the Limited
Partners. Any such assignee or transferee of all or a part of
the Interest of a General Partner shall be deemed admitted to the
Partnership as a general partner of the Partnership immediately
prior to the effective date of such Transfer, and such additional
or successor General Partner is hereby authorized to and shall
continue the business of the Partnership without dissolution.
SECTION 10.02. WITHDRAWAL OF LIMITED PARTNERS. A
Preferred Partner may not withdraw from the Partnership prior to
the dissolution and winding up of the Partnership except upon the
assignment of its Preferred Partner Interests (including any
redemption, repurchase, exchange or other acquisition by the
Partnership), as the case may be, in accordance with the
provisions of this Agreement. Any Person who has been assigned
one or more Interests shall provide the Partnership with a
completed Form W-8 or such other documents or information as are
requested by the Partnership for tax reporting purposes. A
withdrawing Preferred Partner shall not be entitled to receive
any distribution and shall not otherwise be entitled to receive
the fair value of its Preferred Partner Interest except as
otherwise expressly provided in this Agreement.
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ARTICLE XI - DISSOLUTION OF THE PARTNERSHIP
-------------------------------------------
SECTION 11.01. NO DISSOLUTION. The Partnership shall
not be dissolved by the admission of Partners in accordance with
the terms of this Agreement. The death, withdrawal,
incompetency, bankruptcy, dissolution or other cessation to exist
as a legal entity of a Limited Partner, or the occurrence of any
other event that terminates the Interest of a Limited Partner in
the Partnership, shall not in and of itself cause the Partnership
to be dissolved and its affairs wound up. To the fullest extent
permitted by applicable law, upon the occurrence of any such
event, the General Partner, subject to the terms of this
Agreement, may, without any further act, vote or approval of any
Partner, admit any Person to the Partnership as an additional or
substitute Limited Partner, which admission shall be effective as
of the date of the occurrence of such event, and the business of
the Partnership shall be continued without dissolution.
SECTION 11.02. EVENTS CAUSING DISSOLUTION. The
Partnership shall be dissolved and its affairs shall be wound up
upon the occurrence of any of the following events:
(a) The expiration of the term of the
Partnership, as provided in Section 2.04 hereof;
(b) The withdrawal, removal or bankruptcy of the
General Partner or Transfer (other than a grant of a security
interest) by the General Partner of its entire Interest in the
Partnership when the assignee is not admitted to the Partnership
as an additional or successor General Partner in accordance with
Section 10.01 hereof, or the occurrence of any other event that
results in the General Partner ceasing to be a general partner
of the Partnership under the Delaware Act, provided, the
Partnership shall not be dissolved and required to be wound up in
connection with any of the events specified in this clause (b) if
(i) at the time of the occurrence of such event there is at least
one remaining general partner of the Partnership who is hereby
authorized to, agrees to and does carry on the business of the
Partnership, or (ii) within ninety (90) days after the occurrence
of such event, a majority in Interest of the remaining Partners
(or such greater percentage in Interest as is required by the
Delaware Act) agree in writing to continue the business of the
Partnership and to the appointment, effective as of the date of
such event, if required, of one or more additional general
partners of the Partnership;
(c) The entry of a decree of judicial dissolution
under the Delaware Act; or
(d) the written consent of the General Partner
and all of the Preferred Partners.
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SECTION 11.03. NOTICE OF DISSOLUTION. Upon the
dissolution of the Partnership, the General Partner shall
promptly notify the Partners of such dissolution.
ARTICLE XII - LIQUIDATION OF PARTNERSHIP INTERESTS
--------------------------------------------------
SECTION 12.01. LIQUIDATION. Upon dissolution of the
Partnership, the General Partner, or, in the event that the
dissolution is caused by an event described in Section 11.02(b)
and there is no other General Partner, a Person or Persons who
may be approved by Preferred Partners holding not less than a
majority in liquidation preference of the Preferred Partner
Interests as liquidating trustee the "Liquidating Trustee", shall
immediately commence to wind up the Partnership's affairs;
provided, however, that a reasonable time shall be allowed for
the orderly liquidation of the assets of the Partnership and the
satisfaction of liabilities to creditors so as to enable the
Partners to minimize the normal losses attendant upon a
liquidation. The Preferred Partners shall continue to share
profits and losses during liquidation in the same proportions, as
specified in Articles V and VI hereof, as before liquidation.
The proceeds of liquidation shall be distributed, as realized, in
the following order and priority:
(a) to creditors of the Partnership, including
Preferred Partners who are creditors, to the extent otherwise
permitted by law, in satisfaction of the liabilities of the
Partnership (whether by payment or the making of reasonable
provision for payment thereof), other than liabilities for which
reasonable provision for payment has been made and liabilities
for distributions to Partners;
(b) to the holders of Preferred Partner Interests
of each series then outstanding in accordance with the terms of
the Action or Actions for such Series; and
(c) to all Partners in accordance with their
respective positive Capital Account balances, after giving effect
to all contributions, distributions and allocations for all
periods.
SECTION 12.02. TERMINATION. The Partnership shall
terminate when all of the assets of the Partnership have been
distributed in the manner provided for in this Article XII, and
the Certificate of Limited Partnership shall have been cancelled
in the manner required by the Delaware Act.
SECTION 12.03. DUTY OF CARE. The General Partner or
the Liquidating Trustee, as the case may be, shall not be liable
to the Partnership or any Partner for any loss attributable to
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any act or omission of the General Partner taken in good faith in
connection with the liquidation of the Partnership and
distribution of its assets in belief that such course of conduct
was in the best interest of the Partnership. The General Partner
or the Liquidating Trustee, as the case may be, may consult with
counsel and accountants with respect to liquidating the
Partnership and distributing its assets and shall be justified in
acting or omitting to act in accordance with the written opinion
of such counsel or accountants, provided they shall have been
selected with reasonable care.
SECTION 12.04. NO LIABILITY FOR RETURN OF CAPITAL.
The General Partner and its respective officers, directors,
members, shareholders, employees, representatives, agents,
partners and Affiliates shall not be personally liable for the
return of the contributions of any Partner to the Partnership.
No Partner shall be obligated to restore to the Partnership any
amount with respect to a negative Capital Account.
ARTICLE XIII - PREFERRED PARTNER INTERESTS
------------------------------------------
SECTION 13.01. PREFERRED PARTNER INTERESTS.
(a) The aggregate number of Preferred Partner
Interests which the Partnership shall have authority to issue is
unlimited. Each series of Preferred Partner Interests shall rank
equally and all Preferred Partner Interests shall rank senior to
all other Interests in respect of the right to receive
distributions and the right to receive payments out of the assets
of the Partnership upon voluntary or involuntary dissolution and
winding up of the Partnership. The issuance of any Interests
ranking senior to the Preferred Partner Interests shall be deemed
to materially adversely affect the rights of the Preferred
Partner Interests under this Agreement.
(b) The General Partner on behalf of the Partnership
is authorized to issue Preferred Partner Interests, in one or
more series, having such designations, rights, privileges,
restrictions, and other terms and provisions, whether in regard
to distributions, return of capital or otherwise, as may from
time to time be established in a written action or actions (each,
an "Action") of the General Partner providing for the issue of
such series. In connection with the foregoing, the General
Partner is expressly authorized, prior to issuance, to set forth
in an Action or Actions providing for the issue of such series,
the following:
(i) The distinctive designation of such series
which shall distinguish it from other series;
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(ii) The number of Preferred Partner Interests
included in such series, which number may be increased or
decreased from time to time unless otherwise provided by the
General Partner in creating the series;
(iii) The distribution rate (or method of
determining such rate) for Preferred Partner Interests of
such series and the first date upon which such distribution
shall be payable;
(iv) The amount or amounts which shall be paid
out of the assets of the Partnership to the holders of such
series of Preferred Partner Interests upon voluntary or
involuntary dissolution and winding up of the Partnership;
(v) The price or prices at which (the "Redemption
Price"), the period or periods within which and the terms
and conditions upon which the Preferred Partner Interests of
such series may be redeemed or purchased, in whole or in
part, at the option of the Partnership;
(vi) The obligation of the Partnership to
purchase or redeem Preferred Partner Interests of such
series pursuant to a sinking fund or otherwise and the price
or prices at which, the period or periods within which and
the terms and conditions upon which the Preferred Partner
Interests of such series shall be redeemed, in whole or in
part, pursuant to such obligation;
(vii) The period or periods within which and the
terms and conditions, if any, including the price or prices
or the rate or rates of conversion or exchange and the terms
and conditions of any adjustments thereof, upon which the
Preferred Partner Interests of such series shall be
convertible or exchangeable at the option of the Preferred
Partner, or the Partnership, into any other Interests or
securities or other property or cash or into any other
series of Preferred Partner Interests;
(viii) The voting rights, if any, of the
Preferred Partner Interests of such series in addition to
those required by law or set forth herein, and any
requirement for the approval by the Preferred Partner
Interest, or of the Preferred Partner Interests of one or
more series, or of both, as a condition to specified Action
or amendments to this Agreement;
(ix) The additional amounts, if any, which the
Partnership will pay as a distribution as necessary in order
that the net amounts received by the Preferred Partners who
hold such series of Preferred Partner Interests after
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withholding or deduction on account of certain taxes,
duties, assessments or governmental charges will equal the
amount which would have been receivable in respect of such
Preferred Partner Interests in the absence of such
withholding or deduction ("Additional Amounts"); and
(x) Any other relative rights, powers,
preferences or limitations of the Preferred Partner
Interests of the series not inconsistent with this Agreement
or with applicable law.
In connection with the foregoing and without limiting
the generality thereof, the General Partner is hereby expressly
authorized, without the vote or approval of any other Partner, to
take any Action to create under the provisions of this Agreement
a series of Preferred Partner Interests that was not previously
outstanding. Without the vote or approval of any other Partner,
the General Partner may execute, swear to, acknowledge, deliver,
file and record whatever documents may be required in connection
with the issue from time to time of Preferred Partner Interests
in one or more series as shall be necessary, convenient or
desirable to reflect the issue of such series. The General
Partner shall do all things it deems to be appropriate or
necessary to comply with the Delaware Act and is authorized and
directed to do all things it deems to be necessary or permissible
in connection with any future issuance, including compliance with
any statute, rule, regulation or guideline of any Federal, state
or other governmental agency or any securities exchange.
Any Action or Actions taken by the General Partner
pursuant to the provisions of this paragraph (b) shall be deemed
an amendment and supplement to and part of this Agreement.
(c) Except as otherwise provided in this Agreement or
in any Action in respect of any series of the Preferred Partner
Interests and as otherwise required by law, all rights to the
management and control of the Partnership shall be vested
exclusively in the General Partner.
(d) No holder of Interests shall be entitled as a
matter of right to subscribe for or purchase, or have any
preemptive right with respect to, any part of any new or
additional issue of Interests of any class or series whatsoever,
or of securities convertible into any Interests of any class or
series whatsoever, whether now or hereafter authorized and
whether issued for cash or other consideration or by way of
distribution. Any Person acquiring Preferred Partner Interests
shall be admitted to the Partnership as a Preferred Partner upon
compliance with Section 2.06.
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SECTION 13.02. TERMS OF ALL PREFERRED PARTNER
INTERESTS. Notwithstanding anything else in any Action to the
contrary, all Preferred Partner Interests of the Partnership
shall have the following voting rights, preferences,
participating, optional and other special rights and the
qualifications, limitations or restrictions of, and other matters
relating to, the Preferred Partner Interests as set forth below
in this Section 13.02.
(a) Distributions.
(i) The Preferred Partners shall be entitled to
receive, when, as and if declared by the General Partner out
of funds held by the Partnership to the extent that the
Partnership has cash on hand sufficient to permit such
payments and funds legally available therefor, cumulative
cash distributions at a rate per annum established by the
General Partner, calculated on the basis of a 360-day year
consisting of twelve (12) months of thirty (30) days each,
and for any period shorter than a full monthly distribution
period, distributions will be computed on the basis of the
actual number of days elapsed in such period, and payable in
United States dollars monthly in arrears on the last day of
each calendar month of each year. In the event that any
date on which distributions are payable on the Preferred
Partner Interests is not a Business Day, then payment of the
distribution payable on such date will be made on the next
succeeding day which is a Business Day (and without any
interest or other payment in respect of any such delay)
except that, if such Business Day is in the next succeeding
calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and
effect as if made on such date. Such distributions will
accrue and be cumulative from the original date of issue
whether or not they have been declared and whether or not
there are profits, surplus or other funds of the Partnership
legally available for the payment of distributions, or
whether they are deferred.
(ii) If distributions have not been paid in full
on any series of Preferred Partner Interests, the
Partnership may not:
(A) pay any distributions on any other
series of Preferred Partner Interests, unless the
amount of any distributions paid on any Preferred
Partner Interests is paid on all Preferred Partner
Interests then outstanding on a pro rata basis, on
the date such distributions are paid, so that
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(1) (x) the aggregate amount of
distributions paid on such series of
Preferred Partner Interests bears to (y) the
aggregate amount of distributions paid on all
such Preferred Partner Interests outstanding
the same ratio as
(2) (x) the aggregate of all
accumulated arrears of unpaid distributions
in respect of such series of Preferred
Partner Interests bears to (y) the aggregate
of all accumulated arrears of unpaid
distributions in respect of such Preferred
Partner Interests outstanding;
(B) pay any distribution on any general
partner Interest; or
(C) redeem, purchase or otherwise acquire
any other Preferred Partner Interests or any
general partner Interest;
until, in each case, such time as all accumulated and
unpaid distributions on all series of Preferred Partner
Interests shall have been paid in full for all
distribution periods terminating on or prior to, in the
case of clauses (A) and (B), such payment and, in the
case of clause (C), the date of such redemption,
purchase or acquisition.
(b) Redemption Procedures.
(i) Notice of any redemption (a "Notice of
Redemption") of the Preferred Partner Interests
will be given by the Partnership by mail or
delivery to each record holder of Preferred
Partner Interests to be redeemed not fewer than
thirty (30) nor more than sixty (60) days prior to
the date fixed for redemption thereof. For
purposes of the calculation of the date of
redemption and the dates on which notices are
given pursuant to this paragraph (b)(i), a Notice
of Redemption shall be deemed to be given on the
day such notice is first mailed by first-class
mail, postage prepaid, or on the date it was
delivered in person, receipt acknowledged to the
holders of such Preferred Partner Interests. Each
Notice of Redemption shall be addressed to the
record holders of the Preferred Partner Interests
at the address of the holder appearing in the
books and records of the Partnership. No defect
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in the Notice of Redemption or in the mailing or
delivery thereof or publication of its contents
shall affect the validity of the redemption
proceedings.
(ii) The Partnership may not redeem any
Preferred Partner Interests unless all accumulated
and unpaid distributions have been paid on all
Preferred Partner Interests for all monthly
distribution periods terminating on or prior to
the date of redemption. In the case of a partial
redemption resulting from a requirement that the
Partnership pay Additional Amounts or withhold or
deduct certain amounts, the Partnership will (A)
cause the global certificates representing all of
such series of Preferred Partner Interests to be
withdrawn from The Depository Trust Company or its
successor securities depository, (B) issue
certificates in definitive form representing such
series of Preferred Partner Interests, and (C)
redeem the series or portion of the series of
Preferred Partner Interests subject to such
requirement to withhold or deduct Additional
Amounts. Subject to applicable law, PECO or its
subsidiaries may at any time and from time to time
purchase outstanding Preferred Partner Interests
by tender, in the open market or by private
agreement. If a partial redemption of outstanding
Preferred Partner Interests would result in a
delisting of a series of Preferred Partner
Interests from any national securities exchange on
which the series of Preferred Partner Interests is
then listed, the Partnership may then only redeem
the series of Preferred Partner Interests in
whole.
(iii) If Notice of Redemption shall have
been given and payment shall have been made by the
Partnership to the record holders of the Preferred
Partner Interests, then upon the date of such
payment, all rights of the Preferred Partner
Interest Owners or holders of such Preferred
Partner Interests so called for redemption will
cease, except the right of the holders of such
securities to receive the Redemption Price, but
without interest. In the event that any date
fixed for redemption of Preferred Partner
Interests is not a Business Day, then payment of
the Redemption Price payable on such date will be
made on the next succeeding day which is a
Business Day (and without any interest or other
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payment in respect of any such delay), except
that, if such Business Day falls in the next
succeeding calendar year, such payment will be
made on the immediately preceding Business Day (in
each case with the same force and effect as if
made on such day). In the event that payment of
the Redemption Price in respect of Preferred
Partner Interests is not made either by the
Partnership or by PECO pursuant to the Guarantee,
distributions on such Preferred Partner Interests
will continue to accrue at the then applicable
rate, from the original redemption date to the
date of payment, in which case the actual payment
date will be considered the date fixed for
redemption for purposes of calculating the
Redemption Price.
(c) Liquidation Distribution. If, upon any
liquidation, the Liquidation Distribution on any series of
Preferred Partner Interests can be paid only in part because the
Partnership has insufficient assets available to pay in full the
aggregate Liquidation Distribution on all Preferred Partner
Interests, then the amounts payable directly by the Partnership
on such series of Preferred Partner Interests and on all other
series of Preferred Partner Interests shall be paid on a pro rata
basis, so that
(i) (1) the aggregate amount paid in respect
of the Liquidation Distribution bears to (2) the
aggregate amount paid as liquidation distributions
on all other Preferred Partner Interests the same
ratio as
(ii) (1) the aggregate Liquidation
Distribution bears to (2) the aggregate maximum
liquidation distributions on all other Preferred
Partner Interests.
(d) Voting Rights. The Limited Partners shall not
have any right to vote on matters concerning the Partnership
except as specifically set forth in this Agreement, in the
Guarantee or as otherwise required by law. If (i) the
Partnership fails to pay distributions in full on any series of
Preferred Partner Interests for eighteen (18) consecutive months;
(ii) a default under the Indenture occurs and is continuing; or
(iii) PECO is in default on any of its payment or other
obligations under the Guarantee, then the holders of the
Preferred Partner Interests, acting as a single class, will be
entitled, by a vote of the majority of the aggregate stated
liquidation preference of outstanding Preferred Partner
Interests, to appoint and authorize a special representative (the
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"Special Representative") to enforce the Partnership's creditor
rights under the Subordinated Debentures and the Indenture
against PECO and enforce the obligations undertaken by PECO under
the Guarantee, including, after failure to pay distributions for
60 consecutive monthly distribution periods, to declare and pay
distributions on such series of Preferred Partner Interests, the
General Partner agreeing to execute and deliver such documents as
may be necessary, appropriate or convenient for the Special
Representative to enforce such rights and obligations.
Notwithstanding anything else herein, the Special Representative
shall not be admitted as a partner of the Partnership and shall
have no liability for the debts, obligations or liabilities of
the Partnership.
In furtherance of the foregoing, and without limiting
the powers of any Special Representative so appointed and for the
avoidance of any doubt concerning the powers of the Special
Representative, any Special Representative, in its own name and
as trustee of an express trust, may institute a proceeding,
including, without limitation, any suit in equity, an action at
law or other judicial or administrative proceeding, to enforce
the Partnership's creditor rights directly against PECO or any
other obligor in connection with such obligations to the same
extent as the Partnership and on behalf of the Partnership, and
may pursue such proceeding to judgment or final decree, and
enforce the same against PECO or any other obligor in connection
with such obligations and collect, out of the property, wherever
situated, of PECO or any such other obligor upon such
obligations, the monies adjudged or decreed to be payable in the
manner provided by law.
For purposes of determining whether the Partnership has
failed to pay distributions in full for eighteen (18) consecutive
monthly distribution periods, distributions shall be deemed to
remain in arrears, notwithstanding any payments in respect
thereof, until full cumulative distributions have been or
contemporaneously are declared and paid with respect to all
monthly distribution periods terminating on or prior to the date
of payment of such full cumulative distributions. Subject to the
requirements of applicable law, not later than thirty (30) days
after such right to appoint a Special Representative arises, the
General Partner will convene a general meeting for the above
purpose. If the General Partner fails to convene such meeting
within such 30-day period, the Preferred Partners who hold 10% of
the aggregate stated liquidation preference of the outstanding
Preferred Partner Interests will be entitled to convene such
meeting. The provisions of this Agreement relating to the
convening and conduct of meetings of Partners will apply with
respect to any such meeting. Any Special Representative so
appointed shall cease to act in such capacity immediately if the
Partnership (or PECO pursuant to the Guarantee) shall have paid
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in full all accumulated and unpaid distributions on the Preferred
Partner Interests or such default or breach by PECO, as the case
may be, shall have been cured. Notwithstanding the appointment
of any such Special Representative, PECO retains all rights under
the Indenture, including the right to extend the interest payment
period on the Subordinated Debentures.
If any proposed amendment of this Agreement provides
for, or the General Partner otherwise proposes to effect
(pursuant to an Action or otherwise), any action which would
materially adversely affect the powers, preferences or special
rights of any series of Preferred Partner Interests, then holders
of such series of outstanding Preferred Partner Interests will be
entitled to vote on such amendment or action of the General
Partner (but not on any other amendment or action) and, in the
case of an amendment which would equally adversely affect the
powers, preferences or special rights of any other series of
Preferred Partner Interests, all holders of such series of
Preferred Partner Interests, shall vote together as a class on
such amendment or action of the General Partner (but not on any
other amendment or action), and such amendment or action shall
not be effective except with the approval of Preferred Partners
holding not less than 66 2/3% of the aggregate stated liquidation
preference of such outstanding series of Preferred Partner
Interests. Except as otherwise provided under Section 11.02 or
the Delaware Act, the Partnership will be dissolved and wound up
only with the consent of the holders of all outstanding Preferred
Partner Interests.
The powers, preferences or special rights of any
Preferred Partner Interests will be deemed not to be adversely
affected by the creation or issue of, and no vote will be
required for the creation or issuance of, any additional series
of Preferred Partner Interests or additional general partner
Interests.
Any required approval of Preferred Partner Interests
may be given at a separate meeting of such holders convened for
such purpose, at a meeting of the holders of all series of
Preferred Partner Interests or pursuant to written consent. The
Partnership will cause a notice of any meeting at which holders
of any Preferred Partner Interests are entitled to vote, or of
any matter upon which action by written consent of such holders
is to be taken, to be mailed to each holder of Preferred Partner
Interests. Each such notice will include a statement setting
forth (a) the date of such meeting or the date by which such
action is to be taken, (b) a description of any resolution
proposed for adoption at such meeting on which such holders are
entitled to vote or of such matter upon which written consent is
sought, and (c) instructions for the delivery of proxies or
consents.
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No vote or consent of the holders of the Preferred
Partner Interests will be required for the Partnership to redeem
and cancel the Preferred Partner Interests in accordance with
this Agreement.
Notwithstanding that holders of Preferred Partner
Interests are entitled to vote or consent under any of the
circumstances described above, any of the Preferred Partner
Interests that are owned by PECO or any entity owned more than
50% by PECO, either directly or indirectly, shall not be entitled
to vote or consent and shall, for the purposes of such vote or
consent, be treated as if they were not outstanding.
(e) Mergers. The Partnership shall not consolidate,
amalgamate, merge with or into, or be replaced by, or convey,
transfer or lease its properties and assets substantially as an
entirety to any corporation or other entity, except with the
approval of the General Partner and the holders of 66 2/3% in
aggregate stated liquidation preference of such outstanding
Preferred Partner Interests or as otherwise described below. The
General Partner may, without the consent of the holders of the
Preferred Partner Interests, cause the Partnership to
consolidate, amalgamate, merge with or into, or be replaced by,
or convey, transfer or lease its properties and assets
substantially as an entirety to, a corporation, a limited
liability company, limited partnership, trust or other entity
organized as such under the laws of any state of the United
States of America or the District of Columbia, provided that (i)
such successor entity either (1) expressly assumes all of the
obligations of the Partnership under the Preferred Partner
Interests and the other obligations of the Partnership or (2)
substitutes for the Preferred Partner Interests other securities
having substantially the same terms as the Preferred Partner
Interests (the "Successor Securities") so long as the Successor
Securities rank, as regards participation in the profits or
assets of the successor entity, at least as high as the Preferred
Partner Interests rank, as regards participation in the profits
or assets of the Partnership, (ii) PECO confirms its obligations
under the Guarantee with regard to the Successor Securities, if
any are issued, (iii) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not cause the
Preferred Partner Interests or Successor Securities to be
delisted by any national securities exchange or other
organization on which the Preferred Partner Interests are then
listed, (iv) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not cause the
Preferred Partner Interests or Successor Securities to be
downgraded by any "nationally recognized statistical rating
organization", as that term is defined by the Commission for
purposes of Rule 436(g)(2) under the Securities Act, (v) such
merger, consolidation, amalgamation, replacement, conveyance,
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transfer or lease does not adversely affect the powers,
preferences and special rights of holders of Preferred Partner
Interests or Successor Securities in any material respect, (vi)
such successor entity has a purpose substantially identical to
that of the Partnership and (vii) prior to such merger,
consolidation, amalgamation, replacement, conveyance, transfer or
lease PECO has received an opinion of counsel (which may be
regular counsel to PECO or an Affiliate, but not an employee
thereof) experienced in such matters to the effect that (1)
holders of outstanding Preferred Partner Interests will not
recognize any gain or loss for Federal income tax proposes as a
result of the merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, (2) such successor entity will be
treated as a partnership for Federal income tax purposes, (3)
following such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, PECO and such successor entity
will be in compliance with the 1940 Act without registering
thereunder as an "investment company," and (4) such merger,
consolidation, amalgamation, replacement, conveyance, transfer or
lease will not adversely affect the limited liability of holders
of Preferred Partner Interests or Successor Securities.
ARTICLE XIV - TRANSFERS
-----------------------
SECTION 14.01. TRANSFERS OF PREFERRED PARTNER
INTERESTS. Preferred Partner Interests may be freely transferred
by a Preferred Partner. No Interest shall be transferred, in
whole or in part, except in accordance with the terms and
conditions set forth in this Agreement. Any transfer or
purported transfer of any Interest not made in accordance with
this Agreement shall be null and void.
SECTION 14.02. TRANSFER OF CERTIFICATES. The General
Partner shall provide for the registration of Certificates. Upon
surrender for registration of transfer of any Certificate, the
General Partner shall cause one or more new Certificates to be
issued in the name of the designated transferee or transferees.
Every Certificate surrendered for registration of transfer shall
be accompanied by a written instrument of transfer and agreement
to be bound by the terms of this Agreement in form satisfactory
to the General Partner duly executed by the Preferred Partner or
his attorney duly authorized in writing. Each Certificate
surrendered for registration of transfer shall be cancelled by
the General Partner. A transferee of a Certificate shall provide
the Partnership with a completed Form W-8 or such other documents
or information as are requested by the Partnership for tax
reporting purposes and thereafter shall be admitted to the
Partnership as a Preferred Partner and shall be entitled to the
rights and subject to the obligations of a Preferred Partner
hereunder upon the receipt by such transferee of a Certificate.
34
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The transferor of a Certificate shall cease to be a limited
partner of the Partnership at the time that the transferee of the
Certificate is admitted to the Partnership as a Preferred Partner
in accordance with this Section 14.02.
SECTION 14.03. PERSONS DEEMED PREFERRED PARTNERS. The
Partnership may treat the Person in whose name any Certificate
shall be registered on the books and records of the Partnership
as the Preferred Partner and the sole holder of such Certificate
for purposes of receiving distributions and for all other
purposes whatsoever and, accordingly, shall not be bound to
recognize any equitable or other claims to or interest in such
Certificate on the part of any other Person, whether or not the
Partnership shall have actual or other notice thereof.
SECTION 14.04. BOOK ENTRY INTERESTS. The
Certificates, on original issuance, will be issued in the form of
a typewritten Certificate or Certificates representing the Book
Entry Interests to be delivered to The Depository Trust Company,
the initial Clearing Agency, by, or on behalf of, the
Partnership. Such Certificates shall initially be registered on
the books and records of the Partnership in the name of Cede &
Co., the nominee of the initial Clearing Agency, and no Preferred
Partner Interest Owner will receive a definitive Certificate
representing such Preferred Partner Interest Owner's interests in
such Certificate, except as provided in Section 14.06. Unless
and until definitive, fully registered Certificates (the
"Definitive Certificates") have been issued to the Preferred
Partner Interest Owners pursuant to Section 14.06:
(a) The provisions of this Section shall be in
full force and effect;
(b) The Partnership and the General Partner shall
be entitled to deal with the Clearing Agency for all purposes of
this Agreement (including the payment of distributions on the
Certificates and receiving approvals, votes or consents
hereunder) as the Preferred Partner and the sole holder of the
Certificates and shall have no obligations to the Preferred
Partner Interest Owners;
(c) The rights of the Preferred Partner Interest
Owners shall be exercised only through the Clearing Agency and
shall be limited to those established by law and agreements
between such Preferred Partner Interest Owners and the Clearing
Agency and/or the Clearing Agency Participants. Unless or until
the Definitive Certificates are issued pursuant to Section 14.06,
the initial Clearing Agency will make book entry transfers among
the Clearing Agency Participants and receive and transmit
payments of distributions on the Certificates to such Clearing
Agency Participants;
35
<PAGE>
(d) To the extent that the provisions of this
Section conflict with any other provisions of this Agreement, the
provisions of this Section shall control; and
(e) Whenever this Agreement requires or permits
actions to be taken based upon approvals, votes or consents of a
percentage of the Preferred Partners, the Clearing Agency shall
be deemed to represent such percentage only to the extent that it
has received instructions to such effect from the Preferred
Partner Interest Owners and/or Clearing Agency Participants
owning or representing, respectively, such required percentage of
the beneficial interests in the Certificates and has delivered
such instructions to the General Partner.
SECTION 14.05. NOTICES TO CLEARING AGENCY. Whenever a
notice or other communication to the Preferred Partners is
required under this Agreement, unless and until Definitive
Certificates shall have been issued pursuant to Section 14.06,
the General Partner shall give all such notices and
communications specified herein to be given to the Preferred
Partners to the Clearing Agency, and shall have no obligations to
the Preferred Partner Interest Owners.
SECTION 14.06. DEFINITIVE CERTIFICATES. If (i) the
Clearing Agency elects to discontinue its services as securities
depository and gives reasonable notice to the Partnership, or
(ii) the Partnership elects to terminate the book entry system
through the Clearing Agency, then the Definitive Certificates
shall be prepared by the Partnership. Upon surrender of the
typewritten Certificate or Certificates representing the Book
Entry Interests by the Clearing Agency, accompanied by
registration instructions, the General Partner shall cause the
Definitive Certificates to be delivered to the Preferred Partner
Interest Owners in accordance with the instructions of the
Clearing Agency. The General Partner shall not be liable for any
delay in delivery of such instructions and may conclusively rely
on, and shall be protected in relying on, such instructions. Any
Person receiving a Definitive Certificate in accordance with this
Article XIV shall be admitted to the Partnership as a Preferred
Partner upon receipt of such Definitive Certificate. The
Clearing Agency or the nominee of the Clearing Agency, as the
case may be, shall cease to be a Limited Partner of the
Partnership under this Section 14.06 at the time that at least
one additional Person is admitted to the Partnership as a
Preferred Partner in accordance with this Section 14.06. The
Definitive Certificates shall be printed, lithographed or
engraved or may be produced in any other manner as is reasonably
acceptable to the General Partner, as evidenced by its execution
thereof. The General Partner will appoint a registrar, transfer
agent and paying agent for the Preferred Partner Interests.
Registration of transfers of Preferred Partner Interests will be
36
<PAGE>
effected without charge by or on behalf of the Partnership, but
upon payment of any tax or other governmental charges which may
be imposed in relation to it. The Partnership will not be
required to register or cause to be registered the transfer of
Preferred Partner Interests after such Preferred Partner
Interests have been called for redemption.
ARTICLE XV - GENERAL
--------------------
SECTION 15.01. POWER OF ATTORNEY. (a) The Class A
Limited Partner and each Preferred Partner constitutes and
appoints the General Partner and the Liquidating Trustee as its
true and lawful representative and attorney-in-fact, in its name,
place and stead, to make, execute, sign, acknowledge and deliver
or file (i) all instruments, documents and certificates which may
from time to time be required by any law to effectuate, implement
and continue the valid and subsisting existence of the
Partnership, (ii) all instruments, documents and certificates
that may be required to effectuate the dissolution and
termination of the Partnership in accordance with the provisions
hereof and Delaware law, (iii) all other amendments of this
Agreement or the Certificate of Limited Partnership and other
filings contemplated by this Agreement including, without
limitation, amendments reflecting the withdrawal of the General
Partner, or the return, in whole or in part, of the contribution
of any Partner, or the addition, substitution or increased
contribution of any Partner, or any action of the Partners duly
taken pursuant to this Agreement whether or not such Partner
voted in favor of or otherwise approved such action, and (iv) any
other instrument, certificate or document required from time to
time to admit a Partner, to effect its substitution as a Partner,
to effect the substitution of the Partner's assignee as a Partner
or to reflect any action of the Partners provided for in this
Agreement.
(b) The powers of attorney granted herein (i)
shall be deemed to be coupled with an interest, shall be
irrevocable and shall survive the death, insanity, incompetency
or incapacity (or, in the case of a Partner that is a
corporation, association, partnership, limited liability company
or trust, shall survive the merger, dissolution or other
termination of existence) of the Partner and (ii) shall survive
the assignment by the Partner of the whole or any portion of his
Interest, except that where the assignee of the whole or any
portion thereof has furnished a power of attorney, this power of
attorney shall survive such assignment for the sole purpose of
enabling the General Partner and the Liquidating Trustee to
execute, acknowledge and file any instrument necessary to effect
any permitted substitution of the assignee for the assignor as a
Partner and shall thereafter terminate. In the event that the
37
<PAGE>
appointment conferred in this Section 15.01 would not constitute
a legal and valid appointment by any Partner under the laws of
the jurisdiction in which such Partner is incorporated,
established or resident, upon the request of the General Partner
or the Liquidating Trustee, such Partner shall deliver to the
General Partner or the Liquidating Trustee a properly
authenticated and duly executed document constituting a legal and
valid power of attorney under the laws of the appropriate
jurisdiction covering the matters set forth in this Section
15.01.
(c) The General Partner may require a power of
attorney to be executed by a transferee of a Partner as a
condition of its admission as a substitute Partner.
SECTION 15.02. WAIVER OF PARTITION. Each Partner
hereby irrevocably waives any and all rights that it may have to
maintain an action for partition of any of the Partnership's
property or assets.
SECTION 15.03. NOTICES. Any notice permitted or
required to be given hereunder shall be in writing and shall be
deemed given (i) on the day the notice is first mailed to a
Partner by first class mail, postage prepaid, or (ii) on the date
it was delivered in person to a Partner, receipt acknowledged, at
its address appearing on the books and records of the
Partnership. Another address may be designated by a Partner by
such Partner giving notice of its new address as provided in this
Section 15.03.
SECTION 15.04. ENTIRE AGREEMENT. This Agreement,
including the exhibits annexed hereto and incorporated by
reference herein, contains the entire agreement of the parties
hereto and supersedes all prior agreements and understandings,
oral or otherwise, among the parties hereto with respect to the
matters contained herein.
SECTION 15.05. WAIVERS. Except as otherwise expressly
provided herein, no purported waiver by any party of any breach
by another party of any of his obligations, agreements or
covenants hereunder, or any part thereof, shall be effective
unless made in a writing executed by the party or parties sought
to be bound thereby, and no failure to pursue or elect any remedy
with respect to any default under or breach of any provision of
this Agreement, or any part hereof, shall be deemed to be a
waiver of any other subsequent similar or different default or
breach, or any election of remedies available in connection
therewith, nor shall the acceptance or receipt by any party of
any money or other consideration due him under this Agreement,
with or without knowledge of any breach hereunder, constitute a
38
<PAGE>
waiver of any provision of this Agreement with respect to such or
any other breach.
SECTION 15.06. HEADINGS. The section headings herein
contained have been inserted only as a matter of convenience of
reference and in no way define, limit or describe the scope or
intent of any provisions of this Agreement nor in any way affect
any such provisions.
SECTION 15.07. SEPARABILITY. Each provision of this
Agreement shall be considered to be separable, and if, for any
reason, any such provision or provisions, or any part thereof, is
determined to be invalid and contrary to any existing or future
applicable law, such invalidity shall not impair the operation
of, or affect, those portions of this Agreement which are valid,
and this Agreement shall be construed and enforced in all
respects as if such invalid or unenforceable provision or
provisions had been omitted.
SECTION 15.08. CONTRACT CONSTRUCTION. Whenever the
content of this Agreement permits, the masculine gender shall
include the feminine and neuter genders, and reference to
singular or plural shall be interchangeable with the other.
References in this Agreement to particular sections of the Code
or to provisions of the Delaware Act shall be deemed to refer to
such sections or provisions as they may be amended after the date
of this Agreement.
SECTION 15.09. COUNTERPARTS. This Agreement may be
executed in one or more counterparts and each of such
counterparts for all purposes shall be deemed to be an original,
but all of such counterparts, when taken together, shall
constitute but one and the same instrument, binding upon all
parties hereto, notwithstanding that all of such parties may not
have executed the same counterpart.
SECTION 15.10. BENEFIT. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns, but shall not be deemed
for the benefit of creditors or any other Persons, nor shall it
be deemed to permit any assignment by a Partner of any of its
rights or obligations hereunder except as expressly provided
herein.
SECTION 15.11. FURTHER ACTIONS. Each of the Partners
hereby agrees that it shall hereafter execute and deliver such
further instruments and do such further acts and things as may be
required or useful to carry out the intent and purposes of this
Agreement and as are not inconsistent with the terms hereof.
39
<PAGE>
SECTION 15.12. GOVERNING LAW. This Agreement shall be
governed by and construed in accordance with the substantive laws
of the State of Delaware, without regard to conflicts of laws.
SECTION 15.13. AMENDMENTS. Except as otherwise
expressly provided herein or as otherwise required by law, this
Agreement may only be amended by a written instrument executed by
the General Partner provided, however, that any amendment which
would adversely affect the powers, preferences or special rights
of any series of Preferred Partner Interests may be effected only
as permitted by the terms of such series of Preferred Partner
Interests.
40
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date first above written.
GENERAL PARTNER:
PECO ENERGY CAPITAL CORP.
______________________________
Name:
Title:
CLASS A LIMITED PARTNER,
solely to reflect its
withdrawal from the
Partnership:
PECO ENERGY COMPANY
______________________________
Name:
Title:
41
<PAGE>
Exhibit A
Certificate Evidencing Preferred Partner Interests
of
PECO Energy Capital, L.P.
__% Cumulative Monthly Income Preferred Partner
Interests, Series __ (liquidation preference
$25 per Preferred Partner Interest)
PECO Energy Capital, L.P., a Delaware limited
partnership (the "Partnership"), hereby certifies that Cede & Co.
(the "Holder") is the registered owner of ___________ (_________)
fully paid Preferred Partner Interests of the Partnership
designated the __% Cumulative Monthly Income Preferred Partner
Interests, Series __ (liquidation preference $25 per Preferred
Partner Interest) (the "Series __ Preferred Partner Interests")
representing preferred limited partner interests in the
Partnership transferable on the books and records of the
Partnership, in person or by a duly authorized attorney, upon
surrender of this Certificate duly endorsed and in proper form
for transfer. The powers, preferences and special rights and
limitations of the Series __ Preferred Partner Interests are set
forth in, and this Certificate and the Series __ Preferred
Partner Interests represented hereby are issued and shall in all
respects be subject to the terms and provisions of, the Amended
and Restated Limited Partnership Agreement dated as of
___________, 1994 of the Partnership as the same may, from time
A-1
<PAGE>
to time, be amended (the "Partnership Agreement") authorizing the
issuance of the Series __ Preferred Partner Interests and
determining, along with any actions of the General Partner of the
Partnership as authorized under the Partnership Agreement, the
preferred, deferred and other special rights and restrictions,
regarding distributions, voting, redemption and otherwise and
other matters relating to the Series __ Preferred Partner
Interests. The Partnership will furnish a copy of the
Partnership Agreement to the Holder without charge upon written
request to the Partnership at its principal place of business or
registered office. Capitalized terms used herein but not defined
shall have the meaning given them in the Partnership Agreement.
The Holder is entitled to the benefits of the Payment and
Guarantee Agreement of PECO Energy Company, dated as of _______,
1994 relating to the Preferred Partner Interests (the
"Guarantee") and of the Indenture between PECO Energy Company and
Meridian Trust Company, dated as of ____________, 1994 (the
"Indenture"), under and pursuant to which the related series of
Subordinated Debentures are issued and outstanding, in either
case to the extent provided therein. The Holder is further
entitled to enforce such rights of the Partnership under the
Indenture to the extent provided therein and in the Partnership
Agreement. The Partnership will furnish a copy of the Guarantee
and Indenture to the Holder without charge upon written request
to the Partnership at its principal place of business or
registered office.
A-2
<PAGE>
The Holder, by accepting this Certificate, is deemed to
have (i) agreed that the Subordinated Debentures issued pursuant
to the Indenture are subordinate and junior in right of payment
to all general liabilities of PECO Energy Company as and to the
extent provided in the Indenture and (ii) agreed that the
Guarantee is subordinate and junior in right of payment to all
general liabilities of PECO Energy Company. Upon receipt of this
Certificate, the Holder is admitted to the Partnership as a
Preferred Partner, is bound by the Partnership Agreement and is
entitled to the benefits thereunder.
IN WITNESS WHEREOF, the Partnership has executed this
Certificate this ____ day of ________________, 1994.
PECO ENERGY CAPITAL, L.P.
By: PECO Energy Capital Corp.,
its General Partner
By:______________________________
Name:
Title:
A-3
ACTION BY THE GENERAL PARTNER OF PECO ENERGY CAPITAL, L.P.
CREATING THE __% CUMULATIVE MONTHLY INCOME
PREFERRED PARTNER INTERESTS, SERIES A
Pursuant to Section 13.01 of the Amended and Restated
Limited Partnership Agreement of PECO Energy Capital, L.P. dated
____________, 1994 (as amended from time to time, the
"Partnership Agreement"), PECO Energy Capital Corp. as general
partner (the "General Partner") of PECO Energy Capital, L.P. (the
"Partnership"), desiring to state the designations, rights,
privileges, restrictions, preferences, [voting rights] and other
terms and conditions of a new series of Preferred Partner
Interests, hereby authorizes and establishes such new series of
Preferred Partner Interests according to the following terms and
conditions (each capitalized terms used but not defined herein
shall have the meaning set forth in the Partnership Agreement):
(a) Designation. ____________ interests with an
aggregate liquidation preference of $ ______ of the Preferred
Partner Interests of the Partnership, liquidation preference $25
per Preferred Partner Interest, are hereby designated as "__%
Cumulative Monthly Income Preferred Partner Interests, Series A"
(hereinafter the "Series A Preferred Partner Interests.")
(b) Distributions.
(i) The Preferred Partners who hold the Series A
Preferred Partner Interests shall be entitled to
receive, when, as and if declared by the General
Partner out of funds on hand held by the
Partnership and legally available therefor,
cumulative cash distributions at a rate per annum
of ___% of the stated liquidation preference of
$25 per Series A Preferred Partner Interest per
annum, commencing _____, 1994. Distributions on
the Series A Preferred Partner Interests which
accrue from the date of original issue to ____,
1994 shall be payable on ____, 1994.
(ii) Distributions on the Series A Preferred
Partner Interests must be declared by the General
Partner in any calendar year or portion thereof to
the extent that the General Partner reasonably
anticipates that at the time of payment the
Partnership will have, and must be paid by the
Partnership to the extent that at the time of
proposed payment it has, funds on hand legally
available therefor sufficient to permit such
payments. Distributions on the Series A Preferred
Partner Interests will be deferred if and for so
<PAGE>
long as PECO Energy Company ("PECO Energy") defers
payments to the Partnership on the Series A
Debentures (as defined below). Accrued and unpaid
distributions on the Series A Preferred Partner
Interests will accrue additional distributions
("Additional Distributions") in respect thereof,
to the extent permitted by law, at the
distribution rate per annum for the Series A
Preferred Interests. Such Additional
Distributions shall be payable at the time the
related deferred distribution is paid, but in any
event by the end of such deferral period.
Distributions declared on the Series A Preferred
Partner Interests will be payable to the Series A
Preferred Partners as they appear on the books and
records of the Partnership on the relevant record
dates, which will be one Business Day prior to the
relevant payment dates.
(c) Redemption.
(i) The Series A Preferred Partner Interests are
subject to redemption at the option of the General
Partner, in whole or in part, from time to time,
on or after _________, 1999, at the Redemption
Price (as defined below).
(ii) Upon redemption or payment at maturity of
the ____% Subordinated Debentures due 2043, Series
A (the "Series A Debentures") issued by PECO
Energy pursuant to an Indenture dated as of
_______, 1994 between PECO Energy and Meridian
Trust Company, as Trustee (the "Indenture"), which
Series A Debentures were purchased by the
Partnership from PECO Energy with the proceeds
from the issuance and sale of the Series A
Preferred Partner Interests and the related
capital contribution of the General Partner, the
proceeds from such redemption or payment of the
Series A Debentures shall be applied to redeem the
Series A Preferred Partner Interests at the
redemption price of $25 per Preferred Partner
Interest plus accumulated and unpaid distributions
(whether or not declared) and Additional Amounts
(as defined below) to the date fixed for
redemption, together with any accrued Additional
Distributions thereon (the "Redemption Price").
(iii) If at any time after the issuance of the
Series A Preferred Partner Interests, the
Partnership is or would be required to pay
2
<PAGE>
Additional Amounts or if PECO Energy would be
required to pay Additional Interest (as defined in
the Indenture) on the Series A Debentures then,
the Series A Preferred Partner Interests will be
subject to redemption, at the option of the
General Partner, in whole or, if such requirement
relates only to certain of the Series A Preferred
Partner Interests, the Series A Preferred Partner
Interests subject to such requirement, in each
case at any time thereafter at the Redemption
Price.
(iv) If a Tax Event shall occur and be continuing,
the Series A Preferred Partner Interests will be
subject to redemption, at the option of the
General Partner, in whole or in part at the
Redemption Price within ninety (90) days following
the occurrence of such Tax Event. If an
Investment Company Act Event shall occur and be
continuing, the Series A Preferred Partner
Interests will be subject to mandatory redemption
in whole at the Redemption Price within ninety
(90) days following the occurrence of such
Investment Company Event.
(d) Liquidation Distribution. In the event of any
voluntary or involuntary dissolution and winding up of the
Partnership, holders of the Series A Preferred Partner Interests
at the time outstanding will be entitled to receive out of the
assets of the Partnership available for distribution to holders
of Preferred Partner Interests, after satisfaction of liabilities
to creditors as required by the Delaware Act and before any
distribution of assets is made to holders of the general partner
interests, but together with holders of every other series of
Preferred Partner Interests outstanding, an amount equal to, in
the case of holders of Series A Preferred Partner Interests, the
aggregate of the stated liquidation preference of $25 per Series
A Preferred Partner Interest plus accumulated and unpaid
distributions and Additional Distributions to the date of payment
and Additional Amounts, if any (the "Liquidation Distribution").
(e) Voting Rights. The holders of the Series A
Preferred Partner Interests shall have no voting rights except as
provided in the Partnership Agreement.
(f) Additional Amounts. If, as a result of (i) the
Series A Debentures not being treated as indebtedness for United
States federal income tax purposes or (ii) the Partnership not
being treated as a partnership for United States federal income
tax purposes, the Partnership is required to withhold or deduct
from payments on the Series A Preferred Partner Interests for or
3
<PAGE>
on account of any present or future taxes imposed by the United
States which would not otherwise be required to be withheld or
deducted, the Partnership will pay such additional amounts as may
be necessary in order that the net amounts received by the
holders of the Series A Preferred Partner Interests after such
withholding or deduction will equal the amount which would have
been receivable in respect of such Series A Preferred Partner
Interests in the absence of such withholding or deduction
("Additional Amounts"), except that no such Additional Amounts
will be payable to a holder of Series A Preferred Partner
Interests (or a third party on such holder's behalf) with respect
to Series A Preferred Partner Interests if:
(a) such holder is liable for such taxes by reason of
such holder having a connection with the United
States, other than being a holder of Series A
Preferred Partner Interests; or
(b) the Partnership has notified such holder of the
obligation to withhold or deduct taxes and
requested but not received from such holder a
declaration of non-residence, a valid taxpayer
identification number or other claim for exemption
in such form or content as may be required by the
United States Internal Revenue Service, and such
withholding or deduction would not have been
required had such declaration, taxpayer
identification number or claim been received.
(g) Subordination. The holders of Series A Preferred
Partner Interests are deemed, by acceptance of such Interests, to
have (i) agreed that the Debentures issued pursuant to the
Indenture are subordinate and junior in right of payment to all
general liabilities as and to the extent provided in the
Indenture and (ii) agreed that the Guarantee relating to the
Series A Preferred Partner Interests is subordinate and junior in
right of payment to all general liabilities of PECO Energy.
IN WITNESS WHEREOF, the General Partner has executed
this Action as of the day and year first above written.
PECO Energy Capital Corp.
By: _____________________
Name:
Title:
4
PECO ENERGY COMPANY
AND
MERIDIAN TRUST COMPANY, AS TRUSTEE
INDENTURE
DATED AS OF _________________ BY AND BETWEEN
PROVIDING FOR THE ISSUANCE OF
SUBORDINATED DEBENTURES IN SERIES
AND FOR
_% SUBORDINATED DEBENTURES, SERIES A
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01 Definitions.. . . . . . . . . . . . . . . . . . 2
SECTION 1.02 Other Definitions.. . . . . . . . . . . . . . . 7
SECTION 1.03 Incorporation by Reference of Trust Indenture
Act . . . . . . . . . . . . . . . . . . . . . 7
SECTION 1.04 Rules of Construction.. . . . . . . . . . . . . 8
SECTION 1.05 Acts of Holders.. . . . . . . . . . . . . . . . 8
ARTICLE 2 THE DEBENTURES; THE SERIES A DEBENTURES
SECTION 2.01 Issue of Debentures Generally.. . . . . . . . . 9
SECTION 2.02 Form of the Series A Securities;
Denominations.. . . . . . . . . . . . . . . . 11
SECTION 2.03 Payment of Principal and Interest.. . . . . . . 11
SECTION 2.04 Execution and Authentication. . . . . . . . . . 12
SECTION 2.05 Registrar and Paying Agent. . . . . . . . . . . 12
SECTION 2.06 Paying Agent to Hold Money in Trust.. . . . . . 13
SECTION 2.07 Debentureholder Lists.. . . . . . . . . . . . . 14
SECTION 2.08 Transfer and Exchange.. . . . . . . . . . . . . 14
SECTION 2.09 Replacement Debentures. . . . . . . . . . . . . 15
SECTION 2.10 Outstanding Debentures; Determinations of
Holders' Action.. . . . . . . . . . . . . . . 16
SECTION 2.11 Temporary Debentures. . . . . . . . . . . . . . 16
SECTION 2.12 Cancellation. . . . . . . . . . . . . . . . . . 17
SECTION 2.13 Defaulted Interest. . . . . . . . . . . . . . . 17
ARTICLE 3 REDEMPTION
SECTION 3.01 Redemption; Notice to Trustee.. . . . . . . . . 18
SECTION 3.02 Selection of Debentures to be Redeemed. . . . . 18
SECTION 3.03 Notice of Redemption. . . . . . . . . . . . . . 18
SECTION 3.04 Effect of Notice of Redemption. . . . . . . . . 19
SECTION 3.05 Deposit of Redemption Price.. . . . . . . . . . 19
SECTION 3.06 Debentures Redeemed in Part . . . . . . . . . . 20
ARTICLE 4 COVENANTS
SECTION 4.01 Payment of Debentures . . . . . . . . . . . . . 20
SECTION 4.02 Prohibition Against Dividends, etc. During an
Event of Default or an Extension Period . . . 21
SECTION 4.03 SEC Reports . . . . . . . . . . . . . . . . . . 21
SECTION 4.04 Compliance Certificates . . . . . . . . . . . . 21
SECTION 4.05 Relationship with PECO Energy Capital . . . . . 22
SECTION 4.06 Further Instruments and Acts. . . . . . . . . . 22
i
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SECTION 4.07 Payments for Consents . . . . . . . . . . . . . 22
ARTICLE 5 SUCCESSOR CORPORATION
SECTION 5.01 When the Company May Merge, Etc . . . . . . . . 23
ARTICLE 6 DEFAULTS AND REMEDIES
SECTION 6.01 Events of Default . . . . . . . . . . . . . . . 24
SECTION 6.02 Acceleration. . . . . . . . . . . . . . . . . . 25
SECTION 6.03 Other Remedies . . . . . . . . . . . . . . . . 26
SECTION 6.04 Waiver of Past Defaults . . . . . . . . . . . . 26
SECTION 6.05 Control by Majority or the Special
Representatives . . . . . . . . . . . . . . . 26
SECTION 6.06 Limitation on Suits . . . . . . . . . . . . . . 27
SECTION 6.07 Rights of Holders to Receive Payment. . . . . . 27
SECTION 6.08 Collection Suit by the Trustee. . . . . . . . . 27
SECTION 6.09 The Trustee May File Proofs of Claim. . . . . . 28
SECTION 6.10 Priorities. . . . . . . . . . . . . . . . . . . 28
SECTION 6.11 Undertaking for Costs. . . . . . . . . . . . . . 29
SECTION 6.12 Waiver of Stay, Extension or Usury Laws . . . . 29
ARTICLE 7 THE TRUSTEE
SECTION 7.01 Duties of the Trustee . . . . . . . . . . . . . 30
SECTION 7.02 Rights of the Trustee . . . . . . . . . . . . . 31
SECTION 7.03 Individual Rights of the Trustee. . . . . . . . 31
SECTION 7.04 The Trustee's Disclaimer. . . . . . . . . . . . 32
SECTION 7.05 Notice of Defaults. . . . . . . . . . . . . . . 32
SECTION 7.06 Reports by Trustee to Holders . . . . . . . . . 32
SECTION 7.07 Compensation and Indemnity. . . . . . . . . . . 33
SECTION 7.08 Replacement of Trustee. . . . . . . . . . . . . 33
SECTION 7.09 Successor Trustee by Merger . . . . . . . . . . 34
SECTION 7.10 Eligibility; Disqualification . . . . . . . . . 35
SECTION 7.11 Preferential Collection of Claims Against the
Company . . . . . . . . . . . . . . . . . . . 35
ARTICLE 8 SATISFACTION AND DISCHARGE OF INDENTURE;
DEFEASANCE OF CERTAIN OBLIGATIONS; UNCLAIMED
MONEYS
SECTION 8.01 Satisfaction and Discharge of Indenture . . . . 35
SECTION 8.02 Application by Trustee of Funds Deposited for
Payment of Debentures . . . . . . . . . . . . 36
SECTION 8.03 Repayment of Moneys Held by Paying Agent. . . . 37
SECTION 8.04 Return of Moneys Held by the Trustee and
Paying Agent Unclaimed for Three Years. . . . 37
ARTICLE 9 AMENDMENTS
SECTION 9.01 Without Consent of Holders. . . . . . . . . . . 37
SECTION 9.02 With Consent of Holders . . . . . . . . . . . . 38
ii
<PAGE>
SECTION 9.03 Compliance with Trust Indenture Act . . . . . . 39
SECTION 9.04 Revocation and Effect Of Consents, Waivers
and Actions . . . . . . . . . . . . . . . . . 39
SECTION 9.05 Notation on or Exchange of Debentures . . . . . 40
SECTION 9.06 Trustee to Sign Supplemental Indentures . . . . 40
SECTION 9.07 Effect of Supplemental Indentures . . . . . . . 40
ARTICLE 10 SUBORDINATION
SECTION 10.01 Debentures Subordinated to Senior
Indebtedness. . . . . . . . . . . . . . . . . 40
SECTION 10.02 Priority and Payment of Proceeds in Certain
Events; Remedies Standstill . . . . . . . . . 41
SECTION 10.03 Payments which May Be Made Prior to Notice. . . 42
SECTION 10.04 Rights of Holders of Senior Indebtedness Not
to Be Impaired. . . . . . . . . . . . . . . . 42
SECTION 10.05 Trustee May Take Action to Effectuate
Subordination . . . . . . . . . . . . . . . . 43
SECTION 10.06 Subrogation . . . . . . . . . . . . . . . . . . 43
SECTION 10.07 Obligations of Company Unconditional;
Reinstatement . . . . . . . . . . . . . . . . 44
SECTION 10.08 Trustee Entitled to Assume Payments Not
Prohibited in Absence of Notice . . . . . . . 44
SECTION 10.09 Right of Trustee to Hold Senior Indebtedness. . 45
ARTICLE 11 MISCELLANEOUS
SECTION 11.01 Trust Indenture Act Controls. . . . . . . . . . 45
SECTION 11.02 Notices . . . . . . . . . . . . . . . . . . . . 46
SECTION 11.03 Communication by Holders with Other Holders . . 46
SECTION 11.04 Certificate and Opinion as to Conditions
Precedent . . . . . . . . . . . . . . . . . . 47
SECTION 11.05 Statements Required in Certificate or
Opinion . . . . . . . . . . . . . . . . . . . 47
SECTION 11.06 Severability Clause . . . . . . . . . . . . . . 48
SECTION 11.07 Rules by Trustee, Paying Agent and Registrar. . 48
SECTION 11.08 Legal Holidays. . . . . . . . . . . . . . . . . 48
SECTION 11.09 Governing Law . . . . . . . . . . . . . . . . . 48
SECTION 11.10 No Recourse Against Others. . . . . . . . . . . 48
SECTION 11.11 Successors. . . . . . . . . . . . . . . . . . . 49
SECTION 11.12 Multiple Original Copies of this Indenture. . . 49
SECTION 11.13 No Adverse Interpretation of Other
Agreements. . . . . . . . . . . . . . . . . . 49
SECTION 11.14 Table of Contents; Headings, Etc. . . . . . . . 49
SECTION 11.15 Benefits of the Indenture . . . . . . . . . . . 49
EXHIBIT A - Form of Series A Debenture . . . . . . . . . . . .A-1
iii
<PAGE>
CROSS-REFERENCE TABLE
of Provisions of the Indenture
Required by the Trust Indenture Act of 1939
TRUST INDENTURE PROVISION OF
ACT SECTION INDENTURE
- - - - --------------- ------------
Section 310(a)(1) 7.10
(a)(2) 7.10
(a)(3) Not Applicable
(a)(4) Not Applicable
(a)(5) Not Applicable
(b) 7.08; 7.10; 11.01
(c) Not Applicable
Section 311(a) 7.11
(b) 7.11
(c) Not Applicable
Section 312(a) 2.07
(b) 11.03
(c) 11.03
Section 313(a) 7.06
(b)(1) Not Applicable
(b)(2) 7.06
(c) 7.06; 11.02
(d) 7.06
Section 314(a) 4.03; 11.02
(b) Not Applicable
(c)(1) 2.02; 11.04
(c)(2) 2.02; 11.04
(c)(3) Not Applicable
(d) Not Applicable
(e) 11.05
(f) Not Applicable
Section 315(a) 7.01(2)
(b) 7.05; 11.02
(c) 7.01(1)
(d) 7.01(3)
(e) 6.11
Section 316(a)(1)(A) 6.05
(a)(1)(B) 6.04
(a)(2) Not Applicable
(a)(last sentence) 2.10
(b) 6.07
Section 317(a)(1) 6.08
(a)(2) 6.09
(b) 2.06
Section 318(a) 11.01
___________________
Note: This Cross-Reference Table shall not, for any purpose, be
deemed to be part of the Indenture.
iv
<PAGE>
INDENTURE, dated as of __________________, by and
between PECO Energy Company, a Pennsylvania corporation (the
"Company"), and Meridian Trust Company, a Pennsylvania trust
company, as trustee (the "Trustee).
WHEREAS, the Company has formed a wholly owned
subsidiary, PECO Energy Capital Corp., which is the general
partner of PECO Energy Capital, L.P., a Delaware limited
partnership, which intends to issue in series from time to time
its limited partner interests and to loan the proceeds thereof,
together with the investment by PECO Energy Capital Corp. in PECO
Energy Capital, L.P., to the Company.
WHEREAS, in order to evidence its intention to make
such loans and to accept the Debentures as evidence of such
loans, and its approval of the terms of the Series A Debentures
(as hereinafter defined), PECO Energy Capital, L.P. has joined in
this Indenture.
WHEREAS, the Company has authorized the issuance of the
Series A Debentures to evidence its obligations with respect to a
loan from PECO Energy Capital, L.P. of the proceeds of a series
of its preferred limited partner interests designated __%
Cumulative Monthly Income Preferred Securities, Series A and the
related investment by PECO Energy Capital Corp. in PECO Energy
Capital, L.P., and to provide therefor, the Company has duly
authorized the execution and delivery of this Indenture, all
things necessary to make the Series A Debentures when duly issued
and executed by the Company and authenticated and delivered
hereunder, the valid obligations of the Company, and to make this
Indenture a valid and binding agreement of the Company, in
accordance with its terms, have been done.
NOW THEREFORE:
The Company and the Trustee, intending to be legally
bound hereby, agrees as follows for the benefit of the other
party and for the equal and ratable benefit of the Holders of the
securities issued hereunder, including the Company's __%
Subordinated Debentures, Series A (the "Series A Debentures"):
<PAGE>
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01 DEFINITIONS.
------------
"Additional Interest", with respect to the Series A
Debentures, means an amount equal to and payable at the same time
as, any Additional Amounts payable on the Series A Preferred
Securities as defined in the action pursuant to the Limited
Partnership Agreement creating the Series A Preferred Securities
plus amounts, if any, which PECO Energy Capital would be required
to pay as taxes, duties, assessments or governmental charges of
whatever nature (other than withholding taxes) imposed by the
United States, or any other taxing authority, with respect to the
Series A Debentures. With respect to any other series of
Debentures, "Additional Amounts" shall have the meaning set forth
in the supplemental indenture creating such series.
"Affiliate" of any specified Person means any other
Person, directly or indirectly, controlling or controlled by or
under direct or indirect common control with such specified
Person. When used with respect to any Person, "control" 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.
"Board of Directors" means the Board of Directors of
the Company or any committee thereof duly authorized to act on
behalf of such Board.
"Business Day" means any day that is not a Saturday, a
Sunday or a day on which banking institutions in The City of New
York or Delaware are authorized or required to close.
"Capital Lease Obligations" of a Person means any
obligation which is required to be classified and accounted for
as a capital lease on the face of a balance sheet of such Person
prepared in accordance with GAAP.
"Capital Stock" means any and all shares, interests,
rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) corporate
stock, including any Preferred Stock.
"Debentureholder" or "Holder" means a Person in whose
name a Debenture is registered on the Registrar's books.
"Debentures" shall mean any of the securities of any
series issued, authenticated and delivered under this Indenture.
2
<PAGE>
"Default" means any event which is, or after notice or
passage of time, or both, would be, an Event of Default pursuant
to Section 6.01 hereof.
"Exchange Act" means the Securities Exchange Act of
1934, as amended.
"Extension Period" means a period, up to 60 consecutive
months, in which the Company elects to extend the interest
payment period on the Debentures pursuant to Section 4.01(b)
hereof; provided that no Extension Period shall extend beyond the
Stated Maturity date or Redemption Date of any series of
Subordinated Debentures.
"GAAP" means generally accepted accounting principles
set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial
Accounting Standards Board.
"General Partner" means PECO Energy Capital Corp., a
Delaware corporation and a wholly owned subsidiary of PECO Energy
Company, as the general partner of PECO Energy Capital, L.P., a
Delaware limited partnership, or any successor thereto that
becomes a general partner of PECO Energy Capital pursuant to the
Limited Partnership Agreement.
"Guarantee Agreement" means that certain payment and
guarantee agreement issued by PECO Energy Company with respect to
a series of Securities, to irrevocably and nonconditionally agree
to pay such Guarantee Payments (as defined in the Guarantee
Agreement) to the holders of the series of Preferred Securities
issued concurrently therewith.
"Holder" or "Debentureholder" means any Person in whose
name a Debenture is registered on the Registrar's books.
"Indebtedness" means without duplication, (i) the
principal of and premium (if any) in respect of (A) indebtedness
of the Company for money borrowed and (B) indebtedness evidenced
by securities, debentures, bonds or other similar instruments
issued by the Company; (ii) all Capital Lease Obligations of the
Company; (iii) all obligations of the Company issued or assumed
as the deferred purchase price of property, all conditional sale
obligations of the Company and all obligations of the Company
under any title retention agreement (but excluding trade accounts
payable arising in the ordinary course of business); (iv) all
obligations of the Company for the reimbursement of any obligor
on any letter of credit, banker's acceptance, security purchase
facility or similar credit transaction (other than obligations
3
<PAGE>
with respect to letters of credit securing obligations (other
than obligations described in (i) through (iii) above) entered
into in the ordinary course of business of the Company to the
extent such letters of credit are not drawn upon or, if and to
the extent drawn upon, such drawing is reimbursed no later than
the third Business Day following receipt by the Company of a
demand for reimbursement following payment on the letter of
credit); (v) all obligations of the type referred to in clauses
(i) through (iv) of other Persons and all dividends of other
Persons (other than the Preferred Securities) for the payment of
which, in either case, the Company is responsible or liable as
obligor, guarantor or otherwise; and (vi) all obligations of the
type referred to in clauses (i) through (v) of other Persons
secured by any lien on any property or asset of the Company
(whether or not such obligation is assumed by the Company), the
amount of such obligation being deemed to be the lesser of the
value of such property or assets or the amount of the obligation
so secured; provided, however, that Indebtedness will not include
endorsements of negotiable instruments for collection in the
ordinary course of business.
"Indenture" means this indenture, as amended or
supplemented from time to time in accordance with the terms
hereof, including the provisions of the TIA that are deemed to be
a part hereof.
"Issue Date", with respect to a series of Debentures,
means the date on which the Debentures of such series are
originally issued.
"Limited Partnership Agreement" means the Amended and
Restated Limited Partnership Agreement of PECO Energy Capital,
L.P. dated __________, 1994, as it may be amended from time to
time.
"Officer" means, with respect to any corporation, the
Chairman of the Board, the Chief Executive Officer, the
President, any Vice President, the Treasurer, Assistant Treasurer
or the Secretary of such corporation.
"Officer's Certificate" means a written certificate
containing the applicable information specified in Sections 11.04
and 11.05 hereof, signed in the name of the Company by any one of
its Officers, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion containing
the applicable information specified in Sections 11.04 and 11.05
hereof, by legal counsel who is reasonably acceptable to the
Trustee.
4
<PAGE>
"PECO Energy Capital" means PECO Energy Capital, L.P.,
a Delaware limited partnership.
"Person" means any individual, corporation,
partnership, limited liability company, joint venture,
association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision
thereof or any other entity.
"Preferred Securities" means the limited partner
interests issued form time to time in series by PECO Energy
Capital.
"Record date", with respect to any series of the
Debentures, means the date set to determine the holders of such
series entitled to payment of interest or principal or to vote,
consent, make a request or exercise any other right associated
with such series.
"Redemption Date" or "redemption date", with respect to
any Debenture to be redeemed, means the date specified for the
redemption of such Debenture in accordance with the terms thereof
and Article 3 of this Indenture.
"Redemption Price" or "redemption price", with respect
to any Debenture to be redeemed, means the price at which it is
to be redeemed pursuant to this Indenture and such Debenture.
"Regular record date", with respect to an interest
payment on the Debentures of a series, means the date set forth
in paragraph 2 of the Debentures of such series for the
determination of Holders entitled to receive payment of interest
on the next succeeding interest payment date.
"SEC" or "Commission" means the Securities and Exchange
Commission.
"Securities Act" means the Securities Act of 1933, as
amended.
"Senior Indebtedness" means all Indebtedness, except
for Indebtedness that is by its terms subordinated to or pari
passu with the Debentures. Notwithstanding anything to the
contrary in the foregoing, Senior Indebtedness shall not include
any Indebtedness between or among the Company and any Affiliates.
"Series A Debentures" means any of the Company's __%
Subordinated Debentures, Series A issued under this Indenture.
5
<PAGE>
"Special Representative" means a special representative
appointed by the holders of the Preferred Securities pursuant to
Section 13.02(d) of the Limited Partnership Agreement.
"Stated Maturity", with respect to any Debenture,
means, the date specified for the Debentures as the fixed date on
which the principal of the Debentures is due and payable.
"Subsidiary" means any corporation, association,
partnership or other business entity of which more than 50% of
the total voting power of shares of Capital Stock or other
interests (including partnership interests) entitled (without
regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the
time owned or controlled, directly or indirectly, by (i) the
Company, (ii) the Company and one or more Subsidiaries, or (iii)
one or more Subsidiaries.
"TIA" means the Trust Indenture Act of 1939, as amended
and as in effect on the date of this Indenture; provided,
however, that if the TIA is amended after such date, TIA means,
to the extent required by any such amendment, the TIA as so
amended.
"Trust Officer", when used with respect to the Trustee,
means the chairman or vice-chairman of the Board of Directors,
the chairman or vice-chairman of the executive committee of the
Board of Directors, the President, any vice president, any
assistant vice president, the secretary, any assistant secretary,
the treasurer, any assistant treasurer, the cashier, any
assistant cashier, any account officer or assistant account
officer, the controller and any assistant controller or any other
officer of the Trustee customarily performing functions similar
to those performed by any of the above designated officers and
also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his
knowledge of and familiarity with the particular subject.
"Trustee" means the party named as the "Trustee" in the
first paragraph of this Indenture until a successor replaces it
pursuant to the applicable provisions of this Indenture and,
thereafter, shall mean such successor.
"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 issuer's option.
6
<PAGE>
"Voting Stock" means, with respect to a corporation,
all classes of Capital Stock then outstanding of such corporation
normally entitled to vote in elections of directors.
"Wholly Owned Subsidiary" means a Subsidiary all the
Capital Stock of which (other than directors' qualifying shares)
is owned by the Company or another Wholly Owned Subsidiary.
SECTION 1.02 OTHER DEFINITIONS.
------------------
TERM DEFINED IN SECTION
---- ------------------
"Act" . . . . . . . . . . . . . . . . . . 1.05
"Bankruptcy Law" . . . . . . . . . . . . 6.01
"Custodian" . . . . . . . . . . . . . . . 6.01
"Event of Default". . . . . . . . . . . . 6.01
"Legal Holiday" . . . . . . . . . . . . . 11.08
"Notice of Default" . . . . . . . . . . . 6.01
"Paying Agent" . . . . . . . . . . . . . 2.05
"Register" . . . . . . . . . . . . . . . 2.05
"Registrar" . . . . . . . . . . . . . . . 2.05
"Successor" . . . . . . . . . . . . . . . 5.01
SECTION 1.03 INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
--------------------------------------------------
Whenever this Indenture refers to a provision of the
TIA, such 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:
"Commission" means the SEC.
"indenture securities" means the Debentures.
"indenture security holder" means a Debentureholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means
the Trustee.
"obligor" on the indenture securities means the Company
and any other obligor on the Debentures.
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.
7
<PAGE>
SECTION 1.04 RULES OF CONSTRUCTION.
----------------------
Unless the context otherwise requires:
(1) A term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including, without limitation;
(5) words in the singular include the plural, and
words in the plural include the singular; and
(6) "herein," "hereof" and other words of similar
import refer to this Indenture as a whole and not
to any particular Article, Section or other
subdivision.
SECTION 1.05. ACTS OF HOLDERS.
----------------
(1) 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 an agent 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 Trustee and, where it is
hereby expressly required, to the Company. Such instrument or
instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of 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
conclusive in favor of the Trustee and the Company, if made in
the manner provided in this Section.
(2) The fact and date of the execution by any Person
of any such instrument or writing may be proved in any manner
which the Trustee deems sufficient.
(3) The ownership of Debentures shall be proved by the
Register.
(4) Any request, demand, authorization, direction,
notice, consent, waiver or other Act of the Holder of any
8
<PAGE>
Debenture shall bind every future Holder of the same Debenture
and the holder of every Debenture issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the
Trustee or the Company in reliance thereon, whether or not
notation of such action is made upon such Debenture.
(5) If the Company solicits from the Holders any
request, demand, authorization, direction, notice, consent,
waiver or other Act, the Company may, at its option, by or
pursuant to a resolution of its Board of Directors, fix in
advance a record date for the determination of Holders entitled
to give such request, demand, authorization, direction, notice,
consent, waiver or other Act, but the Company shall have no
obligation to do so. If such a record date is fixed, such
request, demand, authorization, direction, notice, consent,
waiver or other Act may be given before or after such record
date, but only Holders of record at the close of business on such
record date shall be deemed to be Holders for the purposes of
determining whether Holders of the requisite proportion of
outstanding Debentures have authorized or agreed or consented to
such request, demand, authorization, direction, notice, consent,
waiver or other Act, and for that purpose the outstanding
Debentures shall be computed as of such record date.
ARTICLE 2
THE DEBENTURES; THE SERIES A DEBENTURES
SECTION 2.01 ISSUE OF DEBENTURES GENERALLY.
------------------------------
The aggregate principal amount of the Debentures which
may be authenticated and delivered under this Indenture is
limited to the aggregate liquidation preference of the Preferred
Securities.
The Debentures may be issued in one or more series as
from time to time shall be authorized by the Board of Directors.
The Debentures of each series and the Trustee's
Certificate of Authentication shall be substantially in the forms
to be attached as exhibits to the Indenture or supplemental
indenture providing for their issuance, but in the case of
Debentures other than Series A Debentures, with such inclusions,
omissions and variations as are such letters, numbers or other
marks of identification or designation and such legends or
endorsements printed, lithographed or engraved thereon as the
Company may deem appropriate and as are not inconsistent with the
provisions of this Indenture, or as may be required to comply
with any law or with any rule or regulation made pursuant thereto
9
<PAGE>
or with any rule or regulation of any securities exchange on
which the Debentures may be listed, or to confirm to usage. Each
Debenture shall be dated the date of its authentication.
The several series of Debentures may differ from the
Series A Debentures, and as and between series, in respect of any
or all of the following matters:
(a) designation;
(b) date or dates of maturity, which may be serial;
(c) interest rate or method of determination of the
interest rate and whether Additional Interest will
be payable;
(d) interest payment dates and the regular record
dates therefor;
(e) Issue Date;
(f) authorized denominations;
(g) the place or places for the payment of principal
(and premium, if any) and for the payment of
interest;
(h) limitation upon the aggregate principal amount of
Debentures of the series which may be issued;
(i) the optional and mandatory redemption provisions,
if any;
(j) provisions, if any, for any sinking or analogous
fund with respect to the Debentures of such
series; and
(k) any other provisions expressing or referring to
the terms and conditions upon which the Debentures
of such series are to be issued under this
Indenture which are not in conflict with the
provisions of this Indenture;
in each case as determined and specified by the Board of
Directors. The Trustee shall not authenticate and deliver
Debentures of any series (other than the Series A Debentures)
upon initial issue unless the terms and conditions of such series
shall have been set forth in a supplemental indenture entered
into between the Company and the Trustee as provided in Section
9.01.
10
<PAGE>
SECTION 2.02 FORM OF THE SERIES A SECURITIES; DENOMINATIONS.
-----------------------------------------------
The Series A Debentures and the Trustee's certificate
of authentication shall be substantially in the form of Exhibit A
attached hereto. The terms and provisions contained in the
Series A Debentures, a form of which is annexed hereto as Exhibit
A, shall constitute, and are hereby expressly made, a part of
this Indenture. The Company and the Trustee, by their execution
and delivery of this Indenture, expressly agree to such terms and
provisions and to be bound thereby.
The Trustee shall authenticate and make available for
delivery Series A Debentures for original issue in the aggregate
principal amount of $ to evidence the Company's
obligation with respect to the loan from PECO Energy Capital,
upon a Board of Directors resolution and a written order of the
Company signed by two Officers of the Company, but without any
further action by the Company. Such order shall specify the
amount of the Series A Debentures to be authenticated and the
date on which the original issue of Debentures is to be
authenticated and delivered. The aggregate principal amount of
Series A Debentures outstanding at any time may not exceed
$ except as provided in Section 2.09 hereof.
The Series A Debentures shall be issuable only in
registered form without coupons and only in denominations of
$25.00 and any integral multiple thereof.
SECTION 2.03 PAYMENT OF PRINCIPAL AND INTEREST.
----------------------------------
The principal of and interest on the Debentures of any
series, as well as any premium thereon in the case of redemption
thereof prior to maturity, shall be payable in the coin or
currency of the United States of America which at the time is
legal tender for public and private debts at the office of the
Paying Agent. Each Debenture shall be dated its Issue Date.
Interest on the Debentures shall be computed on the basis of a
360-day year composed of twelve 30-day months.
The interest on any Debenture which is payable and is
punctually paid or duly provided for, on any interest payment
date for Debentures of that series shall be paid to the person in
whose name the Debenture is registered at the close of business
on the regular record date therefor. In the event that any
Debenture of a particular series or portion thereof is called for
redemption, and the redemption date is subsequent to the regular
record date with respect to any interest payment date and prior
to such interest payment date, interest on such Debenture will be
paid upon presentation and surrender of such Debenture to the
Paying Agent.
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SECTION 2.04 EXECUTION AND AUTHENTICATION.
-----------------------------
The Debentures shall be executed on behalf of the
Company by its Chief Executive Officer, its President or one of
its Vice Presidents, under its corporate seal imprinted or
reproduced thereon attested by its Secretary or one of its
Assistant Secretaries. The signature of any such Officer on the
Debentures may be manual or facsimile.
Debentures bearing the manual or facsimile signatures
of individuals who were at any time the proper Officers of the
Company shall bind the Company, notwithstanding that such
individuals or any of them have ceased to hold such offices prior
to the authentication and delivery of such Debentures or did not
hold such offices at the date of such Debentures.
No Debenture shall be entitled to any benefit under
this Indenture or be valid or obligatory for any purpose unless
there appears on such Debenture a certificate of authentication
duly executed by the Trustee by manual signature of an authorized
officer, and such certificate upon any Debenture shall be
conclusive evidence, and the only evidence, that such Debenture
has been duly authenticated and made available for delivery
hereunder.
The Trustee shall act as the initial authenticating
agent. Thereafter, the Trustee may appoint an authenticating
agent. An authenticating agent may authenticate Debentures
whenever the Trustee may do so. Each reference in this Indenture
to authentication by the Trustee includes authentication by such
agent. An authenticating agent has the same rights as a Paying
Agent to deal with the Company or an Affiliate of the Company.
SECTION 2.05 REGISTRAR AND PAYING AGENT.
---------------------------
The Company shall maintain or cause to be maintained,
within or outside the Commonwealth of Pennsylvania, an office or
agency where the Debentures may be presented for registration of
transfer or for exchange ("Registrar"), an office or agency where
Debentures may be presented or surrendered for purchase or
payment ("Paying Agent"), and an office or agency where notices
and demands to or upon the Company in respect of the Debentures
and this Indenture may be served. The Registrar shall keep a
register (the "Register") of the Debentures and of their transfer
and exchange. The Company may have one or more co-Registrars and
one or more additional Paying Agents. The term Paying Agent
includes any additional paying agent. The corporate trust office
of the Trustee at Reading, Pennsylvania, Attention: Corporate
Trust Department, shall initially be the Registrar and agent for
service of notice or demands on the Company, and Delaware Trust
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Company, Wilmington, Delaware, shall initially be the Paying
Agent.
The Company shall enter into an appropriate agency
agreement with any Registrar, Paying Agent or co-Registrar (if
not the Trustee or the Company). The agreement shall implement
the provisions of this Indenture that relate to such agent. The
Company shall give prompt written notice to the Trustee of any
change of location of such office or agency. If at any time the
Company shall fail to maintain or cause to be maintained any such
required office or agency or shall fail to furnish the Trustee
with the address thereof, such presentations, surrenders, notices
and demands may be made or served at the address of the Trustee
set forth in Section 11.02 hereof. The Company shall notify the
Trustee of the name and address of any such agent. If the Company
fails to maintain a Registrar, Paying Agent or agent for service
of notices or demands, the Trustee shall act as such and shall be
entitled to appropriate compensation therefor pursuant to Section
7.07 hereof. The Company or any Affiliate of the Company may act
as Paying Agent, Registrar or co-Registrar or agent for service
of notices and demands.
The Company may also from time to time designate one or
more other offices or agencies where the Debentures may be
presented or surrendered for any or all such purposes and may
from time to time rescind such designations. The Company will
give prompt written notice to the Trustee of any such designation
or rescission and of any change in location of any such other
office or agency.
SECTION 2.06 PAYING AGENT TO HOLD MONEY IN TRUST.
------------------------------------
Except as otherwise provided herein, prior to each due
date of the principal and interest on any Debenture, the Company
shall deposit with the Paying Agent a sum of money sufficient to
pay such principal, premium (if any) and interest so becoming
due. The Company shall require each Paying Agent (other than the
Trustee or the Company) to agree in writing that such Paying
Agent shall hold in trust for the benefit of Holders or the
Trustee all money held by the Paying Agent for the payment of
principal and interest on the Debentures and shall notify the
Trustee of any default by the Company in making any such payment.
At any time during the continuance of any such default, the
Paying Agent shall, upon the request of the Trustee, forthwith
pay to the Trustee all money so held in trust and account for any
money disbursed by it. The Company at any time may require a
Paying Agent to pay all money held by it to the Trustee and to
account for any money disbursed by it. Upon doing so, the Paying
Agent shall have no further liability for the money so paid over
to the Trustee. If the Company, a Subsidiary or an Affiliate of
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either of them acts as Paying Agent, it shall segregate the money
held by it as Paying Agent and hold it as a separate trust fund.
SECTION 2.07 DEBENTUREHOLDER LISTS.
----------------------
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of
the names and addresses of Debentureholders. If the Trustee is
not the Registrar, the Company shall cause to be furnished to the
Trustee on or before the record date for each interest payment
date and at such other times as the Trustee may request in
writing, within five Business Days of such request, a list, in
such form as the Trustee may reasonably require of the names and
addresses of Debentureholders, provided that during any deferral
period, such information will be provided every six months or
upon request of the Trustee.
SECTION 2.08 TRANSFER AND EXCHANGE.
----------------------
When Debentures are presented to the Registrar or a
co-Registrar with a request to register the transfer or to
exchange them for an equal principal amount of Debentures of the
same series of other authorized denominations, the Registrar
shall register the transfer or make the exchange as requested if
its requirements for such transactions are met. To permit
registrations of transfer and exchanges, the Company shall
execute and the Trustee shall authenticate Debentures, all at the
Registrar's request.
Every Debenture presented or surrendered for
registration of transfer or for exchange shall (if so required by
the Company or the Trustee) be duly endorsed, or be accompanied
by a written instrument of transfer in form satisfactory to the
Company and the Registrar duly executed by the Holder or his
attorney duly authorized in writing.
The Company shall not charge a service charge for any
registration of transfer or exchange, but the Company may require
payment of a sum sufficient to pay all taxes, assessments or
other governmental charges that may be imposed in connection with
the transfer or exchange of the Debentures from the
Debentureholder requesting such transfer or exchange (other than
any exchange of a temporary Debenture for a definitive Debenture
not involving any change in ownership).
The Company shall not be required to make, and the
Registrar need not register, transfers or exchanges of (a) any
Debenture for a period beginning at the opening of business 15
days before the mailing of a notice of redemption of Debentures
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and ending at the close of business on the day of such mailing or
(b) any Debenture selected, called or being called for
redemption, except, in the case of any Debenture to be redeemed
in part, the portion thereof not to be redeemed.
SECTION 2.09 REPLACEMENT DEBENTURES.
-----------------------
If (a) any mutilated Debenture is surrendered to the
Company or the Trustee, or (b) the Company and the Trustee
receive evidence to their satisfaction of the destruction, loss
or theft of any Debenture, and there is delivered to the Company
and the Trustee such Debenture or indemnity as may be required by
them to save each of them harmless, then, in the absence of
notice to the Company or the Trustee that such Debenture has been
acquired by a bona fide purchaser, the Company shall execute in
exchange for any such mutilated Debenture or in lieu of any such
destroyed, lost or stolen Debenture, a new Debenture of like
tenor and principal amount, bearing a number not
contemporaneously outstanding, and the Trustee shall authenticate
and make such new Debenture available for delivery.
In case any such mutilated, destroyed, lost or stolen
Debenture has become or is about to become due and payable, or is
about to be redeemed by the Company pursuant to Article 3 hereof,
the Company in its discretion may, instead of issuing a new
Debenture, pay or purchase such Debenture, as the case may be.
Upon the issuance of any new Debentures under this
Section 2.09, the Company may require the payment of a sum
sufficient to cover any tax or other governmental charge that may
be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee) in connection therewith.
Every new Debenture issued pursuant to this Section
2.09 in lieu of any mutilated, destroyed, lost or stolen
Debenture shall constitute an original additional contractual
obligation of the Company whether or not the mutilated,
destroyed, lost or stolen Debenture shall be at any time
enforceable by anyone, and shall be entitled to all benefits of
this Indenture equally and ratably with any and all other
Debentures duly issued hereunder.
The provisions of this Section 2.09 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 Debentures.
15
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SECTION 2.10 OUTSTANDING DEBENTURES; DETERMINATIONS OF HOLDERS'
--------------------------------------------------
ACTION.
-------
Debentures outstanding at any time are all the
Debentures authenticated by the Trustee except for those canceled
by it, those delivered to it for cancellation, those mutilated,
destroyed, lost or stolen Debentures referred to in Section 2.09
hereof, those redeemed by the Company pursuant to Article 3
hereof, and those described in this Section 2.10 as not
outstanding. A Debenture does not cease to be outstanding because
the Company or a Subsidiary or Affiliate thereof holds the
Debenture; provided, however, that in determining whether the
Holders of the requisite principal amount of Debentures have
given or concurred in any request, demand, authorization,
direction, notice, consent or waiver hereunder, Debentures owned
by the Company shall be disregarded and deemed not to be
outstanding.
Subject to the foregoing, only Debentures outstanding
at the time of such determination shall be considered in any such
determination (including determinations pursuant to Articles 3, 6
and 9).
If a Debenture is replaced pursuant to Section 2.09, it
ceases to be outstanding unless the Trustee receives proof
satisfactory to it that the replaced Debenture is held by a bona
fide purchaser.
If the Paying Agent (other than the Company) holds, in
accordance with this Indenture, at maturity or on a Redemption
Date, money sufficient to pay the Debentures payable on that
date, then immediately on the date of maturity or such Redemption
Date, as the case may be, such Debentures shall cease to be
outstanding, and interest, if any, on such Debentures shall cease
to accrue.
SECTION 2.11 TEMPORARY DEBENTURES.
---------------------
So long as PECO Energy Capital shall hold all of the
Debentures, the Company may execute temporary Debentures, and
upon the Company's written request, signed by two Officers of the
Company, the Trustee shall authenticate and make such temporary
Debentures available for delivery. Temporary Debentures shall be
printed, lithographed, typewritten, mimeographed or otherwise
produced, in any authorized denomination, substantially of the
tenor of the definitive Debentures in lieu of which they are
issued and with such appropriate insertions, omissions,
substitutions and other variations as the Officers of the Company
executing such Debentures may determine, as conclusively
evidenced by their execution of such Debentures.
16
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After the preparation of definitive Debentures, the
temporary Debentures shall be exchangeable for definitive
Debentures of the same series upon surrender of the temporary
Debentures at the office or agency of the Company designated for
such purpose pursuant to Section 2.05 hereof, without charge to
the Holder. Upon surrender for cancellation of any one or more
temporary Debentures, the Company shall execute a like principal
amount of definitive Debentures of authorized denominations, and
the Trustee, upon written request of the Company signed by two
Officers of the Company, shall authenticate and make such
Debentures available for delivery in exchange therefor. Until so
exchanged, the temporary Debentures shall in all respects be
entitled to the same benefits under this Indenture as definitive
Debentures.
SECTION 2.12 CANCELLATION.
-------------
All Debentures surrendered for payment, redemption by
the Company pursuant to Article 3 hereof or registration of
transfer or exchange shall, if surrendered to any Person other
than the Trustee, be delivered to the Trustee and shall be
promptly canceled by the Trustee. The Company may at any time
deliver to the Trustee for cancellation any Debentures previously
authenticated and made available for delivery hereunder which the
Company may have acquired in any manner whatsoever, and all
Debentures so delivered shall be promptly canceled by the
Trustee. The Company may not reissue, or issue new Debentures to
replace Debentures it has paid or delivered to the Trustee for
cancellation. No Debentures shall be authenticated in lieu of or
in exchange for any Debentures canceled as provided in this
Section 2.12, except as expressly permitted by this Indenture.
All canceled Debentures held by the Trustee shall be destroyed by
the Trustee, and the Trustee shall deliver a certificate of
destruction to the Company.
SECTION 2.13 DEFAULTED INTEREST.
-------------------
If the Company defaults in a payment of interest on the
Debentures, it shall pay the defaulted interest, plus (to the
extent lawful) any interest payable on the defaulted interest, to
the Persons who are Holders on a subsequent special record date,
and such special record date, as used in this Section 2.13 with
respect to the payment of any defaulted interest, shall mean the
15th day next preceding the date fixed by the Company for the
payment of defaulted interest, whether or not such day is a
Business Day. At least 15 days before the subsequent special
record date, the Company shall mail to each Holder and to the
Trustee a notice that states the subsequent special record date,
the payment date and the amount of defaulted interest to be paid.
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The Company may also pay defaulted interest in any other lawful
manner.
ARTICLE 3
REDEMPTION
SECTION 3.01 REDEMPTION; NOTICE TO TRUSTEE.
------------------------------
(a) The Series A Debentures are subject to redemption
prior to maturity as provided in the form thereof.
(b) The redemption terms for any additional series of
Debentures shall be as specified in the supplemental indenture
creating such series of Debentures; provided that each series of
Debentures shall be subject to mandatory redemption upon the
dissolution of PECO Energy Capital.
(c) If any or all of the Debentures are to be redeemed
pursuant to paragraphs (a) or (b) above, the Company shall give
notice by first class mail, postage prepaid, to the Trustee
within 45 days prior to the date of such redemption. Any such
notice of redemption shall state the date and price of
redemption.
SECTION 3.02 SELECTION OF DEBENTURES TO BE REDEEMED.
---------------------------------------
If less than all the outstanding Debentures are to be
redeemed at any time, the Trustee shall select the Debentures to
be redeemed on a pro rata basis, by lot or any other method the
Trustee considers fair and appropriate. The Trustee shall make
the selection at least 30 but not more than 60 days before the
Redemption Date from outstanding Debentures not previously called
for redemption. Provisions of this Indenture that apply to
Debentures called for redemption also apply to portions of
Debentures called for redemption. The Trustee shall notify the
Company promptly of the Debentures or portions of Debentures to
be redeemed.
SECTION 3.03 NOTICE OF REDEMPTION.
---------------------
So long as PECO Energy Capital remains the sole Holder
of the Debentures, no notice of any redemption of Debentures will
be required. In the event and at such time that PECO Energy
Capital ceases to be the sole Holder of the Debentures, at least
30 days but not more than 60 days before a Redemption Date, the
Trustee shall mail or cause to be mailed a notice of redemption
by first-class mail, postage prepaid, to each Holder of
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Debentures to be redeemed at the Holder's last address, as it
appears on the Register. At the Company's written request, the
Trustee shall give the notice of redemption in the Company's name
and at its expense.
The notice shall identify the Debentures to be
redeemed, the provision of the Debentures or this Indenture
pursuant to which the Debentures called for redemption are being
redeemed and shall state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) the name and address of the Paying Agent;
(4) that Debentures called for redemption must be
surrendered to the Paying Agent to collect the Redemption Price;
(5) if fewer than all the outstanding Debentures are
to be redeemed, the identification and principal amounts of the
particular Debentures to be redeemed and that, on and after the
Redemption Date, upon surrender of such Debentures, a new
Debenture or Debentures in principal amount equal to the
unredeemed portion thereof will be issued; and
(6) that, unless the Company defaults in making such
redemption payment, interest will cease to accrue on Debentures
called for redemption on and after the Redemption Date.
SECTION 3.04 EFFECT OF NOTICE OF REDEMPTION.
-------------------------------
If notice of redemption is required as set forth in
Section 3.03, and after notice of redemption is given, Debentures
called for redemption become due and payable on the Redemption
Date and at the Redemption Price. Upon the later of the
Redemption Date and the date such Debentures are surrendered to
the Paying Agent, such Debentures shall be paid at the Redemption
Price, plus accrued interest to the Redemption Date.
SECTION 3.05 DEPOSIT OF REDEMPTION PRICE.
----------------------------
On or prior to a Redemption Date, the Company shall
deposit with the Paying Agent (or if the Company or an Affiliate
is the Paying Agent, shall segregate and hold in trust or cause
such Affiliate to segregate and hold in trust) money sufficient
to pay the Redemption Price of, and accrued interest on, all
Debentures to be redeemed on that date. The Paying Agent shall
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return to the Company any money not required for the purpose
stated herein.
SECTION 3.06 DEBENTURES REDEEMED IN PART.
----------------------------
Upon surrender of a Debenture that is redeemed in part,
the Trustee shall authenticate for the Holder a new Debenture
equal in principal amount to the unredeemed portion of such
Debenture.
ARTICLE 4
COVENANTS
SECTION 4.01 PAYMENT OF DEBENTURES.
----------------------
(a) The Company shall pay the principal of and
interest (including interest accruing on or after the filing of a
petition in bankruptcy or reorganization relating to the Company,
whether or not a claim for post-filing interest is allowed in
such proceeding) on the Debentures on (or prior to) the dates and
in the manner provided in the Debentures or pursuant to this
Indenture. An installment of principal or interest shall be
considered paid on the applicable date due if on such date the
Trustee or the Paying Agent holds, in accordance with this
Indenture, money sufficient to pay all of such installment then
due. The Company shall pay interest on overdue principal and
interest on overdue installments of interest (including interest
accruing during an Extension Period and/or on or after the filing
of a petition in bankruptcy or reorganization relating to the
Company, whether or not a claim for post-filing interest is
allowed in such proceeding), to the extent lawful, at the rate
per annum borne by the Debentures, which interest on overdue
interest shall accrue from the date such amounts became overdue.
(b) Notwithstanding paragraph (a) of this Section 4.01
or any other provision herein to the contrary, the Company
shall have the right in its sole and absolute discretion at any
time and from time to time while the Debentures are outstanding,
so long as an Event of Default has not occurred and is
continuing, to extend the interest payment period for up to 60
consecutive months, provided that such Extension Period
shall not extend beyond the stated maturity date or redemption
date of the Series A Subordinated Debentures, and provided
further that at the end of each Extension Period the Company
shall pay all interest then accrued and unpaid (together with
interest thereon compounded daily to the extent permitted by
applicable law). Prior to the termination of an Extension
Period, the Company may shorten or may further extend the
interest payment period, provided that such Extension Period
together with all such further extensions may not exceed 60
months. The Company shall give the Trustee notice of its
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selection of such extended or shortened interest payment period
at least one Business Day prior to the earlier of (i) the date
selected by the Company to make the interest payment or (ii) the
date PECO Energy Capital is required to give notice of the record
or payment date of such related distribution to any national
securities exchange on which the Preferred Securities are then
listed or other applicable self-regulatory organization, but in
any event not less than two Business Days prior to such record
date fixed by the Company for the payment of such interest. The
Company shall give or cause the Trustee to give such notice of
the Company's selection of such extended interest payment period
to the Holders.
SECTION 4.02 PROHIBITION AGAINST DIVIDENDS, ETC. DURING AN
EVENT OF DEFAULT OR AN EXTENSION PERIOD.
----------------------------------------
Neither the Company nor any Subsidiary shall declare or
pay any dividend on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its Capital Stock
(other than dividends by a Wholly Owned Subsidiary) during an
Extension Period or if at such time there shall have occurred any
Default or Event of Default or if the Company shall be in default
with respect to its payment obligations under the Guarantee
Agreement.
SECTION 4.03 SEC REPORTS.
------------
The Company shall file with the Trustee, within 15 days
after it files them with the SEC, copies of its annual report and
of the information, documents and other reports (or copies of
such portions of any of the foregoing as the SEC may by rules and
regulations prescribe) which the Company is required to file with
the SEC pursuant to Section 13 or 15(d) of the Exchange Act. If
the Company is not subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act, the Company shall file
with the Trustee such information, documents and other reports
(or copies of such portions of any of the foregoing as the SEC
may by rules and regulations prescribe) which are specified in
Sections 13 or 15(d) of the Exchange Act. The Company shall also
comply with the provisions of Section 314(a) of the TIA.
SECTION 4.04 COMPLIANCE CERTIFICATES.
------------------------
(a) The Company shall deliver to the Trustee within
90 days after the end of each of the Company's fiscal years an
Officer's Certificate, stating whether or not the signer knows of
any Default or Event of Default. Such certificate shall contain a
certification from the principal executive officer, principal
21
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financial officer or principal accounting officer of the Company
as to his or her knowledge of the Company's compliance with all
conditions and covenants under this Indenture. For purposes of
this Section 4.04(a), such compliance shall be determined without
regard to any period of grace or requirement of notice provided
under this Indenture. If such Officer does know of such a Default
or Event of Default, the certificate shall describe any such
Default or Event of Default, and its status. Such Officer's
Certificate need not comply with Sections 11.04 and 11.05 hereof.
(b) The Company shall deliver to the Trustee any
information reasonably requested by the Trustee in connection
with the compliance by the Trustee or the Company with the TIA.
SECTION 4.05 RELATIONSHIP WITH PECO ENERGY CAPITAL.
--------------------------------------
The Company agrees (i) to maintain direct or indirect
through a wholly owned subsidiary 100% ownership of the General
Partner and will cause the General Partner to maintain 100%
ownership of the general partnership interests in PECO Energy
Capital ("Common Debentures"); (ii) to cause at least 10% of the
total value of PECO Energy Capital and at least 3% of all
interests in the capital, income, gain, loss, deduction and
credit of PECO Energy Capital to be represented by general
partner interests; (iii) to cause the General Partner to timely
perform all of its duties as General Partner of PECO Energy
Capital (including the duty to pay distributions on the Preferred
Securities); and (iv) to use its reasonable efforts to cause PECO
Energy Capital to remain a limited partnership and otherwise
continue to be treated as a partnership for United States federal
income tax purposes.
SECTION 4.06 FURTHER INSTRUMENTS AND ACTS.
-----------------------------
Upon request of the Trustee, the Company shall 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 Indenture.
SECTION 4.07 PAYMENTS FOR CONSENTS.
----------------------
Neither the Company nor any Subsidiary shall, directly
or indirectly, pay or cause to be paid any consideration, whether
by way of interest, fee or otherwise, to any Holder of any
Debentures for or as an inducement to any consent, waiver or
amendment of any of the terms or provisions of this Indenture or
the Debentures unless such consideration is offered to be paid or
agreed to be paid to all Holders of the Debentures who so
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<PAGE>
consent, waive or agree to amend in the time frame set forth in
the documents soliciting such consent, waiver or agreement.
ARTICLE 5
SUCCESSOR CORPORATION
SECTION 5.01 WHEN THE COMPANY MAY MERGE, ETC.
--------------------------------
The Company may not consolidate with or merge with or
into, or sell, convey, transfer or lease all or substantially all
of its assets (either in one transaction or a series of
transactions) to, any Person unless:
(1) the Person formed by or surviving such
consolidation or merger or to which such sale, conveyance,
transfer or lease shall have been made (the "Successor") if other
than the Company, (a) is organized and existing under the laws of
the United States of America or any State thereof or the District
of Columbia, and (b) shall expressly assume by a supplemental
indenture, executed and delivered to the Trustee, in form
satisfactory to the Trustee, all the obligations of the Company
under the Debentures and the Indenture;
(2) immediately prior to and after giving effect to
such transaction (and treating any Indebtedness which becomes an
obligation of the Successor Person or any Subsidiary as a result
of such transaction as having been incurred by such Person or
such Subsidiary at the time of such transaction), no Default or
Event of Default shall have occurred and be continuing; and
(3) the Company, delivers to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, sale, conveyance, transfer or lease and
such supplemental indenture comply with this Indenture.
The Successor will be the successor to the Company, and
will be substituted for, and may exercise every right and power
and become the obligor on the Debentures with the same effect as
if the Successor had been named as, the Company herein but, in
the case of a sale, conveyance, transfer or lease of all or
substantially all of the assets of the Company, the predecessor
Company will not be released from its obligation to pay the
principal of, premium, if any, and interest on the Debentures.
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ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01 EVENTS OF DEFAULT.
------------------
An "Event of Default" occurs if one of the following
shall have occurred and be continuing:
(1) The Company defaults in the payment, when due and
payable, of (a) interest, including Additional Interest, on any
Debenture and the default continues for a period of 10 days;
provided, that during an Extension Period, failure to pay
interest on the Debentures shall not constitute a Default or
Event of Default hereunder, or (b) the principal of, or premium,
if any, on any Debentures when the same becomes due and payable
at maturity, acceleration, on any Redemption Date, or otherwise;
(2) The Company defaults in the performance of, fails
to comply with any of its other covenants or agreements in the
Debentures or this Indenture and such failure continues for 60
days after receipt by the Company of a "Notice of Default";
(3) The Company, pursuant to or within the meaning of
any Bankruptcy Law:
(a) commences a voluntary case or proceeding;
(b) consents to the entry of an order for relief
against it in an involuntary case or
proceeding;
(c) consents to the appointment of a Custodian of
it or for all or substantially all of its
property, and such Custodian is not
discharged within 60 days;
(d) makes a general assignment for the benefit of
its creditors; or
(e) admits in writing its inability to pay its
debts generally as they become due; or
(4) A court of competent jurisdiction enters an order
or decree under any Bankruptcy Law that:
(a) is for relief against the Company in an
involuntary case or proceeding;
24
<PAGE>
(b) appoints a Custodian of the Company for all
or substantially all of its properties;
(c) orders the liquidation of the Company;
(d) and in each case the order or decree remains
unstayed and in effect for 60 days.
The foregoing will constitute Events of Default
whatever the reason for any such Event of Default and whether it
is voluntary or involuntary or is 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.
The term "Bankruptcy Law" means Title 11, United States
Code, or any similar Federal or state law for the relief of
debtors. "Custodian" means any receiver, trustee, assignee,
liquidator, sequestrator, custodian or similar official under any
Bankruptcy Law.
A Default under clause (2) above is not an Event of
Default until the Trustee notifies the Company or the Holders of
at least a majority in aggregate principal amount of the
Debentures at the time outstanding or the Special Representative
notifies the Company and the Trustee, of the Default and the
Company does not cure such Default within the time specified in
clause (2) above after receipt of such notice. Any such notice
must specify the Default, demand that it be remedied and state
that such notice is a "Notice of Default."
SECTION 6.02 ACCELERATION.
-------------
If any Event of Default other than an Event of Default
under clauses (3) or (4) occurs and is continuing, the Trustee,
the Holders of not less than 25% in principal amount of the
Debentures then outstanding or the Special Representative may
declare the principal of all such Debentures due and payable.
Upon such a declaration, such principal and interest shall be due
and payable immediately.
If an Event of Default specified in clause (3) or (4)
with respect to the Company occurs, the principal of and interest
on all the Debentures shall ipso facto become and be immediately
due and payable without any declaration or other act on the part
of the Trustee or any Debentureholders.
The Special Representative or holders of a majority in
aggregate principal amount of the Debentures at the time
outstanding by notice to the Trustee may rescind an acceleration
25
<PAGE>
and its consequences if the rescission would not conflict with
any judgment or decree and if all existing Events of Default have
been cured or waived except nonpayment of principal or interest
that has become due solely because of acceleration. No such
rescission shall affect any subsequent Default or impair any
right consequent thereto.
SECTION 6.03 OTHER REMEDIES.
---------------
If an Event of Default occurs and is continuing, the
Trustee may, in its own name or as trustee of an express trust,
institute, pursue and prosecute any proceeding, including,
without limitation, any action at law or suit in equity or other
judicial or administrative proceeding to collect the payment of
principal of, premium, if any, or interest on the Debentures, to
enforce the performance of any provision of the Debentures or
this Indenture or to obtain any other available remedy.
The Trustee may maintain a proceeding even if it does
not possess any of the Debentures or does not produce any of the
Debentures in the proceeding. A delay or omission by the Trustee,
the Special Representative or any Debentureholder in exercising
any right or remedy accruing upon an Event of Default shall not
impair the right or remedy or constitute a waiver of, or
acquiescence in, the Event of Default. No remedy is exclusive of
any other remedy. All available remedies are cumulative.
SECTION 6.04 WAIVER OF PAST DEFAULTS.
------------------------
The Special Representative or the Holders of 66 2/3% in
aggregate principal amount of the Debentures at the time
outstanding, by notice to the Trustee, the Company and PECO
Energy Capital, may waive an existing Default or Event of Default
and its consequences. When a Default is waived, it is deemed
cured and shall cease to exist, but no such waiver shall extend
to any subsequent or other Default or impair any consequent
right.
SECTION 6.05 CONTROL BY MAJORITY OR THE SPECIAL
----------------------------------
REPRESENTATIVES.
----------------
The Holders of a majority in aggregate principal amount
of the Debentures then outstanding or the Special Representative
may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. However,
the Trustee may refuse to follow any direction that conflicts
with law or this Indenture or that the Trustee determines in good
26
<PAGE>
faith is unduly prejudicial to the rights of other
Debentureholders or would involve the Trustee in personal
liability. The Trustee may take any other action deemed proper by
the Trustee which is not inconsistent with such direction,
including withholding notice to the Holders of the Debentures of
any series of continuing default (except in the payment of the
principal (other than any mandatory sinking fund payment) of (or
premium, if any) or interest on any Debentures of such series) if
the Trustee considers it in the interest of the holders of such
series of Debentures to do so.
SECTION 6.06 LIMITATION ON SUITS.
--------------------
Except as provided in Section 6.07 hereof, the Special
Representative may not pursue any remedy with respect to this
Indenture or the Debentures unless:
(1) the Holders or the Special Representative gives
to the Trustee written notice stating that an Event of Default is
continuing;
(2) the Holders or the Special Representative
provides to the Trustee reasonable security and indemnity against
any loss, liability or expense satisfactory to the Trustee;
(3) the Trustee does not comply with the request
within 60 days after receipt of the notice, the request and the
offer of security and indemnity; and
SECTION 6.07 RIGHTS OF HOLDERS TO RECEIVE PAYMENT.
-------------------------------------
Notwithstanding any other provision of this Indenture,
the right of any Holder to receive payment of the principal
amount of or interest on the Debentures held by such Holder, on
or after the respective due dates expressed in the Debentures (in
the case of interest, as the same may be extended pursuant to
Section 4.01(b)) or any Redemption Date, or to bring suit for the
enforcement of any such payment on or after such respective dates
shall not be impaired or affected adversely without the consent
of each such Holder.
SECTION 6.08 COLLECTION SUIT BY THE TRUSTEE.
-------------------------------
If an Event of Default described in Section 6.01(1)
hereof occurs and is continuing, the Trustee may recover judgment
in its own name and as trustee of an express trust against the
Company or any obligor on the Debentures for the whole amount
27
<PAGE>
owing with respect to the Debentures and the amounts provided for
in Section 6.07 hereof.
SECTION 6.09 THE TRUSTEE MAY FILE PROOFS OF CLAIM.
-------------------------------------
In case of the pendency of any receivership,
insolvency, liquidation, bankruptcy, reorganization, arrangement,
adjustment, composition or other judicial proceeding relative to
the Company or its properties or assets, the Trustee shall be
entitled and empowered, by intervention in such proceeding or
otherwise:
(1) to file and prove a claim for the whole amount of
the principal amount, premium, if any, and interest on the
Debentures and to file such other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and
counsel) and of the Holders allowed in such judicial proceeding;
and
(2) to collect and receive any moneys or other
property payable or deliverable on any such claims and to
distribute the same; and any Custodian in any such judicial
proceeding is hereby authorized by each Holder to make such
payments to the Trustee and, in the event that the Trustee shall
consent to the making of such payments directly to the Holders,
to pay the Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 7.07 hereof.
Nothing herein contained shall be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Debentures or the rights
of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
SECTION 6.10 PRIORITIES.
-----------
If the Trustee collects any money pursuant to this
Article 6, it shall pay out the money in the following order:
FIRST: to the Trustee for amounts due under Section 7.07
hereof;
SECOND: to Debentureholders for amounts due and unpaid on
the Debentures for the principal amount,
28
<PAGE>
Redemption Price or interest, if any, as the case
may be, ratably, without preference or priority of
any kind, according to such amounts due and
payable on the Debentures; and
THIRD: the balance, if any, to the Company.
The Trustee may fix a record date and payment date for
any payment to Debentureholders pursuant to this Section 6.10.
SECTION 6.11 UNDERTAKING FOR COSTS.
----------------------
In any suit for the enforcement of any right or remedy
under this Indenture or in any suit against the Trustee for any
action taken or omitted by it as Trustee, a court in its
discretion may require the filing by any party litigant (other
than the Trustee) in the suit of an undertaking to pay the costs
of the suit, and the court in its discretion may assess
reasonable costs, including reasonable attorneys' fees and
expenses, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses
made by the party litigant. This Section 6.11 does not apply to a
suit by the Trustee, a suit by a Holder pursuant to Section 6.07
hereof or a suit by Holders of more than 10% in aggregate
principal amount of the Debentures at the time outstanding or a
suit by the Special Representative.
SECTION 6.12 WAIVER OF STAY, EXTENSION OR USURY LAWS.
----------------------------------------
The Company 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 or any usury or other law
wherever enacted, now or at any time hereafter in force, that
would prohibit or forgive the Company from paying all or any
portion of the principal or premium, if any, or interest on the
Debentures as contemplated herein or affect the covenants or the
performance by the Company of its obligations under this
Indenture; and the Company (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 Trustee, but will
suffer and permit the execution of every such power as though no
such law had been enacted.
29
<PAGE>
ARTICLE 7
THE TRUSTEE
SECTION 7.01 DUTIES OF THE TRUSTEE.
----------------------
(1) If an Event of Default has occurred and is
continuing, the Trustee shall exercise the rights and powers
vested in it by this Indenture and use the same degree of care
and skill in its exercise as a prudent man would exercise or use
under the circumstances in the conduct of his own affairs.
(2) Except during the continuance of an Event of
Default, (a) the Trustee need perform only those duties that are
specifically set forth in this Indenture and no others; and (b)
in the absence of bad faith on its part, the 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 Trustee and conforming to the
requirements of this Indenture. However, in the case of any
certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee
shall examine the certificates and opinions to determine whether
or not they conform to the requirements of this Indenture.
(3) The Trustee may not be relieved from liability for
its own negligent action, its own negligent failure to act or its
own willful misconduct, except that:
(a) this paragraph (3) does not limit the effect
of paragraph (2) of this Section 7.01;
(b) the Trustee shall not be liable for any error
of judgment made in good faith by a Trust
Officer unless it is proved that the Trustee
was negligent in ascertaining the pertinent
facts; and
(c) the 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 6.05
hereof.
(4) Every provision of this Indenture that in any way
relates to the Trustee is subject to paragraphs (1), (2), (3) and
(5) of this Section 7.01 and Section 7.02.
(5) The Trustee may refuse to perform any duty or
exercise any right or power or extend or risk its own funds or
30
<PAGE>
otherwise incur any financial liability unless it receives
security and indemnity reasonably satisfactory to it against any
loss, liability or expense.
(6) Money held by the Trustee in trust hereunder need
not be segregated from other funds except to the extent required
by law. The Trustee shall not be liable for interest on any money
held by it hereunder.
SECTION 7.02 RIGHTS OF THE TRUSTEE.
----------------------
(1) The Trustee may rely on any document believed by
it to be genuine and to have been signed or presented by the
proper person. The Trustee need not investigate any fact or
matter stated in the document;
(2) Before the Trustee acts or refrains from acting,
it may require an Officer's Certificate and, if appropriate, an
Opinion of Counsel. The Trustee shall not be liable for any
action it takes or omits to take in good faith in reliance on
such Officer's Certificate and Opinion of Counsel;
(3) The Trustee may act through agents and shall not
be responsible for the misconduct or negligence of any agent
appointed with due care;
(4) The Trustee shall not be liable for any action it
takes or omits to take in good faith which it reasonably believes
to be authorized or within its rights or powers;
(5) The Trustee may consult with counsel of its
selection and the advice of such counsel or any Opinion of
Counsel shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon; and
(6) The Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this
Indenture at the request or direction of any of the Holders or
Special Representative pursuant to this Indenture, unless such
Holders shall have offered to the Trustee reasonable security and
indemnity against the costs, expenses and liabilities which might
be incurred by it in compliance with such request or direction.
SECTION 7.03 INDIVIDUAL RIGHTS OF THE TRUSTEE.
---------------------------------
The Trustee in its individual or any other capacity may
become the owner or pledgee of Debentures and may otherwise deal
with the Company or its Affiliates with the same rights it would
31
<PAGE>
have if it were not Trustee. Any Paying Agent, Registrar or
co-registrar may do the same with like rights. However, the
Trustee must comply with Sections 7.10 and 7.11 hereof.
SECTION 7.04 THE TRUSTEE'S DISCLAIMER.
-------------------------
The Trustee makes no representation as to the validity
or adequacy of this Indenture or the Debentures, it shall not be
accountable for the Company's use of the proceeds from the
Debentures, and it shall not be responsible for any statement in
this Indenture or the Debentures or any report or certificate
issued by the Company hereunder or any registration statement
relating to the Debentures (other than the Trustee's certificate
of authentication), or the determination as to which beneficial
owners are entitled to receive any notices hereunder.
SECTION 7.05 NOTICE OF DEFAULTS.
-------------------
If a Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to each
Debentureholder, as their names and addresses appear on the
Debenture Register, notice of the Default within 90 days after it
becomes known to the Trustee unless such Default shall have been
cured or waived. Except in the case of a Default described in
Section 6.01(1) hereof, the Trustee may withhold such notice if
and so long as a committee of Trust Officers in good faith
determines that the withholding of such notice is in the
interests of Debentureholders. The second sentence of this
Section 7.05 shall be in lieu of the proviso to TIA Section
315(b). Said proviso is hereby expressly excluded from this
Indenture, as permitted by the TIA.
SECTION 7.06 REPORTS BY TRUSTEE TO HOLDERS.
------------------------------
Within 60 days after each May 31, beginning with the
May 31 next following the date of this Indenture, the Trustee
shall mail to each Debentureholder, and such other holders that
have submitted their names to the Trustee for such purpose, a
brief report dated as of such May 31 in accordance with and to
the extent required under TIA Section 313.
A copy of each report at the time of its mailing to
Debentureholders shall be filed with the Company, the SEC and
each securities exchange on which the Debentures are listed. The
Company agrees to promptly notify the Trustee whenever the
Debentures become listed on any securities exchange and of any
listing thereof.
32
<PAGE>
SECTION 7.07 COMPENSATION AND INDEMNITY.
---------------------------
The Company agrees:
(1) to pay to the Trustee from time to time such
compensation as shall be agreed in writing between the Company
and the Trustee for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust);
(2) to reimburse the Trustee upon its request for all
reasonable expenses, disbursements and advances incurred or made
by the Trustee in accordance with any provision of this Indenture
(including the reasonable compensation and the expenses, and
advances of its agents and counsel), including all reasonable
expenses and advances incurred or made by the Trustee in
connection with any Event of Default or any membership on any
creditors' committee, except any such expense or advance as may
be attributable to its negligence or bad faith; and
(3) to indemnify the Trustee, its officers, directors
and shareholders, for, and to hold it harmless against, any and
all loss, liability or expense, incurred without negligence or
bad faith on its part, arising out of or in connection with the
acceptance or administration of this trust, including the costs
and expenses of defending itself against any claim or liability
in connection with the exercise or performance of any of its
powers or duties hereunder.
Before, after or during an Event of Default, the
Trustee shall have a claim and lien prior to the Debentures as to
all property and funds held by it hereunder for any amount owing
it or any predecessor Trustee pursuant to this Section 7.07,
except with respect to funds held in trust for the payment of
principal of, premium, if any, or interest on particular
Debentures.
The Company's payment obligations pursuant to this
Section 7.07 are not subject to Article 10 of this Indenture and
shall survive the discharge of this Indenture. When the Trustee
renders services or incurs expenses after the occurrence of a
Default specified in Section 6.01 hereof, the compensation for
services and expenses are intended to constitute expenses of
administration under any Bankruptcy Law.
SECTION 7.08 REPLACEMENT OF TRUSTEE.
-----------------------
The Trustee may resign by so notifying the Company in
writing at least 30 days prior to the date of the proposed
resignation; provided, however, no such resignation shall be
33
<PAGE>
effective until a successor Trustee has accepted its appointment
pursuant to this Section 7.08. The Special Representative or the
Holders of a majority in aggregate principal amount of the
Debentures at the time outstanding, may remove the Trustee by so
notifying the Trustee in writing and may appoint a successor
Trustee, which shall be subject to the consent of the Company
unless an Event of Default has occurred and is continuing. The
Trustee shall resign if:
(1) the Trustee fails to comply with Section 7.10
hereof;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or public officer takes charge of the
Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Company shall promptly
appoint a successor Trustee. A successor Trustee shall deliver a
written acceptance of its appointment to the retiring Trustee and
to the Company. Thereupon the resignation or removal of the
retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the
Trustee under this Indenture. The successor Trustee shall mail a
notice of its succession to Debentureholders. Subject to payment
of all amounts owing to the Trustee under Section 7.07 hereof and
subject further to its lien under Section 7.07, the retiring
Trustee shall promptly transfer all property held by it as
Trustee to the successor Trustee. If a successor Trustee does
not take office within 30 days after the retiring Trustee resigns
or is removed, the retiring Trustee, the Company, the Special
Representative or the Holders of a majority in aggregate
principal amount of the Debentures at the time outstanding, may
petition any court of competent jurisdiction for the appointment
of a successor Trustee.
If the Trustee fails to comply with Section 7.10
hereof, any Debentureholder may petition any court of competent
jurisdiction for its removal and the appointment of a successor
Trustee.
SECTION 7.09 SUCCESSOR TRUSTEE BY MERGER.
----------------------------
If the Trustee consolidates with, merges or converts
into, or transfers all or substantially all its corporate trust
business or assets (including this Trusteeship) to another
34
<PAGE>
corporation, the resulting, surviving or transferee corporation
without any further act shall be the successor Trustee.
SECTION 7.10 ELIGIBILITY; DISQUALIFICATION.
------------------------------
The Trustee shall at all times satisfy the requirements
of TIA Sections 310(a)(1) and 310(a)(2). The Trustee (or any
Affiliate thereof which has unconditionally guaranteed the
obligations of the Trustee hereunder) 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. The Trustee
shall comply with TIA Section 310(b). In determining whether the
Trustee has conflicting interests as defined in TIA Section
310(b)(1), the provisions contained in the proviso to TIA Section
310(b)(1) shall be deemed incorporated herein.
SECTION 7.11 PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE
---------------------------------------------
COMPANY.
--------
If and when the Trustee shall be or become a creditor
of the Company, the Trustee shall be subject to the provisions of
the TIA regarding the collection of claims against the Company.
ARTICLE 8
SATISFACTION AND DISCHARGE OF INDENTURE;
DEFEASANCE OF CERTAIN OBLIGATIONS; UNCLAIMED MONEYS
SECTION 8.01 SATISFACTION AND DISCHARGE OF INDENTURE.
----------------------------------------
The Company shall be deemed to have paid and discharged
the entire indebtedness on any series of the Debentures
outstanding on the date the Company has irrevocably deposited or
caused to be irrevocably deposited with the Trustee or any Paying
Agent as trust funds in trust, specifically pledged as security
for, and dedicated solely to, the benefit the Holders (1) cash in
an amount, or (2) U.S. Government Obligations, maturing as to
principal and interest at such times and in such amounts as will
ensure the availability of cash, or (3) a combination thereof,
sufficient to pay the principal of, premium, if any, and interest
on, all Debentures then outstanding, and on such date; the
provisions of this Indenture with respect to the Debentures shall
no longer be in effect (except as to (1) the rights of
registration of transfer, substitution and exchange of
Debentures, (2) the replacement of apparently mutilated, defaced,
destroyed, lost or stolen Debentures, (3) the rights of the
Holders to receive payments of principal thereof and interest
thereon, (4) the rights of the Holders as beneficiaries hereof
35
<PAGE>
with respect to the property so deposited with the Trustee
payable to all or any of them, (5) the obligation of the Company
to maintain an office or agency for payments on and registration
of transfer of the Debentures, and (6) the rights, obligations
and immunities of the Trustee hereunder); and the Trustee shall,
at the request and expense of the Company, execute proper
instruments acknowledging the same; provided that if the Company
deposits U.S. Government Obligations with the Trustee:
(A) no Default or Event of Default with respect to
the Debentures has occurred and is continuing on the date of
such deposit or occurs as a result of such deposit;
(B) the Company has delivered to the Trustee an
Officer's Certificate and an Opinion of Counsel, each
stating that all conditions precedent relating to the
defeasance contemplated by this provision have been complied
with; and
(C) the Company has delivered to the Trustee (i)
either a private Internal Revenue Service ruling or an
Opinion of Counsel based on a ruling of the Internal Revenue
Service or other change in Federal income tax law to the
effect that the Holders will not recognize income, gain or
loss for federal income tax purposes as a result of such
deposit, defeasance and discharge and will be subject to
federal income tax on the same amount and in the manner and
at the same times as would have been the case if such
deposit, defeasance and discharge had not occurred, and (ii)
an Opinion of Counsel to the effect that (A) the deposit
shall not result in the Company, the Trustee or the trust
being deemed to be an "investment company" under the
Investment Company Act of 1940, as amended, and (B) such
deposit creates a valid trust in which such Holders of the
Debentures have the sole beneficial ownership interest or
that such Holders of the Debentures have a nonavoidable
first priority security interest in such trust.
SECTION 8.02 APPLICATION BY TRUSTEE OF FUNDS DEPOSITED FOR
---------------------------------------------
PAYMENT OF DEBENTURES.
----------------------
Subject to Section 8.04, and Article 10 of this
Indenture, all moneys deposited with the Trustee pursuant to
Section 8.01 hereof shall be held in trust and applied by it to
the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent), to the
Holders for the payment or redemption of which such moneys have
been deposited with the Trustee, of all sums due and to become
due thereon for principal and interest; but such money need not
36
<PAGE>
be segregated from other funds except to the extent required by
law.
SECTION 8.03 REPAYMENT OF MONEYS HELD BY PAYING AGENT.
-----------------------------------------
In connection with the satisfaction and discharge of
this Indenture, all moneys then held by any Paying Agent under
this Indenture shall, upon demand of the Company, be repaid to it
or paid to the Trustee, and thereupon such Paying Agent shall be
released from all further liability with respect to such moneys.
SECTION 8.04 RETURN OF MONEYS HELD BY THE TRUSTEE AND PAYING
-----------------------------------------------
AGENT UNCLAIMED FOR THREE YEARS.
--------------------------------
Any moneys deposited with or paid to the Trustee or any
Paying Agent for the payment of the principal, premium, if any,
or interest on any Debenture and not applied but remaining
unclaimed for three years after the date when such principal,
premium, if any, or interest shall have become due and payable
shall unless otherwise required by mandatory provisions of
applicable escheat or abandoned or unclaimed property law, be
repaid to the Company by the Trustee or such Paying Agent, and
the Holder of such Debenture shall, unless otherwise required by
mandatory provisions of applicable escheat or abandoned or
unclaimed property laws, thereafter look only to the Company for
any payment which such Holder may be entitled to collect, and all
liability of the Trustee or any Paying Agent with respect to such
moneys shall thereupon cease.
ARTICLE 9
AMENDMENTS
SECTION 9.01 WITHOUT CONSENT OF HOLDERS.
---------------------------
From time to time, when authorized by a resolution of
the Board of Directors, the Company and the Trustee, without
notice to or the consent of any holders of the Debentures or
their Special Representative issued hereunder, may amend or
supplement this Indenture or the Debentures:
(1) to cure any ambiguity, defect or inconsistency;
(2) to comply with Article 5 hereof;
(3) to provide for uncertificated Debentures in
addition to or in place of certificated Debentures;
37
<PAGE>
(4) to make any other change that does not adversely
affect the rights of any Debentureholder; or
(5) to comply with any requirement of the SEC in
connection with the qualification of this Indenture under the
TIA; and
(6) to set forth the terms and conditions, which shall
not be inconsistent with this Indenture, of the series of
Debentures (other than the Series A Debentures) that are to be
issued hereunder and the form of Debentures of such series.
SECTION 9.02 WITH CONSENT OF HOLDERS.
------------------------
With written consent of the Special Representative or
the Holders of at least 66 2/3% in aggregate principal amount of
the series of Debentures at the time outstanding, the Company and
the Trustee may amend this Indenture or the Debentures or may
waive future compliance by the Company with any provisions of
this Indenture or the Debentures. However, without the consent of
each Debentureholder affected, such an amendment or waiver may
not:
(1) reduce the principal amount of the Debentures the
Holders of which must consent to an amendment of the Indenture or
a waiver;
(2) change the Stated Maturity of the principal of, or
the interest or rate of interest on the Debentures, change
adversely to the Holders the redemption provisions of Article 3
hereof, or impair the right to institute suit for the enforcement
of any such payment or make any Debenture payable in money or
securities other than that stated in the Debenture;
(3) make any change in Article 10 hereof that
adversely affects the rights of the Holders of the Debentures or
any change to any other section hereof that adversely affects
their rights under Article 10 hereof;
(4) waive a Default in the payment of the principal
of, premium, if any, or interest on, any Debenture; or
(5) change Section 6.07 hereof.
It shall not be necessary for the consent of the
Holders under this Section 9.02 to approve the particular form of
any proposed amendment, but it shall be sufficient if such
consent approves the substance thereof.
If certain Holders agree to defer or waive certain
obligations of the Company hereunder with respect to Debentures
38
<PAGE>
held by them, such deferral or waiver shall not affect the rights
of any other Holder to receive the payment or performance
required hereunder in a timely manner.
After an amendment or waiver under this Section 9.02
becomes effective, the Company shall mail to the Special
Representative and to each Holder a notice briefly describing the
amendment or waiver. Any failure of the Company to mail such
notices, or any defect therein, shall not, however, in any way
impair or affect the validity of such amendment or waiver.
SECTION 9.03 COMPLIANCE WITH TRUST INDENTURE ACT.
------------------------------------
Every supplemental indenture executed pursuant to this
Article 9 shall comply with the TIA.
SECTION 9.04 REVOCATION AND EFFECT OF CONSENTS, WAIVERS AND
----------------------------------------------
ACTIONS.
--------
Until an amendment, waiver or other action by Holders
becomes effective, a consent to it or any other action by a
Holder of a Debenture hereunder is a continuing consent by the
Holder and every subsequent Holder of that Debenture or portion
of the Debenture that evidences the same obligation as the
consenting Holder's Debenture, even if notation of the consent,
waiver or action is not made on the Debenture. However, any such
Holder or subsequent Holder may revoke the consent, waiver or
action as to such Holder's Debenture or portion of the Debenture
if the Trustee receives the notice of revocation before the
consent of the requisite aggregate principal amount of the
Debentures then outstanding has been obtained and not revoked.
After an amendment, waiver or action becomes effective, it shall
bind every Debentureholder, except as provided in Section 9.02
hereof.
The Company may, but shall not be obligated to, fix a
record date for the purpose of determining the Holders entitled
to consent to any amendment or waiver. If a record date is fixed,
then, notwithstanding the first two sentences of the immediately
preceding paragraph, those Persons who were Holders at such
record date or their duly designated proxies, and only those
Persons, shall be entitled to consent to such amendment,
supplement or waiver or to revoke any consent previously given,
whether or not such Persons continue to be Holders after such
record date. No such consent shall be valid or effective for more
than 90 days after such record date.
39
<PAGE>
SECTION 9.05 NOTATION ON OR EXCHANGE OF DEBENTURES.
--------------------------------------
Debentures authenticated and made available for
delivery after the execution of any supplemental indenture
pursuant to this Article 9 may, and shall, if required by the
Trustee, bear a notation in form approved by the Trustee as to
any matter provided for in such supplemental indenture. If the
Company shall so determine, new Debentures so modified as to
conform, in the opinion of the Trustee and the Board of
Directors, to any such supplemental indenture may be prepared and
executed by the Company and authenticated and made available for
delivery by the Trustee in exchange for outstanding Debentures.
SECTION 9.06 TRUSTEE TO SIGN SUPPLEMENTAL INDENTURES.
----------------------------------------
The Trustee shall sign any supplemental indenture
authorized pursuant to this Article 9 if the supplemental indenture
does not adversely affect the rights, duties, liabilities or
immunities of the Trustee. If it does, the Trustee may, but need
not, sign it. In signing such amendment the Trustee shall be
entitled to receive, and shall be fully protected in relying upon,
an Officer's Certificate and Opinion of Counsel stating that such
supplemental indenture is authorized or permitted by this
Indenture.
SECTION 9.07 EFFECT OF SUPPLEMENTAL INDENTURES.
----------------------------------
Upon the execution of any supplemental indenture under
this Article 9, this Indenture shall be modified in accordance
therewith, and such supplemental indenture shall form a part of
this Indenture for all purposes and every Holder of Debentures
theretofore or thereafter authenticated and made available for
delivery hereunder shall be bound thereby.
ARTICLE 10
SUBORDINATION
SECTION 10.01 DEBENTURES SUBORDINATED TO SENIOR INDEBTEDNESS.
-----------------------------------------------
Notwithstanding the provisions of Section 6.01 hereof or
any other provision herein or in the Debentures, the Company and
the Trustee or Holder by his acceptance thereof (a) covenants and
agrees, that all payments by the Company of the principal of,
premium, if any, and interest on the Debentures shall be
subordinated in accordance with the provisions of this Article 10
to the prior payment in full, in cash or cash equivalents, of all
amounts payable on, under or in connection with Senior
40
<PAGE>
Indebtedness, and (b) acknowledges that holders of Senior
Indebtedness are or shall be relying on this Article 10.
SECTION 10.02 PRIORITY AND PAYMENT OF PROCEEDS IN CERTAIN EVENTS;
---------------------------------------------------
REMEDIES STANDSTILL.
--------------------
(a) Upon any payment or distribution of assets or
securities of the Company, as the case may be, of any kind or
character, whether in cash, property or securities, upon any
dissolution or winding up or total or partial liquidation or
reorganization of the Company, whether voluntary or involuntary, or
in bankruptcy, insolvency, receivership or other proceedings, all
amounts payable on, under or in connection with Senior Indebtedness
(including any interest accruing on such Senior Indebtedness
subsequent to the commencement of a bankruptcy, insolvency or
similar proceeding) shall first be paid in full in cash, or payment
provided for in cash or cash equivalents, before the Holders or the
Trustee on behalf of the Holders shall be entitled to receive from
the Company any payment of principal of or interest on or any other
amounts in respect of the Debentures or distribution of any assets
or securities.
(b) No direct or indirect payment by or on behalf of the
Company of principal of or interest on the Debentures whether
pursuant to the terms of the Debentures or upon acceleration or
otherwise shall be made if, at the time of such payment there
exists (i) a default in the payment of all or any portion of any
Senior Indebtedness (and the Trustee has received written notice
thereof from the Company, one or more holders of Senior
Indebtedness or from any trustee, representative or agent
therefor), or (ii) any other default affecting Senior Indebtedness
permitting its acceleration, as the result of which the maturity of
Senior Indebtedness has been accelerated, and the Trustee has
received written notice from any trustee, representative or agent
for the holders of the Senior Indebtedness or the holders of at
least a majority in principal amount of the Senior Indebtedness
then outstanding of such default and acceleration, and such default
shall not have been cured or waived by or on behalf of the holders
of such Senior Indebtedness.
(c) If, notwithstanding the foregoing provision
prohibiting such payment or distribution, the Trustee or any Holder
shall have received any payment on account of the principal of or
interest on the Debentures (other than as permitted by subsections
(a) and (b) of this Section 10.02) when such payment is prohibited
by this Section 10.02 and before all amounts payable on, under or
in connection with Senior Indebtedness are paid in full in cash or
cash equivalents, then and in such event (subject to the provisions
of Section 10.08) such payment or distribution shall be received
and held in trust for the holders of Senior Indebtedness and shall
41
<PAGE>
be paid over or delivered first to the holders of the Senior
Indebtedness remaining unpaid to the extent necessary to pay such
Senior Indebtedness in full in cash or cash equivalents.
Upon any payment or distribution of assets or securities
referred to in this Article 10, the Trustee and the Holders shall
be entitled to rely upon any order or decree of a court of
competent jurisdiction in which such dissolution, winding up,
liquidation or reorganization proceedings are pending, and upon a
certificate of the receiver, trustee in bankruptcy, liquidating
trustee, agent or other Person making any such payment or
distribution, delivered to the Trustee for the purpose of
ascertaining the Persons entitled to participate in such
distribution, the holders of Senior Indebtedness and other
Indebtedness of the Company, the amount thereof or payable thereon,
the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article 10.
SECTION 10.03 PAYMENTS WHICH MAY BE MADE PRIOR TO NOTICE.
-------------------------------------------
Nothing in this Article 10 or elsewhere in this Indenture
shall prevent (i) the Company, except under the conditions
described in Section 10.02 hereof, from making payments of
principal of and interest on the Debentures or from depositing with
the Trustee any monies for such payments, or (ii) the application
by the Trustee of any monies deposited with it for the purpose of
making such payments of principal of and interest on the
Debentures, to the Holders entitled thereto, unless at least one
day prior to the date when such payment would otherwise (except for
the prohibitions contained in Section 10.02 hereof) become due and
payable, the Trustee shall have received the written notice
provided for in Section 10.02(b)(ii) hereof.
SECTION 10.04 RIGHTS OF HOLDERS OF SENIOR INDEBTEDNESS NOT TO BE
--------------------------------------------------
IMPAIRED.
---------
No right of any present or future holder of any Senior
Indebtedness to enforce subordination as herein provided shall at
any time or in any way be prejudiced or impaired by any act or
failure to act in good faith by any such holder, or by any
noncompliance by the Company with the terms and provisions and
covenants herein regardless of any knowledge thereof any such
holder may have or otherwise be charged with.
The provisions of this Article 10 are intended to be for
the benefit of, and shall be enforceable directly by, the holders
of Senior Indebtedness.
42
<PAGE>
Notwithstanding anything to the contrary in this Article
10, to the extent any Holders or the Trustee have paid over or
delivered to any holder of Senior Indebtedness any payment or
distribution received on account of the principal of, or interest
on the Debentures to which any other holder of Senior Indebtedness
shall be entitled to share in accordance with Section 10.02 hereof,
no holder of Senior Indebtedness shall have a claim or right
against any Holders or the Trustee with respect to any such payment
or distribution or as a result of the failure to make payments or
distributions to such other holder of Senior Indebtedness.
SECTION 10.05 TRUSTEE MAY TAKE ACTION TO EFFECTUATE SUBORDINATION.
----------------------------------------------------
Each Holder by his acceptance thereof authorizes and
directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate, as between the holders of
Senior Indebtedness and such Holders, the subordination as provided
in this Article 10 and appoints the Trustee his attorney-in-fact
for any and all such purposes.
SECTION 10.06 SUBROGATION.
------------
Upon the payment in full, in cash or cash equivalents, of
all Senior Indebtedness, any Holder shall be subrogated to the
rights of the holders of such Senior Indebtedness to receive
payments or distributions of assets of the Company made on such
Senior Indebtedness until the Debentures shall be paid in full; and
for the purposes of such subrogation, no payments or distributions
to holders of such Senior Indebtedness of any cash, property or
securities to which such Holders of the Debentures would be
entitled except for this Article 10, and no payment pursuant to
this Article 10 to holders of such Senior Indebtedness by such
Holders of the Debentures, shall, as between the Company, its
creditors other than holders of such Senior Indebtedness and such
Holders of the Debentures, be deemed to be a payment by the Company
to or on account of such Senior Indebtedness, it being understood
that the provisions of this Article 10 are solely for the purpose
of defining the relative rights of the holders of such Senior
Indebtedness, on the one hand, and such Holders of the Debentures,
on the other hand.
If any payment or distribution to which such Holders of
the Debentures would otherwise have been entitled but for the
provisions of this Article 10 shall have been applied, pursuant to
this Article 10, to the payment of all Senior Indebtedness, then
and in such case, such Holders of the Debentures shall be entitled
to receive from the holders of such Senior Indebtedness at the time
outstanding any payments or distributions received by such holders
43
<PAGE>
of Senior Indebtedness in excess of the amount sufficient to pay,
in cash or cash equivalents, all such Senior Indebtedness in full.
SECTION 10.07 OBLIGATIONS OF COMPANY UNCONDITIONAL;
-------------------------------------
REINSTATEMENT.
--------------
Nothing in this Article 10, or elsewhere in this
Indenture or in any Debenture, is intended to or shall impair, as
between the Company and Holders of the Debentures, the obligations
of the Company, which are absolute and unconditional, to pay to
such Holders the principal of, and interest on, the Debentures as
and when the same shall become due and payable in accordance with
their terms, or is intended to or shall affect the relative rights
of such Holders of the Debentures and creditors of the Company
other than the holders of the Senior Indebtedness, nor shall
anything herein or therein prevent the Trustee, the Special
Representative or any Holder from exercising all remedies otherwise
permitted by applicable law upon Default under this Indenture,
subject to the rights, if any, under this Article 10 of the holders
of such Senior Indebtedness in respect of cash, property or
securities of the Company received upon the exercise of any such
remedy.
The failure to make a scheduled payment of principal of,
or interest on, the Debentures by reason of Section 10.02 shall not
be construed as preventing the occurrence of an Event of Default
under Section 6.01 hereof; provided, however, that if (i) the
conditions preventing the making of such payment no longer exist,
and (ii) such Holders of the Debentures are made whole with respect
to such omitted payments, the Event of Default relating thereto
(including any failure to pay any accelerated amounts) shall be
automatically waived, and the provisions of the Indenture shall be
reinstated as if no such Event of Default had occurred.
SECTION 10.08 TRUSTEE ENTITLED TO ASSUME PAYMENTS NOT PROHIBITED
--------------------------------------------------
IN ABSENCE OF NOTICE.
---------------------
The Trustee or Paying Agent shall not be charged with the
knowledge of the existence of any facts which would prohibit the
making of any payment to or by the Trustee or Paying Agent, unless
and until the Trustee or Paying Agent shall have received written
notice thereof from the Company or one or more holders of Senior
Indebtedness or from any trustee or agent therefor or unless the
Trustee or Paying Agent otherwise had actual knowledge thereof;
and, prior to the receipt of any such written notice or actual
knowledge, the Trustee or Paying Agent may conclusively assume that
no such facts exist.
44
<PAGE>
Unless at least one day prior to the date when by the
terms of this Indenture any monies are to be deposited by the
Company with the Trustee or any Paying Agent for any purpose
(including, without limitation, the payment of the principal or the
interest on any Debenture), the Trustee or Paying Agent shall,
except where no notice is necessary or where notice is deemed given
in Sections 10.02 and 10.03 hereof, have received with respect to
such monies the notice provided for in the preceding sentence, the
Trustee or Paying Agent shall have full power and authority to
receive and apply such monies to the purpose for which they were
received. Neither of them shall be affected by any notice to the
contrary, which may be received by either on or after such date.
The foregoing shall not apply to the Paying Agent if the Company is
acting as Paying Agent. Nothing in this Section 10.08 shall limit
the right of the holders of Senior Indebtedness to recover payments
as contemplated by Section 10.02 hereof. The Trustee or Paying
Agent shall be entitled to rely on the delivery to it of a written
notice by a Person representing himself or itself to be a holder of
such Senior Indebtedness (or a trustee on behalf of, or other
representative of, such holder) to establish that such notice has
been given by a holder of such Senior Indebtedness or a trustee or
representative on behalf of any such holder. The Trustee shall not
be deemed to have any duty to the holders of Senior Indebtedness.
SECTION 10.09 RIGHT OF TRUSTEE TO HOLD SENIOR INDEBTEDNESS.
---------------------------------------------
The Trustee and any Paying Agent shall be entitled to all
of the rights set forth in this Article 10 in respect of any Senior
Indebtedness at any time held by them to the same extent as any
other holder of such Senior Indebtedness, and nothing in this
Indenture shall be construed to deprive the Trustee or any Paying
Agent of any of its rights as such holder.
ARTICLE 11
MISCELLANEOUS
SECTION 11.01 TRUST INDENTURE ACT CONTROLS.
-----------------------------
If any provision of this Indenture limits, qualifies or
conflicts with the duties imposed by operation of subsection (c) of
Section 318 of the TIA, the imposed duties shall control. The
provisions of Sections 310 to 317, inclusive, of the TIA that
impose duties on any Person (including provisions automatically
deemed included in an indenture unless the indenture provides that
such provisions are excluded) are a part of and govern this
Indenture, except as, and to the extent, they are expressly
excluded from this Indenture, as permitted by the TIA.
45
<PAGE>
SECTION 11.02 NOTICES.
--------
Any notice or communication shall be in writing and
delivered in person or mailed by first-class mail, postage prepaid,
addressed as follows:
if to the Company:
PECO Energy Company
2301 Market Street
P.O. Box 8699
Philadelphia, Pennsylvania 19101
Attention: Todd D. Cutler, Esq.
Facsimile No.: (215) 841-5743
if to the Trustee:
Meridian Trust Company
35 North 6th Street
P.O. Box 15111
Reading, Pennsylvania 19612-5111
Attn: Corporate Trust Administration
The Company or the Trustee, by giving notice to the
other, may designate additional or different addresses for
subsequent notices of communications. The Company shall notify the
holder, if any, of Senior Indebtedness of any such additional or
different addresses of which the Company receives notice from the
Trustee.
Any notice or communication given to a Debentureholder
other than PECO Energy Capital shall be mailed to the
Debentureholder at the Debentureholder's address as it appears on
the Register of the Registrar and shall be sufficiently given if
mailed within the time prescribed.
Failure to mail a notice or communication to a
Debentureholder or any defect in it shall not affect its
sufficiency with respect to other Debentureholders. If a notice or
communication is mailed in the manner provided above, it is duly
given, whether or not received by the addressee.
If the Company mails a notice or communication to the
Debentureholders, it shall mail a copy to the Trustee and each
Registrar, Paying Agent or co-Registrar.
SECTION 11.03 COMMUNICATION BY HOLDERS WITH OTHER HOLDERS.
--------------------------------------------
Debentureholders may communicate, pursuant to TIA Section
312(b), with other Debentureholders with respect to their rights
46
<PAGE>
under this Indenture or the Debentures. The Company, the Trustee,
the Registrar, the Paying Agent and anyone else shall have the
protection of TIA Section 312(c).
SECTION 11.04 CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
---------------------------------------------------
Upon any request or application by the Company to the
Trustee to take any action under this Indenture, the Company shall
furnish to the Trustee:
(1) an Officer's Certificate (complying with Section
11.05 hereof) stating that, in the opinion of such Officer, all
conditions precedent to the taking of such action have been
complied with; and
(2) if appropriate, an Opinion of Counsel (complying
with Section 11.05 hereof) stating that, in the opinion of such
counsel, all such conditions precedent to the taking of such action
have been complied with.
SECTION 11.05 STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
----------------------------------------------
Each Officer's Certificate and Opinion of Counsel with
respect to compliance with a covenant or condition provided for in
this Indenture shall include:
(1) a statement that each Person making such Officer's
Certificate or Opinion of Counsel has read such covenant or
condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such Officer's Certificate or Opinion of Counsel are
based;
(3) a statement that, in the opinion of each such
Person, he has made such examination or investigation as is
necessary to enable him to express an informed opinion as to
whether or not such covenant or condition has been complied with;
and
(4) a statement that, in the opinion of such Person,
such covenant or condition has been complied with; provided,
however, that with respect to matters of fact not involving any
legal conclusion, an Opinion of Counsel may rely on an Officer's
Certificate or certificates of public officials.
47
<PAGE>
SECTION 11.06 SEVERABILITY CLAUSE.
--------------------
If any provision in this Indenture or in the Debentures
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 11.07 RULES BY TRUSTEE, PAYING AGENT AND REGISTRAR.
---------------------------------------------
The Trustee may make reasonable rules for action by or a
meeting of Debentureholders. The Registrar and Paying Agent may
make reasonable rules for their functions.
SECTION 11.08 LEGAL HOLIDAYS.
---------------
A "Legal Holiday" is any day other than a Business Day.
If any specified date (including a date for giving notice) is a
Legal Holiday, the action to be taken on such date shall be taken
on the next succeeding day that is not a Legal Holiday, and if such
action is a payment in respect of the Debentures, no principal or
interest installment shall accrue for the intervening period;
except that if any interest payment is due on a Legal Holiday and
the next succeeding day is in the next succeeding calendar year,
such payment shall be made on the Business Day immediately
preceding such Legal Holiday.
SECTION 11.09 GOVERNING LAW.
--------------
This Indenture and the Debentures shall be governed by
and construed in accordance with the laws of the Commonwealth of
Pennsylvania as applied to contracts made and performed within the
Commonwealth of Pennsylvania, without regard to its principles of
conflicts of laws.
SECTION 11.10 NO RECOURSE AGAINST OTHERS.
---------------------------
No director, officer, employee or stockholder, as such,
of the Company shall have any liability for any obligations of the
Company under the Debentures or this Indenture or for any claim
based on, in respect of or by reason of such obligations or their
creation. By accepting a Debenture, each Debentureholder shall
waive and release all such liability. The waiver and release shall
be part of the consideration for the issue of the Debentures.
48
<PAGE>
SECTION 11.11 SUCCESSORS.
-----------
All agreements of the Company in this Indenture and the
Debentures shall bind its successors and assigns. All agreements of
the Trustee in this Indenture shall bind its successors and
assigns.
SECTION 11.12 MULTIPLE ORIGINAL COPIES OF THIS INDENTURE.
-------------------------------------------
The parties may sign any number of copies of this
Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement. Any signed copy shall be
sufficient proof of this Indenture.
SECTION 11.13 NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
----------------------------------------------
This Indenture may not be used to interpret another
indenture, loan or debt agreement of the Company or any Subsidiary.
Any such indenture, loan or debt agreement may not be used to
interpret this Indenture.
SECTION 11.14 TABLE OF CONTENTS; HEADINGS, ETC.
---------------------------------
The Table of Contents, Cross-Reference Table, and
headings of the Articles and Sections of this Indenture have been
inserted for convenience of reference only, are not to be
considered a part hereof, and shall in no way modify or restrict
any of the terms or provisions hereof.
SECTION 11.15 BENEFITS OF THE INDENTURE.
--------------------------
Except as expressly provided in Article 10 hereof,
nothing in this Indenture or in the Debentures, express or implied,
shall give to any person, other than the parties hereto and their
successors hereunder, the Holders and the Special Representative,
any benefit or any legal or equitable right, remedy or claim under
this Indenture.
49
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, the undersigned, being duly
authorized, have executed this Indenture on behalf of the
respective parties hereto as of the date first above written.
PECO ENERGY COMPANY
By: __________________________
Name: ________________________
Title: _______________________
MERIDIAN TRUST COMPANY,
AS TRUSTEE
By: __________________________
Name: ________________________
Title: ________________________
PECO Energy Capital, L.P.
By its General Partner,
PECO Energy Capital Corp.
By _____________________
Solely for the purposes stated
in the recitals hereto.
50
<PAGE>
EXHIBIT A
[FORM OF FACE OF DEBENTURE]
__% SUBORDINATED DEBENTURES, SERIES A DUE 2043
No. _______________ $___________
PECO Energy Company, a Pennsylvania corporation (the "Company"),
which term includes any successor corporation under the Indenture
hereinafter referred to), for value received, hereby promises to
pay to ___________________________ or registered assigns, the
principal sum of __________________ Dollars on _____________, 2043,
and to pay interest on said principal sum from _____________, 1994
or from the most recent interest payment date (each such date, an
"Interest Payment Date") to which interest has been paid or duly
provided for, monthly in arrears on the last day of each calendar
month of each year commencing ___________, 1994 at the rate of
______% per annum plus Additional Interest, if any, until the
principal hereof shall have become due and payable, and on any
overdue principal and premium, if any, and (to the extent that
payment of such interest is enforceable under applicable law) on
any overdue installment of interest at the same rate per annum.
The amount of interest payable on any Interest Payment Date shall
be computed on the basis of a 360-day year of twelve 30-day months.
In the event that any date on which interest is payable on the
Series A Debentures is not a Business Day, then payment of interest
payable on such date will be made on the next succeeding day which
is a Business Day (and without any interest or other payment in
respect of any such delay), except that, if such Business Day is in
the next succeeding calendar year, such payment shall be made on
the immediately preceding Business Day, in each case with the same
force and effect as if made on such date. The interest installment
so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in the Indenture, be paid
to the person in whose name this Debenture is registered at the
close of business on the regular record date for such interest
installment, which shall be the close of business on the Business
Day next preceding such Interest Payment Date. Any such interest
installment not punctually paid or duly provided for shall
forthwith cease to be payable to the registered holders on such
regular record date, and may be paid to the person in whose name
this Debenture is registered at the close of business on a special
record date to be fixed by the Trustee for the payment of such
defaulted interest, notice whereof shall be given to the registered
holders of this series of Debentures not less than 10 days prior to
such special record date, as more fully provided in the Indenture
hereinafter referred to. The principal of (and premium, if any)
and the interest on this Debenture shall be payable at the office
A-1
<PAGE>
or agency of the Company maintained for that purpose in Reading,
Pennsylvania, in any coin or currency of the United States of
America which at the time of payment is legal tender for payment of
public and private debts; provided however, that payment of
interest may be made at the option of the Company by check mailed
to the registered holder at such address as shall appear in the
Debenture Register. Notwithstanding the foregoing, so long as the
holder of this Debenture is PECO Energy Capital, the payment of the
principal of (and premium, if any) and interest (including
Additional Interest, if any) in this Debenture will be made at such
place and to such account as may be designated by PECO Energy
Capital.
The indebtedness evidenced by this Debenture is, to the
extent provided in the Indenture, subordinate and subject in right
of payment to the prior payment in full of all Senior Indebtedness,
and this Debenture is issued subject to the provisions of the
Indenture with respect thereto. Each Holder of this Debenture, by
accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his behalf to
take such action as may be necessary or appropriate to acknowledge
or effectuate the subordination so provided and (c) appoints the
Trustee his attorney-in-fact for any and all such purposes. Each
Holder hereof, by his acceptance hereof, hereby waives all notice
of the acceptance of the subordination provisions contained herein
and in the Indenture by each holder of Senior Indebtedness, whether
now outstanding or hereafter incurred, and waives reliance by each
such Holder upon said provisions.
This Debenture is one of a duly authorized series of
Debentures of the Company (herein sometimes referred to as the
"Series A Debentures"), specified in the Indenture, limited in
aggregate principal amount as specified in the Indenture, issued
under and pursuant to an Indenture dated as of ________, 1994 (the
"Indenture") executed and delivered between the Company and
Meridian Trust Company, as trustee (the "Trustee") to which
reference is made to the Indenture for a description of the rights,
limitations of rights, obligations, duties and immunities
thereunder of the Trustee, the Company and the holders of the
Debentures. By the terms of the Indenture, debentures (the
"Debentures") are issuable in series which may vary as to amount,
date of maturity, rate of interest and in other respects as in the
Indenture provided.
The Series A Debentures are subject to mandatory
redemption prior to maturity at 100% of the principal amount
thereof plus accrued interest to the redemption date as follows:
(i) in whole upon the dissolution of PECO Energy
Capital; and
A-2
<PAGE>
(ii) in whole or in part upon a redemption of the
Series A Preferred Securities (as defined in the
Indenture), but if in part, in an aggregate
principal amount equal to the aggregate stated
liquidation preference of the Series A Preferred
Securities redeemed.
The Series A Debentures are subject to redemption prior
to maturity at any time on or after __________, 1999 at the option
of the Company, in whole or in part, at 100% of the principal
amount thereof plus accrued interest to the redemption date.
In the event of redemption of this Debenture in part
only, a new Debenture or Debentures of this series for the
unredeemed portion hereof will be issued in the name of the Holder
hereof upon the cancellation hereof.
In case an Event of Default, as defined in the Indenture,
shall have occurred and be continuing, the principal of all of the
Debentures may be declared, and upon such declaration shall become,
due and payable, in the manner, with the effect and subject to the
conditions provided in the Indenture.
The Indenture contains provisions for defeasance at any
time of the entire indebtedness of this Debenture upon compliance
by the Company with certain conditions set forth therein.
Subject to certain exceptions in the Indenture which
require the consent of every Holder, (i) the Indenture or the
Series A Debentures may be amended with the written consent of the
Holders of a majority in aggregate principal amount of the Series
A Debentures at the time outstanding, and (ii) certain defaults or
noncompliance with certain provisions may be waived by the written
consent of the Holders of a majority in aggregate principal amount
of the Series A Debentures at the time outstanding. Subject to
certain exceptions in the Indenture, without the consent of any
Debentureholder, the Company and the Trustee may amend the
Indenture or the Debentures to cure any ambiguity, defect or
inconsistency, to bind a successor to the obligations of the
Indenture, to provide for uncertificated Debentures in addition to
certificated Debentures, to comply with any requirements of the
Debentures and Exchange Commission in connection with the
qualification of the Indenture under the TIA, or to make any change
that does not adversely affect the rights of any Debentureholder.
Amendments bind all Holders and subsequent Holders.
No reference herein to the Indenture and no provision of
this Debenture or of the Indenture shall alter or impair the
obligation of the Company, which is absolute and unconditional, to
pay the principal of and premium, if any, and interest on this
A-3
<PAGE>
Debenture at the time and place and at the rate and in the money
herein prescribed.
The Company shall have the right at any time during the
term of the Series A Debentures, from time to time to extend the
interest payment period of such Debentures to up to 60 consecutive
months (the "Extended Interest Payment Period"), at the end of
which period the Company shall pay all interest then accrued and
unpaid (together with interest thereon at the rate specified for
the Series A Debentures to the extent that payment of such interest
is enforceable under applicable law); provided that, during such
Extended Interest Payment Period the Company shall not declare or
pay any dividend on, redeem or purchase any of its capital stock.
Prior to the termination of any such Extended Interest Payment
Period, the Company may further extend such Extended Interest
Payment Period, provided that such Period together with all such
further extensions thereof shall not exceed 60 consecutive months.
At the termination of any such Extended Interest Payment Period and
upon the payment of all accrued and unpaid interest and any
additional amounts then due, the Company may select a new Extended
Interest Payment period.
As provided in the Indenture and subject to certain
limitations therein set forth, this Debenture is transferable by
the registered holder hereof on the Debenture Register of the
Company, upon surrender of this Debenture for registration of
transfer at the office or agency of the Trustee accompanied by a
written instrument or instruments of transfer in form satisfactory
to the Company or the Trustee duly executed by the registered
holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Debentures of authorized denominations
and for the same aggregate principal amount and series will be
issued to the designated transferee or transferees. No service
charge will be made for any such transfer, but the Company may
require payment of a sum sufficient to cover any tax or other
governmental charge payable in relation thereto.
Prior to presentment for registration of transfer of this
Debenture, the Company, the Trustee, any paying agent and any
Debenture Registrar may deem and treat the registered holder hereof
as the absolute owner hereof (whether or not this Debenture shall
be overdue and notwithstanding any notice of ownership or writing
hereon made by anyone other than the Debenture Registrar) for the
purpose of receiving payment of or on account of the principal
hereof and premium, if any, and interest due hereon and for all
other purposes, and neither the Company nor the Trustee nor any
payment agent nor any Debenture Registrar shall be affected by any
notice to the contrary.
No recourse shall be had for the payment of the principal
of or the interest on this Debenture, or for any claim based
A-4
<PAGE>
hereon, or otherwise in respect hereof, or based on or in respect
of the Indenture, against any incorporator, stockholder, officer or
director, past, present or future, as such, of the Company or of
any predecessor or successor corporation, whether by virtue of any
constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by
the acceptance hereof and as part of the consideration for the
issuance hereof, expressly waived and released. Debentures of this
series so issued are issuable only in registered form without
coupons in denominations of $25 and any integral multiple thereof.
As provided in the Indenture and subject to certain limitations
therein set forth, Debentures of this series are exchangeable for
a like aggregate principal amount of Debentures of this series of
a different authorized denomination, as requested by the Holder
surrendering the same.
All terms used in this Debenture which are defined in the
Indenture shall have the meanings assigned to them in the
Indenture.
This Debenture shall not be valid until an authorized
officer of the Trustee manually signs the Trustee's Certificate of
Authentication below.
IN WITNESS WHEREOF, the Company has caused this Debenture
to be signed manually or by facsimile by its duly authorized
officers and a facsimile of its corporate seal to be affixed hereto
or imprinted hereon.
PECO ENERGY COMPANY
By: __________________________
Name: ________________________
Title: _______________________
Dated: _____________________
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
THIS IS ONE OF THE DEBENTURES REFERRED
TO IN THE WITHIN-MENTIONED INDENTURE.
MERIDIAN TRUST COMPANY
By: __________________________
Name
______________________________
Authorized Signatory
A-5
<PAGE>
ASSIGNMENT FORM
To assign this Debenture, fill in the form below: (I) or
(we) assign and transfer this Debenture to:
__________________________________________________________________
(Insert assignee's social security or tax I.D. number)
___________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint ______________________________ agent to
transfer this Debenture on the books of the Company. The agent may
substitute another to act for him.
Dated: ________________ Signature: ________________________
(Sign exactly as your name appears
on the other side of this Debenture)
Signature Guaranty: ________________________
A-6
PAYMENT AND GUARANTEE AGREEMENT
THIS PAYMENT AND GUARANTEE AGREEMENT ("Guarantee
Agreement"), dated as of _______ ___, 1994, is executed and
delivered by PECO Energy Company, a Pennsylvania corporation (the
"Guarantor"), for the benefit of the Holders (as defined below)
from time to time of the Series A Preferred Securities (as
defined below) of PECO Energy Capital, L.P., a Delaware limited
partnership ("PECO Energy Capital"), the general partner of which
is PECO Energy Capital Corp. (the "General Partner"), a Delaware
corporation and a wholly owned subsidiary of the Guarantor.
WHEREAS, PECO Energy Capital is issuing on the date hereof
$___________ aggregate stated liquidation preference of limited
partner interests of a series designated the __% Cumulative
Monthly Income Preferred Securities, Series A (the "Series A
Preferred Securities"), and the Guarantor desires to enter into
this Guarantee Agreement for the benefit of the Holders, as
provided herein;
WHEREAS, PECO Energy Capital will loan the proceeds from the
issuance and sale of the Preferred Securities and the related
capital contribution of the General Partner to PECO Energy
Capital (the "G.P. Capital Contribution") to the Guarantor, and
the Guarantor will issue Subordinated Debentures in accordance
with the Indenture (as defined below) to evidence such loan; and
<PAGE>
WHEREAS, the Guarantor desires to irrevocably and
unconditionally agree to the extent set forth herein to pay to
the Holders the Guarantee Payments (as defined below) and to make
certain other undertakings on the terms and conditions set forth
herein.
NOW, THEREFORE, in consideration of the premises and other
consideration, receipt of which is hereby acknowledged, the
Guarantor, intending to be legally bound hereby, agrees as
follows:
ARTICLE I
---------
As used in this Guarantee Agreement, each term set forth
below shall, unless the context otherwise requires, have the
following meaning. Each capitalized term used but not otherwise
defined herein shall have the meaning assigned to such term in
the Amended and Restated Limited Partnership Agreement of PECO
Energy Capital dated as of _______ __, 1994 (the "Limited
Partnership Agreement").
"Guarantee Payments" shall mean the following payments,
without duplication, to the extent not paid by PECO Energy
Capital: (i) any accumulated and unpaid monthly distributions on
the Series A Preferred Securities out of moneys legally available
therefor held by PECO Energy Capital, (ii) the Redemption Price
2
<PAGE>
(as defined below) payable with respect to any Series A Preferred
Securities called for redemption by PECO Energy Capital out of
moneys legally available therefor held by PECO Energy Capital,
and (iii) upon a liquidation of PECO Energy Capital, the lesser
of (a) the Liquidation Distribution (as defined below) and (b)
the amount of assets of PECO Energy Capital available for
distribution to Holders in liquidation of PECO Energy Capital,
and (iv) any Additional Amounts (as defined in the Action of the
General Partner creating the Series A Preferred Securities under
the Limited Partnership Agreement) payable by PECO Energy Capital
in respect of the Series A Preferred Securities.
"Holder" shall mean any person in whose name a Series A
Preferred Security is registered on the registration books
maintained by PECO Energy Capital; provided, however, that in
determining whether the Holders of the requisite percentage of
Series A Preferred Securities have given any request, notice,
consent or waiver hereunder, "Holder" shall not include the
Guarantor or any entity owned more than 50% by the Guarantor,
either directly or indirectly.
"Indenture" shall mean the Indenture, dated
___________________, 1994, between the Guarantor and Meridian
Trust Company and pursuant to which the Guarantor has issued its
__% Subordinated Debentures, Series A (the "Series A Subordinated
Debentures") in an amount equal to the aggregate stated
3
<PAGE>
liquidation preference of the Series A Preferred Securities and
the G.P. Capital Contribution.
"Liquidation Distribution" shall mean the aggregate of the
stated liquidation preference of $25 per Series A Preferred
Security and all accumulated and unpaid distributions to the date
of payment.
"Redemption Price" shall mean the aggregate of $25 per
Series A Preferred Security and all accumulated and unpaid
distributions to the date fixed for redemption.
"Special Representative" shall mean any representative of
the holders of the limited partner interests of PECO Energy
Capital appointed pursuant to Section 13.02(d) of the Limited
Partnership Agreement.
ARTICLE II
----------
SECTION 2.01. The Guarantor hereby irrevocably and
unconditionally agrees to pay in full to the Holders the
Guarantee Payments, as and when due (except to the extent paid by
PECO Energy Capital), to the fullest extent permitted by law,
regardless of any defense, right of set-off or counterclaim which
the Guarantor may have or assert against PECO Energy Capital or
the General Partner. The Guarantor's obligation to make a
4
<PAGE>
Guarantee Payment may be satisfied by direct payment by the
Guarantor to the Holders or by payment of such amounts by PECO
Energy Capital to the Holders. Notwithstanding anything to the
contrary herein, the Guarantor retains all of its rights under
Section 4.01(b) of the Indenture to extend the interest payment
period on the Series A Subordinated Debentures and the Guarantor
shall not be obligated hereunder to pay during an Extension
Period any monthly distributions on the Series A Preferred
Securities which are not paid by PECO Energy Capital during such
Extension Period.
SECTION 2.02. The Guarantor hereby waives notice of
acceptance of this Guarantee Agreement and of any liability to
which it applies or may apply, presentment, demand for payment,
protest, notice of nonpayment, notice of dishonor, notice of
redemption and all other notices and demands.
SECTION 2.03. Except as otherwise set forth herein, the
obligations, covenants, agreements and duties of the Guarantor
under this Guarantee Agreement shall in no way be affected or
impaired by reason of the happening from time to time of any of
the following:
(a) the release or waiver, by operation of law or
otherwise, of the performance or observance by PECO
Energy Capital of any express or implied agreement,
5
<PAGE>
covenant, term or condition relating to the Series A
Preferred Securities to be performed or observed by
PECO Energy Capital;
(b) the extension of time for the payment by PECO
Energy Capital of all or any portion of the
distributions, Redemption Price, Liquidation
Distribution or any other sums payable under the terms
of the Series A Preferred Securities or the extension
of time for the performance of any other obligation
under, arising out of, or in connection with, the
Series A Preferred Securities;
(c) any failure, omission, delay or lack of
diligence on the part of the Holders or the Special
Representative to enforce, assert or exercise any
right, privilege, power or remedy conferred on the
Holders or the Special Representative pursuant to the
terms of the Series A Preferred Securities, or any
action on the part of PECO Energy Capital granting
indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation,
dissolution, receivership, insolvency, bankruptcy,
assignment for the benefit of creditors,
reorganization, arrangement, composition or
6
<PAGE>
readjustment of debt of, or other similar proceedings
affecting, PECO Energy Capital or any of the assets of
PECO Energy Capital;
(e) any invalidity of, or defect or deficiency
in, any of the Series A Preferred Securities; or
(f) the settlement or compromise of any
obligation guaranteed hereby or hereby incurred.
There shall be no obligation to the Holders to give notice to, or
obtain the consent of, the Guarantor with respect to the
occurrence of any of the foregoing.
SECTION 2.04. The Guarantor expressly acknowledges that (i)
this Guarantee Agreement will be deposited with the General
Partner to be held for the benefit of the Holders; (ii) in the
event of the appointment of a Special Representative, the Special
Representative may enforce this Guarantee Agreement for such
purpose; (iii) if no Special Representative has been appointed,
the General Partner has the right to enforce this Guarantee
Agreement on behalf of the Holders; (iv) the Holders of not less
than 10% in aggregate stated liquidation preference of the Series
A Preferred Securities have the right to direct the time, method
and place of conducting any proceeding for any remedy available
in respect of this Guarantee Agreement including the giving of
7
<PAGE>
directions to the General Partner or the Special Representative
as the case may be; and (v) if the General Partner or Special
Representative fails to enforce this Guarantee Agreement as above
provided, any Holder may institute a legal proceeding directly
against the Guarantor to enforce its rights under this Guarantee
Agreement, without first instituting a legal proceeding against
PECO Energy Capital or any other person or entity.
SECTION 2.05. This is a guarantee of payment and not of
collection. A Holder or the Special Representative may enforce
this Guarantee Agreement directly against the Guarantor, and the
Guarantor will waive any right or remedy to require that any
action be brought against PECO Energy Capital or any other person
or entity before proceeding against the Guarantor. The Guarantor
agrees that this Guarantee Agreement shall not be discharged
except by payment of the Guarantee Payments in full (to the
extent not paid by PECO Energy Capital) and by complete
performance of all obligations of the Guarantor contained in this
Guarantee Agreement.
SECTION 2.06. The Guarantor will be subrogated to all
rights of the Holders against PECO Energy Capital in respect of
any amounts paid to the Holders by the Guarantor under this
Guarantee Agreement and shall have the right to waive payment by
PECO Energy Capital pursuant to Section 2.01; provided, however,
that the Guarantor shall not (except to the extent required by
8
<PAGE>
mandatory provisions of law) exercise any rights which it may
acquire by way of subrogation or any indemnity, reimbursement or
other agreement, in all cases as a result of a payment under this
Guarantee Agreement, if, at the time of any such payment, any
amounts remain due and unpaid under this Guarantee Agreement. If
any amount shall be paid to the Guarantor in violation of the
preceding sentence, the Guarantor agrees to pay over such amount
to the Holders.
SECTION 2.07. The Guarantor acknowledges that its
obligations hereunder are independent of the obligations of PECO
Energy Capital with respect to the Series A Preferred Securities
and that the Guarantor shall be liable as principal and sole
debtor hereunder to make Guarantee Payments pursuant to the terms
of this Guarantee Agreement notwithstanding the occurrence of any
event referred to in subsections (a) through (f), inclusive, of
Section 2.03 hereof.
ARTICLE III
-----------
SECTION 3.01. So long as any Series A Preferred Securities
remain outstanding, neither the Guarantor nor any majority-owned
subsidiary of the Guarantor shall declare or pay any dividend on,
or redeem, purchase, acquire or make a liquidation payment with
respect to, any of its capital stock (other than dividends by a
wholly-owned subsidiary) if at such time the Guarantor shall be
9
<PAGE>
in default with respect to its payment or other obligations
hereunder or there shall have occurred any event that, with the
giving of notice or the lapse of time or both, would constitute
an Event of Default under the Indenture. The Guarantor shall
take all actions necessary to ensure the compliance of its
subsidiaries with this Section 3.01.
SECTION 3.02. So long as any Series A Preferred Securities
are outstanding, the Guarantor agrees to maintain its corporate
existence; provided that the Guarantor may consolidate with or
merge with or into, or sell, convey, transfer or lease all or
substantially all of its assets (either in one transaction or a
series of transactions) to, any person, corporation, partnership,
limited liability company, joint venture association, joint stock
company, trust or unincorporated association if such entity
formed by or surviving such consolidation or merger or to which
such sale, conveyance, transfer or lease shall have been made, if
other than the Guarantor, (i) is organized and existing under the
laws of the United States of America or any state thereof or the
District of Columbia, and (ii) shall expressly assume all the
obligations of the Guarantor under this Agreement.
SECTION 3.03. This Guarantee Agreement will constitute an
unsecured obligation of the Guarantor and will rank subordinate
and junior in right of payment to all general liabilities of the
Guarantor.
10
<PAGE>
ARTICLE IV
----------
This Guarantee Agreement shall terminate and be of no
further force and effect upon full payment of the Redemption
Price of all Series A Preferred Securities or upon full payment
of the amounts payable to the Holders upon liquidation of PECO
Energy Capital; provided, however, that this Guarantee Agreement
shall continue to be effective or shall be reinstated, as the
case may be, if at any time any Holder must restore payments of
any sums paid under the Series A Preferred Securities or under
this Guarantee Agreement for any reason whatsoever.
ARTICLE V
---------
SECTION 5.01. All guarantees and agreements contained in
this Guarantee Agreement shall bind the successors, assigns,
receivers, trustees and representatives of the Guarantor and
shall inure to the benefit of the Holders. Except as provided in
Section 3.01, the Guarantor may not assign its obligations
hereunder without the prior approval of the Holders of not less
than 66 2/3% of the aggregate stated liquidation preference of
all Series A Preferred Securities then outstanding.
SECTION 5.02. This Guarantee Agreement may only be amended
by a written instrument executed by the Guarantor; provided that,
so long as any of the Series A Preferred Securities remain
11
<PAGE>
outstanding, any such amendment that adversely affects the
holders of Series A Preferred Securities, any termination of this
Guarantee Agreement and any waiver of compliance with any
covenant hereunder shall be effected only with the prior approval
of the Holders of not less than 66 2/3% of the aggregate
liquidation preference of all Series A Preferred Securities then
outstanding.
SECTION 5.03. All notices, requests or other communications
required or permitted to be given hereunder to the Guarantor
shall be deemed given if in writing and delivered personally or
by recognized overnight courier or express mail service or by
facsimile transmission (confirmed in writing) or by registered or
certified mail (return receipt requested), addressed to the
Guarantor at the following address (or at such other address as
shall be specified by notice to the Holders):
PECO Energy Company
2301 Market Street
P.O. Box 8699
Philadelphia, Pennsylvania 19101
Facsimile No.: (215) 841-5743
Attention: Treasurer
All notices, requests or other communications required or
permitted to be given hereunder to the Holders shall be deemed
given if in writing and delivered by the Guarantor in the same
manner as notices sent by PECO Energy Capital to the Holders.
12
<PAGE>
SECTION 5.04. This Guarantee Agreement is solely for the
benefit of the Holders and is not separately transferable from
the Series A Preferred Securities.
SECTION 5.05. THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE
COMMONWEALTH OF PENNSYLVANIA WITHOUT GIVING EFFECT TO CONFLICT OF
LAW PRINCIPLES THEREOF.
THIS GUARANTEE AGREEMENT is executed as of the day and year
first above written.
PECO ENERGY COMPANY
By:________________________
Name:
Title:
13
Exhibit 5-1
-----------
Ballard Spahr Andrews & Ingersoll
1735 Market Street
Philadelphia, PA 19103
May 25, 1994
PECO Energy Company
2301 Market Street
Philadelphia, PA 19103
Re: $350,000,000 of Preferred Securities
of PECO Energy Capital, L.P.
------------------------------------
Ladies and Gentlemen:
We have acted as special counsel to you (the "Company")
in connection with the proposed issuance from time to time by
PECO Energy Capital, L.P., a Delaware limited partnership ("PECO
Energy Capital"), of $350,000,000 stated liquidation preference
of Cumulative Monthly Income Preferred Securities (the "Preferred
Securities"), representing limited partner interests, and the
execution and delivery by the Company of one or more Payment and
Guaranty Agreements (the "Guarantees") and the issuance of one or
more series of Subordinated Debentures (the "Subordinated
Debentures") in connection therewith and the registration of the
Preferred Securities, the Guarantees and the Subordinated
Debentures under the Securities Act of 1933, as amended. The
Subordinated Debentures will be issued under an Indenture (the
"Indenture") between the Company and Meridian Trust Company, as
trustee.
The opinions expressed below are based on the
following assumptions:
(a) The Registration Statement filed by the
Company and PECO Energy Capital with the Securities and Exchange
Commission with respect to the Preferred Securities, the
Guarantees and the Subordinated Debentures (the "Registration
Statement") will become effective;
(b) The proposed transactions are carried out on
the basis set forth in the Registration Statement and in
<PAGE>
PECO Energy Company
May 25, 1994
Page 2
conformity with the authorizations, approvals, consents or
exemptions under the securities laws of various states and other
jurisdictions of the United States;
(c) Prior to issuance of any series of Preferred
Securities:
(i) the general partner of PECO Energy
Capital will authorize the issuance of, and determine the
terms of, such series of Preferred Securities;
(ii) the Indenture will have been executed
and delivered by the Company and the Board of Directors of
the Company or a committee thereof will have authorized the
issuance of, and established the terms of, the series of the
Subordinated Debentures related to such series of Preferred
Securities;
(iii) the Guarantee related to such series of
Preferred Securities will be executed and delivered by the
Company in accordance with appropriate resolutions of the
Board of Directors of the Company or a committee thereof;
and
(d) The Indenture will be qualified in accordance
with the provisions of the Trust Indenture Act of 1939, as
amended.
Based on the foregoing, we are of the opinion that:
1. When properly executed, authenticated, delivered
and paid for as provided in the Indenture, the Subordinated
Debentures will be legally issued, valid and binding obligations
of the Company.
2. When executed and delivered by the Company, the
Guarantees will be valid and binding obligations of the Company.
We consent to the filing of this opinion as an Exhibit
to the Registration Statement and to the references to this firm
under the heading "Legal Matters" in the Prospectus and under the
heading "United States Taxation" in the Prospective Supplement
included in the Registration Statement.
Very truly yours,
BALLARD SPAHR ANDREWS & INGERSOLL
[Letterhead of Richards, Layton & Finger]
May 25, 1994
PECO Energy Capital, L.P.
1013 Centre Road, Suite 350F
Wilmington, DE 19805
Re: PECO Energy Capital, L.P.
-------------------------
Ladies and Gentlemen:
We have acted as special Delaware counsel for PECO
Energy Capital, L.P., a Delaware limited partnership (the
"Partnership"), in connection with the matters set forth herein.
At your request, this opinion is being furnished to you.
For purposes of giving the opinions hereinafter set
forth, our examination of documents has been limited to the
examination of originals or copies of the following:
(a) The Certificate of Limited Partnership of the
Partnership, dated as of May 23, 1994 (the "Partnership
Certificate"), as filed in the office of the Secretary of State
of the State of Delaware (the "Secretary of State") on May 23,
1994;
(b) The Agreement of Limited Partnership of the
Partnership, dated as of May 23, 1994;
(c) A registration statement (the "Registration
Statement") on Form S-3, including a related prospectus (the
"Prospectus") and a prospectus supplement, proposed to be filed
by PECO Energy Company, a Pennsylvania corporation, and the
Partnership with the Securities and Exchange Commission on or
about May 25, 1994;
(d) A form of Amended and Restated Limited Partnership
Agreement of the Partnership, attached as an exhibit to the
Registration Statement (the "Agreement");
(e) A form of Action of PECO Energy Capital Corp., a
Delaware corporation (the "General Partner"), relating to the
Preferred Partner Interests (the "Action"); and
<PAGE>
PECO Energy Capital, L.P.
May 25, 1994
Page 2
(f) A Certificate of Good Standing for the
Partnership, dated May 25, 1994, obtained from the Secretary of
State.
The Agreement as amended and supplemented by the Action
is hereinafter referred to as the "LP Agreement." Initially
capitalized terms used herein and not otherwise defined are used
as defined in the LP Agreement.
For purposes of this opinion, we have not reviewed any
documents other than the documents listed in paragraphs (a)
through (f) above. In particular, we have not reviewed any
document (other than the documents listed in paragraphs (a)
through (f) above) that is referred to in or incorporated by
reference into the LP Agreement or the Registration Statement.
We have assumed that there exists no provision in any document
that we have not reviewed that is inconsistent with the opinions
stated herein. We have conducted no independent factual
investigation of our own but rather have relied solely upon the
foregoing documents, the statements and information set forth
therein and the additional matters recited or assumed herein, all
of which we have assumed to be true, complete and accurate in all
material respects.
With respect to all documents examined by us, we have
assumed (i) the authenticity of all documents submitted to us as
authentic originals, (ii) the conformity with the originals of
all documents submitted to us as copies or forms, and (iii) the
genuineness of all signatures.
For purposes of this opinion, we have assumed (i) that
the LP Agreement constitutes the entire agreement among the
parties thereto with respect to the subject matter thereof,
including with respect to the admission of partners to, and the
creation, operation and termination of, the Partnership, and that
the LP Agreement and the Partnership Certificate are in full
force and effect and have not been amended, (ii) except to the
extent provided in paragraph 1 below, the due organization or due
formation, as the case may be, and valid existence in good
standing of each party to the documents examined by us under the
laws of the jurisdiction governing its organization or formation,
(iii) the legal capacity of natural persons who are parties to
the documents examined by us, (iv) that each of the parties to
the documents examined by us has the power and authority to
execute and deliver, and to perform its obligations under, such
documents, (v) the due authorization, execution and delivery by
all parties thereto of all documents examined by us, including
the LP Agreement, (vi) the receipt by each Preferred Partner of
a Certificate and the payment for the Preferred Partner Interests
<PAGE>
PECO Energy Capital, L.P.
May 25, 1994
Page 3
acquired by it, in accordance with the LP Agreement, (vii) that
the books and records of the Partnership set forth all
information required by the LP Agreement and the Delaware Revised
Uniform Limited Partnership Act (6 Del. C. Section 17-101, et seq.)
(the "Act"), including all information with respect to all
Persons to be admitted as Partners and their contributions to the
Partnership, and (viii) that the Preferred Partner Interests are
issued and sold to the Preferred Partners in accordance with the
Registration Statement and the LP Agreement. We have not
participated in the preparation of the Registration Statement and
assume no responsibility for its contents.
This opinion is limited to the laws of the State of
Delaware (excluding the securities laws of the State of
Delaware), and we have not considered and express no opinion on
the laws of any other jurisdiction, including federal laws and
rules and regulations relating thereto. Our opinions are
rendered only with respect to Delaware laws and rules,
regulations and orders thereunder which are currently in effect.
Based upon the foregoing, and upon our examination of
such questions of law and statutes of the State of Delaware as we
have considered necessary or appropriate, and subject to the
assumptions, qualifications, limitations and exceptions set forth
herein, we are of the opinion that:
1. The Partnership has been duly formed and is
validly existing in good standing as a limited partnership under
the Act.
2. Assuming that the Preferred Partners, as limited
partners of the Partnership, do not participate in the control of
the business of the Partnership, upon issuance and payment as
contemplated by the LP Agreement, the Preferred Partner Interests
will represent valid and, subject to the qualifications set forth
herein, will be fully paid and nonassessable limited partner
interests in the Partnership, as to which the Preferred Partners,
as limited partners of the Partnership, will have no liability in
excess of their obligations to make payments provided for in the
LP Agreement and their share of the Partnership's assets and
undistributed profits (subject to the obligation of a Preferred
Partner to repay any funds wrongfully distributed to it).
3. There are no provisions in the LP Agreement the
inclusion of which, subject to the terms and conditions therein,
or, assuming that the Preferred Partners, as limited
partners of the Partnership, take no action other than actions
permitted by the LP Agreement, the exercise of which, in
accordance with the terms and conditions therein, would cause the
<PAGE>
PECO Energy Capital, L.P.
May 25, 1994
Page 4
Preferred Partners, as limited partners of the Partnership, to be
deemed to be participating in the control of the business of the
Partnership.
We consent to the filing of this opinion with the
Securities and Exchange Commission as an exhibit to the
Registration Statement. We hereby consent to the use of our name
under the heading "Legal Matters" in the Prospectus. In giving
the foregoing consents, we do not thereby admit that we come
within the category of persons whose consent is required under
Section 7 of the Securities Act of 1933, as amended, or the rules
and regulations of the Securities and Exchange Commission
thereunder. Except as stated above, without our prior written
consent, this opinion may not be furnished or quoted to, or
relied upon by, any other person or entity for any purpose.
Very truly yours,
Ballard Spahr Andrews & Ingersoll
1735 Market Street
Philadelphia, PA 19103
May 25, 1994
PECO Energy Company
2301 Market Street
Philadelphia, PA 19103
Ladies and Gentlemen:
We have acted as special counsel to you (the "Company")
in connection with the registration of $350,000,000 stated
liquidation preference of Cumulative Monthly Income Preferred
Securities of PECO Energy Capital, L.P., a Delaware limited
partnership and the related Guarantees and Subordinated
Debentures, of the Company and hereby confirm to you our opinion
as set forth under the heading "United States Taxation" in the
Prospectus Supplement included in the Registration Statement.
Very truly yours,
BALLARD SPAHR ANDREWS & INGERSOLL
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors,
PECO Energy Company:
We consent to the incorporation by reference in the registration
statement of PECO Energy Company and PECO Energy Capital, L.P. on Form S-3,
with respect to the registration of $350,000,000 of Cumulative Monthly
Income Preferred Securities of PECO Energy Capital, L.P. and guarantees of
PECO Energy Company related thereto and $350,000,000 principal amount of
Subordinated Debentures of PECO Energy Company, of our reports dated
January 31, 1994 on our audits of the consolidated financial statements and
financial statement schedules of PECO Energy Company and Subsidiary
Companies as of December 31, 1993 and 1992, and for each of the three years
in the period ended December 31, 1993, listed in Item 14 of the 1993 Annual
Report of PECO Energy Company on Form 10-K. We also consent to the
reference to our firm under the heading "EXPERTS".
/s/ Coopers & Lybrand
--------------------------------------
Coopers & Lybrand
Philadelphia, Pennsylvania
May 24, 1994
EXHIBIT 24
1 OF 12
PECO ENERGY COMPANY
P O W E R O F A T T O R N E Y
KNOW ALL MEN BY THESE PRESENTS That I, Susan W. Catherwood of Bryn
Mawr, PA, do hereby appoint J. F. PAQUETTE, JR., and K. G. LAWRENCE, or
either of them, attorney for me and in my name and on my behalf to sign the
Registration Statement, and any amendments thereto, of PECO ENERGY COMPANY
to be filed with the Securities and Exchange Commission under the
Securities Act of 1933, in connection with the registration of the
securities of this Company, and generally to do and perform all things
necessary to be done in the premises as fully and effectually in all
respects as I could do if personally present.
Dated: April 13, 1994
/s/ Susan W. Catherwood (L.S.)
-----------------------
Susan W. Catherwood
<PAGE>
EXHIBIT 24
2 of 12
PECO ENERGY COMPANY
P O W E R O F A T T O R N E Y
KNOW ALL MEN BY THESE PRESENTS That I, M. Walter D'Alessio of
Philadelphia, PA, do hereby appoint J. F. PAQUETTE, JR., and K. G.
LAWRENCE, or either of them, attorney for me and in my name and on my
behalf to sign the Registration Statement, and any amendments thereto, of
PECO ENERGY COMPANY to be filed with the Securities and Exchange Commission
under the Securities Act of 1933, in connection with the registration of
the securities of this Company, and generally to do and perform all things
necessary to be done in the premises as fully and effectually in all
respects as I could do if personally present.
Dated: April 13, 1994
/s/ M. Walter D'Alessio (L.S.)
------------------------
M. Walter D'Alessio
<PAGE>
EXHIBIT 24
3 OF 12
PECO ENERGY COMPANY
P O W E R O F A T T O R N E Y
KNOW ALL MEN BY THESE PRESENTS That I, Richard G. Gilmore of Sarasota,
FL, do hereby appoint J. F. PAQUETTE, JR., and K. G. LAWRENCE, or either of
them, attorney for me and in my name and on my behalf to sign the
Registration Statement, and any amendments thereto, of PECO ENERGY COMPANY
to be filed with the Securities and Exchange Commission under the
Securities Act of 1933, in connection with the registration of the
securities of this Company, and generally to do and perform all things
necessary to be done in the premises as fully and effectually in all
respects as I could do if personally present.
Dated: April 13, 1994
/s/ Richard G. Gilmore (L.S.)
----------------------
Richard G. Gilmore
<PAGE>
EXHIBIT 24
4 OF 12
PECO ENERGY COMPANY
P O W E R O F A T T O R N E Y
KNOW ALL MEN BY THESE PRESENTS That I, Richard H. Glanton of
Philadelphia, PA, do hereby appoint J. F. PAQUETTE, JR., and K. G.
LAWRENCE, or either of them, attorney for me and in my name and on my
behalf to sign the Registration Statement, and any amendments thereto, of
PECO ENERGY COMPANY to be filed with the Securities and Exchange Commission
under the Securities Act of 1933, in connection with the registration of
the securities of this Company, and generally to do and perform all things
necessary to be done in the premises as fully and effectually in all
respects as I could do if personally present.
Dated: April 13, 1994
/s/ Richard H. Glanton (L.S.)
----------------------
Richard H. Glanton
<PAGE>
EXHIBIT 24
5 of 12
PECO ENERGY COMPANY
P O W E R O F A T T O R N E Y
KNOW ALL MEN BY THESE PRESENTS That I, James A. Hagen of Villanova, PA,
do hereby appoint J. F. PAQUETTE, JR., and K. G. LAWRENCE, or either of
them, attorney for me and in my name and on my behalf to sign the
Registration Statement, and any amendments thereto, of PECO ENERGY COMPANY
to be filed with the Securities and Exchange Commission under the
Securities Act of 1933, in connection with the registration of the
securities of this Company, and generally to do and perform all things
necessary to be done in the premises as fully and effectually in all
respects as I could do if personally present.
Dated: April 13, 1994
/s/ James A. Hagen (L.S.)
------------------
James A. Hagen
<PAGE>
EXHIBIT 24
6 of 12
PECO ENERGY COMPANY
P O W E R O F A T T O R N E Y
KNOW ALL MEN BY THESE PRESENTS That I, Nelson G. Harris of Lafayette
Hill, PA, do hereby appoint J. F. PAQUETTE, JR., and K. G. LAWRENCE, or
either of them, attorney for me and in my name and on my behalf to sign the
Registration Statement, and any amendments thereto, of PECO ENERGY COMPANY
to be filed with the Securities and Exchange Commission under the
Securities Act of 1933, in connection with the registration of the
securities of this Company, and generally to do and perform all things
necessary to be done in the premises as fully and effectually in all
respects as I could do if personally present.
Dated: April 13, 1994
/s/ Nelson G. Harris (L.S.)
--------------------
Nelson G. Harris
<PAGE>
EXHIBIT 24
7 of 12
PECO ENERGY COMPANY
P O W E R O F A T T O R N E Y
KNOW ALL MEN BY THESE PRESENTS That I, Joseph C. Ladd of Rosemont, PA,
do hereby appoint J. F. PAQUETTE, JR., and K. G. LAWRENCE, or either of
them, attorney for me and in my name and on my behalf to sign the
Registration Statement, and any amendments thereto, of PECO ENERGY COMPANY
to be filed with the Securities and Exchange Commission under the
Securities Act of 1933, in connection with the registration of the
securities of this Company, and generally to do and perform all things
necessary to be done in the premises as fully and effectually in all
respects as I could do if personally present.
Dated: April 13, 1994
/s/ Joseph C. Ladd (L.S.)
------------------
Joseph C. Ladd
<PAGE>
EXHIBIT 24
8 of 12
PECO ENERGY COMPANY
P O W E R O F A T T O R N E Y
KNOW ALL MEN BY THESE PRESENTS That I, Edithe J. Levit of Philadelphia,
PA, do hereby appoint J. F. PAQUETTE, JR., and K. G. LAWRENCE, or either of
them, attorney for me and in my name and on my behalf to sign the
Registration Statement, and any amendments thereto, of PECO ENERGY COMPANY
to be filed with the Securities and Exchange Commission under the
Securities Act of 1933, in connection with the registration of the
securities of this Company, and generally to do and perform all things
necessary to be done in the premises as fully and effectually in all
respects as I could do if personally present.
Dated: April 13, 1994
/s/ Edithe J. Levit (L.S.)
-------------------
Edithe J. Levit
<PAGE>
EXHIBIT 24
9 of 12
PECO ENERGY COMPANY
P O W E R O F A T T O R N E Y
KNOW ALL MEN BY THESE PRESENTS That I, Kinnaird R. McKee of Oxford, MD,
do hereby appoint J. F. PAQUETTE, JR., and K. G. LAWRENCE, or either of
them, attorney for me and in my name and on my behalf to sign the
Registration Statement, and any amendments thereto, of PECO ENERGY COMPANY
to be filed with the Securities and Exchange Commission under the
Securities Act of 1933, in connection with the registration of the
securities of this Company, and generally to do and perform all things
necessary to be done in the premises as fully and effectually in all
respects as I could do if personally present.
Dated: April 13, 1994
/s/ Kinnaird R. McKee (L.S.)
---------------------
Kinnaird R. McKee
<PAGE>
EXHIBIT 24
10 of 12
PECO ENERGY COMPANY
P O W E R O F A T T O R N E Y
KNOW ALL MEN BY THESE PRESENTS That I, Joseph J. McLaughlin of
Rosemont, PA, do hereby appoint J. F. PAQUETTE, JR., and K. G. LAWRENCE, or
either of them, attorney for me and in my name and on my behalf to sign the
Registration Statement, and any amendments thereto, of PECO ENERGY COMPANY
to be filed with the Securities and Exchange Commission under the
Securities Act of 1933, in connection with the registration of the
securities of this Company, and generally to do and perform all things
necessary to be done in the premises as fully and effectually in all
respects as I could do if personally present.
Dated: April 13, 1994
/s/ Joseph J. McLaughlin (L.S.)
------------------------
Joseph J. McLaughlin
<PAGE>
EXHIBIT 24
11 of 12
PECO ENERGY COMPANY
P O W E R O F A T T O R N E Y
KNOW ALL MEN BY THESE PRESENTS That I, Dr. John M. Palms of Columbia,
SC, do hereby appoint J. F. PAQUETTE, JR., and K. G. LAWRENCE, or either of
them, attorney for me and in my name and on my behalf to sign the
Registration Statement, and any amendments thereto, of PECO ENERGY COMPANY
to be filed with the Securities and Exchange Commission under the
Securities Act of 1933, in connection with the registration of the
securities of this Company, and generally to do and perform all things
necessary to be done in the premises as fully and effectually in all
respects as I could do if personally present.
Dated: April 13, 1994
/s/ John M. Palms (L.S.)
-----------------
Dr. John M. Palms
<PAGE>
EXHIBIT 24
12 of 12
PECO ENERGY COMPANY
P O W E R O F A T T O R N E Y
KNOW ALL MEN BY THESE PRESENTS That I, Ronald Rubin of Narberth, PA, do
hereby appoint J. F. PAQUETTE, JR., and K. G. LAWRENCE, or either of them,
attorney for me and in my name and on my behalf to sign the Registration
Statement, and any amendments thereto, of PECO ENERGY COMPANY to be filed
with the Securities and Exchange Commission under the Securities Act of
1933, in connection with the registration of the securities of this
Company, and generally to do and perform all things necessary to be done in
the premises as fully and effectually in all respects as I could do if
personally present.
Dated: April 13, 1994
/s/ Ronald Rubin (L.S.)
----------------
Ronald Rubin
- - - - ------------------------------------------------------------------------------
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) ____
MERIDIAN TRUST COMPANY
---------------------------------------------------
(Exact name of Trustee as specified in its charter)
Pennsylvania 23-2332649
- - - - ------------------------------ -------------------
(jurisdiction of incorporation (I.R.S. Employer
or organization if not a U.S. Identification No.)
national bank)
35 North Sixth Street
Reading, Pennsylvania 19601
- - - - --------------------- ----------
(Address of principal (Zip Code)
executive offices)
Michael Ruppel
35 North Sixth Street
Reading, PA 19601
(610) 655-3151
---------------------------------------------------------
(Name, address and telephone number of agent for service)
PECO ENERGY COMPANY
---------------------------------------------------
(Exact name of obligor as specified in its charter)
Pennsylvania 23-0970240
- - - - --------------------------------- -------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
2301 Market Street
Philadelphia, Pennsylvania 19101
- - - - -------------------------- ----------
(Address of principal (Zip Code)
executive offices)
DEBT SECURITIES
-----------------------------------
(Title of the indenture securities)
- - - - ------------------------------------------------------------------------------
<PAGE>
Item 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.
Federal Reserve Bank (3rd District), Ten Independence Mall,
Philadelphia, Pennsylvania 19106.
Department of Banking, Commonwealth of Pennsylvania, 333
Market Street, Harrisburg, Pennsylvania 17101.
(b) Whether it is authorized to exercise corporate trust powers.
The Trustee is authorized to exercise corporate trust powers.
Item 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 (or any of its
affiliates, including Meridian Bancorp, Inc.).
Item 3. Voting Securities of the Trustee.
---------------------------------
Furnish the following information as to each class of voting
securities of the Trustee:
As of May 20, 1994
- - - - ------------------------------------------------------------------------------
Col. A Col. B
Title of class Amount outstanding
*Common Capital Stock - Par Value $1.00 *300,000 Shares
- - - - ------------------------------------------------------------------------------
* All voting securities of the Trustee are owned by Meridian Asset
Management, Inc., a Pennsylvania business corporation, all of whose
voting securities are owned by Meridian Bancorp, Inc., a Pennsylvania
business corporation.
Item 4. Trusteeship under Other Indentures.
-----------------------------------
If the Trustee is a trustee under another indenture under which any
other securities, or certificates of interest or participation in any
other securities, of the Obligor are outstanding, furnish the following
information:
(a) Title of the securities outstanding under each such other
indenture.
The Trustee is not a trustee under another indenture
under which any other securities, or certificates of interest
or participation in any other securities, of the Obligor are
outstanding.
-2-
<PAGE>
(b) A brief statement of the facts relied upon as a basis for
the claim that no conflicting interest within the meaning of
Section 310(b)(1) of the Act arises as a result of the trust-
eeship under any such other indenture, including a statement
as to how the indenture securities will rank as compared with
the securities issued under such other indenture.
No conflicting interest within the meaning of Section
310(b)(1) of the Act arises because the Trustee is not a
trustee under another indenture under which any other securi-
ties, or certificates of interest or participation in any
other securities, of the Obligor are outstanding.
Item 5. Interlocking Directorates and Similar Relationships with the
------------------------------------------------------------
Obligor or Underwriters.
------------------------
If the Trustee or any of the directors or executive officers of the
Trustee is a director, officer, partner, employee, appointee, or repre-
sentative of the Obligor or of any Underwriter for the Obligor, identify
each such person having any such connection and state the nature of each
such connection.
Mr. Joseph F. Paquette, Jr. is Chairman of the Board and a director
of the Obligor and a director of Meridian Bancorp, Inc., the parent
corporation of the Trustee. (See Note on page 8.)
Mr. Walter J. Laird, Jr. is a Senior Vice President of Dean Witter
Reynolds Inc., one of the Underwriters, and a director of Delaware Trust
Capital Management, Inc., an affiliate of the Trustee. (See Note on page
8.)
Item 6. Voting Securities of the Trustee Owned by the Obligor or its
------------------------------------------------------------
Officials.
----------
Furnish the following information as to the voting securities of the
Trustee owned beneficially by the Obligor and each director, partner and
executive officer of the Obligor:
As of May 20, 1994
- - - - ------------------------------------------------------------------------------
Col. A Col. B Col. C Col. D
Percentage of
voting securi-
ties represented
Amount owned by amount given
Name of owner Title of class beneficially in Col. C
* * * *
- - - - ------------------------------------------------------------------------------
* The amount of voting securities of the Trustee (or any of its
affiliates, including Meridian Bancorp, Inc.) owned beneficially by the
Obligor and its directors, partners and executive officers, taken as a
group, does not exceed one percent of the outstanding voting securities
of the Trustee (or any of its affiliates, including Meridian Bancorp,
Inc.). (See Note on page 8.)
-3-
<PAGE>
Item 7. Voting Securities of the Trustee Owned by Underwriters or
---------------------------------------------------------
their Officials.
----------------
Furnish the following information as to the voting securities of the
Trustee owned beneficially by each Underwriter for the Obligor and each
director, partner and executive officer of each such Underwriter:
As of May 20, 1994
- - - - ------------------------------------------------------------------------------
Col. A Col. B Col. C Col. D
Percentage of
voting securi-
ties represented
Amount owned by amount given
Name of owner Title of class beneficially in Col. C
* * * *
- - - - ------------------------------------------------------------------------------
* The amount of voting securities of the Trustee (or any of its
affiliates, including Meridian Bancorp, Inc.) owned beneficially by each
Underwriter for the Obligor and its directors, partners and executive
officers, taken as a group, does not exceed one percent of the outstand-
ing voting securities of the Trustee (or any of its affiliates, including
Meridian Bancorp, Inc.). (See Note on page 8.)
Item 8. Securities of the Obligor Owned or Held by the Trustee.
-------------------------------------------------------
Furnish the following information as to securities of the Obligor
owned beneficially or held as collateral security for obligations in
default by the Trustee:
As of May 20, 1994
- - - - ------------------------------------------------------------------------------
Col. A Col. B Col. C Col. D
Amount owned
Whether the se- beneficially or
curities are held as collat- Percent of class
voting or non- eral security represented by
voting securi- for obligations amount given in
Title of class ties in default Col. C
* * * *
- - - - ------------------------------------------------------------------------------
* The Trustee (or any of its affiliates, including Meridian Bancorp,
Inc.) does not own beneficially or hold as collateral security for
obligations in default more than one percent of any class of outstanding
securities of the Obligor. (See Note on page 8.)
Item 9. Securities of Underwriters Owned or Held by the Trustee.
--------------------------------------------------------
If the Trustee owns beneficially or holds as collateral security
for obligations in default any securities of an Underwriter for the
Obligor, furnish the following information as to each class of securities
of such Underwriter any of which are so owned or held by the Trustee:
-4-
<PAGE>
As of May 20, 1994
- - - - ------------------------------------------------------------------------------
Col. A Col. B Col. C Col. D
Amount owned
beneficially or
held as collat-
eral security Percent of class
Title of issuer for obligations represented by
and title of Amount outstand- in default by amount given in
class ing Trustee Col. C
* * * *
- - - - ------------------------------------------------------------------------------
* The Trustee (or any of its affiliates, including Meridian
Bancorp, Inc.) does not own beneficially or hold as collateral security
for obligations in default more than one percent of any class of any
securities of an Underwriter for the Obligor. (See Note on page 8.)
Item 10. Ownership or Holdings by the Trustee of Voting Securities of
------------------------------------------------------------
Certain Affiliates or Security Holders of the Obligor.
------------------------------------------------------
If the Trustee owns beneficially or holds as collateral security for
obligations in default voting securities of a person who, to the knowl-
edge of the Trustee (1) owns 10 percent or more of the voting securities
of the Obligor or (2) is an affiliate, other than a subsidiary, of the
Obligor, furnish the following information as to the voting securities of
such person:
As of May 20, 1994
- - - - ------------------------------------------------------------------------------
Col. A Col. B Col. C Col. D
Amount owned
beneficially or
held as collat-
eral security Percent of class
Title of issuer for obligations represented by
and title of Amount outstand- in default by amount given in
class ing Trustee Col. C
* * * *
- - - - ------------------------------------------------------------------------------
* The Trustee (or any of its affiliates, including Meridian
Bancorp, Inc.) does not own beneficially or hold as collateral security for
obligations in default more than one percent of the voting securities of
any person who, to the knowledge of the Trustee (or any of its affili-
ates, including Meridian Bancorp, Inc.), (1) owns 10 percent or more of
the voting securities of the Obligor or (2) is an affiliate, other than a
subsidiary, of the Obligor. (See Note on page 8.)
Item 11. Ownership or Holdings by the Trustee of any Securities of a
-----------------------------------------------------------
Person owning 50 Percent or More of the Voting Securities of
------------------------------------------------------------
the Obligor.
------------
If the Trustee owns beneficially or holds as collateral security for
obligations in default any securities of a person who, to the knowledge
of the Trustee, owns 50 percent or more of the voting securities of the
Obligor, furnish the following information as to each class of securities
of such person any of which are so owned or held by the Trustee:
-5-
<PAGE>
As of May 20, 1994
- - - - ------------------------------------------------------------------------------
Col. A Col. B Col. C Col. D
Amount owned
beneficially or
held as collat-
eral security Percent of class
Title of issuer for obligations represented by
and title of Amount outstand- in default by amount given in
class ing Trustee Col. C
* * * *
- - - - ------------------------------------------------------------------------------
* The Trustee (or any of its affiliates, including Meridian
Bancorp, Inc.) does not own beneficially or hold as collateral security for
obligations in default more than one percent of any securities of a
person who, to the knowledge of the Trustee (or any of its affiliates,
including Meridian Bancorp, Inc.), owns 50 percent or more of the voting
securities of the Obligor. (See Note on page 8.)
Item 12. Indebtedness of the Obligor to the Trustee.
-------------------------------------------
Except as noted on the instructions, if the Obligor is indebted to
the Trustee, furnish the following information:
As of May 20, 1994
- - - - ------------------------------------------------------------------------------
Col. A Col. B Col. C
Nature of indebtedness Amount outstanding Date due
$35,000,000 Line of Credit -- Not applicable
$12,500,000 Line of Credit $500,000 May 31, 1994
$1,000,000 Line of Credit -- Not applicable
$1,000,000 Letter of Credit $536,429 May 31, 1994
$302,049 Letter of Credit $302,049 May 31, 1994
$224,380 Letter of Credit -- Not applicable
$75,000 Letter of Credit -- Not applicable
$10,000 Letter of Credit $10,000 May 31, 1994
- - - - ------------------------------------------------------------------------------
Meridian Bank, an affiliate of the Trustee, has established the
foregoing lines and letters of credit totaling $50,111,429, which may be
drawn upon by the Obligor. As of May 20, 1994, there was an aggregate of
$1,348,478 outstanding on these lines and letters of credit.
Item 13. Defaults by the Obligor.
------------------------
(a) State whether there is or has been a default with respect to
the securities under this indenture. Explain the nature of
any such default.
-6-
<PAGE>
There is not nor has there been a default with respect
to the securities under this indenture. (See Note on page
8.)
(b) If the Trustee is a trustee under another indenture under
which any other securities, or certificates of interest or
participation in any other securities, of the Obligor are
outstanding, or is trustee for more than one outstanding
series of securities under the indenture, state whether there
has been a default under any such indenture or series, iden-
tify the indenture or series affected, and explain the nature
of any such default.
The Trustee is not a trustee under any other indenture
under which any other securities, or certificates of interest
or participation in any other securities, of the Obligor are
outstanding and there has not been a default under any out-
standing securities under this indenture. (See Note on page
8.)
Item 14. Affiliations with the Underwriters.
-----------------------------------
If any Underwriter is an affiliate of the Trustee, describe each
such affiliation.
No Underwriter for the Obligor is an affiliate of the Trustee. (See
Note on page 8.)
Item 15. Foreign Trustee.
----------------
Identify the order or rule pursuant to which the foreign trustee is
authorized to act as sole trustee under indentures qualified or to be
qualified under the Act.
Not applicable.
Item 16. List of Exhibits.
-----------------
List below all exhibits filed as part of this statement of eligibil-
ity and qualification.
1. A copy of the articles of incorporation of the Trustee as now
in effect (incorporated by reference to Exhibit 1 to Form T-1
filed in Form S-3 Registration Statement of The Bell Tele-
phone Company of Pennsylvania (Reg. No. 33-43712)).
2. Certificate of authority of the Trustee to commence business
(incorporated by reference to Exhibit 2 to Form T-1 filed in
Form S-3 Registration Statement of The Bell Telephone Company
of Pennsylvania (Reg. No. 33-43712)).
3. Authorization of the Trustee to exercise corporate trust
powers (incorporated by reference to Exhibit 3 to Form T-1
filed in Form S-3 Registration Statement of The Bell Tele-
phone Company of Pennsylvania (Reg. No. 33-43712)).
4. A copy of the existing by-laws of the Trustee (incorporated
by reference to Exhibit 4 to Form T-1 filed in Form S-3
-7-
<PAGE>
Registration Statement of The Bell Telephone Company of
Pennsylvania (Reg. No. 33-43712)).
5. A copy of the indenture referred to in Item 4, if the Obligor
is in default. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the
Act.
7. A copy of the latest report of condition of the Trustee as of
the close of business on March 31, 1994, published pursuant
to law or the requirement of its supervising or examining
authority.
NOTE
----
Inasmuch as this Form T-1 is filed prior to the ascertainment by
the Trustee of all facts on which to base responsive answers to Items 5,
6, 7, 8, 9, 10, 11, 13 and 14, the answers to said Items are based on
incomplete information.
Items 5, 6, 7, 8, 9, 10, 11, 13 and 14 may, however, be considered
correct unless amended by an amendment to this Form T-1.
In answering any items in this Statement of Eligibility that
related to matters peculiarly within the knowledge of the Obligor, or its
directors or officers, or an Underwriter for the Obligor (Items 5, 6, 7,
8, 9, 10, 11 and 13 particularly), the Trustee has relied upon informa-
tion furnished to it by the Obligor and such Underwriter and the Trustee
disclaims responsibility for the accuracy or completeness of such infor-
mation.
-8-
<PAGE>
SIGNATURE
---------
Pursuant to the requirement of the Trust Indenture Act of 1939, the
Trustee, Meridian Trust Company, a corporation organized and existing
under the laws of the Commonwealth of Pennsylvania, has duly caused this
statement of eligibility and qualification to be signed on its behalf by
the undersigned, thereunto duly authorized, all in the City of Reading
and the Commonwealth of Pennsylvania, on the 20th day of May, 1994.
MERIDIAN TRUST COMPANY
By: /s/ Michael Ruppel
--------------------------------
Name: Michael Ruppel
Title: Account Officer
<PAGE>
CONSENT OF TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture
Act of 1939 and in connection with the proposed issue of up to $360,500,000
aggregate principal amount of PECO Energy Company Subordinated Debentures
due to mature in 2043, we hereby consent that reports of examinations by
federal, state, territorial, or district authorities may be furnished by
such authorities to the Securities and Exchange Commission upon request
therefor.
MERIDIAN TRUST COMPANY
By: /s/ Michael G. Ruppel
--------------------------------
Name: Michael G. Ruppel
Title: Account Officer
Dated: May 25, 1994
------------------
<PAGE>
CONSOLIDATED REPORTS OF CONDITION AND INCOME STATE 034
FOR A COMMERCIAL BANK OR A SAVINGS BANK WITH DOMESTIC OFFICES ONLY Page RC-1
AND TOTAL ASSETS OF LESS THAN $100 MILLION (3-94)
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LEGAL TITLE OF BANK STATE BANK NO.
MERIDIAN TRUST COMPANY --------------------------------
FEDERAL RESERVE DISTRICT NO.
THIRD
- - - - ------------------------------------------------------------------------------
CITY COUNTY STATE ZIP CODE CLOSE OF BUSINESS
MALVERN CHESTER PA 19355 MARCH 31, 1994
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Consolidated Report of Condition for Insured Commercial
and State-Chartered Savings Banks
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of
the quarter.
Schedule RC -- Balance Sheet
--------
| C100 | <-
----------------------
Dollar Amounts in Thousands | Mil Thou |
- - - - --------------------------------------------------------------------------
ASSETS | ////////////////// |
1. Cash and balances due from depository | ////////////////// |
institutions: | ////////////////// |
a. Noninterest-bearing balances and currency | ////////////////// |
and coin(1)(2) ............................ | RCON 0081 5 | 1.a.
b. Interest-bearing balances(3) .............. | RCON 0071 760 | 1.b.
2. Securities: | ////////////////// |
a. HELD-TO-MATURITY SECURITIES (FROM SCHEDULE | ////////////////// |
RC-B, COLUMN A) ........................... | RCON 1754 358 | 2.a.
b. AVAILABLE-FOR-SALE SECURITIES (FROM | ////////////////// |
SCHEDULE RC-B, COLUMN D) .................. | RCON 1773 0 | 2.b
3. Federal funds sold and securities purchased | ////////////////// |
under agreements to resell: | ////////////////// |
a. Federal funds sold(4) ...................... | RCON 0276 0 | 3.a.
b. Securities purchased under agreements | ////////////////// |
to resell(5) ............................... | RCON 0277 0 | 3.b.
4. Loans and lease financing receivables: | ////////////////// |
a. Loans and leases, net of unearned | ////////////////// |
income (from ----------------------| ////////////////// |
Schedule RC-C) ...... | RCON 2122 173 | ////////////////// | 4.a.
b. LESS: Allowance | //////////////////// | ////////////////// |
for loan and | //////////////////// | ////////////////// |
lease losses ........ | RCON 3123 0 | ////////////////// | 4.b.
c. LESS: Allocated | //////////////////// | ////////////////// |
transfer risk | //////////////////// | ////////////////// |
reserve ............. | RCON 3128 0 | ////////////////// | 4.c.
----------------------| ////////////////// |
d. Loans and leases, net of unearned income, | ////////////////// |
allowance, and reserve (item 4.a minus 4.b | ////////////////// |
and 4.c) ................................... | RCON 2125 173 | 4.d.
5. Assets held in trading accounts ............... | RCON 3545 0 | 5.
6. Premises and fixed assets (including | ////////////////// |
capitalized leases) ........................... | RCON 2145 1,003 | 6.
7. Other real estate owned (from Schedule RC-M) .. | RCON 2150 0 | 7.
8. Investments in unconsolidated subsidiaries and | ////////////////// |
associated companies (from Schedule RC-M) ..... | RCON 2130 0 | 8.
9. Customers' liability to this bank on | ////////////////// |
acceptances outstanding ....................... | RCON 2155 0 | 9.
10. Intangible assets (from Schedule RC-M) ........ | RCON 2143 0 |10.
11. Other assets (from Schedule RC-F) ............. | RCON 2160 5,496 |11.
12. a. Total assets (sum of items 1 through 11) ... | RCON 2170 7,795 |12.a.
b. Losses deferred pursuant to 12 U.S.C. | ////////////////// |
1823(j) (from Schedule RC-M) ............... | RCON 0306 0 |12.b.
c. Total assets and losses deferred pursuant | ////////////////// |
to 12 U.S.C. 1823(j) (sum of items 12.a and | ////////////////// |
12.b) ...................................... | RCON 0307 7,795 |12.c.
----------------------
- - - - ----------
(1) Includes cash items in process of collection and unposted debits. Report
deposit accounts "due from" depository institutions that are overdrawn
in Schedule RC, item 16, "Other borrowed money."
(2) The amount reported in this item must be greater than or equal to the
sum of Schedule RC-M, items 2 and 3.
(3) Includes time certificates of deposit not held in trading accounts.
(4) Report "term federal funds sold" in Schedule RC, item 4.a, "Loans and
leases, net of unearned income," and in Schedule RC-C, part I.
(5) Report securities purchased under agreements to resell that involve the
receipt of immediately available funds and mature in one business day
or roll over under a continuing contract in Schedule RC, item 3.a,
"Federal funds sold."
<PAGE>
STATE 034
Page RC-2
(3-94)
Schedule RC -- Continued
--------
| //// | <-
--------------------------
Dollar Amounts in Thousands | ///////////// Mil Thou |
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LIABILITIES | ////////////////////// |
13. Deposits: | ////////////////////// |
a. In domestic offices (sum of totals | ////////////////////// |
of columns A and C from Schedule | ////////////////////// |
RC-E) ............................... | RCON 2200 0 |13.a.
(1) Non- | ////////////////////// |
interest -----------------------| ////////////////////// |
bearing(1) | RCON 6631 0 | ////////////////////// |13.a.(1)
(2) Interest | //////////////////// | ////////////////////// |
bearing .. | RCON 6636 0 | ////////////////////// |13.a.(2)
-----------------------| ////////////////////// |
b. In foreign offices, Edge and | ////////////////////// |
Agreement subsidiaries, and IBFs .... | ////////////////////// |
(1) Non-interest bearing ............ | ////////////////////// |
(2) Interest bearing ................ | ////////////////////// |
14. Federal funds purchased and securities | ////////////////////// |
sold under agreements to repurchase: | ////////////////////// |
a. Federal funds purchased(2) .......... | RCON 0278 0 | 14.a.
b. Securities sold under agreements | ////////////////////// |
to repurchase(3) .................... | RCON 0279 0 | 14.b.
15. a. Demand notes issued to the U.S. | ////////////////////// |
Treasury ............................ | RCON 2840 0 | 15.a.
b. TRADING LIABILITIES ................. | RCON 3548 0 | 15.b.
16. Other borrowed money: | ////////////////////// |
a. WITH ORIGINAL MATURITY OF ONE YEAR | ////////////////////// |
OR LESS ............................. | RCON 2332 0 | 16.a.
b. WITH ORIGINAL MATURITY OF MORE THAN | ////////////////////// |
ONE YEAR ............................ | RCON 2333 0 | 16.b.
17. Mortgage indebtedness and obligations | ////////////////////// |
under capitalized leases ............... | RCON 2910 0 | 17.
18. Bank's liability on acceptances executed | ////////////////////// |
and outstanding ........................ | RCON 2920 0 | 18.
19. Subordinated notes and debentures....... | RCON 3200 0 | 19.
20. Other liabilities (from Schedule RC-G).. | RCON 2930 3,190 | 20.
21. Total liabilities (sum of items 13 | ////////////////////// |
through 20) ............................ | RCON 2948 3,190 | 21.
| ////////////////////// |
22. Limited-life preferred stock and | ////////////////////// |
related surplus ........................ | RCON 3282////////////0 | 22.
EQUITY CAPITAL | ////////////////////// |
23. Perpetual preferred stock and related | ////////////////////// |
surplus ................................ | RCON 3838 0 | 23.
24. Common stock ........................... | RCON 3230 300 | 24.
25. Surplus (exclude all surplus related | ////////////////////// |
to preferred stock) .................... | RCON 3839 477 | 25.
26. a. Undivided profits and capital | ////////////////////// |
reserves ............................ | RCON 3632 3,828 | 26.a.
b. NET UNREALIZED HOLDING GAINS | ////////////////////// |
(LOSSES) ON AVAILABLE-FOR SALE | ////////////////////// |
SECURITIES .......................... | RCON 8434 0 | 26.b.
27. Cumulative foreign currency | ////////////////////// |
translation adjustments ................ | ////////////////////// |
28. a. Total equity capital (sum of items | ////////////////////// |
23 through 27) ...................... | RCON 3210 4,606 | 28.a.
b. Losses deferred pursuant to 12 U.S.C. | ////////////////////// |
1823(j) (from Schedule RC-M) ........ | RCON 0306 0 | 28.b.
c. Total equity capital and losses | ////////////////////// |
deferred pursuant to 12 U.S.C. | ////////////////////// |
1823(j) (sum of items 28.a and 28.b). | RCON 3559 4,606 | 28.c.
29. Total liabilities, limited-life | ////////////////////// |
preferred stock, equity capital, and | ////////////////////// |
losses deferred pursuant to 12 U.S.C. | ////////////////////// |
1823(j) (sum of items 21, 22, and 28.c). | RCON 2257 7,795 | 29.
--------------------------
Memorandum
TO BE REPORTED ONLY WITH THE MARCH REPORT OF CONDITION.
1. Indicate in the box at the right the
number of the statement below that best
describes the most comprehensive level of
auditing work performed for the bank by Number
independent external auditors as of any ------------------
date during 1993 ................................... | RCON 6724 2 | M.1.
------------------
1 = Independent audit of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm which
submits a report on the bank
2 = Independent audit of the bank's parent holding company conducted in
accordance with generally accepted auditing standards by a certified
public accounting firm which submits a report on the consolidated
holding company (but not on the bank separately)
3 = Directors' examination of the bank conducted in accordance with
generally accepted auditing standards by a certified public accounting
firm (may be required by state chartering authority)
4 = Directors' examination of the bank performed by other external auditors
(may be required by state chartering authority)
5 = Review of the bank's financial statements by external auditors
6 = Compilation of the bank's financial statements by external auditors
7 = Other audit procedures (excluding tax preparation work)
8 = No external audit work
- - - - ----------
(1) Includes total demand deposits and noninterest-bearing time
and savings deposits.
(2) Report "term federal funds purchased" in Schedule RC, item 16,
"Other borrowed money."
(3) Report securities sold under agreements to repurchase that involve
the receipt of immediately available funds and mature in one business
day or roll over under a continuing contract in schedule RC, item 14.a,
"Federal funds purchased."
