<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 24, 1995
REGISTRATION NOS. 33-60859
33-60859-01
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1 TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
<TABLE>
<S> <C> <C>
PECO ENERGY COMPANY PECO ENERGY CAPITAL, L.P. PECO ENERGY CAPITAL TRUST I
(EXACT NAME OF REGISTRANT (EXACT NAME OF REGISTRANT AS (EXACT NAME OF REGISTRANT AS
AS SPECIFIED IN ITS CHARTER) SPECIFIED IN SPECIFIED
ITS CERTIFICATE OF LIMITED IN ITS CERTIFICATE OF TRUST)
PARTNERSHIP)
Pennsylvania Delaware Delaware
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)
4931 6799 6799
(PRIMARY STANDARD INDUSTRIAL CLASSIFICATION CODE NUMBER)
23-0970240 51-0355322 51-0369609
(I.R.S. EMPLOYER IDENTIFICATION NO.)
P.O. Box 8699, 2301 Market Street 1013 Centre Road, Suite 350F c/o PNC Bank, Delaware
Philadelphia, PA 19101 Wilmington, DE 19805 222 Delaware Avenue
(215) 841-4000 (302) 998-0592 Wilmington, DE 19801
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF PRINCIPAL EXECUTIVE OFFICES)
J. B. MITCHELL
P.O. Box 8699, 2301 Market Street
Philadelphia, PA 19101
(215) 841-4000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE FOR
EACH REGISTRANT)
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 1345 Chestnut Street
Philadelphia, PA 19103-7599 Philadelphia, PA 19107
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the Registration Statement becomes effective.
---------------------
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
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CALCULATION OF REGISTRATION FEE
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<CAPTION>
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PROPOSED PROPOSED
AMOUNT MAXIMUM OFFERING MAXIMUM AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF TO BE PRICE PER OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(1) UNIT(2)(3) PRICE(2)(3) FEE(4)
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<S> <C> <C> <C> <C>
Trust Receipts issued by PECO Energy Capital I
representing PECO Energy Capital, L.P. %
Cumulative Monthly Income Preferred
Securities, Series B........................ $ % $ $
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PECO Energy Capital, L.P. % Cumulative
Monthly Income Preferred Securities, Series
B........................................... $ % $ $
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PECO Energy Company Guarantee with respect to
PECO Energy Capital, L.P. % Cumulative
Monthly Income Preferred Securities, Series
B(5)........................................ $ % $ $
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PECO Energy Company, % Deferrable Interest
Subordinated Debentures, Series B........... $ % $ $
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Total......................................... $135,000,000 100% $135,000,000 $46,552
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</TABLE>
(1) There are being registered hereunder a presently indeterminate number of
Trust Receipts, each representing a % Cumulative Monthly Income
Preferred Security, Series B of PECO Energy Capital, L.P., with an aggregate
initial offering price not to exceed $135,000,000 and related Guarantee and
% Deferrable Interest Subordinated Debentures, Series B 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 Trust Receipts.
(5) Includes the rights of holders of the Series B Preferred Securities under
the Payment and Guarantee Agreement and certain backup undertakings related
thereto as described in the Registration Statement.
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> 2
CROSS REFERENCE SHEET
PECO ENERGY COMPANY
PECO ENERGY CAPITAL, L.P.
PECO ENERGY CAPITAL TRUST I
PURSUANT TO ITEM 501(b) OF REGULATION S-K SHOWING
LOCATION IN OFFERING CIRCULAR/PROSPECTUS OF ITEMS OF FORM S-4
<TABLE>
<CAPTION>
FORM S-4 ITEM NO. CAPTION IN OFFERING CIRCULAR/PROSPECTUS
------------------------------------------- -------------------------------------------
<S> <C>
1. Forepart of Registration Statement and
Outside Front Cover Page of Prospectus... Outside Front Cover Page; Inside Front
Cover Page
2. Inside Front and Outside Back Cover Pages
of Prospectus............................ Inside Front Cover Page; Available
Information; Incorporation of Certain
Documents by Reference; Table of Contents
3. Risk Factors, Ratio of Earnings to Fixed
Charges and Other Information............ Offering Circular/Prospectus Summary; Risk
Factors; Coverage Ratios; Selected
Consolidated Financial Data; Comparison
of Preferred Trust Receipts and
Depositary Shares; The Offer -- General;
United States Taxation
4. Terms of the Transaction................... Offering Circular/Prospectus Summary
5. Pro Forma Financial Information............ Not Applicable
6. Material Contracts with the Company Being
Acquired................................. Not Applicable
7. Additional Information Required for
Reoffering by Persons and Parties Deemed
to be Underwriters....................... Not Applicable
8. Interests of Named Experts and Counsel..... Legal Matters; Experts
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities.............................. Not Applicable
10. Information with Respect to S-3
Registrants.............................. Incorporation of Certain Documents by
Reference
11. Incorporation of Certain Information by
Reference................................ Incorporation of Certain Documents by
Reference
12. Information with Respect to S-2 or S-3
Registrants.............................. Not Applicable
13. Incorporation of Certain Information by
Reference................................ Not Applicable
14. Information with Respect to Registrants
Other than S-3 or S-2 Registrants........ The Trust
15. Information with Respect to S-3
Companies................................ Not Applicable
16. Information with Respect to S-2 or S-3
Companies................................ Not Applicable
17. Information with Respect to Companies Other
than S-3 or S-2 Companies................ Not Applicable
18. Information if Proxies, Consents or
Authorizations are to be Solicited....... Not Applicable
19. Information if Proxies, Consents or
Authorizations are not to be Solicited or
in an Exchange Offer..................... Incorporation of Certain Documents by
Reference
</TABLE>
<PAGE> 3
SUBJECT TO COMPLETION, DATED OCTOBER , 1995
OFFERING CIRCULAR/PROSPECTUS
PECO ENERGY COMPANY
OFFER TO EXCHANGE
TRUST RECEIPTS ("TOPRS (SM)") EACH REPRESENTING A
% CUMULATIVE MONTHLY INCOME PREFERRED SECURITY,
SERIES B OF PECO ENERGY CAPITAL, L.P.
(STATED LIQUIDATION PREFERENCE $25 PER PREFERRED SECURITY)
FOR UP TO 5,400,000 OUTSTANDING DEPOSITARY SHARES
EACH REPRESENTING A ONE-FOURTH INTEREST IN A SHARE OF $7.96
CUMULATIVE PREFERRED STOCK
OF
PECO ENERGY COMPANY
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON , 1995,
UNLESS THE OFFER IS EXTENDED.
---------------------
PECO Energy Company, a Pennsylvania corporation ("PECO Energy"), hereby
offers, upon the terms and subject to the conditions set forth in this Offering
Circular/Prospectus and the accompanying Letter of Transmittal (the "Letter of
Transmittal" which, together with this Offering Circular/Prospectus, constitute
the "Offer"), to effect the exchange (the "Exchange") of Trust Receipts, each
representing a % Cumulative Monthly Income Preferred Security, Series B,
representing a limited partner interest issued by PECO Energy Capital, L.P., a
limited partnership formed under the laws of the State of Delaware ("PECO Energy
Capital"), for up to 5,400,000 depositary shares (the "Depositary Shares"), or
96.4% of the outstanding Depositary Shares, each representing a one-fourth
interest in a share of $7.96 Cumulative Preferred Stock of PECO Energy. The
Trust Receipts, which will be issued by PECO Energy Capital Trust I, a statutory
business trust created under the laws of the State of Delaware (the "Trust"),
are hereinafter referred to as the "Preferred Trust Receipts" and the underlying
% Cumulative Monthly Income Preferred Securities, Series B of PECO Energy
Capital are hereinafter referred to as the "Series B Preferred Securities."
Exchanges will be made on the basis of one Preferred Trust Receipt for each
Depositary Share validly tendered and accepted for exchange in the Offer.
Depositary Shares not accepted for exchange because of proration or otherwise
will be returned.
IN ORDER TO PARTICIPATE IN THE OFFER, HOLDERS OF DEPOSITARY SHARES MUST
EITHER SUBMIT A LETTER OF TRANSMITTAL (OR AN AGENT'S MESSAGE, IF APPLICABLE) OR
SUBMIT A NOTICE OF GUARANTEED DELIVERY AND COMPLY WITH THE OTHER PROCEDURES FOR
TENDERING IN ACCORDANCE WITH THE INSTRUCTIONS CONTAINED HEREIN AND IN THE LETTER
OF TRANSMITTAL PRIOR TO 12:00 MIDNIGHT, NEW YORK CITY TIME, ON , 1995
(THE "EXPIRATION DATE").
Application has been made to list the Preferred Trust Receipts on the New
York Stock Exchange (the "NYSE"). If such application is approved, trading of
the Preferred Trust Receipts on the NYSE is expected to commence within a 30-day
period after the initial delivery of the Preferred Trust Receipts.
---------------------
SEE "RISK FACTORS" WHICH COMMENCES ON PAGE 9 OF THIS OFFERING
CIRCULAR/PROSPECTUS FOR A DISCUSSION OF CERTAIN FACTORS RELATING TO THE
PREFERRED TRUST RECEIPTS THAT SHOULD BE CONSIDERED BY INVESTORS, INCLUDING THE
PERIOD DURING WHICH AND CIRCUMSTANCES UNDER WHICH DISTRIBUTIONS ON THE
UNDERLYING SERIES B PREFERRED SECURITIES MAY BE DEFERRED AND THE RELATED FEDERAL
INCOME TAX CONSEQUENCES.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR BY ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
OFFERING CIRCULAR/PROSPECTUS, AND ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
---------------------
NO RECOMMENDATION TO HOLDERS OF DEPOSITARY SHARES TO TENDER OR TO REFRAIN
FROM TENDERING IN THE OFFER IS MADE BY PECO ENERGY, THE BOARD OF DIRECTORS OF
PECO ENERGY, PECO ENERGY CAPITAL, THE GENERAL PARTNER OF PECO ENERGY CAPITAL,
THE TRUST OR THE TRUSTEE (AS DEFINED BELOW). HOLDERS OF DEPOSITARY SHARES ARE
URGED TO CONSULT THEIR FINANCIAL AND TAX ADVISERS IN MAKING THEIR DECISIONS ON
WHAT ACTION TO TAKE IN LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES.
---------------------
PECO Energy will pay to Soliciting Dealers (as defined herein) designated by
the record or beneficial owner, as appropriate, of Depositary Shares a
solicitation fee of $ per Depositary Share validly tendered and accepted
for exchange pursuant to the Offer and to Merrill Lynch & Co. and Smith Barney
Inc., as Dealer Managers, an aggregate fee of $ per Depositary Share
tendered pursuant to the Offer, subject to certain conditions. Soliciting
Dealers are not entitled to a solicitation fee for Depositary Shares
beneficially owned by such Soliciting Dealer. See "The Offer -- Dealer Managers;
Soliciting Dealers."
---------------------
The Dealer Managers for the Offer are:
MERRILL LYNCH & CO. SMITH BARNEY INC.
THE DATE OF THIS OFFERING CIRCULAR/PROSPECTUS IS , 1995.
"TOPrS (SM)" is a service mark of Merrill Lynch & Co., Inc.
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 OFFERING CIRCULAR/PROSPECTUS 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> 4
DIAGRAM OF OFFER
[CHART]
- ---------------
(1) Depositary Shares
(2) Series B Subordinated Debentures*
(3) Series B Preferred Securities
(4) Preferred Trust Receipts**
* The principal amount of the Series B Subordinated Debentures delivered to
PECO Energy Capital pursuant to the Exchange will be equal to the aggregate
stated liquidation preference of the Series B Preferred Securities issued
in connection with the Offer. PECO Energy Capital will also purchase Series
B Subordinated Debentures with a principal amount equal to the proceeds
received by PECO Energy Capital from the issuance of additional general
partner interests to PECO Energy Capital Corp., the general partner.
** Holders of Depositary Shares who participate in the Offer will receive one
Preferred Trust Receipt for each outstanding Depositary Share that is
validly tendered and accepted for exchange.
<PAGE> 5
DIAGRAM OF OFFER SHOWING END RESULT
FOR HOLDERS OF DEPOSITARY SHARES
[CHART]
- ---------------
* Holders of Depositary Shares who participate in the Offer will receive one
Preferred Trust Receipt for each outstanding Depositary Share that is validly
tendered and accepted for exchange.
DIAGRAM OF PAYMENT
FLOWS AFTER COMPLETION
OF THE EXCHANGE
[CHART]
<PAGE> 6
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED IN THIS
OFFERING CIRCULAR/PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS SHOULD NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY PECO
ENERGY, PECO ENERGY CAPITAL, THE TRUST OR THE DEALER MANAGERS. NEITHER THE
DELIVERY OF THIS OFFERING CIRCULAR/PROSPECTUS NOR ANY EXCHANGE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF PECO ENERGY, PECO ENERGY CAPITAL OR THE TRUST SINCE THE
RESPECTIVE DATES AS OF WHICH INFORMATION IS GIVEN HEREIN. THE OFFER IS NOT BEING
MADE TO (NOR WILL TENDERS BE ACCEPTED FROM OR ON BEHALF OF) HOLDERS OF
DEPOSITARY SHARES IN ANY JURISDICTION IN WHICH THE MAKING OF THE OFFER OR THE
ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE LAWS OF SUCH
JURISDICTION. HOWEVER, PECO ENERGY, PECO ENERGY CAPITAL OR THE TRUST MAY, AT
THEIR DISCRETION, TAKE SUCH ACTION AS THEY MAY DEEM NECESSARY TO MAKE THE OFFER
IN ANY SUCH JURISDICTION AND EXTEND THE OFFER TO HOLDERS OF DEPOSITARY SHARES IN
SUCH JURISDICTION. IN ANY JURISDICTION THE LAWS OF WHICH REQUIRE THE OFFER TO BE
MADE BY A LICENSED BROKER OR DEALER, THE OFFER IS BEING MADE ON BEHALF OF PECO
ENERGY BY THE DEALER MANAGERS OR ONE OR MORE REGISTERED BROKERS OR DEALERS WHICH
ARE LICENSED UNDER THE LAWS OF SUCH JURISDICTION.
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
information statements 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
and information statements and other information concerning PECO Energy may be
inspected.
No separate financial statements of PECO Energy Capital or the Trust have
been included herein. PECO Energy does not consider that such financial
statements would be material to holders of Preferred Trust Receipts offered
hereby because PECO Energy Capital and the Trust are special purpose entities,
have no independent operations and are not engaged in, and do not propose to
engage in, any activity other than as set forth below. See "PECO Energy Capital"
and "The Trust."
1
<PAGE> 7
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, 1994;
2. PECO Energy's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1995 and June 30, 1995; and
3. PECO Energy's Current Reports on Form 8-K dated February 2, 1995,
May 24, 1995, June 13, 1995, July 24, 1995, August 14, 1995, October 17,
1995 and October 23, 1995.
Each document filed subsequent to the date of this Offering
Circular/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 Offering Circular/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 Offering Circular/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 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 Offering
Circular/Prospectus.
THIS OFFERING CIRCULAR/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. PECO ENERGY UNDERTAKES TO
PROVIDE WITHOUT CHARGE TO EACH PERSON, INCLUDING ANY BENEFICIAL OWNER, TO WHOM
AN OFFERING CIRCULAR/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. IN ORDER TO ENSURE TIMELY
DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE NOT LATER THAN FIVE
BUSINESS DAYS PRIOR TO THE EXPIRATION DATE.
TABLE OF CONTENTS
<TABLE>
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PAGE
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Offering Circular/Prospectus Summary.................................................. 3
Risk Factors.......................................................................... 9
Comparison of Preferred Trust Receipts and Depositary Shares.......................... 11
PECO Energy........................................................................... 14
PECO Energy Capital................................................................... 14
The Trust............................................................................. 14
Coverage Ratios....................................................................... 14
Selected Consolidated Financial Data.................................................. 16
The Offer............................................................................. 18
Listing and Trading of Preferred Trust Receipts and Depositary Shares................. 25
Transactions and Arrangements Concerning the Offer.................................... 26
Fees and Expenses; Transfer Taxes..................................................... 26
Price Range of Depositary Shares...................................................... 26
Description of the Preferred Trust Receipts........................................... 27
Description of the Series B Preferred Securities...................................... 30
Description of the Series B Guarantee................................................. 36
Description of the Series B Subordinated Debentures and the Indenture................. 38
Description of the Depositary Shares.................................................. 43
United States Taxation................................................................ 48
Legal Matters......................................................................... 51
Experts............................................................................... 51
</TABLE>
2
<PAGE> 8
OFFERING CIRCULAR/PROSPECTUS SUMMARY
The following summary does not purport to be complete and is qualified in
its entirety by the more detailed information contained elsewhere in, or
incorporated by reference in, this Offering Circular/Prospectus.
PECO ENERGY
PECO Energy Company, incorporated in Pennsylvania in 1929, is an operating
utility which provides electric and gas service to the public in southeastern
Pennsylvania. In 1994, PECO Energy's total revenues were $4 billion, with
approximately 90% derived from its electric business and 10% from its gas
business. PECO Energy's mailing address is P.O. Box 8699, Philadelphia, PA
19101, and its telephone number is (215) 841-4000. See "PECO Energy -- Recent
Developments."
PECO ENERGY CAPITAL
PECO Energy Capital, L.P. is a limited partnership formed in 1994 under the
laws of the State of Delaware solely for the purpose of issuing one or more
series of its limited partner interests (the "Preferred Securities") and lending
the proceeds thereof to PECO Energy and entering into similar arrangements. PECO
Energy Capital's mailing address is 1013 Centre Road, Suite 350F, Wilmington, DE
19805, and its telephone number is (302) 998-0592.
THE TRUST
PECO Energy Capital Trust I is a statutory business trust recently created
under the laws of the State of Delaware solely for the purpose of issuing
Preferred Trust Receipts representing the Series B Preferred Securities held by
the Trust and performing functions directly related thereto. The Trust's mailing
address is c/o PNC Bank, Delaware, Corporate Trust Department, 222 Delaware
Avenue, Wilmington, Delaware 19801, and its telephone number is (302) 429-1546.
THE OFFER
Subject to the terms and conditions set forth herein and in the Letter of
Transmittal, PECO Energy offers to effect the exchange of Preferred Trust
Receipts, each representing a Series B Preferred Security, for up to 5,400,000
Depositary Shares. The exchange of Preferred Trust Receipts for Depositary
Shares will be effected by (a) the delivery by PECO Energy of its %
Deferrable Interest Subordinated Debentures, Series B (the "Series B
Subordinated Debentures") to First Chicago Trust Company of New York (the
"Exchange Agent"), which will receive the Series B Subordinated Debentures on
behalf of the Holders (as defined herein) of the Depositary Shares in exchange
for Depositary Shares, (b) the delivery by the Exchange Agent (acting pursuant
to the directions of the Holders of the Depositary Shares) of the Series B
Subordinated Debentures to PECO Energy Capital in consideration for the issuance
and deposit by PECO Energy Capital of the Series B Preferred Securities to the
Trust under an Amended and Restated Trust Agreement (the "Trust Agreement") with
PNC Bank, Delaware, as Trustee and (c) the issuance and delivery by the Trust of
the Preferred Trust Receipts to the Exchange Agent for distribution to the
former Holders of the Depositary Shares.
The Preferred Trust Receipts are being issued in exchange for the
Depositary Shares instead of directly issuing the Series B Preferred Securities
to Holders so that a holder of Preferred Trust Receipts will receive a Form 1099
to report interest income for Federal income tax purposes, rather than a Form
K-1 which would have been required if the Series B Preferred Securities were
held directly by investors.
On July 3, 1995, the last day of trading prior to the first public
announcement of the Offer, the closing sales price of the Depositary Shares on
the NYSE as reported on the Composite Tape was $25 1/8 per share. Holders of
Depositary Shares are urged to obtain a current market quotation for the
Depositary Shares.
3
<PAGE> 9
PURPOSE OF THE OFFER
- The purpose of the Offer is to reduce the after-tax financing costs of
PECO Energy through the replacement of Depositary Shares with Preferred
Trust Receipts.
POTENTIAL BENEFITS TO EXCHANGING HOLDERS
- The rate of Distributions on the Preferred Trust Receipts will be
basis points greater than the dividend rate on the Depositary Shares.
- Dividends on the Depositary Shares accumulate but do not compound.
Monthly Distributions on Preferred Trust Receipts will be cumulative and
monthly Distributions in arrears after the monthly payment date therefor
will accumulate additional Distributions thereon at the Distribution
rate. The term "Distributions" as used herein shall include, as
applicable, monthly distributions and distributions on monthly
distributions in arrears. Monthly Distributions on the Series B Preferred
Securities underlying the Preferred Trust Receipts will be made from
interest payments by PECO Energy on the Series B Subordinated Debentures.
PECO Energy can defer such interest payments for up to 60 consecutive
months (the "Extension Period"). During such deferral, PECO Energy may
not pay dividends on any of its capital stock, including the Depositary
Shares. PECO Energy currently believes that it is unlikely that it (a)
will discontinue declaring dividends on its capital stock, including the
Depositary Shares, or (b) defer interest payments on the Series B
Subordinated Debentures.
- Monies for Distributions and liquidation and redemption payments on the
Preferred Trust Receipts will only be available if PECO Energy pays
principal and interest on the Series B Subordinated Debentures. Although
the Series B Subordinated Debentures are subordinated to all Senior
Indebtedness (as defined herein) of PECO Energy (approximately $5.0
billion at September 30, 1995) and the Payment and Guarantee Agreement
delivered by PECO Energy for the benefit of the holders of the Series B
Preferred Securities (the "Series B Guarantee") is subordinated to all
creditors of PECO Energy, in the event of a liquidation of PECO Energy,
the Series B Subordinated Debentures and the Series B Guarantee must be
satisfied in full before the holders of PECO Energy's preferred stock,
including the Depositary Shares, will be entitled to any liquidation
payments.
- The Series B Preferred Securities and the Preferred Trust Receipts will
be redeemed upon payment at maturity of the Series B Subordinated
Debentures on , 2025. As a result, the Preferred Trust
Receipts are effectively subject to mandatory redemption; in contrast the
Depositary Shares could remain outstanding indefinitely.
POTENTIAL DISADVANTAGES TO EXCHANGING HOLDERS
- Participation in the Offer will be a taxable event for Holders of
Depositary Shares; Holders of Depositary Shares should consult their tax
advisers.
- If PECO Energy elects to defer payments of interest on the Series B
Subordinated Debentures by extending the interest period thereon,
Distributions on the Preferred Trust Receipts would also be deferred but
the holders of the Preferred Trust Receipts would continue to accrue
interest income (as original issue discount) in respect of the Preferred
Trust Receipts which will be taxable to owners of the Preferred Trust
Receipts. As a result, owners of the Preferred Trust Receipts during an
Extension Period of interest on the Series B Subordinated Debentures will
include their pro rata share of the interest in gross income in advance
of the receipt of cash.
- Holders of Preferred Trust Receipts will have no voting rights with
respect to PECO Energy. If preferred dividends of PECO Energy are in
arrears in an aggregate amount equivalent to four full quarterly dividend
payments, the holders of PECO Energy's preferred stock, including Holders
of Depositary Shares, have the right to elect the least number of
directors necessary to constitute a majority of the full board of
directors of PECO Energy.
4
<PAGE> 10
- While the Depositary Shares are not redeemable prior to October 1, 1997,
the Series B Preferred Securities (and thus the Preferred Trust Receipts)
in certain circumstances will be redeemable prior to that date upon the
occurrence of a Tax Event (as defined herein) or an Investment Company
Act Event (as defined herein).
- While dividends on the Depositary Shares are eligible for the dividends
received deduction for corporate holders, distributions on the Preferred
Trust Receipts are not eligible for the dividends received deduction for
corporate holders.
- While application has been made for listing the Preferred Trust Receipts
on the NYSE, the Preferred Trust Receipts have not yet been approved for
listing. Even if the Preferred Trust Receipts are approved for listing,
the Preferred Trust Receipts are a new issue of securities with no
established trading market.
- Holders of the Depositary Shares are entitled to participate in PECO
Energy's Dividend Reinvestment and Stock Purchase Plan. Holders of
Preferred Trust Receipts will not be entitled to participate in such
plan.
POTENTIAL RISK TO NON-EXCHANGING HOLDERS
- The liquidity and trading market for Depositary Shares which are not
exchanged in the Offer could be adversely affected by the reduction in
the number of publicly traded Depositary Shares resulting from the Offer.
For more detailed information concerning the potential disadvantages to
exchanging Holders of Depositary Shares and the potential risk to non-exchanging
Holders of Depositary Shares, see "Risk Factors" and "United States Taxation"
herein.
TERMS OF THE OFFER
BASIS OF EXCHANGE: One Preferred Trust Receipt for each Depositary
Share validly tendered and accepted.
MAXIMUM NUMBER OF SHARES;
PRORATION: The Offer is for up to 5,400,000 Depositary Shares,
unless reduced by PECO Energy in its sole
discretion. If more than 5,400,000 Depositary
Shares are validly tendered, acceptance of
Depositary Shares of each tendering Holder will
be pro rated.
EXPIRATION DATE: 12:00 Midnight, New York City time on ,
1995 unless extended by PECO Energy in its sole
discretion or as required by law.
EXCHANGE DATE: The date of issuance of the Preferred Trust
Receipts will be as soon as practicable following
the Expiration Date or up to 12 Business Days
following the Expiration Date if proration of
tendered Depositary Shares is required.
WITHDRAWALS: Any time prior to the Expiration Date and, unless
accepted for exchange, at any time after 40
Business Days (defined, for purposes of the
Offer, as any day other than a Saturday, Sunday
or federal holiday) from , 1995.
AMENDMENT; TERMINATION: PECO Energy may amend or terminate the Offer and
not accept any Depositary Shares at any time
prior to the Expiration Date, provided PECO
Energy will not accept Depositary Shares if as of
the Expiration Date for any reason there would be
fewer than 1,000,000 Preferred Trust Receipts to
be issued or 400 record or beneficial holders of
Preferred Trust Receipts to be issued as a result
of the Exchange.
5
<PAGE> 11
PROCEDURES FOR TENDERING: In order to participate in the Offer, Holders of
Depositary Shares must submit a Letter of
Transmittal or Agent's Message (as defined
herein) or submit a Notice of Guaranteed Delivery
and comply with the other procedures for
tendering in accordance with instructions
contained herein and in the Letter of Transmittal
prior to the Expiration Date.
LETTERS OF TRANSMITTAL, DEPOSITARY SHARES AND ANY OTHER REQUIRED DOCUMENTS
SHOULD BE SENT ONLY TO THE EXCHANGE AGENT, NOT TO PECO ENERGY, PECO ENERGY
CAPITAL, THE TRUST, THE DEALER MANAGERS OR THE INFORMATION AGENT.
BENEFICIAL OWNERS: Any beneficial owner of Depositary Shares
registered in the name of a broker/dealer,
commercial bank, trust company or other nominee
who wishes to tender must instruct such
registered holder to tender on behalf of such
beneficial owner.
GUARANTEED DELIVERY
PROCEDURES: A tender may be effected in accordance with the
guaranteed delivery procedures set forth in "The
Offer -- Procedures for Tendering -- Guaranteed
Delivery."
EXCHANGE AGENT: First Chicago Trust Company of New York.
INFORMATION AGENT: D. F. King & Co., Inc.
DEALER MANAGERS: Merrill Lynch & Co. and Smith Barney Inc.
Questions and requests for assistance, requests for additional copies of
this Offering Circular/Prospectus or of the Letter of Transmittal and requests
for Notices of Guaranteed Delivery should be directed to the Information Agent.
The address and telephone number of the Information Agent are set forth in "The
Offer -- Exchange Agent and Information Agent" and on the outside back cover of
this Offering Circular/Prospectus. Questions with respect to the Offer may be
directed to Merrill Lynch & Co. Marketing Support at (212) 236-4565 (call
collect) or the Smith Barney Inc. Liability Management Group at (800) 813-3754.
PREFERRED TRUST RECEIPTS
NATURE OF SECURITY: Each Preferred Trust Receipt represents a Series B
Preferred Security
DISTRIBUTIONS: Cumulative Distributions at the annual rate
of % per annum payable monthly in arrears.
Distributions in arrears after the monthly
payment date therefor will accumulate additional
Distributions thereon at the Distribution rate.
Additionally, the Preferred Trust Receipts will
accrue an additional distribution at the rate of
7.96% per annum of the liquidation amount thereof
from November 1, 1995 up to but not including the
Exchange Date, payable on the first Distribution
payment date.
DENOMINATIONS: Each Preferred Trust Receipt represents a Series B
Preferred Security; each Series B Preferred
Security has a stated liquidation preference of
$25.
FORM: Certificated or Book-Entry
REDEMPTION: Upon any redemption of Series B Preferred
Securities, which are subject to the following
redemptions:
Optional:
(i) After October 1, 1997
(ii) Upon a Tax Event
Mandatory:
(i) Upon an Investment Company Event
(ii) Upon payment at maturity of the
Series B Subordinated
Debentures on , 2025
6
<PAGE> 12
(iii) Upon redemption of the Series B
Subordinated Debentures, which are
subject to optional redemption
upon a Tax Event or after October 1,
1997
LISTING: Application has been made for listing the Preferred
Trust Receipts on the NYSE. In order to satisfy
the NYSE listing requirements, acceptance of
Depositary Shares validly tendered in the Offer
is subject to the conditions that as of the
Expiration Date there be at least 1,000,000
Preferred Trust Receipts to be issued or 400
record or beneficial holders of Preferred Trust
Receipts to be issued in exchange for such
Depositary Shares, which conditions may not be
waived.
WITHDRAWAL: Upon surrender of Preferred Trust Receipts at the
principal office of the Trustee, and subject to
the terms of the Partnership Agreement, a holder
of Preferred Trust Receipts represented thereby
is entitled to delivery of the whole number of
Series B Preferred Securities represented by such
Preferred Trust Receipts.
SERIES B SUBORDINATED
DEBENTURES: The Distribution rate and the Distribution and
other payment dates for the Series B Preferred
Securities represented by the Preferred Trust
Receipts will correspond to the interest rate and
the interest and other payment dates of the
Series B Subordinated Debentures issued to PECO
Energy Capital concurrently with the issuance of
the Series B Preferred Securities. The Series B
Subordinated Debentures will be issued under PECO
Energy's Indenture dated as of July 1, 1994
between PECO Energy and Meridian Trust Company,
as trustee (the "Indenture Trustee"), as
supplemented by a First Supplemental Indenture
dated as of , 1995 (as so supplemented,
the "Indenture").
SERIES B GUARANTEE: The Series B Guarantee guarantees payment of
accumulated and unpaid monthly Distributions,
amounts payable upon redemption, and amounts
payable upon liquidation with respect to the
Series B Preferred Securities, in each case, only
to the extent that PECO Energy Capital has funds
on hand legally available therefor and payment
does not violate applicable law. If PECO Energy
fails to make interest payments on its Series B
Subordinated Debentures, PECO Energy Capital will
not have sufficient funds to pay Distributions on
the Series B Preferred Securities. The Series B
Guarantee does not cover payment of Distributions
when PECO Energy Capital does not have sufficient
funds to pay such Distributions. In such event,
the remedy of a holder of Series B Preferred
Securities is to enforce the rights of PECO
Energy Capital under the Series B Subordinated
Debentures.
SUBORDINATION OF PECO
ENERGY OBLIGATIONS: The obligations of PECO Energy under the Series B
Guarantee are subordinate and junior in right of
payment to all general liabilities of PECO Energy
and its obligations under the Series B
Subordinated Debentures are subordinate and
junior in right of payment to all present and
future Senior Indebtedness of PECO Energy, which
aggregated approximately $5.0 billion at
September 30, 1995.
CERTAIN UNITED STATES INCOME TAX CONSIDERATIONS
The Exchange will be a taxable event. Gain or loss generally will be
recognized in an amount equal to the difference between the fair market value on
the Exchange Date of the Holder's pro rata share of the Series B Subordinated
Debentures deemed received in the Exchange and the exchanging Holder's tax basis
in the Depositary Shares surrendered. For this purpose, the fair market value of
the Series B Subordinated Debentures deemed issued in exchange for Depositary
Shares on the Exchange Date will equal the fair market
7
<PAGE> 13
value of the Preferred Trust Receipts on that date. See "United States
Taxation -- Receipt of Preferred Trust Receipts for Depositary Shares."
No portion of the amounts received on the Preferred Trust Receipts will be
eligible for the dividends received deduction.
The Preferred Trust Receipts may trade at a price that does not fully
reflect the value of accrued but unpaid interest with respect to the Series B
Subordinated Debentures. During any extension period, each holder of Preferred
Trust Receipts (a "Securityholder") who disposes of his Preferred Trust Receipts
prior to the record date for payment of Distributions at the end of such
Extension Period will nevertheless be required to include his pro rata share of
accrued but unpaid interest on the Series B Subordinated Debentures allocable
monthly to the Trust through the date of disposition in income as ordinary
income, and to add such amount to his adjusted tax basis in his pro rata share
of the Series B Preferred Securities deemed disposed of. Accordingly, such a
Securityholder will recognize a capital loss to the extent the selling price
(which may not fully reflect the value of accrued but unpaid interest) is less
than the Securityholder's adjusted tax basis (which will include accrued but
unpaid interest). Subject to certain limited exceptions, capital losses cannot
be applied to offset ordinary income for United States federal income tax
purposes.
8
<PAGE> 14
RISK FACTORS
Holders of the Depositary Shares who plan to participate in the Offer
should carefully consider, in addition to the information set forth elsewhere in
this Offering Circular/Prospectus, the following:
TAX CONSEQUENCES OF THE EXCHANGE
The Exchange will be a taxable event. Generally, gain or loss will be
recognized in an amount equal to the difference between the fair market value on
the Exchange Date of the Holder's pro rata share of the Series B Subordinated
Debentures deemed received in the Exchange and the exchanging Holder's tax basis
in the Depositary Shares exchanged. See "United States Taxation -- Receipt of
Preferred Trust Receipts for Depositary Shares." All Holders of the Depositary
Shares are advised to consult their tax advisers regarding the United States
federal, state, local and foreign tax consequences of the exchange of the
Depositary Shares and the issuance of Preferred Trust Receipts.
SUBORDINATE OBLIGATIONS OF SERIES B GUARANTEE AND SERIES B SUBORDINATED
DEBENTURES
PECO Energy's obligations under the Series B Guarantee are subordinate and
junior in right of payment to all general liabilities of PECO Energy and its
obligations under the Series B Subordinated Debentures are subordinate and
junior in right of payment to all Senior Indebtedness of PECO Energy. At
September 30, 1995, the Senior Indebtedness of PECO Energy aggregated
approximately $5.0 billion. There are no terms in the Series B Subordinated
Debentures or the Series B Guarantee that limit PECO Energy's ability to incur
additional indebtedness, including indebtedness that ranks senior to the Series
B Subordinated Debentures and the Series B Guarantee. The Series B Guarantee
guarantees payment of accumulated and unpaid monthly distributions, amounts
payable on redemption, and amounts payable on liquidation with respect to the
Series B Preferred Securities, 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 on its obligation to pay interest or amounts payable on redemption or
maturity of the Series B Subordinated Debentures, PECO Energy Capital would lack
legally available funds for the payment of Distributions or amounts payable on
redemption of the Series B Preferred Securities or upon liquidation of PECO
Energy Capital, and in such event the holders of the Preferred Trust Receipts
representing the Series B Preferred Securities would not be able to rely upon
the Series B Guarantee for payment of such amounts. Instead, holders of the
Preferred Trust Receipts representing the Series B 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 Series B
Guarantee -- Status of the Series B Guarantee" and "Description of the Series B
Subordinated Debentures and the Indenture -- Subordination."
OPTION TO EXTEND INTEREST PAYMENT PERIOD; TAX IMPACT OF EXTENSION
PECO Energy has the right under the Indenture to extend interest payment
periods on the Series B Subordinated Debentures for up to 60 consecutive months,
and, as a consequence, monthly Distributions on the Series B Preferred
Securities can be deferred by PECO Energy Capital during any such extended
interest payment period. Distributions in arrears after the monthly payment date
therefor will accumulate additional distributions thereon at the rate per annum
of % thereof. In the event PECO Energy exercises its right to extend the
interest payment periods on the Series B Subordinated Debentures, PECO Energy
may not declare dividends on any shares of its capital stock during such
extension period. See "Description of the Series B Subordinated Debentures and
the Indenture -- Option to Extend Interest Payment Period."
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 the holders of the Preferred Trust
Receipts, as the owners for tax purposes of the Series B Preferred Securities
represented by the Preferred Trust Receipts. 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
9
<PAGE> 15
such income if the owner disposes of the Preferred Trust Receipts prior to the
record date for payment of Distributions. See "United States
Taxation -- Potential Extension of Payment Period."
LISTING AND TRADING OF PREFERRED TRUST RECEIPTS AND DEPOSITARY SHARES
The Preferred Trust Receipts constitute a new issue of securities with no
established trading market. Application has been made for listing the Preferred
Trust Receipts on the NYSE. Listing on the NYSE will be subject to meeting the
requirements of the NYSE. Even if approval for listing is received, there can be
no assurance that an active market for the Preferred Trust Receipts will develop
or be sustained in the future on the NYSE. Although the Dealer Managers have
indicated to PECO Energy and PECO Energy Capital that they intend to make a
market in the Preferred Trust Receipts as permitted by applicable laws and
regulations prior to the commencement of trading on the NYSE, they are not
obligated to do so and may discontinue any such market-making at any time
without notice. Accordingly, no assurance can be given as to the liquidity of,
or trading markets for, the Preferred Trust Receipts. In order to satisfy the
NYSE listing requirements, acceptance of Depositary Shares validly tendered in
the Offer is subject to the conditions that as of the Expiration Date there be
at least 1,000,000 Preferred Trust Receipts to be issued and 400 record or
beneficial holders of Preferred Trust Receipts to be issued as a result of the
Exchange, which condition may not be waived by PECO Energy.
The liquidity and trading market for Depositary Shares which are not
exchanged in the Offer could be adversely affected by the reduction in the
number of publicly traded Depositary Shares resulting from the Offer. The Offer
is for up to 5,400,000 Depositary Shares (or 96.4% of the 5,600,000 Depositary
Shares outstanding) rather than for all the outstanding Depositary Shares, to
reduce the risk that the Depositary Shares would be subject to delisting
following consummation of the Offer.
Under the rules of the NYSE, preferred securities such as the Depositary
Shares are subject to delisting if (i) the aggregate value of publicly held
shares is less than $2 million and (ii) the number of publicly held shares is
less than 100,000. Since at least 200,000 Depositary Shares will remain
outstanding following consummation of the Offer, the number of outstanding
Depositary Shares will exceed the delisting criteria set forth in clause (ii)
above. In addition, based on the market price of the Depositary Shares on the
NYSE ($25 1/8 on July 3, 1995, the closing sales price of the Depositary Shares
on the NYSE on the last trading day immediately prior to PECO Energy's first
public announcement of the Offer, and $ on October , 1995), PECO
Energy believes that the aggregate value of the minimum number (200,000) of
Depositary Shares which will be outstanding following consummation of the Offer
should exceed the delisting criteria set forth in clause (i) above. See "Price
Range of Depositary Shares." If less than 5,400,000 Depositary Shares are
validly tendered, then the number of Depositary Shares remaining outstanding,
and the aggregate value thereof, will be even greater.
POSSIBLE REDEMPTION OF PREFERRED TRUST RECEIPTS PRIOR TO OCTOBER 1, 1997
The Depositary Shares are not subject to redemption prior to October 1,
1997. Except as described below, the Series B Preferred Securities will not be
subject to redemption prior to October 1, 1997. If a Tax Event shall occur and
be continuing, the Series B Preferred Securities will be subject to redemption,
at the option of PECO Energy Capital Corp., a Delaware corporation and a wholly
owned subsidiary of PECO Energy, as the sole general partner (the "General
Partner") of PECO Energy Capital, in whole or in part. If an Investment Company
Act Event shall occur and be continuing, the Series B Preferred Securities will
be subject to mandatory redemption following the occurrence of such event. In
the event the Series B Preferred Securities are redeemed, an equal amount of
related Preferred Trust Receipts will be redeemed. See "Description of the
Series B Preferred Securities -- Special Event Redemptions" and "Description of
the Series B Subordinated Debentures and the Indenture -- Redemption."
10
<PAGE> 16
COMPARISON OF PREFERRED TRUST RECEIPTS AND DEPOSITARY SHARES
The following is a brief summary of certain terms of the Preferred Trust
Receipts and the Depositary Shares. For a more complete description of the
Preferred Trust Receipts, see "Description of the Preferred Trust Receipts" and
"Description of the Series B Preferred Securities." For a more complete
description of the Series B Subordinated Debentures which will represent the
sole source for the payment of distributions and other payments on the Series B
Preferred Securities represented by the Preferred Trust Receipts, see
"Description of the Series B Subordinated Debentures and the Indenture."
<TABLE>
<CAPTION>
PREFERRED TRUST RECEIPTS DEPOSITARY SHARES
--------------------------------- ---------------------------------
<S> <C> <C>
Nature of Security....... Represents a Series B Preferred A one-fourth interest in $7.96
Security, which represents a Cumulative Preferred Stock issued
limited partner interest in PECO by PECO Energy.
Energy Capital.
Distribution/Dividend
Rate................... % per annum payable $1.99 ($7.96 per share of $7.96
monthly in arrears on the Cumulative Preferred Stock) per
last day of each month of each annum payable on February 1, May
year, commencing 1, August 1 and November 1 of
, 1995 from and including the each year, out of funds legally
Exchange Date but only if, and to available therefor, when, as and
the extent that, Distributions if declared by PECO Energy's
are made in respect of the Series Board of Directors. Dividends are
B Preferred Securities. cumulative. Accumulated unpaid
Distributions in arrears after dividends do not accumulate
the monthly payment date additional dividends thereon.
therefor, including during any
Extension Period for the Series B
Subordinated Debentures,
accumulate additional
Distributions thereon at the rate
of % per annum.
Optional Redemption...... See "Maturity/Mandatory Redeemable at the option of PECO
Redemption" below. Energy on and after October 1,
1997, in whole or in part, at a
redemption price equal to 100% of
the stated liquidation preference
of the shares to be redeemed,
plus accrued and unpaid
dividends, if any, to the
redemption date.
Maturity/Mandatory
Redemption............. The Preferred Trust Receipts will None
be redeemed upon: (1) the
redemption of the Series B
Preferred Securities upon the
payment at maturity of the Series
B Subordinated Debentures, (2)
optional redemption, in whole or
in part, of the Series B
Subordinated Debentures or the
Series B Preferred Securities on
or after October 1, 1997 or (3)
the optional redemption of the
Series B Subordinated Debentures
or Series B Preferred Securities
upon the occurrence of a Tax
Event or mandatory redemption of
the Series B Preferred Securities
upon occurrence of an Investment
Company Act Event. Any such
redemption of the Preferred Trust
Receipts will be at a redemption
price equal to 100% of the stated
</TABLE>
11
<PAGE> 17
<TABLE>
<CAPTION>
PREFERRED TRUST RECEIPTS DEPOSITARY SHARES
--------------------------------- ---------------------------------
<S> <C> <C>
liquidation preference of the
Series B Preferred Securities to
be redeemed, plus accrued and
unpaid Distributions, if any, to
the redemption date, including
Distributions accrued as a result
of PECO Energy's election to
defer payments of interest on the
Series B Subordinated Debentures.
The Series B Subordinated
Debentures have a final maturity
of , 2025. See
"Description of the Preferred
Trust Receipts -- Redemption of
Preferred Trust Receipts" and
"Description of the Series B
Preferred Securities -- Mandatory
Redemption" and "-- Special Event
Redemptions."
Withdrawal Rights........ Upon surrender of Preferred Trust Upon surrender of Depositary
Receipts at the principal office Receipts (as defined below) at
of the Trustee, and subject to the principal office of the
the terms of the Partnership Depositary (as defined below),
Agreement, a holder of Preferred and upon payment of the
Trust Receipts is entitled to Depositary's customary charges
delivery of the number of whole therefor, and subject to the
Series B Preferred Securities terms of the deposit agreement
represented by such Preferred for the Depositary Shares, a
Trust Receipts. holder of the Depositary Shares
is entitled to delivery of the
number of whole shares of the
$7.96 Preferred Stock and all
money and other property, if any,
represented by such Depositary
Shares.
Subordination............ The Series B Preferred Securities Subordinate to claims of
will rank subordinate to claims creditors of PECO Energy,
of creditors of PECO Energy including the Subordinated
Capital, but senior to the Debentures, but senior to the
general partner interests in PECO common stock of PECO Energy and
Energy Capital and pari passu pari passu with all other
with all other Preferred outstanding series of preferred
Securities of PECO Energy stock of PECO Energy.
Capital. The obligations of PECO
Energy under the Series B
Guarantee are subordinate and
junior in right of payment to all
general liabilities of PECO
Energy and its obligations under
the Series B Subordinated
Debentures are subordinate and
junior in right of payment to all
present and future Senior
Indebtedness of PECO Energy,
which aggregated approximately
$5.0 billion at September 30,
1995, but senior in payment to
all capital stock of PECO Energy,
including the Depositary Shares.
Listing.................. Application has been made for The Depositary Shares are listed
listing the Preferred Trust on the NYSE.
Receipts on the NYSE. In order to
satisfy the NYSE listing
requirements, acceptance of
</TABLE>
12
<PAGE> 18
<TABLE>
<CAPTION>
PREFERRED TRUST RECEIPTS DEPOSITARY SHARES
--------------------------------- ---------------------------------
<S> <C> <C>
Depositary Shares validly
tendered in the Offer is subject
to the conditions that as of the
Expiration Date there be at least
1,000,000 Preferred Trust
Receipts to be issued and 400
record or beneficial holders of
Preferred Trust Receipts to be
issued in exchange for such
Depositary Shares, which
conditions may not be waived.
Federal Income Tax
Consequences of
Distributions/
Dividends.............. Distributions are not eligible Dividends are eligible for the
for the dividends received dividends received deduction for
deduction for corporate holders. corporate holders.
Voting
Rights/Enforcement..... If (i) PECO Energy Capital fails If dividends shall be in arrears
to pay Distributions in full on in an aggregate amount equivalent
any series of the Preferred to four quarterly dividend
Securities for 18 consecutive payments, the holders of PECO
monthly distribution periods, Energy preferred stock, including
(ii) an Event of Default (as the holders of Depositary Shares,
defined in the Indenture) occurs have the right to elect the
and is continuing, or (iii) PECO smallest number of directors
Energy is in default on any of necessary to constitute a
its payment obligations under the majority of the full board of
Payment and Guarantee Agreements directors of PECO Energy.
(the "Guarantees") relating to
the Preferred Securities issued
by PECO Energy Capital, then the
holders of the Preferred
Securities, including the Trust
acting through the Trustee at the
direction of the holders of the
Preferred Trust Receipts, 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 Deferrable
Interest Subordinated Debentures
of PECO Energy (the "Subordinated
Debentures") and the Indenture
and the obligations undertaken by
PECO Energy under the Guarantees,
including, after failure to pay
distributions for 60 consecutive
monthly distribution periods on
the Preferred Securities, the
payment of distributions on the
Preferred Securities.
</TABLE>
13
<PAGE> 19
PECO ENERGY
GENERAL
PECO Energy, incorporated in Pennsylvania in 1929, is an operating utility
which provides electric and gas service to the public in southeastern
Pennsylvania. The total area served by PECO Energy covers 2,107 square miles.
Electric service is supplied in an area of 1,972 square miles with a population
of about 3,638,000, including 1,600,000 in the City of Philadelphia.
Approximately 94% of the electric service area and 63% of retail kilowatthour
sales are in the suburbs around Philadelphia, and 6% of the service area and 37%
of such sales are in the City of Philadelphia. In 1994, approximately 60% of
PECO Energy's electric output was generated from nuclear sources. PECO Energy
estimates for 1995 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.
RECENT DEVELOPMENTS
Information concerning PECO Energy's proposal to PP&L Resources that the
two companies combine is included in PECO Energy's reports filed with the SEC,
which are incorporated by reference herein. Information with respect to any
subsequent material developments concerning such proposal will be included in
reports filed by PECO Energy with the SEC which upon filing also will be
incorporated by reference herein. See "Incorporation of Certain Documents by
Reference." This Offer is not contingent upon either the acceptance or rejection
of PECO Energy's proposal by PP&L Resources.
PECO ENERGY CAPITAL
PECO Energy Capital is a limited partnership formed in 1994 under the laws
of the State of Delaware. All of its general partner interests are owned by PECO
Energy Capital Corp., as the General Partner. As a limited partnership, all of
the business and affairs of PECO Energy Capital are managed by the General
Partner. PECO Energy Capital was created solely for the purpose of issuing the
Preferred Securities and lending the proceeds thereof to PECO Energy, and
entering into similar financing arrangements. Such loans are evidenced by the
Subordinated Debentures issued by PECO Energy under the Indenture. The
Subordinated Debentures are the only assets of PECO Energy Capital and the only
revenues of PECO Energy Capital are interest on the Subordinated Debentures. The
General Partner pays all of PECO Energy Capital's operating expenses and has
general liability for all of PECO Energy Capital's obligations.
THE TRUST
PECO Energy Capital Trust I is a statutory business trust recently created
under the laws of the State of Delaware. PNC Bank, Delaware is the sole trustee
of the Trust (in such capacity, and not in its individual capacity, the
"Trustee"). The Trust exists for the sole purpose of issuing the Preferred Trust
Receipts representing the Series B Preferred Securities held by the Trust and
performing functions directly related thereto. The Series B Preferred Securities
are the only assets of the Trust. All expenses or liabilities of the Trust will
be paid by the General Partner, provided that if the Trustee incurs fees,
charges or expenses for which it is not otherwise liable under the Trust
Agreement at the election of a holder of Preferred Trust Receipts or other
person, such holder or other person will be liable for such fees, charges and
expenses.
COVERAGE RATIOS
PECO Energy's Ratio of Earnings to Fixed Charges for each of the periods
indicated was as follows:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE
YEARS ENDED DECEMBER 31, 30,
- ---------------------------------------- -------------
1990 1991 1992 1993 1994 1994 1995
- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
1.31(1) 2.55 2.43 3.15 2.66(2) 3.30 3.46
</TABLE>
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,
amortiza-
14
<PAGE> 20
tion 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:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE
YEARS ENDED DECEMBER 31, 30,
- ---------------------------------------- -------------
1990 1991 1992 1993 1994 1994 1995
- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
1.04(1) 2.14 2.06 2.67 2.32(2) 2.80 3.15
</TABLE>
- ---------------
(1) Reflects the one-time, after-tax charge against income of $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 $150 million associated with PECO
Energy's 1990 early retirement plan.
(2) Reflects a one-time after-tax charge against income of $254 million
associated with early retirement and separation programs.
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.
15
<PAGE> 21
SELECTED CONSOLIDATED FINANCIAL DATA
Reference is made to PECO Energy's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994 (the "Form 10-K"), which is incorporated by
reference in this Offering Circular/Prospectus and which contains PECO Energy's
audited consolidated financial statements, including the consolidated income
statement for the three fiscal years in the period ended December 31, 1994,
consolidated balance sheets as of December 31, 1993 and 1994, and the related
notes. Selected unaudited financial information as of and for the six months
ended June 30, 1994 and 1995 should be read in conjunction with the audited
consolidated financial statements and related notes contained in the Form 10-K
and the unaudited consolidated financial statements contained in PECO Energy's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1995, which report
is also incorporated by reference in this Offering Circular/Prospectus. Such
unaudited information reflects, in the opinion of management, all adjustments,
consisting of only normal accruals, necessary for a consistent presentation with
the audited financial information. Results of operations for the six months
ended June 30, 1995 are not necessarily indicative of the results to be expected
for the full fiscal year.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30, YEARS ENDED DECEMBER 31,
--------------------- -----------------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
--------- --------- --------- --------- --------- --------- ---------
(MILLIONS OF DOLLARS)
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF EARNINGS
Operating Revenues........................ $ 2,017.2 $ 2,080.0 $ 4,040.6 $ 3,988.1 $ 3,962.5 $ 4,018.6 $ 3,786.7
Operating Income.......................... 489.3 463.1 829.6 1,035.4 1,033.4 1,081.2 767.7
Income from Continuing Operations......... 305.6 275.4 426.7 590.6 478.9 534.7 105.8
Net Income................................ 305.6 275.4 426.7 590.6 478.9 534.7 214.2
Earnings Applicable to Common Stock....... 293.5 253.8 389.4(2) 541.6 418.2 468.6 123.9(1)
Earnings Per Average Common Share From
Continuing Operations (Dollars)......... 1.32 1.15 1.76 2.45 1.90 2.15 0.07
Earnings Per Average Common Shares
(Dollars)............................... 1.32 1.15 1.76 2.45 1.90 2.15 0.58
Dividends Per Common Share (Dollars)...... 0.81 0.76 1.545 1.43 1.325 1.225 1.45
Common Stock Equity (Per Share)........... 19.94 19.63 19.41 19.25 18.24 17.69 16.71
Average Shares of Common Stock Outstanding
(Millions).............................. 221.7 221.5 221.6 221.1 220.2 218.2 214.4
FINANCIAL CONDITION AT END OF PERIOD
Net Utility Plant, at Original Cost....... 10,693.4 10,727.6 10,828.7 10,763.0 10,691.2 10,598.4 10,591.3
Leased Property, Net...................... 163.2 167.6 174.6 194.7 210.0 223.8 241.3
--------- --------- --------- --------- --------- --------- ---------
Total Current Assets...................... 683.3 605.0 454.8 514.8 550.0 783.2 745.0
Total Deferred Debits and Other Assets.... 3,539.5 3,664.8 3,634.7 3,559.8 1,127.0 918.1 938.6
--------- --------- --------- --------- --------- --------- ---------
Total Assets............................ $15,079.4 $15,165.0 $15,092.8 $15,032.3 $12,578.2 $12,523.5 $12,516.2
======== ======== ======== ======== ======== ======== ========
Common Shareholders' Equity............... $ 4,423.2 $ 4,349.3 $ 4,302.5 $ 4,263.4 $ 4,022.2 $ 3,892.3 $ 3,624.5
Preferred and Preference Stock
Without Mandatory Redemption............ 277.4 422.5 277.5 422.5 422.5 422.5 422.5
With Mandatory Redemption............... 92.7 182.1 92.7 186.5 231.1 315.6 330.9
Company Obligated Mandatorily Redeemable
Preferred Securities of Partnership
holding solely PECO Energy Debentures... 221.3 -- 221.3 -- -- -- --
Long-Term Debt............................ 4,515.5 4,876.5 4,785.6 4,884.3 5,203.9 5,415.6 5,830.8
--------- --------- --------- --------- --------- --------- ---------
Total Capitalization...................... 9,530.1 9,830.4 9,679.6 9,756.7 9,879.7 10,046.0 10,208.7
--------- --------- --------- --------- --------- --------- ---------
Total Current Liabilities................. 1,064.3 930.4 878.6 954.6 830.6 823.4 783.8
--------- --------- --------- --------- --------- --------- ---------
Total Deferred Credits and Other
Liabilities............................. 4,485.0 4,404.2 4,534.6 4,321.0 1,867.9 1,654.1 1,523.7
--------- --------- --------- --------- --------- --------- ---------
Total Capitalization and Liabilities...... $15,079.4 $15,165.0 $15,092.8 $15,032.3 $12,578.2 $12,523.5 $12,516.2
======== ======== ======== ======== ======== ======== ========
</TABLE>
- ---------------
(1) Reflects the one-time, after-tax charge against income of $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 $150 million associated with PECO
Energy's 1990 early retirement plan.
(2) Reflects a one-time after-tax charge against income of $254 million
associated with early retirement and separation programs.
16
<PAGE> 22
On October 23, 1995, PECO Energy reported that common stock earnings for
the quarter ended September 30, 1995 were $0.80 per share, which are $0.08 per
share, or 11% higher than the third quarter of last year after adjusting for the
one-time charge in 1994 of $0.66 per share associated with PECO Energy's
retirement and separation programs. The increase in earnings was attributable to
higher electric sales resulting primarily from warmer weather in August 1995
compared to last year and lower operations and maintenance expenses related to
PECO Energy's retirement and separation programs.
Total electric sales increased 11% from the third quarter of 1994 primarily
due to increased sales to other utilities and increased residential sales. Gas
sold and transported increased 42% primarily due to increased gas transported
for others.
Earnings for the twelve months ended September 30, 1995 were $2.68 per
share as compared to $1.78 per share for the corresponding period in 1994. The
increase is primarily attributable to the one-time charge in the third quarter
of 1994 associated with PECO Energy's retirement and separation programs. Also
contributing to the increase in earnings were lower operations and maintenance
expenses related to PECO Energy's retirement and separation programs, the
ongoing emphasis on cost control, a one-time gain on the sale of Conowingo Power
Company in June 1995, and benefits of PECO Energy's ongoing debt and preferred
stock refinancing program. These increases were partially offset by a reduction
in revenue received in 1994 for accepting nuclear fuel from the Shoreham Nuclear
Power Station.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED TWELVE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
--------------------- --------------------- ---------------------
1995 1994 1995 1994 1995 1994
--------- --------- --------- --------- --------- ---------
(MILLIONS OF DOLLARS)
<S> <C> <C> <C> <C> <C> <C>
Total Operating Revenues.......... $ 1,125.2 $ 1,041.1 $ 3,142.4 $ 3,121.1 $ 4,061.9 $ 4,062.8
Net Income........................ 184.3 22.2 489.9 297.6 619.0 436.6
Shares of Common Stock -- Average
(Millions)...................... 221.9 221.6 221.8 221.5 221.7 221.5
Earnings Per Average Common Share
(Dollars)....................... $ 0.80 $ 0.06 $ 2.13 $ 1.20 $ 2.68 $ 1.78
</TABLE>
17
<PAGE> 23
THE OFFER
PURPOSE OF THE OFFER
The purpose of the Offer is to reduce the after-tax financing costs of PECO
Energy through the replacement of Depositary Shares with Preferred Trust
Receipts. Although the Distribution rate on the Preferred Trust Receipts will be
higher than the dividend rate on the Depositary Shares, PECO Energy will deduct
interest payable on the Series B Subordinated Debentures for federal income tax
purposes; dividends payable on the Depositary Shares are not deductible by PECO
Energy for federal income tax purposes.
Except as described herein, PECO Energy has no present plans or intentions
to make acquisitions of or offers for the Depositary Shares. PECO Energy will
continue to monitor the market for the Depositary Shares outstanding after the
expiration of the Offer and reserves the right, in its sole discretion, subject
to applicable law, to acquire and to make offers for Depositary Shares
subsequent to the Expiration Date for cash or in exchange for other securities,
by optional redemption of the Depositary Shares, after October 1, 1997, or
otherwise. The terms of any such acquisitions or offers may differ from the
terms of the Offer. Such acquisitions or offers, if any, may depend upon, among
other things, the market price of the Depositary Shares, and general economic
and market conditions.
GENERAL
PARTICIPATION IN THE OFFER IS VOLUNTARY AND HOLDERS OF DEPOSITARY SHARES
SHOULD CAREFULLY CONSIDER WHETHER TO ACCEPT. NO RECOMMENDATION TO HOLDERS TO
TENDER OR TO REFRAIN FROM TENDERING IN THE OFFER IS MADE BY PECO ENERGY, THE
BOARD OF DIRECTORS OF PECO ENERGY, PECO ENERGY CAPITAL, THE GENERAL PARTNER, THE
TRUST OR THE TRUSTEE. HOLDERS OF DEPOSITARY SHARES ARE URGED TO CONSULT THEIR
FINANCIAL AND TAX ADVISERS IN MAKING THEIR DECISIONS ON WHAT ACTION TO TAKE IN
LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES.
Holders of Depositary Shares will not have any appraisal or dissenters'
rights under the Pennsylvania Business Corporation Law in connection with the
Offer. PECO Energy intends to conduct the Offer in accordance with the
applicable requirements of the Exchange Act and the rules and regulations of the
SEC thereunder. PECO Energy has received all regulatory approvals necessary to
consummate the Exchange.
Unless the context requires otherwise, the term "Holder" with respect to
the Offer means (i) any person in whose name any Depositary Shares are
registered on the books of the Depositary or (ii) any other person who has
obtained a properly completed stock power from the registered Holder, or (iii)
any person whose Depositary Shares are held of record by The Depository Trust
Company ("DTC"), Philadelphia Depository Trust Company or Midwest Securities
Trust Company (collectively, the "Depositories" and each, a "Depository") who
desires to deliver such Depositary Shares by book-entry transfer at such
Depository.
The $7.96 Cumulative Preferred Stock represented by the Depositary Shares
exchanged pursuant to the Offer will be retired. PECO Energy will take all
actions necessary to restore such retired Preferred Stock to the status of
authorized but unissued Preferred Stock which may thereafter be reissued.
TERMS OF THE OFFER
Upon the terms and subject to the conditions set forth herein and in the
Letter of Transmittal, PECO Energy will offer to effect an exchange of Preferred
Trust Receipts for up to 5,400,000 outstanding Depositary Shares. The exchange
of Preferred Trust Receipts for Depositary Shares will be effected by (a) the
delivery by PECO Energy of its Series B Subordinated Debentures to the Exchange
Agent, which will receive the Series B Subordinated Debentures on behalf of the
Holders of the Depositary Shares, in exchange for Depositary Shares, (b) the
delivery by the Exchange Agent (acting pursuant to the directions of the Holders
of Depositary Shares) of the Series B Subordinated Debentures to PECO Energy
Capital in consideration for the issuance and deposit by PECO Energy Capital of
the Series B Preferred Securities to and with the Trust under the Trust
Agreement and (c) the issuance and delivery by the Trust of the Preferred Trust
Receipts to the Exchange Agent for distribution to the former Holders of the
Depositary Shares.
18
<PAGE> 24
Holders of Depositary Shares will not have the right to retain the Series B
Subordinated Debentures delivered to the Exchange Agent in exchange for
Depositary Shares validly tendered and accepted. The Offer will be effected on
the basis of one Preferred Trust Receipt for each Depositary Share validly
tendered and accepted for exchange. See "-- Procedures for Tendering." Upon the
terms and subject to the conditions set forth herein and in the Letter of
Transmittal, PECO Energy will accept up to 5,400,000 Depositary Shares validly
tendered and not withdrawn prior to the Expiration Date and, unless the Offer
has been withdrawn or terminated, PECO Energy will cause to be delivered
Preferred Trust Receipts to tendering Holders of Depositary Shares as promptly
as practicable following the Exchange Date. PECO Energy expressly reserves the
right, in its sole discretion, to delay acceptance for exchange of Depositary
Shares tendered under the Offer and the delivery of the Preferred Trust Receipts
with respect to the Depositary Shares accepted for exchange (subject to Rules
13e-4 and 14e-1 under the Exchange Act, which require that PECO Energy
consummate the Offer or return the Depositary Shares deposited by or on behalf
of the Holders thereof promptly after the termination or withdrawal of the
Offer), or to withdraw or terminate the Offer at any time prior to the
Expiration Date for any reason.
In all cases, except to the extent waived by PECO Energy, delivery of
Preferred Trust Receipts issued with respect to the Depositary Shares accepted
for exchange pursuant to the Offer will be made only after timely receipt by the
Exchange Agent of Depositary Shares (or confirmation of book-entry transfer
thereof), a properly completed and duly executed Letter of Transmittal or
Agent's Message, as applicable, and any other documents required thereby.
As of the date of this Offering Circular/Prospectus, there are 5,600,000
Depositary Shares outstanding. This Offering Circular/Prospectus, together with
the Letter of Transmittal, is being sent to all registered Holders as of
, 1995.
PECO Energy will accept validly tendered Depositary Shares (or defectively
tendered Depositary Shares with respect to which PECO Energy has waived such
defect) by giving oral or written notice thereof to the Exchange Agent. The
Exchange Agent will act as agent for the tendering Holders for the purpose of
receiving Depositary Shares from, and remitting Preferred Trust Receipts to,
tendering Holders who are participating in the Offer and whose shares are
accepted. Upon the terms and subject to the conditions of the Offer, delivery of
Preferred Trust Receipts to tendering Holders will be made as promptly as
practicable following the Expiration Date.
If proration of tendered Depositary Shares is required, the Preferred Trust
Receipts will be issued and distributed by the Exchange Agent up to 12 Business
Days following the Expiration Date. If proration of tendered Depositary Shares
is required, because of the difficulty in determining the number of Depositary
Shares validly tendered (including shares tendered by the guaranteed delivery
procedures described in "-- Procedures for Tendering"), PECO Energy does not
expect that it would be able to announce the final proration factor or to
commence the Exchange for any Depositary Shares pursuant to the Offer until
approximately seven Business Days after the Expiration Date. Preliminary results
of the proration will be announced by press release as promptly as practicable
after the Expiration Date. Holders of Depositary Shares may obtain such
preliminary information from the Dealer Managers, the Information Agent or the
Exchange Agent and may also be able to obtain such information from their
brokers.
If any tendered Depositary Shares are not accepted for exchange because of
an invalid tender, proration or withdrawal or termination by PECO Energy of the
Offer, unless otherwise requested by the Holder under "Special Delivery
Instructions" in the Letter of Transmittal, such Depositary Shares will be
returned, without expense, to the tendering Holder thereof (or in the case of
Depositary Shares tendered by book-entry transfer into the Exchange Agent's
account at the Depository where such Depositary Shares are held, such Depositary
Shares will be credited to an account maintained at the Depository designated by
the participant therein who so delivered such Depositary Shares), as promptly as
practicable after the Expiration Date or the withdrawal or termination of the
Offer.
Holders who tender Depositary Shares in the Offer will not be required to
pay brokerage commissions or fees or, subject to the instructions in the Letter
of Transmittal, transfer taxes with respect to the exchange of Depositary Shares
pursuant to the Offer. See "Fees and Expenses; Transfer Taxes."
19
<PAGE> 25
Holders who tender Depositary Shares held in global form shall receive
Preferred Trust Receipts in global form and holders tendering Depositary Shares
held directly in certificated form shall receive Preferred Trust Receipts in
certificated form in each case unless otherwise provided in the Letter of
Transmittal. See "-- Procedures for Tendering."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS; TERMINATION
The Offer will expire on the Expiration Date. PECO Energy reserves the
right to extend the Offer in its sole discretion at any time and from time to
time by giving oral or written notice to the Exchange Agent and by timely public
announcement communicated or as otherwise required by applicable law or
regulation. During any extension of the Offer, all Depositary Shares previously
tendered pursuant to the Offer and not withdrawn will remain subject to the
Offer.
PECO Energy expressly reserves the right to (i) extend, amend or modify the
terms of the Offer in any manner and (ii) withdraw or terminate the Offer and
not accept for exchange any Depositary Shares at any time prior to the
Expiration Date for any reason. PECO also reserves the right to waive any
condition of the Offer, including the condition that at least 2,800,000
Depositary Shares are tendered in the Offer; provided that in order to satisfy
the NYSE listing requirements, acceptance of Depositary Shares validly tendered
in the Offer is subject to the conditions that as of the Exchange Date there be
at least 1,000,000 Preferred Trust Receipts to be issued and 400 record or
beneficial holders of Preferred Trust Receipts to be issued in exchange for such
Depositary Shares, which conditions may not be waived. If PECO Energy makes a
material change in the terms of the Offer or if it waives a material condition
of the Offer, PECO Energy may extend the Offer. The minimum period for which the
Offer will be extended following a material change or waiver, other than a
change in the amount of Depositary Shares sought for exchange, the consideration
offered therefor or the fee paid to the Soliciting Dealers, will depend upon the
facts and circumstances, including the relative materiality of the change or
waiver. With respect to a change in the amount of Depositary Shares sought, the
consideration offered therefor or the fee paid to the Soliciting Dealers, if
required, the Offer will remain open for a minimum of ten Business Days
following public announcement of such change. Any withdrawal or termination of
the Offer will be followed as promptly as practicable by public announcement
thereof. If PECO Energy withdraws or terminates the Offer, it will give
immediate notice to the Exchange Agent, and all Depositary Shares theretofore
tendered pursuant to the Offer will be returned promptly to the tendering
Holders thereof. See "-- Withdrawal of Tenders."
ACCUMULATED DIVIDENDS AND DISTRIBUTIONS
The Preferred Trust Receipts will bear Distributions at an annual rate of
% from and including the Exchange Date. Dividends accumulated after October
31, 1995 on the Depositary Shares which have been accepted for exchange in the
Offer will not be paid. In lieu thereof, holders of Preferred Trust Receipts
will be entitled to an additional distribution at the rate of 7.96% per annum
(equal to the dividend rate on the Depositary Shares) from and including
November 1, 1995 up to but not including the Exchange Date, payable at the time
of the first Distribution payment on the Preferred Trust Receipts. See
"Description of Preferred Trust Receipts -- Distributions."
PROCEDURES FOR TENDERING
The tender of Depositary Shares by a Holder thereof pursuant to one of the
procedures set forth below will constitute an agreement between such Holder and
PECO Energy in accordance with the terms and subject to the conditions set forth
herein and in the Letter of Transmittal and PECO Energy's right to terminate or
withdraw the Offer at any time for any reason.
EACH HOLDER OF THE DEPOSITARY SHARES WISHING TO PARTICIPATE IN THE OFFER
MUST (I) PROPERLY COMPLETE AND SIGN THE LETTER OF TRANSMITTAL IN ACCORDANCE WITH
THE INSTRUCTIONS CONTAINED HEREIN AND IN THE LETTER OF TRANSMITTAL (EXCEPT WHEN
AN AGENT'S MESSAGE IS APPROPRIATE AND UTILIZED), TOGETHER WITH ANY REQUIRED
SIGNATURE GUARANTEES, AND DELIVER THE SAME TO THE EXCHANGE AGENT, AT ONE OF ITS
ADDRESSES SET FORTH IN "-- EXCHANGE AGENT AND INFORMATION AGENT" PRIOR TO THE
EXPIRATION DATE AND EITHER (A) CERTIFICATES FOR THE
20
<PAGE> 26
DEPOSITARY SHARES MUST BE RECEIVED BY THE EXCHANGE AGENT AT SUCH ADDRESS OR (b)
SUCH DEPOSITARY SHARES MUST BE TRANSFERRED PURSUANT TO THE PROCEDURES FOR
BOOK-ENTRY TRANSFER DESCRIBED BELOW AND A CONFIRMATION OF SUCH BOOK-ENTRY
TRANSFER MUST BE RECEIVED BY THE EXCHANGE AGENT, IN EACH CASE PRIOR TO THE
EXPIRATION DATE OR (ii) COMPLY WITH THE GUARANTEED DELIVERY PROCEDURES DESCRIBED
BELOW. LETTERS OF TRANSMITTAL, DEPOSITARY SHARES AND ANY OTHER REQUIRED
DOCUMENTS SHOULD BE SENT ONLY TO THE EXCHANGE AGENT, NOT TO PECO ENERGY, PECO
ENERGY CAPITAL, THE TRUST, THE TRUSTEE, THE DEALER MANAGERS OR THE INFORMATION
AGENT.
Special Procedure for Beneficial Owners. Any beneficial owner whose
Depositary Shares are registered in the name of a broker, dealer, commercial
bank, trust company or other nominee and who wishes to tender should contact
such registered Holder promptly and instruct such registered Holder to tender on
such beneficial owner's behalf. If such beneficial owner wishes to tender on its
own behalf, such owner must, prior to completing and executing the Letter of
Transmittal and delivering its Depositary Shares, either make appropriate
arrangements to register ownership of the Depositary Shares in such owner's name
or obtain a properly completed stock power from the registered Holder. The
transfer of registered ownership may take considerable time and may not be able
to be completed prior to the Expiration Date.
THE METHOD OF DELIVERY OF DEPOSITARY SHARES AND ALL OTHER DOCUMENTS IS AT
THE ELECTION AND RISK OF THE HOLDER. IF SENT BY MAIL, IT IS RECOMMENDED THAT (A)
REGISTERED MAIL, RETURN RECEIPT REQUESTED, BE USED, (B) INSURANCE BE OBTAINED,
AND (C) THE MAILING BE MADE SUFFICIENTLY IN ADVANCE OF THE EXPIRATION DATE TO
PERMIT DELIVERY TO THE EXCHANGE AGENT ON OR BEFORE THE EXPIRATION DATE.
Signature Guarantees. If tendered Depositary Shares are registered in the
name of the signer of the Letter of Transmittal and the Preferred Trust Receipts
to be issued in exchange therefor are to be issued (and any untendered
Depositary Shares are to be reissued) in the name of the registered holder
(which includes any participant in a Depository whose name appears on a security
listing as the owner of Depositary Shares), the signature of such signer need
not be guaranteed. If the tendered Depositary Shares are registered in the name
of someone other than the signer of the Letter of Transmittal, or if Preferred
Trust Receipts issued in exchange therefor are to be issued in the name of any
other person other than the signer of the Letter of Transmittal, such tendered
Depositary Shares must be endorsed or accompanied by written instruments of
transfer in form satisfactory to First Chicago Trust Company of New York,
transfer agent for the Depositary Shares, and duly executed by the registered
Holder, and the signature on the endorsement or instrument of transfer must be
guaranteed by a financial institution (including most banks, savings and loans
associations and brokerage houses) that is a participant in the Security
Transfer Agents Medallion Program or the Stock Exchange Medallion Program (any
of the foregoing hereinafter referred to as an "Eligible Institution"). If the
Depositary Shares not exchanged are to be delivered to an address other than
that of the registered Holder appearing on the register for the Depositary
Shares, the signature in the Letter of Transmittal must be guaranteed by an
Eligible Institution.
Book-Entry Transfer. PECO Energy understands that the Exchange Agent has
an account or will make a request promptly after the date of this Offering
Circular/Prospectus to establish accounts with respect to the Depositary Shares
at DTC and such other Depositories which hold Depositary Shares for the purpose
of facilitating the Offer, and subject to the establishment thereof, any
financial institution that is a participant in DTC's or such other Depository's
system may make book-entry delivery of Depositary Shares by causing DTC or such
other Depository to transfer such Depositary Shares into the Exchange Agent's
account with respect to the Depositary Shares in accordance with DTC's Automated
Tender Offer Program ("ATOP") procedures, in the case of DTC, or the procedures
of such other Depository, in the case of such other Depository, for such
book-entry transfers. However, the exchange for the Depositary Shares so
tendered will only be made after timely confirmation (a "Book-Entry
Confirmation") of such book-entry transfer of Depositary Shares into the
Exchange Agent's account, and timely receipt by the Exchange Agent of an Agent's
Message (as such term is defined in the next sentence), in the case of a
book-entry transfer effected by DTC, or the Letter of Transmittal and any other
documents required by the Letter of Transmittal, in the case of DTC or any other
Depository.
21
<PAGE> 27
The term "Agent's Message" means a message, transmitted by DTC and received
by the Exchange Agent and forming a part of a Book-Entry Confirmation, which
states that DTC has received an express acknowledgment from a participant
tendering Depositary Shares that are the subject of such Book-Entry Confirmation
that such participant has received and agrees to be bound by the terms of the
Letter of Transmittal, and that PECO Energy may enforce such agreement against
such participant.
Guaranteed Delivery. If a Holder desires to participate in the Offer and
time will not permit a Letter of Transmittal or Depositary Shares to reach the
Exchange Agent before the Expiration Date or the procedure for book-entry
transfer cannot be completed on a timely basis, a tender may be effected if the
Exchange Agent has received at its office prior to the Expiration Date a Notice
of Guaranteed Delivery from an Eligible Institution setting forth the name and
address of the tendering Holder, the name(s) in which the Depositary Shares are
registered and, if the Depositary Shares are held in certificated form, the
certificate numbers of the Depositary Shares to be tendered, and stating that
the tender is being made thereby and guaranteeing that within three NYSE trading
days after the date of execution of such Notice of Guaranteed Delivery by the
Eligible Institution, the Depositary Shares in proper form for transfer together
with a properly and duly executed Letter of Transmittal (and any other required
documents), or a confirmation of book-entry transfer of such Depositary Shares
into the Exchange Agent's account at a Depository with a Letter of Transmittal
(and any other required documents) or, in the case of DTC, an Agent's Message,
will be delivered by such Eligible Institution. Unless the Depositary Shares
being tendered by the above-described method are deposited with the Exchange
Agent within the time period set forth above (accompanied or preceded by a
properly completed Letter of Transmittal and any other required documents) or a
confirmation of book-entry transfer of such Depositary Shares into the Exchange
Agent's account at a Depository, in accordance with such Depository's procedures
(accompanied or preceded by a properly completed Letter of Transmittal and any
other required documents) or, in the case of DTC, in accordance with DTC's ATOP
procedures (along with a Letter of Transmittal or an Agent's Message), is
received, PECO Energy may, at its option, reject the tender. In addition to the
copy being transmitted herewith, copies of a Notice of Guaranteed Delivery which
may be used by Eligible Institutions for the purposes described in this
paragraph are available from the Exchange Agent and the Information Agent.
Miscellaneous. All questions as to the validity, form, eligibility
(including time of receipt) and acceptance for exchange of any tender of
Depositary Shares will be determined by PECO Energy, whose determination will be
final and binding. PECO Energy reserves the absolute right to reject any or all
tenders not in proper form or the acceptance for exchange of which may, in the
opinion of PECO Energy's counsel, be unlawful. PECO Energy also reserves the
absolute right to waive any defect or irregularity in the tender of any
Depositary Shares, and PECO Energy's interpretation of the terms and conditions
of the Offer (including the instructions in the Letter of Transmittal) will be
final and binding. None of PECO Energy, the Exchange Agent, the Dealer Managers,
the Information Agent or any other person will be under any duty to give
notification of any defects or irregularities in tenders or incur any liability
for failure to give any such notification.
Tenders of Depositary Shares involving any irregularities will not be
deemed to have been made until such irregularities have been cured or waived.
Depositary Shares received by the Exchange Agent that are not validly tendered
and as to which the irregularities have not been cured or waived will be
returned by the Exchange Agent to the tendering Holder (or in the case of
Depositary Shares tendered by book-entry transfer into the Exchange Agent's
account at DTC or such other Depository, such Depositary Shares will be credited
to an account maintained at DTC or such other Depository designated by the
participant therein who so delivered such Depositary Shares), unless otherwise
requested by the Holder in the Letter of Transmittal, as promptly as practicable
after the Expiration Date or the withdrawal or termination of the Offer.
LETTER OF TRANSMITTAL
The Letter of Transmittal contains, among other things, the following terms
and conditions, which are part of the Offer.
22
<PAGE> 28
The party tendering Depositary Shares for exchange (the "Transferor")
sells, assigns and transfers the Depositary Shares to PECO Energy, and
irrevocably constitutes and appoints the Exchange Agent as the Transferor's
agent and attorney-in-fact to cause the Depositary Shares to be assigned,
transferred and exchanged. The Letter of Transmittal directs the Exchange Agent
to deliver the Series B Subordinated Debentures received upon exchange of the
Depositary Shares to PECO Energy Capital. The Transferor represents and warrants
that it has full power and authority to tender, exchange, assign and transfer
the Depositary Shares and to acquire Preferred Trust Receipts issuable upon the
exchange of such tendered Depositary Shares and that, when such Transferor's
Depositary Shares are accepted for exchange, PECO Energy will acquire good and
unencumbered title to such tendered Depositary Shares, free and clear of all
liens, restrictions, charges and encumbrances and not subject to any adverse
claim. The Transferor also warrants that it will, upon request, execute and
deliver any additional documents deemed by PECO Energy to be necessary or
desirable to complete the exchange, assignment and transfer of tendered
Depositary Shares or transfer ownership of such Depositary Shares. All authority
conferred by the Transferor will survive the death, bankruptcy or incapacity of
the Transferor and every obligation of the Transferor shall be binding upon the
heirs, legal representatives, successors, assigns, executors and administrators
of such Transferor.
WITHDRAWAL OF TENDERS
Tenders of Depositary Shares pursuant to the Offer may be withdrawn at any
time prior to the Expiration Date and, unless accepted for exchange by PECO
Energy, may be withdrawn at any time after 40 Business Days from ,
1995.
To be effective, a written notice of withdrawal delivered by mail, hand
delivery or facsimile transmission must be timely received by the Exchange Agent
at the address set forth below under "-- Exchange Agent and Information Agent."
The method of notification is at the risk and election of the Holder. Any such
notice of withdrawal must specify (i) the Holder named in the Letter of
Transmittal as having tendered Depositary Shares to be withdrawn, (ii) if the
Depositary Shares are held in certificated form, the certificate numbers of the
Depositary Shares to be withdrawn, (iii) that such Holder is withdrawing his
election to have such Depositary Shares exchanged and (iv) the name of the
registered Holder of such Depositary Shares. Any notice of withdrawal must be
signed by the Holder in the same manner as the original signature on the Letter
of Transmittal (including any required signature guarantees) or be accompanied
by evidence satisfactory to PECO Energy that the person withdrawing the tender
has succeeded to the beneficial ownership of the Depositary Shares being
withdrawn. The Exchange Agent will return the properly withdrawn Depositary
Shares promptly following receipt of notice of withdrawal. If Depositary Shares
have been tendered pursuant to the procedure for book-entry transfer, any notice
of withdrawal must specify the name and number of the account at DTC or other
Depository to be credited with the withdrawn Depositary Shares and otherwise
comply with DTC's or such other Depository's procedures. All questions as to the
validity of notice of withdrawal, including time of receipt, will be determined
by PECO Energy, and such determination will be final and binding on all parties.
Withdrawals of tenders of Depositary Shares may not be rescinded and any
Depositary Shares withdrawn will thereafter be deemed not validly tendered for
purposes of the Offer. Properly withdrawn Depositary Shares, however, may be
retendered by following the procedures therefor described elsewhere herein at
any time prior to the Expiration Date. See "-- Procedures for Tendering."
ACCEPTANCE OF DEPOSITARY SHARES AND PRORATION
Upon the terms and subject to the conditions of the Offer, if 5,400,000
Depositary Shares (or, if decreased as described herein, such lesser number as
PECO Energy may elect to exchange pursuant to the Offer) have been validly
tendered and not withdrawn prior to the Expiration Date, PECO Energy will accept
for exchange all such Depositary Shares. Upon the terms and subject to the
conditions of the Offer, if more than 5,400,000 Depositary Shares (or, if
decreased as described herein, such lesser number) have been validly tendered
and not withdrawn prior to the Expiration Date, PECO Energy will accept for
exchange Depositary Shares from each Holder on a pro rata basis, subject to
adjustment to avoid the acceptance for exchange of fractional shares.
23
<PAGE> 29
If PECO Energy decreases the amount of Depositary Shares sought, changes
the consideration offered therefor or changes the fee offered to the Soliciting
Dealers, and the Offer is scheduled to expire less than ten Business Days from
and including the date that notice of such decrease is first published, sent or
given in the manner specified above in "-- Expiration Date; Extensions;
Amendments; Termination," then the Offer will be extended for ten Business Days
from and including the date of such notice.
All Depositary Shares not accepted pursuant to the Offer, including
Depositary Shares not accepted because of proration, will be returned to the
tendering Holders at PECO Energy's expense as promptly as practicable following
the Expiration Date.
EXCHANGE AGENT AND INFORMATION AGENT
First Chicago Trust Company of New York has been appointed as the Exchange
Agent for the Offer.
THE EXCHANGE AGENT:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
By Hand or Overnight Courier in New York:
First Chicago Trust Company of New York
14 Wall Street
Tenders and Exchanges
8th Floor -- Suite 4680-PECO
New York, New York 10005
By Mail:
(Registered or certified mail recommended)
First Chicago Trust Company of New York
Tenders and Exchanges
Suite 4660-PECO
P.O. Box 2559
Jersey City, New Jersey 07303-2559
By Facsimile Transmission:
(For Eligible Institutions Only)
(201) 222-4720 or 4721
Confirm Receipt of Notice of Guaranteed Delivery by Telephone:
(201) 222-4707
D. F. King & Co., Inc. (the "Information Agent") has been retained by PECO
Energy as the Information Agent to assist in connection with the Offer.
Questions and requests for assistance regarding the Offer, requests for
additional copies of this Offering Circular/Prospectus, the Letter of
Transmittal and requests for Notice of Guaranteed Delivery may be directed to
the Information Agent at 77 Water Street, New York, New York 10005. Banks and
brokers call collect: (212) 425-1685; all others telephone (800) 628-8509.
PECO Energy will pay the Exchange Agent and the Information Agent
reasonable and customary fees for their services and will reimburse them for all
their reasonable out-of-pocket expenses in connection therewith.
DEALER MANAGERS; SOLICITING DEALERS
Merrill Lynch & Co. and Smith Barney Inc., as Dealer Managers, have agreed
to solicit exchanges of Depositary Shares for Preferred Trust Receipts. PECO
Energy will pay the Dealer Managers an aggregate fee
24
<PAGE> 30
of $ per Depositary Share tendered and not withdrawn (up to 5,400,000
Depositary Shares) pursuant to the Offer. The maximum fee payable to the Dealer
Managers is approximately $ plus such amount, if any, that Merrill
Lynch & Co. and Smith Barney Inc. may be entitled to pursuant to the next
paragraph. PECO Energy will also reimburse the Dealer Managers for certain
reasonable out-of-pocket expenses in connection with the Offer and will
indemnify the Dealer Managers against certain liabilities, including liabilities
under the Securities Act of 1933, as amended ("Securities Act"). Merrill Lynch &
Co. and Smith Barney Inc. engage in transactions with, and from time to time
have each performed services for, PECO Energy, including acting as an
underwriter for the issuance of the Depositary Shares.
PECO Energy will pay to a Soliciting Dealer a solicitation fee of
$ per Depositary Share validly tendered and accepted for exchange
pursuant to the Offer. As used in this Offering Circular/Prospectus, "Soliciting
Dealer" includes (i) any broker or dealer in securities, including each Dealer
Manager in its capacity as a broker or dealer, who is a member of any national
securities exchange or of the National Association of Securities Dealers, Inc.
(the "NASD"), (ii) any foreign broker or dealer not eligible for membership in
the NASD who agrees to conform to the NASD's Rules of Fair Practice in
soliciting tenders outside the United States to the same extent as though it
were an NASD member, or (iii) any bank or trust company, any one of whom has
solicited and obtained a tender pursuant to the Offer. No such fee shall be
payable to a Soliciting Dealer in respect of Depositary Shares registered in the
name of such Soliciting Dealer unless such Depositary Shares are held by such
Soliciting Dealer as nominee and such shares are being tendered for the benefit
of one or more beneficial owners identified on the Letter of Transmittal or on
the Notice of Solicited Tenders (included in the materials provided to brokers
and dealers). No such fee shall be payable to a Soliciting Dealer with respect
to the tender of Depositary Shares by a holder unless the Letter of Transmittal
accompanying such tender designates such Soliciting Dealer as such in the box
captioned "Solicited Tenders" or the Notice of Solicited Tenders accompanying
such tender designates such Soliciting Dealer. No such fee shall be payable to
the Soliciting Dealer with respect to the tender of Depositary Shares by the
holder of record, for the benefit of the beneficial owner, unless the beneficial
owner has designated such Soliciting Dealer. No such fee shall be payable to the
Soliciting Dealer unless the Soliciting Dealer returns a Notice of Solicited
Tenders to the Exchange Agent within five business days after the Expiration
Date. No such fee shall be payable to a Soliciting Dealer if such Soliciting
Dealer is required for any reason to transfer the amount of such fee to a
depositing holder. No broker, dealer, bank, trust company or fiduciary shall be
deemed to be the agent of PECO Energy, PECO Energy Capital, the Trust, the
Exchange Agent, the Information Agent or the Dealer Managers for purposes of the
Offer. Soliciting Dealers are not entitled to a solicitation fee for Depositary
Shares beneficially owned by such Soliciting Dealer. The maximum fee payable to
Soliciting Dealers is $ , exclusive of the amount that Merrill Lynch &
Co. and Smith Barney Inc. are entitled to pursuant to the preceding paragraph.
Additional solicitation may be made by telephone or in person by officers
and regular employees of PECO Energy and its affiliates. No additional
compensation will be paid to any such officers and employees who engage in
soliciting tenders.
LISTING AND TRADING OF PREFERRED TRUST RECEIPTS AND DEPOSITARY SHARES
The Preferred Trust Receipts constitute a new issue of securities with no
established trading market. Application has been made for listing the Preferred
Trust Receipts on the NYSE. If such application is approved, trading of the
Preferred Trust Receipts on the NYSE is expected to commence within a 30-day
period after the initial delivery of the Preferred Trust Receipts. Even if the
Preferred Trust Receipts are approved for listing, there can be no assurance
that an active market for the Preferred Trust Receipts will develop or be
sustained in the future on such exchange. Although the Dealer Managers have
indicated to PECO Energy that they intend to make a market in the Preferred
Trust Receipts as permitted by applicable laws and regulations prior to the
commencement of trading on the NYSE, they are not obligated to do so and may
discontinue any such market-making at any time without notice. Accordingly, no
assurance can be given as to the liquidity of, or trading markets for, the
Preferred Trust Receipts. In order to satisfy the NYSE listing requirements,
acceptance of Depositary Shares validly tendered in the Offer are subject to the
conditions that as of the Exchange Date there be at least 1,000,000 Preferred
Trust Receipts to be issued and
25
<PAGE> 31
400 record or beneficial holders of Preferred Trust Receipts to be issued in
exchange for such Depositary Shares, which conditions may not be waived.
To the extent that Depositary Shares are tendered and accepted in the
Offer, the terms on which untendered Depositary Shares could subsequently be
sold could be adversely affected. In addition, if the Offer is substantially
subscribed or oversubscribed, there would be a significant risk that round lot
holdings of Depositary Shares outstanding following the Offer would be limited.
See "Risk Factors -- Listing and Trading of Preferred Trust Receipts and
Depositary Shares."
TRANSACTIONS AND ARRANGEMENTS CONCERNING THE OFFER
Except as described or referred to herein, there are no material contracts,
arrangements, understandings or relationships in connection with the Offer
between PECO Energy or any of its directors or executive officers, PECO Energy
Capital or the General Partner, the Trust or the Trustee and any person with
respect to the Series B Subordinated Debentures, the Depositary Shares, the
Series B Preferred Securities and the Preferred Trust Receipts.
FEES AND EXPENSES; TRANSFER TAXES
The expenses of soliciting tenders of the Depositary Shares will be borne
by PECO Energy. For compensation to be paid to the Dealer Managers and
Soliciting Dealers, see "The Offer -- Dealer Managers; Soliciting Dealers." The
total cash expenditures to be incurred by PECO Energy in connection with the
Offer, other than fees payable to the Dealer Managers and Soliciting Dealers,
but including the expenses of the Dealer Managers, accounting and legal fees,
and the fees and expenses of the Exchange Agent, the Information Agent, the
Trustee, and Meridian Trust Company, as trustee under the Indenture (the
"Indenture Trustee") are estimated to be approximately $525,000.
PECO Energy will pay all transfer taxes, if any, applicable to the exchange
of Depositary Shares pursuant to the Offer. If, however, Depositary Shares not
tendered or accepted for exchange, are to be delivered to, or are to be issued
in the name of, any person other than the registered Holder of the Depositary
Shares tendered or if a transfer tax is imposed for any reason other than the
exchange of Depositary Shares pursuant to the Offer, then the amount of any such
transfer taxes (whether imposed on the registered Holder or any other persons)
will be payable by the tendering Holder. If satisfactory evidence of payment of
such taxes or exemption therefrom is not submitted with the Letter of
Transmittal, the amount of such transfer taxes will be billed directly to such
tendering Holder.
PRICE RANGE OF DEPOSITARY SHARES
The Depositary Shares are listed and principally traded on the NYSE. The
following table sets forth, for each period shown, the high and low sales prices
of the Depositary Shares as reported on the NYSE Composite Tape.
<TABLE>
<CAPTION>
HIGH LOW
--- ---
<S> <C> <C>
Fiscal Year Ended December 31, 1993
1st Quarter............................................................ 27 1/8 25
2nd Quarter............................................................ 26 1/2 25 1/2
3rd Quarter............................................................ 27 1/8 26
4th Quarter............................................................ 27 25 3/8
Fiscal Year Ended December 31, 1994
1st Quarter............................................................ 26 3/8 24 1/2
2nd Quarter............................................................ 25 1/4 23 7/8
3rd Quarter............................................................ 25 1/8 23 3/8
4th Quarter............................................................ 24 1/4 21 5/8
</TABLE>
26
<PAGE> 32
<TABLE>
<CAPTION>
HIGH LOW
--- ---
<S> <C> <C>
Fiscal Year Ended December 31, 1995
1st Quarter............................................................ 25 22 3/8
2nd Quarter............................................................ 25 1/4 24
3rd Quarter............................................................ 26 24 7/8
4th Quarter (through October , 1995).................................
</TABLE>
On July 3, 1995 the last day of trading prior to the first public
announcement of the Offer, the closing sales price of the Depositary Shares on
the NYSE as reported on the Composite Tape was $25 1/8 per share. Holders of
Depositary Shares are urged to obtain a current market quotation for the
Depositary Shares.
DESCRIPTION OF THE PREFERRED TRUST RECEIPTS
The following is a summary of certain terms and provisions of the Preferred
Trust Receipts and the Trust Agreement. The summary is subject to, and qualified
in its entirety by reference to, the Trust Agreement and the laws of the State
of Delaware for business trusts. The Trust Agreement is an exhibit to the
Registration Statement of which this Offering Circular/Prospectus forms a part.
The Preferred Trust Receipts will be issued by the Trust pursuant to the
Trust Agreement. Each Preferred Trust Receipt represents a Series B Preferred
Security. Each Series B Preferred Security has a stated liquidation preference
of $25. The Preferred Trust Receipts will be issued directly to the holders
thereof or in book-entry form through DTC or such other Depository at which the
Exchange Agent may have established an account.
The Trust is a statutory business trust created under the Delaware Business
Trust Act. The Trustee will hold the Series B Preferred Securities deposited in
the Trust for the benefit of the holders of the Preferred Trust Receipts. The
holders of the Preferred Trust Receipts will have the right to withdraw
Preferred Securities from the Trust as described below. The Trust Agreement
provides that, to the fullest extent permitted by law, without the need for any
other action of any person, including the Trustee and any other holder of
Preferred Trust Receipts, each holder of Preferred Trust Receipts shall be
entitled to enforce in the name of the Trust the Trust's rights under the Series
B Preferred Securities represented by the Preferred Trust Receipts held by such
holder.
DISTRIBUTIONS
Whenever the Trust shall receive any cash distribution representing a
monthly distribution on the Series B Preferred Securities (whether or not
distributed by PECO Energy Capital on the regular monthly distribution date
therefor) or payment under the Series B Guarantee in respect thereof, the Trust
shall distribute such amounts to the holders of the Preferred Trust Receipts in
proportion to the respective number of Series B Preferred Securities represented
by such Preferred Trust Receipts. Under the Indenture, PECO Energy shall have
the right at any time after payment of the Additional Distribution (as defined
below), so long as an Event of Default under the Indenture has not occurred and
is continuing, 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 redemption of any series
of Subordinated Debentures. At the end of the Extension Period, PECO Energy
shall pay all interest then accrued and unpaid on such Subordinated Debentures
(together with interest thereon to the extent permitted by applicable law at the
rate per annum borne by such Subordinated Debentures). During any Extension
Period, no Distributions will be made on the Series B Preferred Securities
represented by the Preferred Trust Receipts; however, all accrued and unpaid
Distributions (together with any applicable Distributions on such Distributions)
shall be paid at the end of the Extension Period. See "Description of the Series
B Subordinated Debentures and the Indenture -- Option to Extend Interest Payment
Period."
The paying agent for the Preferred Trust Receipts will be First Chicago
Trust Company of New York.
27
<PAGE> 33
REDEMPTION OF PREFERRED TRUST RECEIPTS
Whenever PECO Energy Capital shall elect or is required to redeem Series B
Preferred Securities in accordance with the Amended and Restated Limited
Partnership Agreement of PECO Energy Capital, dated as of July 25, 1994, as
amended (the "Partnership Agreement"), PECO Energy Capital shall give the
Trustee at least 40 days' prior notice thereof. The Trustee will mail the notice
of redemption not less than 30 nor more than 60 days prior to the date fixed for
redemption of the Series B Preferred Securities and the Preferred Trust Receipts
to the holders of the Preferred Trust Receipts. On the date of redemption of the
Series B Preferred Securities, provided that PECO Energy Capital (or PECO Energy
pursuant to the Series B Guarantee) shall have deposited with the Trustee the
aggregate amount payable upon redemption of all Series B Preferred Securities
held by the Trust to be redeemed, the Trustee shall redeem Preferred Trust
Receipts representing the same number of such Series B Preferred Securities
redeemed by PECO Energy Capital at the same redemption price at which such
Series B Preferred Securities are redeemed. In the event that fewer than all the
outstanding Preferred Trust Receipts are redeemed, the Preferred Trust Receipts
to be redeemed shall be selected by lot or pro rata or other equitable method
determined by the Trustee. Under the Trust Agreement, PECO Energy Capital agrees
that if a partial redemption of the Series B Preferred Securities would result
in a delisting of the Preferred Trust Receipts from any national exchange on
which the Preferred Trust Receipts are then listed, PECO Energy Capital will
only redeem the Series B Preferred Securities in whole.
PAYMENTS ON LIQUIDATION OF PECO ENERGY CAPITAL
Upon receipt by the Trust of any distribution from PECO Energy Capital upon
liquidation of PECO Energy Capital (or payment by PECO Energy under the Series B
Guarantee in respect thereof), after satisfaction of creditors of the Trust as
required by applicable law, the Trustee shall distribute to the holders of the
Preferred Trust Receipts such amounts in proportion to the respective number of
Series B Preferred Securities represented by such Preferred Trust Receipts.
PAYMENTS ON PREFERRED TRUST RECEIPTS
Monthly distributions on the Preferred Trust Receipts in certificated form
will be payable by check to the holders of record on the record date therefor
which will be the fifteenth day (whether or not a business day) of the month.
Payments of the redemption price of the Preferred Trust Receipts in certificated
form and distributions in liquidation will be made at the office of First
Chicago Trust Company of New York, as paying agent, upon surrender of such
Preferred Trust Receipts. Payments on Preferred Trust Receipts in global form
will be made through the appropriate Depository.
TRANSFERS AND EXCHANGES
First Chicago Trust Company of New York will act as transfer agent and
registrar for the Preferred Trust Receipts. Subject to the terms and conditions
of the Trust Agreement, the transfer agent shall register the transfers on its
books from time to time of Preferred Trust Receipts upon any surrender thereof
by the holder in person or by a duly authorized attorney, properly endorsed or
accompanied by a properly executed instrument of transfer or endorsement,
together with evidence of the payment of any transfer taxes as may be required
by law.
Upon surrender of Preferred Trust Receipts at the office of the transfer
agent, subject to the terms and conditions of the Trust Agreement, the transfer
agent shall execute and deliver new Preferred Trust Receipts representing the
same number of Series B Preferred Securities as the Preferred Trust Receipts
surrendered.
As a condition precedent to the registration of the transfer or exchange of
any Preferred Trust Receipt, the transfer agent, may require (i) payment to it
of a sum sufficient for the payment of any tax or other governmental charge with
respect thereto; (ii) the production of proof satisfactory to it as to the
identity and genuineness of any signature; and (iii) compliance with such
requirements as the Trustee may establish not inconsistent with the provisions
of the Trust Agreement.
28
<PAGE> 34
No service charge shall be made to a holder of Preferred Trust Receipts for
any registration of transfer or exchange of Preferred Trust Receipts, but the
Trustee or the registrar shall require payment of a sum sufficient to cover any
tax or governmental charge that may be imposed in connection with any transfer
or exchange of Preferred Trust Receipts.
The transfer agent shall not be required (i) to register the transfer of or
exchange any Preferred Trust Receipts for a period beginning at the opening of
business ten days next preceding any selection of Preferred Trust Receipts to be
redeemed and ending at the close of business on the day of the mailing of a
notice of redemption of Preferred Trust Receipts or (ii) to transfer or exchange
for another Preferred Trust Receipt any Preferred Trust Receipt called or being
called for redemption in whole or in part.
WITHDRAWAL OF SERIES B PREFERRED SECURITIES
Upon surrender of Preferred Trust Receipts at the principal office of the
Trustee and subject to the terms of the Trust Agreement and the Partnership
Agreement, an owner of Preferred Trust Receipts is entitled to delivery of the
number of whole Series B Preferred Securities represented by such Preferred
Trust Receipts. Owners of Preferred Trust Receipts will be entitled to receive
whole numbers of Series B Preferred Securities on the basis of one Series B
Preferred Security for each Preferred Trust Receipt. Partial Series B Preferred
Securities will not be issued. If the Preferred Trust Receipts delivered by the
owner exceed the number of the Series B Preferred Securities to be withdrawn,
the Trustee will deliver to such owner at the same time a new Preferred Trust
Receipt evidencing such excess number of Preferred Trust Receipts. Subject to
the terms of the Trust Agreement, owners of the Series B Preferred Securities
thus withdrawn will thereafter be entitled to deposit such Series B Preferred
Securities under the Trust Agreement and to receive Preferred Trust Receipts
representing Series B Preferred Securities therefor. The Series B Preferred
Securities will not be listed on any exchange, and as a result, the liquidity
and trading market for the Series B Preferred Securities will be limited.
VOTING RIGHTS
If the holders of the Preferred Partner Interests (as defined in the
Partnership Agreement), acting as a single class, are entitled to appoint and
authorize a Special Representative pursuant to the Partnership Agreement, the
Trustee shall notify the holders of the Preferred Trust Receipts of such right,
request direction of each holder of a Preferred Trust Receipt as to the
appointment of a Special Representative and vote the Series B Preferred
Securities represented by such Preferred Trust Receipt in accordance with such
direction. If the General Partner fails to convene a general meeting of PECO
Energy Capital as required in the Partnership Agreement, the Trustee shall
notify the holders of the Preferred Trust Receipts and, if so directed by the
holders of the Preferred Trust Receipts representing Preferred Securities
constituting at least 10% of the aggregate stated liquidation preference of the
outstanding Preferred Partner Interests shall convene such meeting. Under the
Trust Agreement, PECO Energy Capital has agreed that without the consent of the
holders of 66 2/3% in liquidation amount of the Preferred Trust Receipts it 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 if, as a result, the Preferred Trust Receipts would
be delisted, downgraded or the holders thereof would recognize any gain or loss
for federal income tax purposes.
Upon receipt of notice of any meeting at which the holders of Series B
Preferred Securities are entitled to vote, the Trustee shall, as soon as
practicable thereafter, mail to the holders of Preferred Trust Receipts a
notice, which shall be provided by the General Partner and which shall contain
(i) such information as is contained in such notice of meeting, (ii) a statement
that the holders of Preferred Trust Receipts will be entitled, subject to any
applicable provision of law, to instruct the Trustee as to the exercise of the
voting rights pertaining to the amount of Series B Preferred Securities
represented by their respective Preferred Trust Receipts, and (iii) a brief
statement as to the manner in which such instructions may be given. Upon the
written request of a holder of a Preferred Trust Receipt, the Trustee shall vote
or cause to be voted the number of Series B Preferred Securities represented by
such Preferred Trust Receipts in accordance with the instructions set forth in
such request.
29
<PAGE> 35
AMENDMENT AND TERMINATION OF TRUST AGREEMENT
PECO Energy Capital or the General Partner may, and the Trustee shall, at
any time and from time to time enter into one or more agreements supplemental to
the Trust Agreement without the consent of the holders of the Preferred Trust
Receipts: (i) to evidence the succession of another partnership, corporation or
other entity to PECO Energy Capital or the General Partner and the assumption by
any such successor of the covenants of PECO Energy Capital or the General
Partner in the Trust Agreement; (ii) to add to the covenants of PECO Energy
Capital or the General Partner for the benefit of the holders of the Preferred
Trust Receipts, or to surrender any right or power herein conferred upon PECO
Energy Capital or the General Partner; (iii) to correct or supplement any
provision in the Trust Agreement which may be defective or inconsistent with any
other provision therein or to make any other provisions with respect to matters
or questions arising under the Trust Agreement, provided, that any such action
shall not materially adversely affect the interests of the holders of Preferred
Trust Receipts; or (iv) to cure any ambiguity or correct any mistake. Any other
amendment of the Trust Agreement must be approved by the holders of 66 2/3% of
the Preferred Trust Receipts.
The Trust Agreement shall terminate upon the redemption of the Preferred
Trust Receipts or a final distribution in respect of the Series B Preferred
Securities and such distribution has been delivered to the holders of the
Preferred Trust Receipts.
EXPENSES OF THE TRUSTEE
All charges or expenses of the Trust, including the charges and expenses of
the Trustee, will be paid by the General Partner, provided that if the Trustee
incurs fees, charges or expenses for which it is not otherwise liable under the
Trust Agreement at the election of a holder of Preferred Trust Receipts or other
person, such holder or other person will be liable for such fees, charges and
expenses.
RESIGNATION AND REMOVAL OF TRUSTEE
The Trust shall at all times have a Trustee which is a bank that has its
principal place of business in the State of Delaware having a combined capital
and surplus of $50,000,000. If the Trustee ceases to be eligible, it will
resign.
The Trustee may at any time resign as trustee under the Trust Agreement by
notice of its election to do so delivered to PECO Energy Capital and the General
Partner, such resignation to take effect upon the appointment of a successor
trustee and its acceptance of such appointment as hereinafter provided. The
Trustee may at any time be removed by PECO Energy Capital by notice of such
removal delivered to the Trustee, such removal to take effect upon the
appointment of a successor trustee and its acceptance of such appointment.
In case at any time the Trustee shall resign or be removed, PECO Energy
Capital shall, within 45 days after the delivery of the notice of resignation or
removal, as the case may be, appoint a successor trustee, which shall be a bank
or trust company, or an affiliate of a bank or trust company, having its
principal office in the State of Delaware and having a combined capital and
surplus of at least $50,000,000.
DESCRIPTION OF THE SERIES B PREFERRED SECURITIES
The following is a summary of certain terms and provisions of the Series B
Preferred Securities represented by the Preferred Trust Receipts and the
Partnership Agreement. The summary is subject to, and qualified in its entirety
by reference to, the Partnership Agreement and the Delaware Revised Uniform
Limited Partnership Act. The Partnership Agreement is an exhibit to the
Registration Statement of which this Offering Circular/Prospectus forms a part.
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GENERAL
Under the Partnership Agreement, PECO Energy Capital is authorized to issue
two classes of partner interests: the Preferred Securities representing limited
partner interests, including the Series B Preferred Securities, 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 issued by PECO Energy Capital will be of
equal rank in participation in the profits and assets and income of PECO Energy
Capital. The 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. Distributions 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.
DISTRIBUTIONS
The Series B Preferred Securities will be entitled to Distributions 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. Distributions on the
Series B Preferred Securities will be cumulative, will accrue from the Exchange
Date and, except as otherwise described below, will be payable monthly in
arrears, on the last day of each month of each year, commencing on
. Distributions in arrears after the monthly payment date therefor will
accumulate additional distributions thereon at the rate of % per annum. In
addition, holders of Series B Preferred Securities will be entitled to receive,
when, as and if declared by the General Partner out of funds on hand and legally
available therefor an additional cash distribution at the rate of 7.96% per
annum of the stated liquidation preference thereof from November 1, 1995 up to
but not including the Exchange Date in lieu of dividends accumulating from
November 1, 1995 on their Depositary Shares accepted for exchange, such
additional distribution to be made at the time the first distribution on the
Series B Preferred Securities is made (the "Additional Distribution").
The General Partner may make distributions on the general partner interests
of PECO Energy Capital only after payment in full of all Distributions accrued
on the Series B Preferred Securities and any other outstanding Preferred
Securities of PECO Energy Capital. The Series B Preferred Securities will rank
pari passu with all other series of Preferred Securities which may be issued by
PECO Energy Capital. The Series A Preferred Securities are the only other series
of Preferred Securities which have been issued by PECO Energy Capital to date.
The stated liquidation preference of the Series A Preferred Securities is
$221,250,000.
After payment of the Additional Distribution, PECO Energy has the right
under the Indenture to extend the interest payment period from time to time on
the Series B 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 Subordinated Debentures,
including the Series B Subordinated Debentures. As a consequence, monthly
Distributions on the Series B Preferred Securities would be deferred (but would
continue to accumulate with Distributions 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 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 Subordinated
Debentures, PECO Energy may elect to extend the interest payment period again,
subject to the above requirements. Following an extension period of eighteen
(18) months or more, the holders of Preferred Securities, including the Series B
Preferred Securities, shall have the right to appoint a Special Representative
(as hereinafter defined) to enforce PECO Energy Capital's rights against PECO
Energy under the Subordinated Debentures and the Indenture and the obligations
of PECO Energy under the Guarantees. See "-- Voting Rights," "Risk Factors" and
"Description of the Series B Subordinated Debentures and the Indenture -- Option
to Extend Interest Payment Period" and "-- Interest."
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Distributions on the Series B Preferred Securities must be paid by PECO
Energy Capital in any calendar year or portion thereof to the extent that PECO
Energy Capital has funds on hand legally available therefor. It is anticipated
that the funds available for distribution by PECO Energy Capital will be limited
to payments received by PECO Energy Capital in respect of the Series B
Subordinated Debentures. See "Description of the Series B Subordinated
Debentures and the Indenture."
The amount of Distributions 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. Distributions on the Series B
Preferred Securities will be made to the Holders thereof as they appear on the
books and records of PECO Energy Capital on the relevant record dates, which
will be the 15th day of each month. If any date on which Distributions are
payable on the Series B Preferred Securities is not a business day, then payment
of the Distributions payable on such date will be made on the next succeeding
day that 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
term "business day," as used in relation to the Series B Preferred Securities,
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.
CERTAIN RESTRICTIONS ON PECO ENERGY CAPITAL
If distributions have not been paid in full on any series of Preferred
Securities of PECO Energy Capital, PECO Energy Capital shall not:
(i) pay any distributions on any other series of Preferred Securities,
unless the amount of any distributions paid on any Preferred Securities is
paid on all Preferred Securities then outstanding on a pro rata basis in
proportion to the full distributions 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 distributions on
all series of Preferred Securities shall have been paid in full for all prior
distribution periods.
OPTIONAL REDEMPTION
The Series B 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
October 1, 1997, at $25 per Series B Preferred Security, plus accumulated and
unpaid Distributions(whether or not declared), if any, to the date fixed for
redemption (the "Redemption Price").
MANDATORY REDEMPTION
If at any time PECO Energy redeems the Series B Subordinated Debentures or
pays the Series B Subordinated Debentures at maturity, the Series B Preferred
Securities will be subject to mandatory redemption at the Redemption Price.
The Series B 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
B 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
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(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 B 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 B Subordinated Debentures or PECO
Energy Capital will otherwise not be taxed as a partnership, (ii) interest
payable by PECO Energy on the Series B Subordinated Debentures will not be
deductible for United States federal income tax purposes 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 B 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 the issuance of the Series B 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.
REDEMPTION PROCEDURES
PECO Energy Capital may not redeem any Series B Preferred Securities unless
all accumulated and unpaid Distributions have been paid on all Series B
Preferred Securities for all monthly distribution periods terminating on or
prior to the date of redemption.
Notice of any redemption of the Preferred Partner Interests will be given
by the Partnership by mail or delivery to each record holder of Series B
Preferred Securities to be redeemed not fewer than 30, nor more than 60 days
prior to the date fixed for redemption thereof (at least 40 days' prior for
notice to the Trust). 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
Series B Preferred Securities. Notices of redemption shall be addressed to the
record holders of the Series B Preferred Securities at the addresses of the
holders appearing in the books and records of the Partnership.
If notice of redemption shall have been given and payment shall have been
made by the Partnership to the Trust and any other holder of Series B Preferred
Securities, then, upon the date of such payment all rights of beneficial owners
of the Series B Preferred Securities so called for redemption will cease. In the
event that any date fixed for redemption of Series B 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).
LIQUIDATION DISTRIBUTION
In the event of any voluntary or involuntary dissolution and winding up of
PECO Energy Capital, the holders of the Preferred Securities 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 sum of their
stated liquidation preference and all accumulated
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and unpaid Distributions to the date of payment for such series of Preferred
Securities (collectively, the "Partnership Liquidation Distribution"). All
assets of PECO Energy Capital remaining after payment of the Partnership
Liquidation Distribution will be distributed to the General Partner. If, upon
such liquidation, the Partnership Liquidation Distribution can be paid only in
part because PECO Energy Capital has insufficient assets available to pay in
full the aggregate Partnership 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 Partnership
Liquidation Distribution to which each series of Preferred Securities would be
entitled.
Pursuant to the 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 withdrawal, removal or bankruptcy 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 or as otherwise
provided in the 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 Partnership
Liquidation Distribution.
The amount per share payable on the Series B Preferred Securities in the
event of any voluntary or involuntary liquidation of PECO Energy Capital is $25
plus accumulated and unpaid Distributions.
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 Successor 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, (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 and (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) experienced in such matters to the
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 1940 Act without
registering thereunder as an
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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 "-- Merger, Consolidation, etc. of PECO
Energy Capital" and "Description of the Series B Guarantee -- Amendments" and as
otherwise required by law and the Partnership Agreement, the holders of the
Preferred Securities will have no voting rights.
If (i) PECO Energy Capital fails to pay Distributions 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
Guarantees, 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 Guarantees,
including, after failure to pay Distributions for 60 consecutive monthly
distribution periods on the Preferred Securities, the payment of Distributions
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
Distributions in full for 18 consecutive monthly distribution periods,
Distributions shall be deemed to remain in arrears, notwithstanding any payments
in respect thereof, until full cumulative Distributions 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 Distributions. 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
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 Distributions 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 on the Subordinated Debentures.
If any proposed amendment to the 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 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 as well as the General Partner.
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.
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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 holder of the Subordinated Debentures or the Indenture Trustee
under the Indenture, or executing any trust or power conferred on the Indenture
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 Indenture 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.
The holders of the Preferred Securities will have no rights to remove or
replace the General Partner.
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 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 SERIES B GUARANTEE
The following is a summary of certain provisions of the Series B Guarantee
which will be executed and delivered by PECO Energy concurrently with the
issuance of the Series B 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 Offering
Circular/Prospectus forms a part.
GENERAL
Under the Series B Guarantee, PECO Energy will agree to pay (i) any
accumulated and unpaid Distributions on the Series B Preferred Securities to the
extent that PECO Energy Capital has funds on hand legally available therefor,
(ii) the redemption price payable with respect to any Series B Preferred
Securities called for redemption by PECO Energy Capital 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 portion of the
Partnership Liquidation Distribution applicable to the Series B Preferred
Securities and (b) the amount of
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assets of PECO Energy Capital legally available for distribution to holders of
Series B Preferred Securities in liquidation of PECO Energy Capital and (iv) the
Additional Distribution (collectively, the "Guarantee Payments"). PECO Energy
will agree to pay 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 PECO Energy may have or
assert against PECO Energy Capital, the General Partner, the Trust or the
Trustee. 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
Series B Preferred Securities or by causing PECO Energy Capital to pay such
amounts to such holders.
STATUS OF THE SERIES B GUARANTEE
The Series B 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 Series B Guarantee will constitute a guarantee of payment and not of
collection. The Series B Guarantee will be held by the General Partner for the
benefit of the holders of the Series B Preferred Securities. In the event of the
appointment of a Special Representative, the Special Representative may enforce
the Series B Guarantee. If no Special Representative has been appointed to
enforce the Series B Guarantee, the General Partner has the right to enforce the
Series B Guarantee on behalf of the holders of the Series B Preferred
Securities. The holders of Preferred Trust Receipts, together with the holders
of the Series B Preferred Securities other than the Trust, representing not less
than 10% in aggregate stated liquidation preference of the Series B Preferred
Securities have the right to direct the time, method and place of conducting any
proceeding to enforce any remedy available in respect of the Series B 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 Series B Guarantee as above provided, any
holder of Preferred Trust Receipts representing Series B Preferred Securities,
and any holder of Series B Preferred Securities other than the Trust, may
institute a legal proceeding directly against PECO Energy to enforce its rights
under the Series B Guarantee without first instituting a legal proceeding
against PECO Energy Capital or any other person or entity. The Series B
Guarantee will 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 PECO Energy contained in the Series B Guarantee.
RELATIONSHIP AMONG SERIES B GUARANTEE, SERIES B SUBORDINATED DEBENTURES AND
SERIES B PREFERRED SECURITIES
In addition to the obligations of PECO Energy under the Series B Guarantee,
the Indenture provides that PECO Energy shall cause the General Partner to
remain the general partner of PECO Energy Capital and timely perform all its
duties as such (including the duty to pay Distributions on the Preferred
Securities), which include, among other things, the General Partner's duties
under the Partnership Agreement to directly pay all costs and expenses of PECO
Energy Capital (for the purpose of insuring that payment of principal and
interest by PECO Energy on the Subordinated Debentures will be sufficient to
allow payment in full to the holders of the Preferred Securities) and the
covenant of the General Partner in the Partnership Agreement to at all times
maintain a "fair market value net worth" of at least 10% of the total
contributions (less redemptions) to PECO Energy Capital. While the assets of the
General Partner will not be available for making Distributions on the Preferred
Securities, they will be available for payment of the expenses of PECO Energy
Capital. Accordingly, the Series B Guarantee and the Indenture, together with
the related covenants contained in the Partnership Agreement and PECO Energy's
obligations under the Subordinated Debentures, provide for PECO Energy's full
and unconditional guarantee of the Series B Preferred Securities as set forth
above.
CERTAIN COVENANTS OF PECO ENERGY
Under the Series B Guarantee, PECO Energy will covenant that, so long as
any Series B 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
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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 Series B Guarantee 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.
AMENDMENTS
Except with respect to any changes which do not materially adversely affect
the rights of holders of Series B Preferred Securities (in which case no vote
will be required), the Series B Guarantee may be amended only with the prior
approval of the holders of Preferred Trust Receipts representing not less than
66 2/3% of the aggregate stated liquidation preference of the outstanding Series
B Preferred Securities.
MERGER OF PECO ENERGY
So long as the Series B 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 all or substantially all its properties and assets 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 Series B Guarantee.
TERMINATION OF THE SERIES B GUARANTEE
The Series B Guarantee will terminate and be of no further force and effect
upon full payment of the redemption price of all Series B Preferred Securities
or upon full payment of the amounts payable with respect to the Series B
Preferred Securities upon liquidation of PECO Energy Capital. The Series B
Guarantee will continue to be effective or will be reinstated, as the case may
be, if at any time any holder of Series B Preferred Securities must restore
payments of any sums paid under the Series B Preferred Securities or the Series
B Guarantee.
DESCRIPTION OF THE SERIES B SUBORDINATED DEBENTURES AND THE INDENTURE
The following is a summary of certain terms and provisions of the Series B
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 Offering Circular/Prospectus forms a part.
GENERAL
The Series B Subordinated Debentures will be unsecured subordinated
obligations of PECO Energy issued under the Indenture. The Series B Subordinated
Debentures will be in a principal amount equal to the aggregate stated
liquidation preference of the Series B Preferred Securities plus the General
Partner's concurrent investment in PECO Energy Capital, will bear interest at a
rate equal to the Distribution rate on the Series B Preferred Securities payable
on the Distribution dates, will have maturity and redemption provisions
corresponding to the redemption provisions of the Series B Preferred Securities
and will be subject to mandatory redemption upon the dissolution and winding up
of PECO Energy Capital. The entire principal amount of the Series B Subordinated
Debentures will become due and payable, together with any accrued and unpaid
interest thereon, on , 2025.
PECO Energy will deliver the Series B Subordinated Debentures to the
Exchange Agent (which will receive the Series B Subordinated Debentures on
behalf of the Holders of the Depositary Shares) in exchange for the Depositary
Shares. The Series B Subordinated Debentures will be delivered by the Exchange
Agent to PECO Energy Capital in consideration for the issuance and deposit by
PECO Energy Capital of the Series B Preferred Securities with the Trustee under
the Trust Agreement. PECO Energy Capital will purchase additional Series B
Subordinated Debentures issued by PECO Energy in an amount equal to the
contribution made by the General Partner to PECO Energy Capital concurrently
with the Exchange.
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REDEMPTION
Except as provided below, the Series B Subordinated Debentures may not be
redeemed prior to October 1, 1997. PECO Energy shall have the right to redeem
the Series B Subordinated Debentures, in whole or in part, from time to time, on
or after October 1, 1997, upon not less than 30 nor more than 60 days' notice
(and not less than 40 days' notice to the Trust), at a redemption price equal to
100% of the aggregate principal amount to be redeemed, plus any accrued and
unpaid interest, to the redemption date, including interest accrued during an
Extension Period. PECO Energy will also have the right to redeem the Series B
Subordinated Debentures at any time upon the occurrence of a Tax Event if
certain conditions are met as described under "Description of the Series B
Preferred Securities -- Special Event Redemption." The Series B Subordinated
Debentures will be subject to mandatory redemption upon the dissolution of PECO
Energy Capital or upon redemption of the Series B Preferred Securities.
If PECO Energy gives a notice of redemption in respect of Series B
Subordinated Debentures, then, on or prior to the redemption date, PECO Energy
shall deposit with the paying agent funds sufficient to pay the applicable
redemption price and will give irrevocable instructions and authority to pay
such redemption price. If notice of redemption shall have been given, if
required, then the Series B Subordinated Debentures called for redemption shall
become due and payable on the redemption date and upon the redemption date,
interest will cease to accrue on the Series B Subordinated Debentures called for
redemption and such Series B Subordinated Debentures will no longer be deemed to
be outstanding.
INTEREST
The Series B Subordinated Debentures will bear interest at an annual rate
of % plus Additional Interest, if any, from the Exchange Date. Interest
will be payable monthly in arrears on the last day of each month of each year,
commencing on , 1995, to PECO Energy Capital. In addition, PECO
Energy is obligated under the Series B Subordinated Debentures to pay on the
first interest payment date an amount sufficient to pay the Additional
Distribution.
PECO Energy will make additional interest payments on any overdue
installment of interest on the Series B Subordinated Debentures to PECO Energy
Capital at the same rate per annum as the annual rate payable on the Series B
Subordinated Debentures.
Interest payments on the Subordinated Debentures are eliminated in
consolidation from the Consolidated Statements of Income of PECO Energy.
Distributions on the Preferred Securities appear as a separate line item under
Interest Charges entitled "Dividends on Preferred Securities of Subsidiary" on
the Consolidated Statements of Income of PECO Energy.
ADDITIONAL INTEREST
If at any time PECO Energy Capital would be required to pay any taxes,
duties, or other 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, or other governmental charges will
not be less than the amounts PECO Energy Capital would have received had no such
taxes, duties or other governmental charges been imposed.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
Under the Indenture, PECO Energy shall have the right at any time after
payment of the Additional Distribution, so long as an Event of Default under the
Indenture has not occurred and is continuing, 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
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 to the extent permitted by applicable law at the rate per
annum borne by such Subordinated Debentures). During any such Extension Period,
neither PECO Energy
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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 shorten or 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 the Indenture
Trustee notice of its selection of such extended or shortened interest payment
period one business day prior to the earlier of (i) the date PECO Energy has
selected to make the interest payment or (ii) the date PECO Energy Capital is
required to give notice to the NYSE or other applicable self-regulatory
organization of the record date or the date such Distributions are payable, but
in any event not less than two business days prior to such record date. PECO
Energy shall cause the Indenture Trustee to give such notice of PECO Energy's
selection of such extended interest payment period to the holders of the
Preferred Securities.
SUBORDINATION
The Indenture provides that all payments by PECO Energy in respect of the
Subordinated Debentures, including the Series B 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, if any, 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; (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 or indebtedness between or among PECO
Energy and its affiliates.
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 (as
holder of the Subordinated Debentures), the Indenture Trustee on behalf of such
holder 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 or distribution of any assets or securities.
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 received by the Indenture Trustee and such
default shall not have been cured or waived by or on behalf of the holders of
such Senior Indebtedness.
If the Indenture 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
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and before all amounts payable on, under or in connection with 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 the Indenture Trustee,
PECO Energy Capital (as holder of the Subordinated Debentures) 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 be paid before PECO Energy Capital (as holder
of the Subordinated Debentures) 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
(as holder of the Subordinated Debentures) (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 distributions of assets of PECO
Energy made on such Senior Indebtedness until 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 any 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 the General Partner to at all times maintain a
"fair market net worth" of at least 10% of the total capital contributions (less
redemptions) to PECO Energy Capital and to maintain general partner interests
representing 3% of all interests in the capital, income, gain, loss, deduction
and credit of PECO Energy Capital, (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 Series B 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.
MODIFICATION OF THE INDENTURE
The Indenture contains provisions permitting PECO Energy and the Indenture
Trustee, without the consent of the Special Representative or PECO Energy
Capital, to modify the Indenture or any Supplemental Indenture:
(i) to cure any ambiguity, defect or inconsistency; (ii) to comply
with the provisions of the Indenture regarding a successor to PECO Energy;
(iii) to provide for uncertificated Subordinated Debentures in addition to
or in place of certificated Subordinated Debentures; (iv) to make any other
change that does not adversely affect the rights of any holder of the
Subordinated Debentures; (v) to comply with any requirement for
qualification of the Indenture under the Trust Indenture Act of 1939, as
amended; and (vi) to set forth the terms and conditions of any series of
Subordinated Debentures.
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The Indenture contains provisions permitting PECO Energy and the Indenture
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 aggregate stated
liquidation preference of the Preferred Securities 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,
without the consent of each holder of the Subordinated Debentures affected, may,
(i) change the stated maturity date of the principal of, or any installment of
principal of or interest, if any, on, the Subordinated Debentures, (ii) reduce
the principal amount of, or premium or rate of interest, if any, on, the
Subordinated Debentures, (iii) reduce the amount of principal of an original
issue discount Subordinated Debenture payable upon acceleration of the maturity
thereof, (iv) make the Subordinated Debentures payable in money or securities
other than as stated in the Subordinated Debentures, (v) impair the right to
institute suit for the enforcement of any payment on or with respect to the
Subordinated Debentures, (vi) adversely change the redemption provisions of the
Subordinated Debentures, (vii) adversely affect the rights of the holders of the
Subordinated Debentures with respect to subordination or (viii) reduce the
principal amount of the holders of the Subordinated Debentures that must consent
to an amendment 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 on any series of 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) any Subordinated Debentures;
(iii) default for 60 days after notice in the performance of any other covenant
or agreement in the Indenture or any series of Subordinated Debentures 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, insolvency or
reorganization of PECO Energy, in which case principal and interest on all of
the Subordinated Debentures shall become immediately due and payable), the
Indenture Trustee, PECO Energy Capital (as holder of the Subordinated
Debentures) or the Special Representative may declare the principal of all the
Subordinated Debentures to be due and payable. Under certain circumstances, a
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 Indenture 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.
ENFORCEMENT OF CERTAIN RIGHTS OF HOLDERS OF PREFERRED SECURITIES
The holders of the Preferred Securities will have the rights referred to
under "Description of the Series B Preferred Securities -- Voting Rights,"
including the right to appoint a Special Representative authorized to exercise
the rights of PECO Energy Capital, as the holder of the Series B Subordinated
Debentures, to declare the principal and interest on the Series B Subordinated
Debentures due and payable and to enforce the obligations of PECO Energy under
the Series B Subordinated Debentures and the Indenture directly against PECO
Energy, without first proceeding against PECO Energy Capital or any other person
or entity.
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
The Indenture provides that PECO Energy may not consolidate with or merge
with or into, or sell, convey, transfer or lease all or substantially all its
assets (either in one transaction or a series of transactions) to, any person,
unless, among other things, (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 prior to and 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.
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DEFEASANCE AND DISCHARGE
Under the terms of the Indenture, PECO Energy will be deemed to have paid
and discharged the entire indebtedness of the Series B Subordinated Debentures
if PECO Energy irrevocably deposits with the Indenture Trustee or other paying
agent, in trust, (i) cash and/or (ii) United States Government Obligations (as
defined in the Indenture), which through the payment of interest thereon and
principal thereof in accordance with their terms will provide cash in an amount
sufficient to pay all the principal of, premium, if any, and interest on, the
Subordinated Debentures then outstanding on the dates such payments are due in
accordance with the terms of the Series B Subordinated Debentures.
INFORMATION CONCERNING THE INDENTURE TRUSTEE
Subject to the provisions of the Indenture relating to its duties, the
Indenture Trustee will be under no obligation to exercise any of its rights or
powers under the Indenture, unless the Indenture Trustee receives security and
indemnity reasonably satisfactory to it. 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 Indenture Trustee
thereunder, or exercising any trust or power conferred on the Indenture Trustee.
The Indenture contains limitations on the right of the Indenture 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 Indenture Trustee may be deemed to have a
conflicting interest and may be required to resign as Indenture 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
Indenture Trustee.
DESCRIPTION OF THE DEPOSITARY SHARES
The summary of the terms of the Depositary Shares set forth below does not
purport to be complete and is subject to, and qualified in its entirety by
reference to the provisions of PECO Energy's Amended and Restated Articles of
Incorporation and the Deposit Agreement (the "Deposit Agreement") among PECO
Energy, First Chicago Trust Company of New York, as depositary (the
"Depositary") and Holders from time to time of the Depositary Shares, and copies
of which may be obtained from PECO Energy upon request.
Each Depositary Share represents a one-fourth interest in a share of $7.96
Cumulative Preferred Stock (the "$7.96 Preferred Stock"). The shares of $7.96
Preferred Stock underlying the Depositary Shares are deposited with the
Depositary under the Deposit Agreement. The Depositary Shares are evidenced by
Depositary Receipts ("Depositary Receipts") issued by the Depositary under the
Deposit Agreement. Subject to the terms of the Deposit Agreement, each owner of
a Depositary Share is entitled, through the Depositary, in proportion to the
one-fourth interest in a share of $7.96 Preferred Stock underlying such
Depositary Share, to all rights and preferences of the $7.96 Preferred Stock
(including dividend, voting, redemption and liquidation rights). Since each
share of $7.96 Preferred Stock entitles the holder thereof to one vote on
matters on which the holders of the $7.96 Preferred Stock are entitled to vote,
each Depositary Share, in effect, entitles the Holder thereof to one-fourth of a
vote thereon, rather than one full vote. The Depositary acts as registrar and
transfer agent with respect to the Depositary Shares.
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GENERAL
All shares of preferred stock of PECO Energy, including the $7.96 Preferred
Stock, are of equal rank. The shares of the preferred stock of different series
may vary as to (i) annual dividend rate or rates, (ii) redemption price or
prices, if any, and any special terms and conditions applicable to redemption,
(iii) amount or amounts payable upon any voluntary or involuntary liquidation or
winding up of PECO Energy, (iv) terms and amounts of any sinking fund provided
for the purchase or redemption of shares, and (v) conversion, participating or
other special rights, and qualifications, limitations or restrictions thereof,
if any.
The authorized capital stock of PECO Energy consists of 15 million shares
of preferred stock without par value, issuable in series, 100 million shares of
preference stock, issuable in series, and 500 million shares of common stock
without par value.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Depositary distributes all cash dividends or other cash distributions
received in respect of the $7.96 Preferred Stock, less any amount required to be
withheld, to the record holders of Depositary Receipts representing the related
Depositary Shares in proportion to the number of Depositary Shares owned by such
holders on the relevant record date, which is the same date as the record date
fixed by PECO Energy for the $7.96 Preferred Stock. In the event that the
calculation of any such cash dividend or other cash distribution to be paid to
any record holder on the aggregate number of Depositary Receipts held by such
holder results in an amount which is a fraction of a cent, the amount the
Depositary distributes to such record holder is rounded to the next highest
whole cent.
In the event of a distribution other than in cash, the Depositary is
required to distribute property received by it to the record holders of
Depositary Receipts entitled thereto, in proportion, as nearly as may be
practicable, to the number of Depositary Shares owned by such holders on the
relevant record date, unless PECO Energy determines that it is not feasible to
make such distribution, in which case PECO Energy may adopt any other method for
such distribution as it deems equitable and practicable, including the sale of
such property and distribution of the net proceeds from such sale to such
holders.
The $7.96 Preferred Stock, pari passu with the issued and outstanding
preferred stock of PECO Energy, is entitled to dividends when and as declared by
the Board of Directors of PECO Energy at the rate of $7.96 (equivalent to $1.99
per annum per Depositary Share), payable quarterly on February 1, May 1, August
1 and November 1. After payment in full of all dividends accrued on the
preferred stock, dividends on the common stock of PECO Energy or any other stock
junior to the preferred stock may be declared and paid as the Board of Directors
of PECO Energy determine.
Unless dividends on all outstanding shares of preferred stock of all series
shall have been paid for all past monthly dividend periods, no dividends shall
be paid or declared and no other distribution shall be made on the preference
stock or the common stock, and no preference stock or common stock shall be
purchased or otherwise acquired for value by PECO Energy.
REDEMPTION PROVISIONS
The Depositary Shares will be redeemed from the proceeds received by the
Depositary resulting from the redemption, in whole or in part, of the $7.96
Preferred Stock held by the Depositary. Whenever PECO Energy redeems any $7.96
Preferred Stock held by the Depositary, the Depositary will redeem as of the
same redemption date the number of Depositary Shares representing the $7.96
Preferred Stock so redeemed. The Depositary will mail the notice of redemption
no less than 30 nor more than 60 days prior to the date fixed for redemption of
the $7.96 Preferred Stock and Depositary Shares to the record Holders of the
Depositary Receipts. If less than all of the Depositary Shares are to be
redeemed, the Depositary Shares to be redeemed will be selected by lot or pro
rata or by any other method determined by PECO Energy in its sole discretion to
be equitable.
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The $7.96 Preferred Stock is not subject to redemption prior to October 1,
1997. Thereafter, the $7.96 Preferred Stock may be redeemed as a whole at any
time or in part from time to time by PECO Energy upon not less than 30 days'
notice at a price of $100 per share of $7.96 Preferred Stock (equivalent to $25
per Depositary Share) plus accrued and unpaid dividends.
The $7.96 Preferred Stock is not entitled to any sinking fund.
Notice of redemption having been given as described above, from and after
the date fixed for redemption, unless PECO Energy shall have failed to redeem
the number of shares of $7.96 Preferred Stock called for redemption, the
Depositary Shares so called for redemption will no longer be deemed to be
outstanding, and all rights of the Holders of the Depositary Shares will cease,
except for the right to receive the monies payable upon such redemption and any
money or other property to which the Holders of such Depositary Shares were
entitled upon such redemption and surrender to the Depositary of the Depositary
Receipts evidencing such Depositary Shares.
LIQUIDATION VALUE
The amount per share payable on the $7.96 Preferred Stock in the event of
any voluntary or involuntary liquidation of PECO Energy is $100 (equivalent to
$25 per Depositary Share) plus accrued and unpaid dividends. All shares of PECO
Energy preferred stock of all series are of equal rank.
VOTING RIGHTS OF $7.96 PREFERRED STOCK
Except as hereinafter set forth or when some mandatory provision of law
shall be controlling, the holders of preferred stock of PECO Energy, including
the Holders of the Depositary Shares, have no voting rights.
Holders of preferred stock of PECO Energy are entitled to vote on certain
matters relating to (i) authorizing of stock (other than a series of preferred
stock) ranking prior to or on a parity with the preferred stock or any security
convertible into shares of stock of such kind; (ii) change of the express terms
of the preferred stock or of any series thereof in a manner prejudicial to the
holders thereof; (iii) issuance of additional shares of preferred stock unless,
for any twelve consecutive calendar months within the fifteen calendar months
immediately preceding the calendar month within which such additional shares are
issued, net earnings applicable to the payment of dividends on the preferred
stock and net income before payment of interest charges on indebtedness and
after provision for depreciation and taxes shall have been, respectively, at
least two times the dividend requirements upon the entire amount of preferred
stock to be outstanding immediately after the proposed issue of such additional
shares, and at least one and one-half times the aggregate of such dividend
requirements and interest charges for such period on the entire amount of
indebtedness then to be outstanding; (iv) issuance of additional shares of
preferred stock, unless the capital of PECO Energy represented by its preference
stock and common stock together with its surplus is in the aggregate at least
equal to the involuntary liquidating value of the preferred stock to be
outstanding immediately after the proposed issue of such additional shares of
preferred stock; (v) increase in the total authorized amount of preferred stock
of all series; and (vi) merger or consolidation with or into any corporation, or
division, unless ordered, exempted, approved, or permitted by the SEC or other
federal regulatory authority. Except as otherwise provided in the express terms
of any series of preferred stock, the number of authorized shares of preferred
stock of any series may be increased without vote or consent of the holders of
the outstanding shares of the series so affected, subject to the aggregate limit
on the authorized number of shares of preferred stock. With respect to (i),
(ii), (iii), and (iv) above, the consent or affirmative vote of the holders of
shares of the preferred stock entitled to cast at least two-thirds of the votes
which all holders of preferred stock of all series then outstanding are entitled
to cast (or of the affected series in the case of a change prejudicial to less
than all series) is required; and with respect to (v) and (vi), the consent or
affirmative vote of the holders of shares of the preferred stock entitled to
cast at least a majority of the votes which all holders of preferred stock of
all series then issued and outstanding are entitled to cast is required.
Coverage under the more restrictive earnings test of PECO Energy's Amended and
Restated Articles of Incorporation relating to dividend requirements and
interest charges on all indebtedness and preferred stock for the twelve months
ended June 30, 1995 was 2.17.
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The Board of Directors of PECO Energy is classified into three classes. In
each election of Directors, holders of common stock elect an entire class for
three-year terms. If and when dividends payable on all shares of the preferred
stock are in default in an amount equal to four full quarterly dividends, and
until all dividends then in default are paid or declared and set apart for
payment, the holders of all shares of preferred stock, voting separately as a
class, are entitled to elect the smallest number of Directors necessary to
constitute a majority of the full Board of Directors, and the holders of the
common stock (and except as otherwise provided by the terms of the preference
stock), voting separately as a class, are entitled to elect the remaining
Directors. Holders of preferred stock are not entitled to cumulative voting
rights in election of Directors.
The preferred stock of all series constitutes one class in any vote of
shareholders except as stated above, or when some mandatory provision of law is
controlling.
VOTING PROCEDURES FOR DEPOSITARY SHARES
Promptly upon receipt of notice of any meeting at which the holders of the
$7.96 Preferred Stock are entitled to vote, the Depositary will mail the
information contained in such notice of meeting to the record holders of the
Depositary Receipts as of the record date for such meeting. Each such record
holder of Depositary Receipts will be entitled to instruct the Depositary as to
the exercise of the voting rights pertaining to the amount of the $7.96
Preferred Stock represented by such record holder's Depositary Shares. The
Depositary will endeavor, insofar as practicable, to vote the amount of the
$7.96 Preferred Stock represented by such Depositary Shares in accordance with
such instructions, and PECO Energy will agree to take all action which may be
deemed necessary by the Depositary in order to enable the Depositary to do so.
The Depositary will abstain from voting any of the $7.96 Preferred Stock to the
extent that it does not receive specific instructions from the Holders of
Depositary Receipts.
Each share of $7.96 Preferred Stock will be entitled to one vote or a
fraction thereof for each $100 or fraction thereof of involuntary liquidation
value of such share on matters on which the $7.96 Preferred Stock is entitled to
vote.
WITHDRAWAL OF $7.96 PREFERRED STOCK
Upon surrender of Depositary Receipts at the principal office of the
Depositary, upon payment of the Depositary's customary charges therefor, and
subject to the terms of the Deposit Agreement, the owner of the Depositary
Shares evidenced thereby is entitled to delivery of the number of whole shares
of the $7.96 Preferred Stock and all money and other property, if any,
represented by such Depositary Shares. Owners of Depositary Shares will be
entitled to receive whole shares of the $7.96 Preferred Stock on the basis of
one share of $7.96 Preferred Stock for four Depositary Shares. Fractional
interests in the Depositary Shares will not be issued. If the Depositary
Receipts delivered by the holder evidence a number of Depositary Shares in
excess of the number of Depositary Shares representing the number of whole
shares of the $7.96 Preferred Stock to be withdrawn, the Depositary will deliver
to such holder, at the same time, a new Depositary Receipt evidencing such
excess number of Depositary Shares. Subject to the terms of the Deposit
Agreement, holders of the $7.96 Preferred Stock thus withdrawn will thereafter
be entitled to deposit such shares under the Deposit Agreement and to receive
Depositary Receipts evidencing Depositary Shares therefor.
DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
PECO Energy maintains a Dividend Reinvestment and Stock Purchase Plan (as
described in a separate prospectus) which permits holders of PECO Energy's
common and preferred shares to reinvest cash dividends automatically and make
direct investments of up to $50,000 per calendar year in shares of common stock.
Holders of Preferred Trust Receipts will not be entitled to participate in PECO
Energy's Dividend Reinvestment and Stock Purchase Plan.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of Depositary Receipt evidencing the Depositary Shares and any
provision of the Deposit Agreement may at any time and from time to time be
amended by agreement between PECO Energy and the
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Depositary. Any amendment that shall impose any fees, taxes or charges shall not
become effective as to outstanding Depositary Receipts until the expiration of
three months after notice of such amendment has been given to the Holders of the
outstanding Depositary Receipts. Any amendment which is prejudicial to any
substantial existing rights of the Holders of Depositary Shares will not be
effective unless such amendment has been approved by the Holders of at least a
majority of the Depositary Shares then outstanding. No such amendment may impair
the right, subject to the terms of the Deposit Agreement, of any owner of any
Depositary Shares to surrender the Depositary Receipt evidencing such Depositary
Shares with instructions to the Depositary to deliver to the holder the $7.96
Preferred Stock and all money and other property, if any represented thereby,
except in order to comply with mandatory provisions of applicable law. The
Deposit Agreement may be terminated by PECO Energy or the Depositary only if all
outstanding Depositary Shares relating thereto have been redeemed or there has
been a final distribution in respect of the $7.96 Preferred Stock in connection
with any liquidation, dissolution or winding up of PECO Energy and such
distribution has been distributed to the holders of the related Depositary
Receipts. Notwithstanding the foregoing, PECO Energy has the right to terminate
the Deposit Agreement upon 30 days' prior written notice to the Holders of the
Depositary Receipts and the Depositary if (i) the deposit arrangement evidenced
by the Deposit Agreement is in violation of applicable law or becomes separately
taxable for federal income tax purposes or (ii) PECO Energy affects a
four-for-one split of the $7.96 Preferred Stock.
CHARGES OF DEPOSITARY
Under the Deposit Agreement, Holders of Depositary Shares are required to
pay all transfer and other taxes and governmental charges arising from the
existence of the depositary arrangements. PECO Energy will pay charges of the
Depositary in connection with any redemption of the $7.96 Preferred Stock.
Holders of Depositary Shares pay transfer and other taxes and governmental
charges and certain other charges as are provided in the Deposit Agreement to be
for their accounts.
RESIGNATION AND REMOVAL OF DEPOSITARY
The Depositary may resign at any time by delivering to PECO Energy notice
of its election to do so, and PECO Energy may at any time remove the Depositary,
any such resignation or removal to take effect upon the appointment of a
successor depositary and its acceptance of such appointment. Such successor
depositary must be appointed within 45 days after delivery of the notice for
resignation or removal and must be a bank or trust company having its principal
office in the United States of America and having a combined capital and surplus
of at least $50,000,000.
MISCELLANEOUS
The Depositary forwards all reports and communications from PECO Energy
which are delivered to the Depositary and which PECO Energy is required to
furnish to the holders of the $7.96 Preferred Stock. In addition, the Depositary
makes available for inspection by Holders of Depositary Receipts at the
principal office of the Depositary, and at such other places as it may from time
to time deem advisable, any reports and communications received from PECO Energy
which are received by the Depositary as the holder of $7.96 Preferred Stock.
The obligations of PECO Energy and the Depositary under the Deposit
Agreement are limited to performance in good faith of their duties thereunder
and neither the Depositary nor PECO Energy assumes any other obligation or will
be subject to any other liability under the Deposit Agreement to holders of
Depositary Receipts. Neither the Depositary nor PECO Energy will be liable if it
is prevented or delayed by law or any circumstance beyond its control in
performing its obligations under the Deposit Agreement. The Depositary and PECO
Energy will not be obligated to prosecute or defend any legal proceeding in
respect of any Depositary Shares or $7.96 Preferred Stock unless satisfactory
indemnity is furnished. PECO Energy and the Depositary may rely on written
advice of counsel or accountants, on information provided by Holders of
Depositary Shares or other persons believed in good faith to be competent to
give such information and on documents believed to be genuine and to have been
signed or presented by the proper party or parties.
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UNITED STATES TAXATION
In the opinion of Ballard Spahr Andrews & Ingersoll, counsel to PECO
Energy, the following are the material United States federal income tax
consequences (and certain Pennsylvania tax considerations) of the receipt of
Preferred Trust Receipts in exchange for the Depositary Shares pursuant to the
Offer and of the ownership and disposition of Preferred Trust Receipts. Unless
otherwise stated, this summary deals only with Preferred Trust Receipts held as
capital assets by holders who acquire the Preferred Trust Receipts pursuant to
the Offer ("Initial Holders"). It does not deal with special classes of holders,
such as dealers in securities or currencies, life insurance companies, persons
holding Preferred Trust Receipts as a hedge against or which are hedged against
currency risks or as a part of a straddle, or persons whose functional currency
is not the United States dollar. This summary is based on the Internal Revenue
Code of 1986, as amended, Treasury Regulations thereunder and administrative and
judicial interpretations thereof, as of the date hereof, all of which are
subject to change (possibly on a retroactive basis).
ALL HOLDERS OF DEPOSITARY SHARES ARE ADVISED TO CONSULT THEIR TAX ADVISERS
AS TO THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE RECEIPT OF
PREFERRED TRUST RECEIPTS FOR DEPOSITARY SHARES AND OF THE OWNERSHIP AND
DISPOSITION OF PREFERRED TRUST RECEIPTS IN LIGHT OF THEIR PARTICULAR
CIRCUMSTANCES, AS WELL AS THE EFFECT OF ANY STATE, LOCAL OR OTHER LAWS.
RECEIPT OF PREFERRED TRUST RECEIPTS FOR DEPOSITARY SHARES
The receipt in the Exchange of Preferred Trust Receipts for Depositary
Shares pursuant to the Offer will be treated for United States federal income
tax purposes as consisting of three transactions: (a) a taxable exchange of
Depositary Shares for the underlying Series B Subordinated Debentures followed
by (b) a tax-free contribution of the underlying Series B Subordinated
Debentures to PECO Energy Capital in exchange for Series B Preferred Securities
followed, in turn, by (c) a tax-free deposit of Series B Preferred Securities
with the Trust in consideration for the issuance of the Preferred Trust Receipts
to the Holders of the Depositary Shares.
The receipt of Preferred Trust Receipts for Depositary Shares pursuant to
the Offer will be a taxable transaction. In the case of an Initial Holder who
actually or constructively owns solely Depositary Shares, or not more than one
percent of such stock and not more than one percent of any other class of PECO
Energy stock, gain or loss will be recognized in an amount equal to the
difference between (a) the fair market value on the Exchange Date of the
underlying Series B Subordinated Debentures received in the Exchange and (b) the
Initial Holder's tax basis in the Depositary Shares exchanged therefor, and will
be long-term capital gain or loss if the Depositary Shares have been held for
more than one year as of such date. For this purpose, the fair market value of
the Series B Subordinated Debentures deemed issued in exchange for Depositary
Shares on the Exchange Date will equal the fair market value of the Preferred
Trust Receipts on that date.
No further gain or loss will be recognized by an Initial Holder on account
of the contribution of the underlying Series B Subordinated Debentures to PECO
Energy Capital or the deposit of the Series B Preferred Securities with the
Trust in consideration for the issuance of the Preferred Trust Receipts.
An Initial Holder's aggregate tax basis in his pro rata share of the Series
B Preferred Securities (represented by his Preferred Trust Receipts) will be
equal to his tax basis for the Depositary Shares surrendered in the Exchange
increased by the amount of any gain or reduced by the amount of any loss
recognized in the Exchange.
Holders of Depositary Shares who actually or constructively own more than
one percent of any class of PECO Energy stock are advised to consult their tax
advisers as to the income tax consequences of exchanging Depositary Shares.
CLASSIFICATION OF PECO ENERGY CAPITAL AND THE TRUST
In connection with the issuance of Preferred Trust Receipts, Ballard Spahr
Andrews & Ingersoll will render its tax opinion to the effect that, under then
current law and assuming full compliance with the terms of
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the Partnership Agreement and the Trust Agreement, (a) PECO Energy Capital will
be classified for United States federal income tax purposes as a partnership and
not as an association taxable as a corporation and (b) the Trust will be
classified as a grantor trust and not as an association taxable as a
corporation.
As a consequence, each Securityholder will be considered the owner of a pro
rata portion of the Series B Preferred Securities held by the Trust. As a
further consequence, each Securityholder will be required to include in gross
income his pro rata share of the income accrued on the Series B Subordinated
Debentures held by PECO Energy Capital and allocated to the Trust. Such income
should not exceed distributions received by the Securityholders on the Preferred
Trust Receipts except in limited circumstances described under "-- Potential
Extension of Payment Period." No portion of such income will be eligible for the
dividends received deduction.
ACCRUAL OF ORIGINAL ISSUE DISCOUNT AND PREMIUM
The underlying Series B Subordinated Debentures will be considered to have
been issued with "original issue discount." PECO Energy Capital will be required
to include original issue discount on the Series B Subordinated Debentures in
income as it accrues, in accordance with a constant yield method based on a
compounding of interest, before the receipt of cash distributions on the
Preferred Trust Receipts. Each Securityholder, including a taxpayer who
otherwise uses the cash method of accounting, will be required to include his
pro rata share of such original issue discount allocated to the Trust.
Generally, all of a Securityholder's taxable interest income with respect to the
Series B Subordinated Debentures will be accounted for by PECO Energy Capital as
"original issue discount" and actual distributions of stated interest will not
be separately reported as taxable income. So long as the interest payment period
is not extended, cash distributions received by an initial Securityholder for
any monthly interest period (assuming no disposition prior to the record date
for such distribution) will equal or exceed the sum of the daily accruals of
income for such interest period, unless the issue price of the underlying Series
B Subordinated Debentures (as defined below) is less than $25.
The total amount of "original issue discount" on the underlying Series B
Subordinated Debentures will equal the difference between the "issue price" of
the Series B Subordinated Debentures and their "stated redemption price at
maturity." Because PECO Energy has the right to extend the interest payment
period of the Series B Subordinated Debentures, all of the stated interest
payments on the Series B Subordinated Debentures will be includible in
determining their "stated redemption price at maturity." The "issue price" of
each $25 principal amount of the Series B Subordinated Debentures will be equal
to the fair market value of the Depositary Shares on the Exchange Date, which
may be more or less than $25, with the result that the total amount of original
issue discount on the underlying Series B Subordinated Debentures may be more or
less than the amount of stated interest payable with respect thereto.
POTENTIAL EXTENSION OF PAYMENT PERIOD
Securityholders will continue to accrue original issue discount with
respect to their pro rata share of the underlying Series B Subordinated
Debentures during an extended interest payment period, and any Securityholders
who dispose of Preferred Trust Receipts prior to the record date for the payment
of Distributions following such extended interest payment period will not
receive from the Trust any cash related thereto.
Under the terms of the Indenture, PECO Energy will be permitted to extend
the interest payment period on the Series B 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 currently believes 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 payment period, over the length of the extended interest payment
period.
Accrued income will be allocated, but not distributed, to Securityholders
of record on the 15th day of each calendar month. As a result, during an
extended interest payment period, Securityholders will be required to include
interest in gross income in advance of the receipt of cash, and any such
Securityholders who dispose of Preferred Trust Receipts prior to the record date
for the payment of Distributions following
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such extended interest payment period will include interest in gross income but
will not receive any cash related thereto from the Trust. The tax basis of a
Series B 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 and distributed
by PECO Energy Capital and the Trust. The subsequent receipt or distribution of
such cash will not be included in gross income.
TREATMENT OF THE PAYMENT OF THE ADDITIONAL DISTRIBUTION
The Additional Distribution payable on the first monthly Distribution date
for the Preferred Trust Receipts should be treated as a dividend for United
States federal income tax purposes.
WITHDRAWAL OF SERIES B PREFERRED SECURITIES
The receipt of Series B Preferred Securities by a Securityholder in
exchange for Preferred Trust Receipts (and vice versa), at the option of the
Securityholder, will not be a taxable event. The Securityholder's tax basis and
holding period for the Series B Preferred Securities immediately after the
exchange will equal the Securityholder's tax basis and holding period for the
Preferred Trust Receipts (or Series B Preferred Securities, as applicable)
surrendered in the exchange. Income earned from the Series B Preferred
Securities will be reported annually to the Securityholder and to the Internal
Revenue Service on Schedule K-1 and not on Form 1099.
DISPOSITION OF THE PREFERRED TRUST RECEIPTS
Gain or loss will be recognized on a sale, including a redemption for cash,
of Preferred Trust Receipts in an amount equal to the difference between the
amount realized and the Securityholder's tax basis in his pro rata share of
Series B Preferred Securities represented by such Preferred Trust Receipts. Gain
or loss recognized by a Securityholder on the sale or exchange of Preferred
Trust Receipts held for more than one year generally will be taxable as
long-term capital gain or loss.
PENNSYLVANIA TAX CONSIDERATIONS
In the opinion of Ballard Spahr Andrews & Ingersoll, the Preferred Trust
Receipts are exempt from existing personal property taxes in Pennsylvania.
UNITED STATES ALIEN HOLDERS
For purposes of this discussion, a "United States Alien Holder" is any
holder or beneficial owner who or which is (a) a nonresident alien individual or
(b) a foreign corporation, partnership, estate or trust, in either case not
subject to United States federal income tax on a net income basis in respect of
a Series B Preferred Security.
Under present United States federal income tax law, subject to the
discussion below with respect to backup withholding:
(i) Payments by the Trust or any of its paying agents to any United
States Alien Holder will not be subject to United States withholding tax
provided that (a) the beneficial owner of the Preferred Trust Receipt 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 Preferred Trust Receipt is not a controlled foreign corporation that is
related to PECO Energy through stock ownership, and (c) either (A) the
beneficial owner of the Preferred Trust Receipt certifies to the Trust 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 Preferred
Trust Receipt 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 the Trust 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 Preferred Trust Receipt will
not be subject to United States federal income or withholding tax on any
gain realized on the Exchange or on the sale or exchange of a Preferred
Trust Receipt unless such person is present in the United States for 183
days or more in the
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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 the Preferred
Trust Receipts 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
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 federal 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 payment.
Payments of the proceeds from the sale of 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.
LEGAL MATTERS
Certain matters of Delaware law relating to the validity of the Series B
Preferred Securities and the Preferred Trust Receipts will be passed upon for
PECO Energy Capital and the Trust by Richards, Layton & Finger, P.A.,
Wilmington, Delaware, special Delaware counsel to PECO Energy Capital. The
validity of the Series B Guarantee and the Series B Subordinated Debentures will
be passed upon on behalf of PECO Energy by Ballard Spahr Andrews & Ingersoll,
Philadelphia, Pennsylvania. Certain legal matters will be passed upon on behalf
of the Dealer Managers by Drinker Biddle & Reath, Philadelphia, Pennsylvania,
counsel to the Dealer Managers. 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 Offering Circular/Prospectus have been audited
by Coopers & Lybrand L.L.P., 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, 1994. The consolidated financial statements and
schedules audited by Coopers & Lybrand L.L.P. have been incorporated herein by
reference in reliance on their report given on their authority as experts in
accounting and auditing.
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Facsimile copies of the Letter of Transmittal will not be accepted. Letters
of Transmittal, certificates representing Depositary Shares and any other
required documents should be sent by each Holder of Depositary Shares or his
broker, dealer, commercial bank, trust company or other nominee to the Exchange
Agent at one of the addresses as set forth below:
THE EXCHANGE AGENT IS:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
By Hand or Overnight Courier in New York:
First Chicago Trust Company of New York
14 Wall Street
Tenders and Exchanges
8th Floor -- Suite 4680 -- PECO
New York, New York 10005
By Mail:
(registered or certified mail recommended)
First Chicago Trust Company of New York
Tenders and Exchanges
Suite 4660 -- PECO
P.O. Box 2559
Jersey City, New Jersey 07303-2559
By Facsimile Transmission:
(For Eligible Institutions Only)
(201) 222-4720 or 4721
Confirm Receipt of Notice of Guaranteed Delivery by Telephone:
(201) 222-4707
The Information Agent is:
D. F. King & Co., Inc..
77 Water Street
New York, New York 10005
Banks and Brokers Call Collect: (212) 425-1685
ALL OTHERS CALL TOLL-FREE: (800) 628-8509
Any questions or requests for assistance or additional copies of this
Offering Circular/Prospectus, the Letter of Transmittal or for copies of the
Notice of Guaranteed Delivery may be directed to the Information Agent at its
telephone number and location set forth above. You may also contact your broker,
dealer, commercial bank or trust company or other nominee for assistance
concerning the Offer.
The Dealer Managers for the Offer are:
MERRILL LYNCH & CO. SMITH BARNEY INC.
<PAGE> 58
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. 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, PECO
Energy'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.
PECO Energy has purchased directors' and officers' liability insurance.
Pursuant to the 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 Partnership Agreement,
except that no Indemnified Person shall be indemnified for any loss, claim or
damage incurred by reason of the Indemnified Persons's gross negligence, willful
misconduct or fraud; 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 prior
to the final disposition of such claim, demand, action, suit or proceeding
pursuant to 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 Trust Agreement provides, to the fullest extent permitted by law, that
the General Partner will indemnify and defend the Trustee, the Registrar and any
Paying Agent and their directors, officers, employees and agents against, and
hold each of them harmless from, any liability, costs and expenses (including
reasonable attorneys' fees) that may arise out of or in connection with its
acting as the Trustee or the Registrar or Paying Agent, respectively, under the
Trust Agreement and the Preferred Trust Receipts, except for any liability
arising out of negligence, bad faith or willful misconduct on the part of any
such person or persons.
II-1
<PAGE> 59
ITEM 21. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBERS
- -------
<S> <C>
1-1 Form of Dealer Manager Agreement.
3-1 Amended and Restated Articles of Incorporation of PECO Energy (incorporated by
reference to Exhibit 3-1 of PECO Energy's 1993 Annual Report on Form 10-K, File No.
1-1401).
3-2 Bylaws of PECO Energy, adopted February 26, 1990 and amended January 24, 1994
(incorporated by reference to Exhibit 3-2 of PECO Energy's 1993 Annual Report on
Form 10-K, File No. 1-1401).
3-3 Certificate of Limited Partnership of PECO Energy Capital, L.P. (incorporated by
reference to Registration Statement Nos. 33-53785 and 33-53785-01).
4-1 Amended and Restated Limited Partnership Agreement of PECO Energy Capital
(incorporated by reference to Exhibit 10-7 of PECO Energy's 1994 Annual Report on
Form 10-K,
File No. 1-1401).
4-2 Amendment to Amended and Restated Limited Partnership Agreement of PECO Energy
Capital.
4-3 Form of Action of General Partner creating Series B Preferred Securities.
4-4 Form of Series B Preferred Security Certificate (included in Exhibit 4-1 above).
4-5 Subordinated Debenture Indenture (incorporated by reference to Exhibit 4-5 of PECO
Energy's 1994 Annual Report on Form 10-K, File No. 1-1401).
4-6 Form of Series B Subordinated Debenture (included in Exhibit 4-7 below).
4-7 Form of First Supplemental Indenture.
4-8 Certificate of Trust.
4-9 Trust Agreement.
4-10 Form of Amended and Restated Trust Agreement.
4-11 Form of Payment and Guarantee Agreement.
4-12 Form of Certificate Representing the Preferred Trust Receipts (included in Exhibit
4-10 above).
5-1 Opinion of Ballard Spahr Andrews & Ingersoll relating to the legality of the Series
B Subordinated Debentures and Series B Guarantees, including consent.
5-2 Opinion of Richards, Layton & Finger, P.A., relating to the legality of the
Preferred Trust Receipts, 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, 1990-1994 and for the three months ended March 31,
1994 and March 31, 1995 (incorporated by reference to Exhibits 12-1 and 12-2,
respectively, of PECO Energy's 1994 Annual Report on Form 10-K, File No. 1-1401 and
PECO Energy's Quarterly Reports on Form 10-Q for the quarters ended June 30, 1994
and June 30, 1995).
13 PECO Energy's Annual Report on Form 10-K for the fiscal year ended December 31,
1994 and Quarterly Reports on Form 10-Q for the quarters ended March 31, 1995 and
June 30, 1995 (incorporated by reference, File No. 1-1401).
21 List of Subsidiaries of PECO Energy*.
23-1 Consent of Independent Accountants.
</TABLE>
- ---------------
* Previously filed as an Exhibit (with the same exhibit number) to Registration
Statement Nos. 33-60859 and 33-60859-01.
II-2
<PAGE> 60
<TABLE>
<CAPTION>
EXHIBIT
NUMBERS
- -------
<S> <C>
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.*
25-1 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of
Meridian Trust Company, as Trustee under the First Supplemental Indenture.*
25-2 Amendment No. 1 to Statement of Eligibility under the Trust Indenture Act of 1939,
as amended, of Meridian Trust Company, as Trustee under the First Supplemental
Indenture.
99-1 Proposed Form of Letter of Transmittal.
99-2 Proposed Form of Notice of Guaranteed Delivery.
99-3 Proposed Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.
99-4 Proposed Form of Letter to Clients.
99-5 Form of Exchange Agent Agreement.
99-6 Form of Information Agent Agreement.
99-7 Form of Newspaper Announcement.
99-8 Press Release.*
99-9 Form of Letter from PECO Energy to Holders of $7.96 Cumulative Preferred Stock.
99-10 Form of Questions and Answers.
99-11 Form of Dealer Manager's Letter to Non-Contacts.
</TABLE>
- ---------------
* Previously filed as an Exhibit (with the same exhibit number) to Registration
Statement Nos. 33-60859 and 33-60859-01.
ITEM 22. UNDERTAKINGS
(1) The undersigned registrants hereby undertake:
(a) 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. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.
(b) That, for the purpose of determining any liability under the
Securities Act of 1933, each 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.
II-3
<PAGE> 61
(c) 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.
(2) The undersigned registrants hereby undertake that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrants' annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) 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.
(3) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrants pursuant to the foregoing provisions, or otherwise, the
Registrants have been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
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 of 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 Act and will be governed by the final
adjudication of such issue.
(4) The undersigned registrants hereby undertake to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this Form S-4, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(5) The undersigned registrants hereby undertake to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-4
<PAGE> 62
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant,
PECO Energy Capital, L.P., has duly caused this Amendment No. 1 to the
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized in the City of Philadelphia, Commonwealth of Pennsylvania, on
the 24th of October, 1995.
PECO Energy Capital, L.P.
By: PECO Energy Capital Corp.,
its general partner
By: /s/ J.B. MITCHELL
------------------------------------
J.B. Mitchell
President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ------------------------------ -----------------
<C> <S> <C>
/s/ J.B. MITCHELL President and Director October 24, 1995
- --------------------------------------------- (Principal Executive Officer
J.B. Mitchell and Principal Financial and
Accounting Officer)
/s/ K.G. LAWRENCE Director October 24, 1995
- ---------------------------------------------
K.G. Lawrence
/s/ N.E. DESCANO Director October 24, 1995
- ---------------------------------------------
N.E. Descano
</TABLE>
II-5
<PAGE> 63
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant,
PECO Energy Company, has duly caused this Amendment No. 1 to the Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Philadelphia, Commonwealth of Pennsylvania, on the
24th of October, 1995.
PECO Energy Company
By: /s/ J.F. PAQUETTE, JR.
------------------------------------
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.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ------------------------------ -----------------
<C> <S> <C>
/s/ J.F. PAQUETTE, JR. Chairman of the Board and October 24, 1995
- --------------------------------------------- Director
J.F. Paquette, Jr.
/s/ C.A. MCNEILL, JR. President and Director October 24, 1995
- --------------------------------------------- (Principal Executive Officer)
C.A. McNeill, Jr.
/s/ K.G. LAWRENCE Senior Vice October 24, 1995
- --------------------------------------------- President -- Finance and Chief
K.G. Lawrence Financial Officer (Principal
Financial and Accounting
Officer)
</TABLE>
This Amendment No. 1 to the Registration Statement has also been signed by
C.A. McNeill, Jr., Attorney-in-Fact, on behalf of the following Directors on the
date indicated:
<TABLE>
<S> <C>
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
Robert Subin
</TABLE>
By: /s/ C.A. MCNEILL, JR.
----------------------------------
C.A. MCNEILL, JR.,
ATTORNEY-IN-FACT
II-6
<PAGE> 64
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant,
PECO Energy Capital Trust I, has duly caused this Amendment No. 1 to the
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized in the City of Philadelphia, Commonwealth of Pennsylvania, on
the 24th of October, 1995.
PECO Energy Capital Trust I
By: PECO Energy Capital, L.P.,
as its sponsor
By: PECO Energy Capital Corp.,
as general partner
By: /s/ J.B. MITCHELL
------------------------------------
J.B. Mitchell
President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ------------------------------ -----------------
<C> <S> <C>
/s/ J.B. MITCHELL President and Director October 24, 1995
- --------------------------------------------- (Principal Executive Officer
J.B. Mitchell and Principal Financial and
Accounting Officer)
/s/ K.G. LAWRENCE Director October 24, 1995
- ---------------------------------------------
K.G. Lawrence
/s/ N.E. DESCANO Director October 24, 1995
- ---------------------------------------------
N.E. Descano
</TABLE>
II-7
<PAGE> 65
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ ------------------------------------------------------------------------------------
<S> <C>
1-1 Form of Dealer Manager Agreement.
3-1 Amended and Restated Articles of Incorporation of PECO Energy (incorporated by
reference to Exhibit 3-1 of PECO Energy's 1993 Annual Report on Form 10-K, File No.
1-1401).
3-2 Bylaws of PECO Energy, adopted February 26, 1990 and amended January 24, 1994
(incorporated by reference to Exhibit 3-2 of PECO Energy's 1993 Annual Report on
Form 10-K, File No. 1-1401).
3-3 Certificate of Limited Partnership of PECO Energy Capital, L.P. (incorporated by
reference to Registration Statement Nos. 33-53785 and 33-53785-01).
4-1 Amended and Restated Limited Partnership Agreement of PECO Energy Capital
(incorporated by reference to Exhibit 10-7 of PECO Energy's 1994 Annual Report on
Form 10-K,
File No. 1-1401).
4-2 Amendment to Amended and Restated Limited Partnership Agreement of PECO Energy
Capital.
4-3 Form of Action of General Partner creating Series B Preferred Securities.
4-4 Form of Series B Preferred Security Certificate (included in Exhibit 4-1 above).
4-5 Subordinated Debenture Indenture (incorporated by reference to Exhibit 4-5 of PECO
Energy's 1994 Annual Report on Form 10-K, File No. 1-1401).
4-6 Form of Series B Subordinated Debenture (included in Exhibit 4-7 below).
4-7 Form of First Supplemental Indenture.
4-8 Certificate of Trust.
4-9 Trust Agreement.
4-10 Form of Amended and Restated Trust Agreement.
4-11 Form of Payment and Guarantee Agreement.
4-12 Form of Certificate Representing the Preferred Trust Receipts (included in Exhibit
4-10 above).
5-1 Opinion of Ballard Spahr Andrews & Ingersoll relating to the legality of the Series
B Subordinated Debentures and Series B Guarantees, including consent.
5-2 Opinion of Richards, Layton & Finger, P.A., relating to the legality of the
Preferred Trust Receipts, 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, 1990-1994 and for the three months ended March 31, 1994 and
March 31, 1995 (incorporated by reference to Exhibits 12-1 and 12-2, respectively,
of PECO Energy's 1994 Annual Report on Form 10-K, File No. 1-1401 and PECO Energy's
Quarterly Reports on Form 10-Q for the quarters ended June 30, 1994 and June 30,
1995).
13 PECO Energy's Annual Report on Form 10-K for the fiscal year ended December 31, 1994
and Quarterly Reports on Form 10-Q for the quarters ended March 31, 1995 and June
30, 1995 (incorporated by reference, File No. 1-1401).
21 List of Subsidiaries of PECO Energy.*
23-1 Consent of Independent Accountants.
</TABLE>
- ---------------
* Previously filed as an Exhibit (with the same exhibit number) to Registration
Statement Nos. 33-60859 and 33-60859-01.
<PAGE> 66
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ ------------------------------------------------------------------------------------
<S> <C>
</TABLE>
<TABLE>
<S> <C>
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.*
25-1 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of
Meridian Trust Company, as Trustee under the First Supplemental Indenture.*
25-2 Amendment No. 1 to Statement of Eligibility under the Trust Indenture Act of 1939,
as amended, of Meridian Trust Company, as Trustee under the First Supplemental
Indenture.
99-1 Proposed Form of Letter of Transmittal.
99-2 Proposed Form of Notice of Guaranteed Delivery.
99-3 Proposed Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.
99-4 Proposed Form of Letter to Clients.
99-5 Form of Exchange Agent Agreement.
99-6 Form of Information Agent Agreement.
99-7 Form of Newspaper Announcement.
99-8 Press Release.*
99-9 Form of Letter from PECO Energy to Holders of $7.96 Cumulative Preferred Stock.
99-10 Form of Questions and Answers.
99-11 Form of Dealer Manager's Letter to Non-Contacts.
</TABLE>
- ---------------
* Previously filed as an Exhibit (with the same exhibit number) to Registration
Statement Nos. 33-60859 and 33-60859-01.
<PAGE> 1
EXHIBIT 1.1
[ ], 1995
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Merrill Lynch World Headquarters
World Financial Center
North Tower
New York, New York 10281-1201
Smith Barney Inc.
388 Greenwich St.
New York, New York 10013
Dear Sir or Madam:
PECO Energy Company (the "Company") proposes to effect the exchange
of Trust Receipts (the "Preferred Trust Receipts") issued by PECO Energy
Capital Trust I (the "Trust"), a statutory business trust created under the
laws of Delaware, each representing a ___% Cumulative Monthly Income Preferred
Security, Series B (the "Series B Preferred Securities") representing a limited
partner interest in PECO Energy Capital, L.P., a limited partnership formed
under the laws of the State of Delaware ("PECO Energy Capital"), for up to
5,400,000 depositary shares (the "Depositary Shares"), each representing a
one-fourth interest in a share of $7.96 Cumulative Preferred Stock of the
Company. The exchange of Preferred Trust Receipts for Depositary Shares will
be effected by (a) the delivery by the Company, pursuant to the Indenture dated
as of July 1, 1994 between the Company and Meridian Trust Company, as trustee,
as supplemented by a First Supplemental Indenture between the Company and
Meridian Trust Company, as trustee (together, the "Indenture"), of its %
Deferrable Interest Subordinated Debentures, Series B (the "Series B
Subordinated Debentures") to First Chicago Trust Company of New York (the
"Exchange Agent"), which will receive the Series B Subordinated Debentures on
behalf of the holders of the Depositary Shares in exchange for Depositary
Shares, (b) the delivery by the Exchange Agent (acting pursuant to the
directions of the holders of the Depositary Shares) of the Series B
Subordinated Debentures to PECO Energy Capital in consideration for the
issuance and deposit by PECO Energy Capital of the Series B Preferred
Securities to the Trust under an Amended and Restated Trust Agreement (the
"Trust Agreement") with PNC Bank, Delaware, Trustee (the "Trustee") and (c) the
issuance and delivery by the Trust of the Preferred Trust Receipts to the
Exchange Agent for distribution to the former holders of the Depositary Shares.
The Series B Preferred Securities and the Preferred Trust Receipts are together
hereinafter referred as the "Preferred Securities." The Company and PECO
Energy are together hereinafter referred to
<PAGE> 2
as the "Offerors", and the offer, as described above is hereinafter referred to
as the "Offer". Merrill Lynch & Co. of Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch") and Smith Barney Inc. ("Smith Barney") are
together hereinafter referred to as the "Co-Dealer Managers." The Series B
Preferred Securities will be guaranteed (the "Guarantee") by the Company to the
extent described in the Offer Materials (as hereinafter defined).
This Agreement will confirm the understanding between the Offerors
and the Co-Dealer Managers pursuant to which the Offerors have retained the
Co-Dealer Managers to act as their co-dealer managers, on the terms and subject
to the conditions set forth herein, in connection with the Offer.
1. Appointment and Duties as Co-Dealer Managers. Subject to the
terms and conditions hereof, the Offerors hereby authorize the Co-Dealer
Managers to act as co-dealer managers and the Co-Dealer Managers agree to act
as the Offerors' co-dealer managers in connection with the Offer. The Offerors
hereby authorize the Co-Dealer Managers to act in accordance with this
Agreement and the terms of the Offer Materials (hereinafter defined), which
Offer Materials the Co-Dealer Managers and any other broker or dealer or any
commercial bank or trust company are entitled to use in connection with the
solicitation of exchanges in connection with the Offer. In so soliciting, the
Co-Dealer Managers shall not be deemed to act as agent of the Offerors, and the
Offerors shall not be deemed to act as their agent. In addition, in so
soliciting, no broker, dealer, commercial bank or trust company shall be deemed
to act as their agent of the Co-Dealer Managers or as agent of the Offerors,
and the Co-Dealer Managers shall not be deemed to act as the agent of any
broker, dealer, commercial bank or trust company. The Offerors shall obtain
their own legal, tax and accounting advice from appropriate third party
advisers.
The Co-Dealer Managers agree, in accordance with their customary
practice, to perform those services in connection with the Offer as are
customarily performed by investment banking concerns in connection with offers
of like nature, including, but not limited to, soliciting tenders pursuant to
the Offer and communicating generally regarding the Offer with brokers,
dealers, commercial banks and trust companies and other persons, including the
holders of Depositary Shares; notwithstanding the foregoing, we agree that
nothing set forth in this Agreement shall require the Co-Dealer Managers to
continue to render services hereunder (i) for the period during which any
injunction, restraining order or other adverse judicial or regulatory ruling,
declaration, pronouncement, motion or other order shall remain in effect with
respect to the Offer or with respect to any of the transactions in connection
with, or contemplated by, the Offer or this Agreement if in their judgment
-2-
<PAGE> 3
the Co-Dealer Managers believe it inadvisable to render services pursuant
hereto, or (ii) if their continuing so to act would, in their judgment, violate
any statute, regulation or other law of the United States of America or any
state thereof or other jurisdiction applicable to the Offer.
We further agree that the Co-Dealer Managers shall not be under any
liability to the Offerors or any other person for any act on the part of any
broker or dealer (other than themselves in their capacities as co-dealer
managers for the Offer, which liability shall be governed by Section 6 hereof),
commercial bank or trust company which solicits holders of Depositary Shares;
the Offerors acknowledge and agree that, in their capacities as co-dealer
managers, the Co-Dealer Managers shall act as independent contractors, and any
of their duties arising out of their engagement pursuant to this Agreement
shall be owed solely to the Offerors.
The Offer Materials will be prepared and approved by the Offerors;
the Co-Dealer Managers and any other broker or dealer or any commercial bank or
trust company are authorized to use the Offer Materials in connection with the
solicitation of holders of Depositary Shares. The Co-Dealer Managers agree not
to provide the holders of Depositary Shares any written information regarding
the Offer other than information contained in the Offer Materials.
2. Duties of the Offerors.
(a) Other than pursuant to filings under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), incorporated by
reference in the registration statement on Form S-4 (File No. 33-60859) (the
"Registration Statement") filed by the Offerors with the Securities Exchange
Commission (the "Commission") registering the securities to be issued in the
Offer and in the prospectus (the "Prospectus") included therein in the form
first filed pursuant to Rule 424(b) under the Securities Act of 1933, as
amended (the "Act"), the Offerors shall not amend or supplement the Offer
Materials or prepare or approve any related material for use in connection with
the Offer without first having submitted a copy thereof to the Co-Dealer
Managers within a reasonable period of time prior to the filing or use thereof,
including as set forth in Section 3; the Offerors agree, at their expense, to
furnish to each Co-Dealer Manager as many copies of the Offer Materials in
final form for use in connection with the Offer as such Co-Dealer Manager may
reasonably request.
(b) The Offerors agree to furnish to the Co-Dealer Managers
cards or lists or copies thereof showing the names and addresses of, and the
number of shares or principal amount, as applicable, of Depositary Shares held
by the
-3-
<PAGE> 4
registered holders of the Depositary Shares as of a reasonably appropriate
date, and shall advise the Co-Dealer Managers on each business day during the
continuance of the Offer as to any transfers known to the Offerors or of record
of the Depositary Shares.
(c) The Offerors shall or shall cause the Exchange Agent to
inform the Co-Dealer Managers during each business day during the Offer (to be
followed on a daily basis by written confirmation) as to the respective amounts
of Depositary Shares which have been tendered pursuant to the Offer during the
interval since its previous daily report to the Co-Dealer Managers pursuant to
this provision, and the names and addresses of any holders who have so tendered
Depositary Shares.
(d) The Offerors agree to advise the Co-Dealer Managers
promptly of the occurrence of any event which could cause the Offerors to
withdraw, rescind, or modify the Offer and shall also advise the Co-Dealer
Managers promptly of any proposal or requirement to amend or supplement any
filing with respect to the Offer, required pursuant to the Act, or the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or, to the
extent known by the Company, "blue sky" or other state securities laws; the
Offerors will prepare and, if necessary, file with the Securities and Exchange
Commission (the "Commission"), as required by applicable law or regulation, any
and all necessary amendments and supplements to the Offer Materials; prior to
and during the continuance of the Offer, the Offerors will inform the Co-Dealer
Managers promptly after either of the Offerors receives notice or becomes aware
of the happening of any event, or the discovery of any fact, that would require
the making of any change in any Offer Materials then being used or would affect
the truth or completeness of any representation or warranty contained in this
Agreement if such representation or warranty were being made immediately after
the happening of such event or the discovery of such fact.
(e) The Offerors shall arrange for each information agent and
depositary named in the Offer Materials relating to the Offer to cooperate with
the Co-Dealer Managers in all respects reasonably requested by you.
(f) The Offerors acknowledge and agree that the Co-Dealer
Managers may use the Offer Materials as specified herein and the Offerors
represent and warrant to the Co-Dealer Managers that the Co-Dealer Managers may
rely on any information delivered to the Co-Dealer Managers by or on behalf of
the Offerors without any independent verification of such information or an
appraisal or evaluation of the Offerors' assets and liabilities and that such
information does not and will not contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
-4-
<PAGE> 5
therein, in the light of the circumstances under which they were made, not
misleading.
3. Offer Materials and Withdrawal Rights. Prior to the
commencement of the Offer, the Offerors agree to furnish each Co-Dealer Manager
with as many copies as each Co-Dealer Manager may reasonably request of the
following, to the extent prepared by or at the request of the Company: (i)
each of the documents that is filed with the Commission, including each
registration statement, preliminary and final prospectus filed with the
Commission, in connection with or pertaining to the Offer, and all documents
incorporated therein by reference, (ii) each offering circular, sales
memorandum, term sheet, proposed agreement, solicitation statement, disclosure
document, or other explanatory statement, or other report, filing, document,
release or communication mailed, delivered, published, or filed by or on behalf
of the Offerors in connection with the Offer, and (iii) each appendix,
attachment, modification, amendment or supplement to any of the foregoing and
all related documents, including but not limited to each related letter of
transmittal. The information referred to in clauses (i), (ii) and (iii) above,
in each case in the form as amended or supplemented at the time it is first
used or made available by the Offerors, together with each document
incorporated by reference into any of the foregoing, in each case to the extent
prepared by or at the request of the Company or approved in writing by the
Company an "Offer Material" and, collectively, the "Offer Materials"). At the
commencement of the Offer, the Offerors shall cause timely to be delivered to
each registered holder of any Depositary Shares legally entitled thereto, such
of the Offer Materials as may be required by the Securities Act or the Exchange
Act to be delivered to such holder and any other offering materials prepared
expressly for use by holders of Depositary Shares tendering in the Offer,
together with a return envelope. Thereafter, to the extent practicable, until
the expiration of the Offer, the Offerors shall use their best efforts to cause
copies of such materials and a return envelope to be mailed to each person who
becomes a holder of any applicable Depositary Shares.
In connection with the Offer, if either of the Offerors (a) uses or
permits the use of, or files with the Commission or any other governmental or
regulatory agency, authority or instrumentality, any Offer Material that (i)
has not been submitted to the Co-Dealer Managers on a timely basis for their
comments to the extent required in Section 2(a) hereof or (ii) has been so
submitted and with respect to which either Co-Dealer Manager reasonably objects
or (b) shall have breached any of its representations, warranties, agreements
or covenants herein, then the Co-Dealer Managers shall be entitled to withdraw
as co-dealer managers in connection with the Offer, without any liability or
penalty to the Co-Dealer Managers or any other Indemnified Party
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<PAGE> 6
(as hereinafter defined) for such withdrawal and without loss of any right to
indemnification or contribution provided in this Agreement, to the payment of
all fees and expenses payable hereunder that have accrued to the date of such
withdrawal or to the benefit of any other provisions surviving such withdrawal
pursuant to Section 11. In the event of any such withdrawal, for the purpose
of determining the fees payable to the Co-Dealer Managers pursuant to this
Section 3, the amount of Depositary Shares tendered for exchange as of the
close of business on the date of such withdrawal that are thereafter exchanged
pursuant to the Offer shall be deemed to have been exchanged, pursuant to the
Offer, as of the date of such withdrawal. If the Co-Dealer Managers should
withdraw, the fees accrued and reimbursement for their expenses through the
date of such withdrawal shall be paid to the Co-Dealer Managers in cash on or
promptly after such date.
4. Compensation and Expense Reimbursement; Certain Limitations.
(a) In consideration of the services to be rendered pursuant hereto, the
character and sufficiency of which the Offerors hereby acknowledge, the Company
agrees to pay, in cash, the following non-refundable amounts:
(i) The Company agrees to pay to the Co-Dealer Managers a
fee (the "Management Fee"), payable upon the consummation of the Offer, equal
to $______ per share of Depositary Shares, up to a maximum of 5,400,000
Depository Shares, validly tendered and not withdrawn pursuant to the Offer.
The Management Fee shall be divided ____% to Merrill Lynch and ____% to Smith
Barney.
(ii) In addition, and without regard to whether the Offer
is commenced or consummated or whether this Agreement is terminated, unless
this Agreement is terminated by the Company for cause, the Company agrees to
pay to each Co-Dealer Manager promptly, in cash, all of the reasonable
out-of-pocket expenses such Co-Dealer Manager incurred in connection with the
services rendered or to be rendered by such Co-Dealer Manager pursuant to this
Agreement, including all reasonable fees (not to exceed $_____) and expenses of
its counsel. Nothing in this paragraph shall in any way limit or affect the
Co-Dealer Managers' or any other Indemnified Party's right to receive all
expenses (including reasonable counsel fees and expenses) under the
indemnification provisions of this Agreement.
(b) The Company agrees to pay to each Soliciting Dealer (as
defined herein) a solicitation fee of $____ per share of Depositary Shares
validly tendered and accepted for exchange pursuant to the Offer and covered by
a Letter of Transmittal which designates, as having solicited and obtained the
tender, the name of (i) any dealer or broker in securities, including either
Co-Dealer Manager in its capacity as a dealer or broker, who is a member of any
national securities exchange or of the
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<PAGE> 7
National Association of Securities Dealers, Inc. ("NASD"), (ii) any foreign
dealer or broker not eligible for membership in the NASD which agrees to
conform to the NASD's Rules of Fair Practice in soliciting tenders outside the
United States to the same extent as though it were an NASD member, or (iii) any
bank or trust company (each of which is referred to herein as a "Soliciting
Dealer"). No such fee shall be payable to a Soliciting Dealer in respect of
Depositary Shares registered in the name of such Soliciting Dealer unless such
Depositary Shares are held by such Soliciting Dealer as nominee and such
Depositary Shares are being tendered for the benefit of one or more beneficial
owners identified on the Letter of Transmittal. No such fee shall be payable
to a Soliciting Dealer with respect to the tender of Depositary Shares by a
holder unless the Letter of Transmittal accompanying such tender designates
such Soliciting Dealer. If the Depositary Shares covered by the Letter of
Transmittal are held by the Soliciting Dealer as nominee for the tendering
holder, the nominee may only be designated as a Soliciting Dealer if the
beneficial owner has so designated. No such fee shall be payable to a
Soliciting Dealer if such Soliciting Dealer is required for any reason to
transfer the amount of such fee to a tendering holder. No Soliciting Dealer
shall be deemed to be the agent of the Offerors.
(c) Whether or not the Offer is commenced or consummated and
whether or not this Agreement has been terminated, the Company shall pay or
cause to be paid (i) all expenses of preparation, printing, mailing and
dissemination of the Offer Materials and any other documents related to the
Offer; (ii) all fees and expenses paid by brokers, dealers (including you),
commercial banks, trust companies and nominees for their customary mailing and
handling expenses incurred in forwarding Offer Materials and any other
documents related to the Offer to their customers; (iii) all fees and expenses
of the Exchange Agent and any depositary, information agent or other persons
rendering services in connection with the Offer, including, without limitation,
fees payable and expenses incurred in respect of any agent of the Offerors
engaged to solicit holders of the Depositary Shares; (iv) all fees and expenses
of the Trust and the Trustee in connection with the Trust; (v) all advertising
charges incurred with the approval of the Company; (vi) all filing fees
applicable to any transaction addressed herein required to be paid to any
governmental or regulatory agency (including those required of the Co-Dealer
Managers by the Commission); (vii) any fees payable in connection with the
rating of the Preferred Trust Receipts; (viii) the fees and expenses incurred
in connection with the listing on the New York Stock Exchange of the Preferred
Trust Receipts; and (viii) all other expenses incurred in connection with the
Offer.
(d) Anything in this Agreement to the contrary notwithstanding,
the Co-Dealer Managers' rights to payment under
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<PAGE> 8
this Agreement shall be limited to the payment of compensation and expenses as
provided in Section 3, 4 and 5 and indemnification and/or contribution as
provided in Section 6 of this Agreement.
5. Termination. The Co-Dealer Managers may resign upon written
notice to the Company that any of the conditions specified in Section 7 have
not been fulfilled pursuant to Section 7, and, following 3 business days
notice, the Offerors may terminate their engagement hereunder at any time. If
this Agreement were to terminate for any reason, however, in addition to, but
without duplication of, any fees earned pursuant to Section 3, the Co-Dealer
Managers shall be entitled to receive from the Company all of the amounts
payable in respect of expenses incurred in accordance with Section 4(a)(ii)
and, to the extent applicable, Section 4(a)(c) hereof up to and including the
effective date of such termination; provided that if this Agreement were to be
terminated by the Co-Dealer Managers for cause or by the Offerors other than
for cause, and on or prior to the first anniversary of the date this Agreement
either of the Offerors or any affiliate of the Offerors proceed or proceeds
with any exchange offer the terms of which do not differ substantially from the
terms set forth in any Offer Material or as recommended by the Co-Dealer
Managers prior to such termination, the Co-Dealer Managers also shall be
entitled to receive from the Company all of the amounts due and payable
pursuant to Section 4(a)(i) hereof as if this Agreement were to remain in
effect with respect to such subsequent exchange offer.
6. Indemnification, Contribution and Other Provisions.
(a) The Company agrees to indemnify and hold harmless each
Co-Dealer Manager and its affiliates and their respective directors, officers,
employees, agents and controlling persons as follows:
(i) from and against any and all loss, liability, claim,
damage, and expense whatsoever, as incurred, under any applicable
federal or state law, or otherwise, and related to or arising out of
(A) an untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement as of its effective
date, or the omission or alleged omission therefrom of a material
fact required to be stated therein or necessary in order to make the
statements therein not misleading, (B) an untrue statement or alleged
untrue statement of a material fact contained in the Offer Materials,
or the omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the statements
therein, in the light of the circumstances
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<PAGE> 9
under which they were made, not misleading, (C) any breach by either
of the Offerors of any of their representations, warranties and
agreements contained in this Agreement, (D) either of the Offerors'
failure to make the Offer, or the withdrawal, termination or
extension of the Offer or any other failure on their part to comply
with the terms and conditions specified in the Offer Materials, and
(E) the Offer, the engagement of the Co-Dealer Managers pursuant to,
and the performance by the Co-Dealer Managers of the services
contemplated by, this Agreement;
(ii) from and against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, to the extent of the
aggregate amount paid in settlement of any litigation, or
investigation or proceeding by any governmental agency or body,
commenced or threatened, or of any claim whatsoever based upon the
occurrence of any matter described in clause (i) above, if such
settlement is effected with the written consent of the Offerors; and
(iii) from and against any and all expense whatsoever,
as incurred (including, subject to the last sentence of Section 6(d)
hereof, reasonable fees and disbursements of counsel chosen by you),
reasonably incurred in investigating, preparing or defending against
any litigation, or investigation or proceeding by any governmental
agency or body, commenced or threatened, or any claim whatsoever
based upon the occurrence of any matter described in clause (i)
above, whether or not the indemnified party is a party thereto and
whether or not such claim, action or proceeding is initiated or
brought by or on behalf of the Offerors, to the extent that any such
expense is not paid under clause (i) or (ii) above.
The Offerors shall not, however, be liable under this subsection 6(a)
to a Co-Dealer Manager for any loss, liability, claim, settlement, damage or
expense under (x) clauses (i)(A) and (B) of this subsection 6(a) to the extent
arising out of an untrue statement or omission or alleged untrue statement or
omission made in the Offer Materials in reliance upon and in conformity with
written information furnished to the Offerors by such Co-Dealer Manager
expressly for use in the Offer Materials and (y) clause (i) (E) of this
subsection 6(a) that is found in a final judgment by a court of competent
jurisdiction to have resulted from the bad faith, willful misconduct or gross
negligence of such Co-Dealer Manager. Each of the Offerors recognizes and
acknowledges for all purposes of this Agreement that the only information
covered by clause (x) above consists of the third sentence of the first
paragraph under the caption
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<PAGE> 10
"Listing and Trading of Preferred Trust Receipts and Depositary Shares" in the
Prospectus.
The Offerors also agree that neither Co-Dealer Manager or any of its
affiliates or any of their respective directors, officers, employees, agents
and controlling persons shall have any liability (whether direct or indirect,
in contract or tort or otherwise) to the Offerors or to the extent legally
enforceable, to either of the Offerors' security holders or creditors claiming
through or on or in behalf of the Offerors or either of them, in each case
related to or arising out of the Offer or the engagement of such Co-Dealer
Manager pursuant to, or the performance by such Co-Dealer Manager of the
services contemplated by, this Agreement except to the extent that any loss,
liability, claim, damage or expense is found in a final judgment by a court of
competent jurisdiction to have resulted from such Co-Dealer Manager's bad
faith, willful misconduct or gross negligence.
The Offerors agree that, without the prior written consent of the
Co-Dealer Managers, they will not settle, compromise or consent to the entry of
any judgment in any pending or threatened claim, action or proceeding in
respect of which indemnification could be sought under the indemnification
provisions of this subsection 6(a) (whether or not either Co-Dealer Manager or
any other indemnified party under this subsection 6(a) is an actual or
potential party to such claim, action or proceeding), unless such settlement,
compromise or consent includes an unconditional release of each such
indemnified party from all liability arising out of such claim, action or
proceeding.
(b) Each Co-Dealer Manager agrees, severally and not jointly,
to indemnify and hold harmless the Offerors and their respective controlling
persons, partners, directors, employees, agents and officers to the same extent
as the indemnity described in subsection 6(a) above from the Offerors to such
Co-Dealer Manager, but only with respect to any untrue statement or omission or
alleged untrue statement or omission made in the Offer Materials in reliance
upon and in conformity with written information furnished to the Offerors by
such Co-Dealer Manager expressly for use therein. Each of the Offerors
recognizes and acknowledges that for purposes of the immediately preceding
sentence the only written information provided by either Co-Dealer Manager
consists of the third sentence of the first paragraph under the caption
"Listing and Trading of Preferred Trust Receipts and Depositary Shares" in the
Prospectus. In case any action shall be brought against the Offerors or any
such controlling person, partner, director or officer in respect of which he or
it may seek indemnity or reimbursement from any Co-Dealer Manager on account of
its agreement contained in this subsection 6(b), such Co-Dealer
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<PAGE> 11
Manager shall have the rights and duties given to the Offerors, and the
Offerors and any such controlling person, partner, director, or officer shall
have the rights and duties given to each Co-Dealer Manager, by subsection 6(c)
below.
(c) Promptly after the receipt by the Offerors or either of
them of written notice thereof, the Offerors agree to notify each Co-Dealer
Manager promptly of the assertion against any Co-Dealer Manager or any other
person of any claim or the commencement of any action or proceeding relating to
a transaction contemplated by this Agreement. Promptly after its receipt of
written notice of any claim or commencement of any action or proceeding with
respect to which indemnification is being sought hereunder, a Co-Dealer Manager
will notify the Offerors in writing of such claim or of the commencement of
such action or proceeding. Failure to notify the Offerors or the Co-Dealer
Managers, as the case may be, will not relieve an Offeror or a Co-Dealer
Manager from any liability which it may have for indemnification (i) under this
Section 6, except to the extent that the indemnifying party is materially
prejudiced by such failure. The Offerors or either of them may participate at
its own expense in the defense of any action. If it so elects within a
reasonable time after receipt of such notice, the Offeror or either of them may
assume the defense of such action with counsel chosen by it or them and
approved by the indemnified party (which approval shall not be unreasonably
withheld), unless the indemnified party reasonably objects to such assumption
on the ground that there may be legal defenses available to it which are
different from or in addition to those available to the Offerors or either of
them. If an Offeror assumes the defense of such action, the Offerors shall not
be liable for any fees and expenses of counsel for the indemnified parties
incurred thereafter in connection with such action. In no event shall the
Offerors be liable for reasonable fees and expenses of more than one counsel
(in addition to any local counsel) separate from their own counsel for all
indemnified parties in connection with any one action or separate but similar
or related actions in the same jurisdiction arising out of the same general
allegations or circumstances.
(d) If the indemnification provided for in this Agreement and
otherwise applicable by its terms is for any reason held unenforceable, each
Co-Dealer Manager, on the one hand, and the Offerors, on the other hand, shall
contribute, respectively, to the aggregate losses, liabilities, claims, damages
and expenses for which such indemnification is held unenforceable, as incurred,
in the proportion as is appropriate to reflect the relative benefits of the
Offerors, on the one hand, and such Co-Dealer Manager, on the other hand, in
connection with the matter giving rise to such claims, losses, expenses,
damages or liabilities, subject to the limitation that in any event each
Co-Dealer Manager's aggregate contribution to all claims, losses,
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<PAGE> 12
expenses, damages and liabilities shall not exceed the amount of fees actually
received by such Co-Dealer Manager with respect to the Offer pursuant to
Section 4. It is hereby agreed that the relative benefits of a Co-Dealer
Manager, on the one hand, and the Offerors, on the other hand, with respect to
the Offer shall be deemed to be in the same proportion that (x) such Dealer-
Manager's compensation payable hereunder bears to (y) the aggregate liquidation
value of the Depositary Shares tendered and not withdrawn in the Offer, with
such Co-Dealer Manager paying the smaller portion and the Offerors paying the
larger portion. The foregoing contribution provision shall be in addition to
any rights that any person or entity entitled to contribution may have at
common law or otherwise. No investigation or failure to investigate by either
Co-Dealer Manager shall impair the foregoing indemnification and contribution
provisions or any rights the Co-Dealer Managers may have.
7. Representations and Warranties. The Offerors represent and
warrant to each of the Co-Dealer Managers at the commencement of the Offer, at
each mailing or other dissemination of any Offer Material and at the
consummation of the exchange of securities pursuant to the Offer:
(a) The Company is a validly existing corporation in good
standing under the laws of the Commonwealth of Pennsylvania. Each of the
Company'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
Company and each Utility Subsidiary have all requisite power and authority to
own or lease 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 Company or
the Company and its Subsidiaries taken as a whole.
(b) The Trust has been duly created and is validly existing in
good standing as a business trust under the Delaware Business Trust Act, is and
will be treated as a "grantor trust" for Federal Income Tax purposes under
existing law, has the trust power and authority to conduct its business as
presently conducted and as described in the Offer Materials, and will not be
required to be authorized to do business in any other jurisdiction.
(c) PECO Energy Capital is a validly existing limited
partnership in good standing under the laws of the State
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of Delaware. PECO Energy Capital has all requisite power and authority to
issue the Series B Preferred Securities.
(d) PECO Energy Capital has no subsidiaries.
(e) The Offerors and the Trust have taken all corporate,
partnership and trust action necessary to authorize this Agreement and the
making and consummation of the Offer and the transactions contemplated hereby
and thereby. This Agreement has been validly executed and delivered by each of
the Offerors.
(f) Each of the Offer Materials and the Offer complies in all
material respects with the Securities Act and the Exchange Act, as such Acts
may be applicable, and in each case the applicable rules and regulations of the
Commission promulgated pursuant thereto, and with all applicable rules or
regulations of governmental or regulatory authorities or bodies other than the
blue sky or similar securities laws, and no authorization, consent or approval
of, or filing with, any court or governmental body or agency is required in
connection with the commencement or consummation of the Offer and the other
transactions contemplated hereby, other than those which have been obtained or
any filing which will have been made prior to the commencement or consummation,
as the case may be, of the Offer. Neither of the Offerors nor any of their
affiliates is presently doing business with the government of Cuba or with any
person or affiliate located in Cuba.
(g) None of the Offer Materials contains any untrue statement
of a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements made therein not misleading in
light of the circumstances under which they were made; provided, however, that
the representations and warranties in this subsection shall not apply to
statements or omissions made in the Offer Materials in reliance upon and in
conformity with written information furnished to the Offerors by a Co-Dealer
Manager expressly for use in the Offer Materials.
(h) Upon the consummation of the Offer, the Preferred
Securities will have been duly authorized by PECO Energy Capital's Amended and
Restated Limited Partnership Agreement, as amended (the "Partnership
Agreement") and the Trust Agreement, as applicable, and, when the Preferred
Trust Receipts are issued in exchange for Depositary Shares pursuant to the
Offer, the Preferred Trust Receipts and the Series B Preferred Securities will
be validly issued and fully paid and nonassessable beneficial interests in the
Trust and limited partner interests in PECO Energy Capital, respectively, not
subject to any preemptive or similar rights, and will conform to all statements
relating thereto contained in the Offer Materials.
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<PAGE> 14
(i) The Trust Agreement has been duly authorized, executed and
delivered by PECO Energy Capital and PECO Energy Capital Corp., the general
partner of PECO Energy Capital (the "General Partner") and, assuming due
authorization, execution and delivery of the Trust Agreement by the Trustee,
the Trust Agreement is a valid and binding obligation of PECO Energy Capital
and the General Partner and the Trustee, enforceable against PECO Energy
Capital and the General Partner and the Trustee in accordance with its terms,
subject to applicable bankruptcy, insolvency and similar laws affecting
creditors' rights and remedies generally and to general principles of equity
(regardless of whether enforcement is sought in a proceeding at law or in
equity).
(j) The Indenture has been duly qualified under the Trust
Indenture Act of 1939, as amended, and, assuming due authorization, execution
and delivery by Meridian Trust Company, upon the consummation of the Offer,
each of the Indenture and the Series B Subordinated Debentures will be a valid
and binding agreement of PECO Energy Capital and the Company enforceable in
accordance with its terms except as (a) the enforceability thereof may be
limited by bankruptcy, insolvency or similar laws affecting creditors' rights
generally and (b) rights of acceleration and the availability of equitable
remedies may be limited by equitable principles of general applicability, and
will conform to all statements relating thereto contained in the Offer
Materials.
(k) Neither of the Offerors or the Trustee nor any of the
Subsidiaries is in violation of its respective trust agreement, charter,
bylaws, certificate of limited partnership or partnership agreement, as
applicable. The issue of the Series B Preferred Securities by PECO Energy
Capital, the issue of the Series B Subordinated Debentures by the Company, the
issue of the Preferred Trust Receipts by the Trust, the execution, delivery and
performance by the Company and PECO Energy Capital, as the case may be, of this
Agreement and 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 Company, PECO Energy Capital, the Trust or any other
Subsidiary is a party or by which the Company, PECO Energy Capital, the Trust
or any other Subsidiary is bound or to which any of the property or assets of
the Company, PECO Energy Capital, the Trust or any other Subsidiary is subject,
which breach, violation or default would be material to the issue of the
Preferred Securities or would have a material adverse effect on the general
affairs, management, prospects, financial position, stockholders' equity (or
partnership net worth, as applicable) or results of operations of the Trust or
of PECO Energy Capital or of the
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<PAGE> 15
Company 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 Company or the Certificate of Limited Partnership or Partnership Agreement
of PECO Energy Capital or the Certificate of Trust or the Trust Agreement or
any statute, order, rule or regulation of any court or governmental agency or
body having jurisdiction over the Company, PECO Energy Capital or any other
Subsidiary or the Trust or any of their properties.
(l) Except (i) for the orders of the Commission making the
Registration Statement effective and the filing of Schedule 13E-4 with the
Commission, (ii) for the Notice of Registration of a Securities Certificate by
the Pennsylvania Public Utility Commission in respect of the issuance of its
Subordinated Debentures and Guarantee in connection with the issuance of an
aggregate principal amount of up to $_________ (liquidation value) of preferred
interests by a special purpose subsidiary of the Company permitting PECO Energy
Capital to issue, inter alia, the Series B 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
for the qualification of the Indenture under the Trust Indenture Act of 1939,
as amended, and (v) 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 legally required for the execution, delivery and performance of
this Agreement by the Company and PECO Energy Capital and the consummation of
the transactions contemplated hereby.
(m) Coopers & Lybrand L.L.P. are independent certified public
accountants as required by the Act and the rules and regulations of the
Commission thereunder;
(n) The financial statements of the Company included or
incorporated by reference in the Offer Materials present fairly the financial
position of the Company and the consolidated subsidiaries of the Company as of
the dates indicated and the results of their operations for the periods
specified; except as otherwise stated in the Offer Materials, said financial
statements have been prepared in conformity with generally accepted accounting
principles applied on a consistent basis.
(o) Since the respective dates as of which information is given
in the Offer Materials, and except as otherwise stated or contemplated therein,
there has been no material adverse change and no development involving a
prospective material adverse change in the financial condition, business, or
results of operations of the Company and the
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<PAGE> 16
Subsidiaries, considered as one enterprise, whether or not arising in the
ordinary course of business.
(p) Neither of the Offerors or the Trust is an "investment
company" or a company "controlled" by an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
(q) The Offerors and the Trust meet the registrant requirements
for use of Form S-4 under the Securities Act and the rules and regulations
promulgated thereunder.
(r) The Offerors have not retained or caused to be retained
and, during the term of this Agreement, will not retain or cause to be retained
as financial advisor, placement agent, dealer manager or underwriter any other
person to advise or assist them with the Offer or otherwise directly or
indirectly to use any other person to contact, approach or negotiate with
holders of the Depositary Shares with respect to the Offer other than the
Co-Dealer Managers.
(s) Any certificate signed by any officer of either of the
Offerors and delivered to the Co-Dealer Managers or to their counsel shall be
deemed a representation and warranty by the Offerors to the Co-Dealer Managers
as to the matters covered thereby.
8. Conditions to Obligations. The Co-Dealer Managers' obligation
to render services pursuant to this Agreement shall at all times be subject, in
their discretion, to the following conditions:
(a) The Offerors shall at all times during the Offer have
performed all of their obligations hereunder theretofore to be performed.
(b) All representations, warranties and other statements of the
Offerors contained in this Agreement are now and, at the commencement of, and
at all times during the continuance and upon consummation of, the Offer, shall
be true and correct.
(c) On the commencement date (the "Commencement Date") of the
Offer and on the acceptance date (the "Acceptance Date"), the Offerors' counsel
shall deliver to the Co-Dealer Managers the opinions, in each case satisfactory
to the Co-Dealer Managers, covering the matters set forth in Appendix A hereto.
The Offerors agree to furnish to the Co-Dealer Managers, at their request, (i)
a letter, satisfactory in form to the Co-Dealer Managers and their counsel,
dated the Commencement Date (and reaffirmed and updated upon the Acceptance
Date) and addressed to the Co-Dealer Managers, of Coopers & Lybrand L.L.P.,
independent
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<PAGE> 17
certified public accountants for the Company, containing statements and
information of the type ordinarily included in accountants' comfort letters
with respect to the financial statements and certain financial information
contained in the Offer Materials, (ii) a certificate from PNC Bank, Delaware,
as Trustee, dated the Commencement Date (and reaffirmed upon the Acceptance
Date) and signed by appropriate officers of the Trustee, containing statements
and information substantially as set forth in Appendix B hereto, and (iii) a
certificate from the Company upon the Acceptance Date and signed by appropriate
officers of the Company reaffirming that the representations and warranties of
the Company contained in Section 7 are true and correct as of such date and
that the Offerors have complied with all of the agreements and satisfied all of
the conditions on their part to be performed or satisfied on or before the
consummation of the Offer.
(d) No stop order, restraining order or injunction has been
issued by the Commission or any court and no litigation shall have been
commenced or threatened before the Commission or any court with respect to (i)
the making or consummation of the Offer, (ii) the execution, delivery or
performance by the Offerors of this Agreement, or (iii) any of the transactions
in connection with, or contemplated by, the Offer Materials which either
Co-Dealer Manager or their legal counsel believes makes it inadvisable for the
Co-Dealer Managers to continue to render services pursuant hereto.
(e) It shall not have become unlawful under any law or
regulation, Federal, state or local, for the Co-Dealer Managers to render
services pursuant to this Agreement, or to continue so to act, as the case may
be.
(f) The Offerors will have advised the Co-Dealer Managers
promptly of (i) the occurrence of any event that could cause the Offerors to
withdraw or terminate the Offer or would permit the Offerors not to consummate
the Offer and (ii) the issuance of any comment or order by the Commission or
any other governmental or regulatory agency or instrumentality concerning the
Offer.
(g) The Preferred Trust Receipts shall have been approved for
listing on the New York Stock Exchange upon notice of issuance.
(h) At the commencement of, and at all times during the
continuance, and upon consummation of, the Offer, the Preferred Trust Receipts
shall have a rating of at least "baa2" from Moody's Investors Service, Inc. and
at least "BBB" from Standard & Poor's Ratings Group as evidenced in a letter
from such rating agencies or other evidence satisfactory to you; the Preferred
Trust Receipts and any preferred security of the
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<PAGE> 18
Company or its Subsidiaries issued and outstanding (including any "MIPS,"
"TOPrS," or other similar securities which are equity securities under
generally accepted accounting principles and are preferred as to the receipt of
dividends) shall not have been downgraded or placed on any "watch list" for
possible downgrading by any nationally recognized statistical rating
organization.
(i) Since the date of this Agreement, and except as otherwise
stated or contemplated in the Offer Materials as of the date of this Agreement,
there has been no material adverse change and no development involving a
prospective material adverse change in the financial condition, business or
results of operations of the Company and the Subsidiaries considered as one
enterprise, whether or not in the ordinary course of business.
9. Reference to Co-Dealer Managers. The Offerors agree that any
reference to any Co-Dealer Manager or any of its affiliates in any Offer
Material, or any other release, publication or communication to any party
outside the Offerors, is subject to such Co-Dealer Manager's prior approval.
If either Co-Dealer Manager resigns or is terminated prior to the dissemination
of any Offer Material or any other release or communication, no reference shall
be made therein to such Co-Dealer Manager without its prior written permission.
10. Access to Information. In connection with their activities
hereunder, the Offerors agree to furnish the Co-Dealer Managers and their
counsel with all information concerning the Offerors that the Co-Dealer
Managers reasonably deem appropriate and agree to provide the Co-Dealer
Managers with reasonable access to the Offerors' officers, directors,
accountants, counsel, consultants and other appropriate agents and
representatives.
11. Survival of Certain Provisions. The indemnity and contribution
agreements and other provisions contained in Section 6 of this Agreement, the
representations and warranties of the Offerors made pursuant to Section 7 of
this Agreement, the provisions contained in Sections 4 and 5 of this Agreement
and this Section 11 shall remain operative and in full force and effect
regardless of (a) any investigation made by or on behalf of either Co-Dealer
Manager or by or on behalf of any Indemnified Party, (b) consummation of the
Offer, or (c) any termination of this Agreement, and shall be binding upon, and
shall inure to the benefit of, any successors, assigns, heirs and personal
representatives of the Offerors, the Co-Dealer Managers, the Indemnified
Persons and any such person.
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<PAGE> 19
12. Notices. Notice given pursuant to any of the provisions of this
Agreement shall be in writing and shall be mailed or delivered (a) to the
Offerors at:
PECO Energy Company
Financial Division
S21-1
P.O. Box 8699
Philadelphia, PA 19101
Attention:____________________________
with a copy to:
Ballard Spahr Andrews & Ingersoll
1735 Market Street
51st Floor
Philadelphia, PA 19103
Attention: Robert C. Gerlach, Esq.
and (b) to the Co-Dealer Managers at:
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith, Incorporated
World Financial Center
North Tower
New York, NY 10281-1327
Attention:_____________________________
Smith Barney Inc.
388 Greenwich St.
New York, New York 10013
Attention: Paul Galant
with a copy to:
Drinker Biddle & Reath
Philadelphia National Bank Building
1345 Chestnut Street
Philadelphia, PA 19107-3496
Attention: Robert Mead Jones, Jr., Esq.
13. Construction. This Agreement incorporates the entire
understanding of the parties and (except as otherwise provided herein)
supersedes all previous agreements, and shall be governed by, and construed in
accordance with, the laws of the State of New York as applied to contracts made
and performed in such State, without regard to principles of conflicts of law.
14. Severability. Any determination that any provision of this
Agreement may be, or is, unenforceable shall not affect the enforceability of
the remainder of this Agreement.
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<PAGE> 20
15. Headings. The section headings in this Agreement have been
inserted as a matter of convenience of reference and are not to be deemed to be
part of this Agreement.
16. Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but all of
which shall constitute but one and the same instrument.
17. Third Party Beneficiaries. This Agreement has been and is made
solely for the benefit of the Offerors, the Co-Dealer Managers and the other
Indemnified Parties referred to in Section 6 hereof and their respective
successors, heirs, personal representatives and assigns, and no other person
shall acquire or have any right under or by virtue of this Agreement.
18. Advertisements. The Offerors agree that the Co-Dealer Managers
shall have the right to place advertisements in financial and other newspapers
and journals at their own expense describing their services to the Offerors
hereunder; provided that such advertisements shall have been approved in
advance by the Company (which approval shall not be unreasonably withheld), and
that the publication of such advertisements shall comply with applicable law.
19. Modification. This Agreement may not be modified or amended
except in writing, duly executed by the parties hereto.
20. Further Agreements. This Agreement does not constitute any
agreement, express or implied, on the part of the Co-Dealer Managers or any
commitment by the Co-Dealer Managers to underwrite, purchase, place, or cause
the placement of any securities or indebtedness.
21. Certain Actions. To the extent that any action(s) is (are)
required to be taken by the Trust in order to permit the Offerors or either of
them to comply in full with any or all of their respective representations,
covenants, agreements, obligations or undertakings under this Agreement, the
Offerors and each of them agree(s) to cause the Trust promptly to take such
action or actions.
If the foregoing terms correctly set forth our agreement, please
confirm this by signing and returning a duplicate copy of this letter.
Thereupon, this letter, as signed
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<PAGE> 21
in counterpart, shall constitute our agreement on the subject matter herein.
PECO ENERGY COMPANY
By:_____________________________
Name:
Title:
PECO ENERGY CAPITAL, L.P.,
a Delaware limited partnership
BY: PECO ENERGY CAPITAL CORP.,
its general partner
By:______________________________
Name:
Title:
Confirmed and agreed to as
of the date first above written:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By:___________________________________
Name:
Title:
SMITH BARNEY INC.
By:___________________________________
Name:
Title:
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<PAGE> 22
Appendix A
(1) The favorable opinion of Ballard Spahr Andrews & Ingersoll to the
effect that:
(i) The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the Commonwealth of
Pennsylvania and has all requisite corporate power and authority to own
and operate its properties, to carry on its business as now conducted and
as currently proposed to be conducted, to consummate the Offer, to enter
into the Dealer Manager Agreement, the Series B Guarantee and the
Indenture, to issue the Series B Subordinate Debentures and to cause the
General Partner of the PECO Energy Capital to enter into the Trust
Agreement.
(ii) The General Partner of PECO Energy Capital is a corporation
duly incorporated, validly existing and in good standing under the laws of
the state of Delaware and has all requisite corporate power and authority
to own its properties, to carry on business as now conducted and as
currently proposed to be conducted and to enter into the Trust Agreement.
(iii) All of the partner interests of PECO Energy Capital
other than the Preferred Securities and the Cumulative Monthly Income
Preferred Securities, Series A, issued by PECO Energy Capital are owned
directly or indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims.
(iv) The execution, delivery and performance by the Company
and/or PECO Energy Capital of the Dealer Manager Agreement, the Trust
Agreement, the Series B Guarantee and the Indenture and the issuance of
the Series B Subordinated Debentures by the Company, the issuance by PECO
Energy Capital of the Series B Preferred Securities and the consummation
of the transactions contemplated in the Dealer Manager Agreement and in
the Offer Materials will not result in any violation of or be in conflict
with or constitute a default under or result in the creation or imposition
of any lien, charge or encumbrance upon any property or assets of the
Trust, PECO Energy Capital, the Company or any of the Subsidiaries
pursuant to any term of the Company's or such General Partner's Amended
and Restated Articles of Incorporation or Bylaws, as applicable, or of the
Certificate of Limited Partnership or Partnership Agreement of PECO Energy
Capital, or, to the best of our knowledge after due inquiry of officials
of the Company and PECO Energy Capital, any term of any material contract,
note, lease, mortgage, loan agreement, indenture, or other
A-1
<PAGE> 23
instrument to which the Trust, the Company or PECO Energy Capital is a
party or by which any of them is bound or to which any of the property or
assets of the Trust, the Company or PECO Energy Capital are subject, or
any statute, order, rule or regulation known to us of any local or
governmental agency or body having jurisdiction over the Company or PECO
Energy Capital or any of their respective properties.
(v) The Pennsylvania Public Utility Commission has entered an
appropriate order (with respect to Securities Certificate No. S-00950499)
authorizing the Company to execute and deliver the Series B Guarantee and
to issue the Series B Subordinated Debentures and an appropriate order and
Certificate of Public Convenience authorizing the Company to acquire all
of the stock of the general partner of PECO Energy Capital, such orders
are in full force and effect and, to the best of our knowledge after due
inquiry, no proceeding has been initiated upon appeal from or to review
the effectiveness of such orders; and, except as specified in Paragraphs
(viii) and (ix) hereof and the filing of Schedule 13E-4, no other
approval, authorization, order or consent of or declaration, registration
or filing with, any governmental authority is required for the valid
execution and delivery by the Company and PECO Energy Capital of the Trust
Agreement or by the Company of the Dealer Manager Agreement, the Series B
Guarantee and the Indenture, the valid issuance and delivery of the Series
B Guarantee and the Series B Subordinated Debentures by the Company, or
the valid issuance and delivery by PECO Energy Capital of the Series B
Preferred Securities (other than in connection with the provisions of
state securities or "blue sky" laws of any jurisdiction, as to which we
express no opinion).
(vi) The Series B Guarantee and the Indenture have been duly
authorized, executed and delivered by the Company and constitute [or in
the case of the opinion to be delivered on the Commencement Date, when
executed and delivered will constitute] legal, valid and binding
obligations of the Company enforceable in accordance with their respective
terms except as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium and other laws affecting the rights
of creditors generally and general principles of equity.
(vii) The Series B Subordinated Debentures have been duly
authorized by all necessary corporate action on the part of the Company,
have been duly executed and delivered by duly authorized offices of the
Company (or in the case of the opinion to be delivered on the Consummation
Date when executed and delivered) and when authenticated by
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<PAGE> 24
the Indenture Trustee and delivered to PECO Energy Capital will constitute
legal, valid and binding obligations of the Company enforceable in
accordance with their terms.
(viii) The Dealer Manager Agreement has been duly authorized
by the Offerors and by the General Partner respectively, and [in the case
of the opinion to be delivered on the Acceptance Date, such agreements
have been duly executed and delivered by such parties respectively].
(ix) The Trust Agreement has been duly authorized, executed
and delivered by PECO Energy Capital and the General Partner respectively.
(x) The Registration Statement has become effective under the
Securities Act of 1933, as amended (the "Act"), and, to the best of our
knowledge after due inquiry, no stop order suspending the effectiveness of
the Registration Statement has been issued and no proceedings for that
purpose have been instituted or are pending or contemplated.
(xi) The Indenture has been qualified under the Trust Indenture
Act of 1939, as amended.
(xii) Under current law and interpretations of current law
issued by the Securities and Exchange Commission, none of the Company,
PECO Energy Capital and the Trust is an "investment company" required to
register under the Investment Company Act of 1940, as amended.
(xiii) The descriptions in the Registration Statement and the
Prospectus of the Preferred Trust Receipts, Series B Preferred Securities,
the Series B Guarantee Agreement and Series B Subordinated Debentures and
of statutes, legal and governmental proceedings and other documents are
accurate and fairly present the information required to be shown and we do
not know of any legal or governmental proceedings required to be described
in the Prospectus which are not described as required, nor or any
documents of a character required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the Registration
Statement which are not described and filed as required.
(xiv) The Registration Statement and the Prospectus comply
as to form in all material respects with the Act and the rules and
regulations thereunder, and the documents incorporated therein by
reference in the Prospectus complied, when filed, as to form in all
material respects with the Securities Exchange Act of 1934, as amended
(provided that we express no opinion as to financial
A-3
<PAGE> 25
statements, schedules or other financial data included in the Registration
Statement or the Prospectus).
(xv) The statements made under the caption "United States
Taxation" in the Prospectus, insofar as they describe matters of United
States law (including Pennsylvania law) and legal conclusions are fair
summaries thereof and we confirm to the Co-Dealer Managers our opinion
stated therein.
We have acted as special counsel to the Company in connection with
the Offer and the issuance and delivery of the Series B Subordinated Debentures
and the Series B Guarantee and to PECO Energy Capital in connection with the
issuance of the Series B Preferred Securities and to the Trust in connection
with the issuance of the Preferred Trust Receipts and in connection therewith
have participated in the preparation of the Registration Statement and have
reviewed all of the documents incorporated therein by reference. Although we
have not undertaken to determine independently and assume no responsibility for
the accuracy, completeness or fairness of the statements contained in the
Registration Statement or in the Prospectus, we do not believe that either the
Registration Statement or the Prospectus, including the documents incorporated
therein by reference (except for financial statements, schedules and other
financial data included therein or incorporated therein by reference, as to
which we express no opinion or belief), at the time the Registration Statement
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 not misleading or that the Prospectus, including the
documents incorporated therein by reference (except for financial statements,
schedules and other financial data included therein or incorporated therein by
reference, as to which we express no opinion or belief) contained on the date
of the Prospectus or contains on the date hereof any untrue statement of a
material fact or omitted or omits to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading.
(2) The favorable opinion of James W. Durham, Esq., Senior Vice President
and General Counsel of the Company, or Todd Cutler, Esq., Assistant General
Counsel of the Company, to the effect that:
(i) The Company is a corporation duly organized and existing
under the laws of the Commonwealth of Pennsylvania.
(ii) Each of the Company's Utility Subsidiaries is a validly
existing corporation under the laws of the
A-4
<PAGE> 26
jurisdiction of its incorporation. The Company and each Utility
Subsidiary have all requisite corporate 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 Company. The Company and each Utility Subsidiary have all such
franchises, permits and licenses as are necessary to conduct their
respective businesses, the absence of which would have a materially
adverse effect on the Company.
(iii) There is no pending or, to the best of my knowledge
after due inquiry, threatened action, investigation or proceeding against
or affecting the Company or any of its Subsidiaries before any court,
governmental agency or arbitrator which is likely to have a material
adverse effect on the business, financial condition or results of
operations of the Company and its Subsidiaries taken as a whole, except as
set forth in the Prospectus including the documents incorporated by
reference therein.
(3) The favorable opinion of Richards, Layton & Finger to the
effect that:
(i) PECO Energy Capital has been duly formed and is validly
existing in good standing as a limited partnership under the Delaware
Revised Uniform Limited Partnership Act (the "Delaware Act").
(ii) Under the Partnership Agreement and the Delaware Act, this
Agreement and the Trust Agreement have been duly authorized for execution
and delivery by PECO Energy Capital by all necessary partnership action on
the part of PECO Energy Capital.
(iii) Assuming that the Trust, as a limited partner of PECO
Energy Capital, does not participate in the control of the business of
PECO Energy Capital, the Series B Preferred Securities issued to the Trust
have been duly and validly authorized and are validly issued and, subject
to the qualifications set forth in this opinion (iii), are fully paid and
nonassessable limited partner interests in PECO Energy Capital, as to
which the Trust, as a limited partner of PECO Energy Capital, will have no
liability in excess of its obligation to make payments provided for in the
Partnership Agreement and its share of PECO Energy Capital's assets and
undistributed profits (subject to the
A-5
<PAGE> 27
obligation of the Trust to repay and funds wrongfully distributed to it).
(iv) There are no provisions in the Partnership Agreement
the inclusion of which, subject to the terms and conditions therein, or,
assuming that the Trust, as a limited partner of PECO Energy Capital,
takes no action other than actions permitted by the Partnership Agreement,
the exercise of which, in accordance with the terms and conditions
therein, would cause the Trust, as a limited partner of PECO Energy
Capital, to be deemed to be participating in the control of the business
of PECO Energy Capital.
(v) The execution and delivery by PECO Energy Capital of, and
the performance by PECO Energy Capital of its obligations under, this
Agreement and the Trust Agreement will not violate any provision of any
material applicable law of the State of Delaware or the Certificate of
Limited Partnership or the Partnership Agreement (excluding the securities
or Blue Sky Laws of the State of Delaware, as to which no opinion is
expressed).
(vi) The Trust has been duly created and is validly existing in
good standing as a business trust under the Delaware Business Trust Act,
and under the Trust Agreement and the Delaware Business Trust Act has the
trust power and authority to conduct its business as described in the
Prospectus.
(vii) Assuming due authorization, execution and delivery of
the Trust Agreement by PECO Energy Capital Corp., PECO Energy Capital and
the Trustee, the Trust Agreement is a legal, valid and binding agreement
of PECO Energy Capital Corp., PECO Energy Capital and the Trustee,
enforceable against PECO Energy Capital Corp., PECO Energy Capital and the
Trustee, in accordance with its terms, except as the enforceability
thereof may be subject to the effect upon the Trust Agreement of (a)
bankruptcy, insolvency, moratorium, receivership, reorganization,
liquidation, fraudulent conveyance and other similar laws relating to or
affecting the rights and remedies of creditors generally, (b) principles
of equity (regardless of whether considered and applied in a proceeding in
equity or at law), (c) applicable law relating to fiduciary duties, and
(d) the effect of applicable public policy on the enforceability of
provisions relating to indemnification or contribution.
(viii) The Preferred Trust Receipts have been duly
authorized by the Trust Agreement, and when issued and sold in accordance
with the Trust Agreement, the Preferred Trust
A-6
<PAGE> 28
Receipts will be duly and validly issued and, subject to the
qualifications set forth in opinion (ix) below, fully paid and
nonassessable interests in the Trust.
(ix) The holders of Preferred Trust Receipts, in their
capacities as such, will be entitled to the same limitation of personal
liability extended to stockholders of private corporations for profit
organized under the General Corporation Law of the State of Delaware. In
rendering such opinion, such counsel may note that holders of Preferred
Trust Receipts may be obligated to make other payments provided for in the
Trust Agreement.
(x) Under Delaware law and the Trust Agreement, the
issuance of the Preferred Trust Receipts is not subject to preemptive
rights.
(xi) Under Delaware law and the Partnership Agreement, the
issuance of the Series B Preferred Securities is not subject to preemptive
rights.
A-7
<PAGE> 29
Appendix B
TRUSTEE'S CERTIFICATE
PNC Bank, Delaware, a Delaware banking corporation (the "Trustee"),
hereby certifies that:
1. The Trust Agreement dated as of ________ __, 1995 (the "Trust
Agreement"), by and among PECO Energy Capital Corp., a Delaware corporation
("PECO Energy"), PECO Energy Capital, L.P., a Delaware limited partnership
("PECO Energy Capital") and the Trustee has been duly executed and delivered in
the name and on behalf of the Trustee.
2. Each person who, on behalf of the Trustee, executed and
delivered the Trust Agreement was at the date thereof and is now duly elected,
appointed or authorized, qualified and acting as an officer or authorized
signatory of the Trustee and duly authorized to perform such act at the time of
such act and the signatures of such persons appearing on such documents are
their genuine signatures.
3. Attached hereto are (a) an extract from the By-laws of the
undersigned, duly adopted by its Board of Directors, respecting the signing
authority of the persons mentioned above in paragraph 2 above, and (b) a letter
from a Senior Executive Vice President of the undersigned authorizing, pursuant
to such By-laws, such signing authority, which By-laws and letter at the date
hereof are in full force and effect.
4. To the knowledge of the Trustee, without any independent
investigation, the trust created pursuant to the Trust Agreement (a) has
conducted no business other than in connection with the matters described in
the Registration Statement on Form S-4 (No. 33-60859) of PECO Energy and PECO
B-1
<PAGE> 30
Energy Capital (the "Registration Statement") and (b) has no liabilities other
than in connection with the matters described in the Registration Statement.
IN WITNESS WHEREOF, the Trustee has caused this certificate to be
executed in its corporate name by an officer thereunto duly authorized and its
corporate seal to be affixed hereto.
Dated: ___________ __, 1995
PNC BANK, DELAWARE
By: ________________________
Name:
Title:
[SEAL]
B-2
<PAGE> 1
EXHIBIT 4-2
AMENDMENT NO. 1 TO THE
AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT
OF PECO ENERGY CAPITAL, L.P.
This Amendment No. 1 to the Amended and Restated Limited Partnership
Agreement of Peco Energy Capital, L.P., a Delaware limited partnership (the
"Partnership"), dated as of October 20, 1995 (this "Amendment"), is made by
and among Peco Energy Capital Corp., as general partner of the Partnership, and
the Persons who are limited partners of the Partnership.
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 of the Partnership with the Secretary of
State of the State of Delaware on May 23, 1994, and entering into a Limited
Partnership Agreement of the Partnership, dated as of May 23, 1994 (the
"Original Agreement");
WHEREAS, the Original Agreement was amended and restated in its
entirety by the Amended and Restated Limited Partnership Agreement of the
Partnership, dated as of July 25, 1994 (the "Partnership Agreement");
WHEREAS, upon the admission of one Preferred Partner as a limited
partner of the Partnership, the Class A Limited Partner withdrew from the
Partnership as a limited partner of the Partnership and has no further interest
in the Partnership;
WHEREAS, the parties hereto desire to amend the Partnership Agreement
as described herein; and
WHEREAS, this Amendment does not adversely affect the powers,
preferences or special rights of any series of Preferred Partner Interests.
NOW, THEREFORE, the parties hereto, intending to be legally bound
hereby, agree to amend the Partnership Agreement as follows:
ARTICLE I - AMENDMENTS
1.1. Article I of the Partnership Agreement is hereby amended to
add a new definition of "Global Certificate" in its proper alphabetical order
to read as follows:
"GLOBAL CERTIFICATE" shall mean a Certificate issued
in the form of a typewritten Certificate or Certificates
representing the Book Entry Interests to be delivered to a
Clearing Agency in accordance with Section 14.04.
1.2. Section 2.03 of the Partnership Agreement is hereby amended by
inserting "(a)" immediately before the first sentence thereof and by adding a
new subsection to said section to be designated as subsection "(b)" to read as
follows:
<PAGE> 2
(b) In furtherance of the purposes set forth in
Section 2.03(a) and without limiting the generality thereof,
the Partnership may issue Preferred Partner Interests for
consideration other than cash, including Subordinated
Debentures, which consideration shall constitute payment for
the Preferred Partner Interests so issued.
1.3. The last sentence of Section 3.01 of the Partnership Agreement
is hereby deleted in its entirety and replaced with the following:
Each Preferred Partner, or its predecessor in interest, will
be deemed to have contributed to the capital of the
Partnership the amount of the Purchase Price for the Preferred
Partner Interests held by it.
1.4. Section 8.04 of the Partnership Agreement is hereby amended by
(i) redesignating paragraph (h) thereof as paragraph (i), (ii) deleting the
word "and" at the end of paragraph (g), and (iii) adding a new paragraph (h) to
read as follows:
(h) Enter into and perform one or more trust agreements or other
organizational documents relating to the creation of one or more
Preferred Partners that will own Preferred Partner Interests,
including by entering into and performing agreements or documents
referred to in such trust agreements or other organizational
documents, in each case on behalf of the Partnership; and
1.5. Section 14.04(d) of the Partnership Agreement is hereby
amended by deleting the word "To" contained therein and substituting therefor
the words "Subject in all respects to Section 14.07, to".
1.6. The Partnership Agreement is hereby amended by adding a new
Section 14.07 in its proper numerical order to read as follows:
SECTION 14.07. DEFINITIVE CERTIFICATES ON ORIGINAL
ISSUANCE. Notwithstanding anything in this Agreement to the
contrary, including, without limitation, Sections 14.04, 14.05
and 14.06, on original issuance, Certificates may but need not
be issued to The Depository Trust Company in the form of a
Global Certificate or Global Certificates in accordance with
Section 14.04, and may but need not be issued to any Person in
the form of a Definitive Certificate or Definitive
Certificates in accordance with this Section 14.07. Without
limiting the generality of the foregoing, in connection with
the original issuance of Certificates as Definitive
Certificates in accordance with this Section 14.07, (i) a
Clearing Agency or a nominee of the Clearing Agency that is a
limited partner of the Partnership in accordance with Sections
14.03 and 14.04 with respect to one or more series of
Preferred Partner Interests shall continue to be a limited
partner of the Partnership notwithstanding the fact that
another Person holding a Definitive Certificate issued in
accordance with this Section 14.07 has been admitted to the
Partnership as a limited partner of the Partnership with
respect to one or more series of Preferred Partner Interests,
and (ii) Sections 14.04, 14.05 and 14.06 shall be inapplicable
to a Person holding a Definitive Certificate issued in
accordance with this Section 14.07. The General Partner will
appoint a registrar, transfer agent and paying agent for the
Preferred Partner Interests. The Definitive Certificates
shall be printed,
2
<PAGE> 3
lithographed or engraved or may be produced in any other
manner as is reasonably acceptable to the General Partner, as
is evidenced by its execution thereof. Registration of
transfers of Preferred Partner Interests will be 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. Any Person
receiving a Definitive Certificate in accordance with this
Section 14.07 shall be admitted to the Partnership as a
Preferred Partner pursuant to Section 2.06.
1.7. Exhibit A to the Partnership Agreement is hereby amended (a)
by deleting the reference to "Cede & Co." contained therein and substituting
for such reference a "__________________," (b) by deleting the reference to
"1994" contained in the 31st line of the first paragraph thereof and
substituting for such reference "199_," and (c) by deleting the reference to
"1994" contained in the last paragraph thereof and substituting for such
reference "199_."
ARTICLE II - MISCELLANEOUS
2.1. Capitalized Terms. Capitalized terms used herein and not
otherwise defined are used as defined in the Partnership Agreement.
2.2. Full Force and Effect. Except to the extent modified hereby,
the Partnership Agreement shall remain in full force and effect.
2.3. Successors and Assigns. This Amendment shall be binding upon,
and shall enure to the benefit of, the parties hereto and their respective
successors and assigns.
2.4. Counterparts. This Amendment may be executed in counterparts,
all of which together shall constitute one agreement binding on all parties
hereto, notwithstanding that all such parties are not signatories to the
original or same counterpart.
2.5. Governing Law. This Amendment shall be interpreted in
accordance with the laws of the State of Delaware (without regard to conflict
of laws principles), all rights and remedies being governed by such laws.
GENERAL PARTNER:
PECO ENERGY CAPITAL CORP.
By: /s/ J. Barry Mitchell
------------------------------
Name: J. Barry Mitchell
Title: President
PREFERRED PARTNERS:
3
<PAGE> 4
All Preferred Partners now and
hereafter admitted as limited
partners of the Partnership pursuant
to Powers of Attorney now or
hereafter executed in favor of, and
delivered to, the General Partner.
By: PECO ENERGY CAPITAL CORP.
By: /s/ J. Barry Mitchell
-----------------------------
Name: J. Barry Mitchell
Title: President
4
<PAGE> 1
EXHIBIT 4-3
Action by the General Partner of PECO Energy Capital, L.P.
Creating the ___% Cumulative Monthly Income
Preferred Securities, Series B
Pursuant to Section 13.01 of the Amended and Restated Limited
Partnership Agreement of PECO Energy Capital, L.P. dated as of July 25, 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 Securities, hereby authorizes and
establishes such new series of Preferred Securities according to the following
terms and conditions (each capitalized term 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 Securities of the Partnership, liquidation preference $25 per
Preferred Security, are hereby designated as "___% Cumulative Monthly Income
Preferred Securities, Series B" (hereinafter the "Series B Preferred
Securities").
(b) Distributions.
(i) Holders of the Series B Preferred Securities
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 B Preferred Security. Distributions
on the Series B Preferred Securities which accrue from the date of original
issue to __________ shall be payable commencing on _____, 1995. In addition,
holders of the Series B Preferred Securities 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 a cash distribution at the rate
of 7.96% per annum of the stated liquidation preference of $25 per Series B
Preferred Security accumulating from November 1, 1995 through _____________,
1995, payable on ____________, 1995.
(ii) Distributions on the Series B Preferred
Securities 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
legally
<PAGE> 2
available therefor sufficient to permit such payments. Distributions on the
Series B Preferred Securities will be deferred if and for so long as PECO
Energy Company ("PECO Energy") defers payments to the Partnership on the Series
B Debentures (as defined below). Accrued and unpaid distributions on the
Series B Preferred Securities will accrue additional distributions ("Additional
Distributions") in respect thereof, to the extent permitted by law, at the rate
of ____% per annum of the stated liquidation preference of $25 per Series B
Preferred Securities. 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 B Preferred
Securities will be payable to the holders of Series B Preferred Securities as
they appear on the books and records of the Partnership on the relevant record
dates, which will be the 15th day of the month of the relevant payment.
(c) Redemption.
(i) The Series B 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 October 1, 1997, at the Redemption Price (as defined
below).
(ii) Upon redemption or payment at maturity of the
__% Deferrable Interest Subordinated Debentures due 2025, Series B (the "Series
B Debentures") issued by PECO Energy pursuant to a First Supplemental Indenture
dated as of _________, 1995 between PECO Energy and Meridian Trust Company, as
Trustee (the "Supplemental Indenture") to the Indenture dated as of July 1,
1994 between PECO Energy and Meridian Trust Company, as Trustee (as
supplemented, the "Indenture"), the proceeds from such redemption or payment of
the Series B Debentures shall be applied by the Partnership to redeem the
Series B Preferred Securities at the redemption price of $25 per Preferred
Security plus accumulated and unpaid distributions (whether or not declared) to
the date fixed for redemption, together with any accrued Additional
Distributions thereon (the "Redemption Price").
(iii) If a Tax Event shall occur and be continuing,
the Series B Preferred Securities 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 B Preferred
Securities will be subject to mandatory redemption in whole at the Redemption
Price within ninety (90) days following the occurrence of such Investment
Company Act Event.
2
<PAGE> 3
(d) Liquidation Distribution. In the event of any
voluntary or involuntary dissolution and winding up of the Partnership, holders
of the Series B Preferred Securities at the time outstanding will be entitled
to receive out of the assets of the Partnership available for distribution to
holders of Preferred Securities, 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 Securities outstanding, an amount equal to, in the
case of holders of Series B Preferred Securities, the aggregate of the stated
liquidation preference of $25 per Series B Preferred Security plus accumulated
and unpaid distributions and Additional Distributions to the date of payment
(the "Liquidation Distribution").
(e) Voting Rights. The holders of the Series B Preferred
Securities shall have no voting rights except as provided in the Partnership
Agreement.
(f) Subordination. The holders of Series B Preferred
Securities are deemed, by acceptance of such Securities, to have (i) agreed
that the Series B Debentures issued pursuant to the Supplemental Indenture are
subordinate and junior in right of payment to all general liabilities as and to
the extent provided in the Supplemental Indenture and (ii) agreed that the
Guarantee relating to the Series B Preferred Securities is subordinate and
junior in right of payment to all general liabilities of PECO Energy.
(g) Issuance. The Series B Preferred Securities shall be
issued by the Partnership to and initially deposited with PNC Bank, Delaware,
as trustee of PECO Energy Capital Trust I, a statutory business trust created
under an amended and restated trust agreement among the Trustee, the
Partnership and, in certain limited respects, the General Partner, in
consideration for the transfer to the Partnership of Series B Debentures with
an aggregate principal amount equal to the aggregate liquidation preference of
the Series B Preferred Securities. The Partnership shall initially be the
transfer agent, registrar and paying agent for the Series B Preferred
Securities.
3
<PAGE> 4
IN WITNESS WHEREOF, the General Partner as executed this
Action as of the day and year first above written.
PECO Energy Capital Corp.
By:
-------------------------
Name: J. Barry Mitchell
Title: President
4
<PAGE> 1
EXHIBIT 4-7
PECO ENERGY COMPANY
AND
MERIDIAN TRUST COMPANY, AS TRUSTEE
FIRST SUPPLEMENTAL
INDENTURE
DATED AS OF __________ 1, 1995
TO
INDENTURE
DATED AS OF JULY 1, 1994
PROVIDING FOR THE ISSUANCE OF
_____% DEFERRABLE INTEREST SUBORDINATED DEBENTURES, SERIES B
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
------------------------------------------
SECTION 1.01 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 2
THE SERIES B DEBENTURES
-----------------------
SECTION 2.01 Form of the Series B Debentures; Denominations . . . . . . . . . . . . . . . . . . 2
ARTICLE 3
REDEMPTION
-----------
SECTION 3.01 Redemption; Notice to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 3.02. Compliance with Terms of Indenture . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE 4
EXTENSION PERIOD
----------------
SECTION 4.01 Limitation on Right of Company to Extend Interest Payment Period . . . . . . . . . 4
ARTICLE 5
CONCERNING THE TRUSTEE
----------------------
SECTION 5.01. Not Responsible for Recitals . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 5.02. Qualification Under Trust Indenture Act of 1939 . . . . . . . . . . . . . . . . . 4
ARTICLE 6
MISCELLANEOUS
-------------
SECTION 6.01 Trust Indenture Act Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 6.02 Severability Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 6.03 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 6.04 No Recourse Against Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 6.05. Use of Term "Trustee" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 6.06. Confirmation of Original Indenture . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 6.07 Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 6.08 Multiple Original Copies of this Indenture . . . . . . . . . . . . . . . . . . . . 6
SECTION 6.09 Table of Contents; Headings, Etc . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 6.10 Benefits of the Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 6.11. Date of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
</TABLE>
(i)
<PAGE> 3
FIRST SUPPLEMENTAL INDENTURE, dated as of 1, 1995, by and
between PECO Energy Company, a Pennsylvania corporation (the "Company"), and
Meridian Trust Company, a Pennsylvania trust company, as trustee (the
"Trustee"), to an Indenture, dated as of July 1, 1994, by and between the
Company and the Trustee (the "Original Indenture", together with this
Supplemental Indenture, the "Indenture").
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 ("PECO Energy Capital"), to issue in
series from time to time its limited partner interests ("Preferred Securities")
and to loan the proceeds thereof, together with the investment by PECO Energy
Capital Corp. in PECO Energy Capital, to the Company and to effect other
similar arrangements.
WHEREAS, the Company has duly executed and delivered to the
Trustee the Original Indenture to provide for the issue of one or more series
of deferrable interest subordinated debentures (herein sometimes called the
"Debentures"), issuable as in the Indenture provided, and authorized and issued
the initial series of Debentures which were designated therein as the 9%
Deferrable Interest Subordinated Debentures, Series A; and
WHEREAS, the Company desires to effect the exchange of Trust
Receipts, each representing a __% Cumulative Monthly Income Preferred Security,
Series B of PECO Energy Capital for _______ Depositary Shares, each
representing a one-fourth interest in a share of $7.96 Cumulative Preferred
Stock of the Company and the Company has authorized the issuance of $_______
aggregate principal amount of its ____% Deferrable Subordinated Debentures,
Series B (the "Series B Debentures") under this First Supplemental Indenture
for such purpose;
WHEREAS, all things necessary to make the Series B Debentures
when duly issued and executed by the Company and authenticated and delivered
hereunder, the valid obligations of the Company, and to make this Supplemental
Indenture a valid and binding agreement of the Company, in accordance with its
terms, have been done.
NOW THEREFORE:
Each of 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 Series B Debentures:
<PAGE> 4
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01 DEFINITIONS.
"Additional Interest", with respect to the Series B
Debentures, means 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 B Debentures.
"Additional Payments" means an amount equal to interest on the
principal amount of the Series B Debentures at the rate of 7.96% per annum from
and including November 1, 1995 through but not including the Issue Date of the
Series B Debentures, payable on the first interest payment date for the Series
B Debentures.
"Exchange Agent" means First Chicago Trust Company of New York
in its capacity as the Exchange Agent under an Exchange Agreement dated as of
_______, 1995 between the Company and the Exchange Agent.
"Issue Date" means _____________, 1995.
"Series B Debentures" means any of the Company's _____%
Deferrable Interest Subordinated Debentures, Series B issued under this
Supplemental Indenture.
"Series B Debentureholder" or "Series B Holder" means a
Person in whose name a Series B Debenture is registered on the Registrar's
books.
"Series B Preferred Securities" means the ___% Cumulative
Monthly Income Preferred Securities, Series B, representing limited partner
interests of PECO Energy Capital.
Unless otherwise defined herein, all other capitalized terms
used herein have the meanings set forth in the Original Indenture.
ARTICLE 2
THE SERIES B DEBENTURES
SECTION 2.01 FORM OF THE SERIES B DEBENTURES; DENOMINATIONS.
The Series B Debentures and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit A
2
<PAGE> 5
attached hereto. The terms and provisions contained in the Series B
Debentures, a form of which is annexed hereto as Exhibit A, shall constitute,
and are hereby expressly made, a part of this Supplemental Indenture. The
Company and the Trustee, by their execution and delivery of this First
Supplemental Indenture, expressly agree to such terms and provisions and to be
bound thereby.
The Trustee shall authenticate and make available for delivery
the Series B Debentures for original issue in the aggregate principal amount of
$ upon receipt by the Trustee of 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. Upon authentication by the Trustee,
the Series B Debentures shall be delivered by the Trustee as follows:
(i) $_________ of Series B Debentures shall be delivered to the Exchange Agent
in exchange for Depositary Shares and subsequent delivery by the Exchange Agent
(acting pursuant to the directions of the holders of such Depositary Shares)
to PECO Energy Capital and (ii) $_________ of Series B Debentures shall be
delivered to PECO Energy Capital as evidence of the Company's obligation with
respect to the loan to the Company of the investment by PECO Energy Capital
Corp. in PECO Energy Capital on the date of issuance of the Series B
Subordinated Debentures.
The Series B Debentures shall be issuable only in registered
form without coupons and only in denominations of $25.00 and any integral
multiple thereof attached hereto as Exhibit A.
ARTICLE 3
REDEMPTION
SECTION 3.01 REDEMPTION; NOTICE TO TRUSTEE.
(a) The Series B Debentures are subject to redemption
prior to maturity as provided in the form thereof attached hereto as Exhibit A.
(b) If any or all of the Series B Debentures are to be
redeemed pursuant to paragraph (a) above, in addition to the notices required
by the Original Indenture, the Company shall give notice by first class mail,
postage prepaid, to the Trustee at least 40 days prior to the date of such
redemption. Any such notice of redemption shall state the date and price of
redemption.
SECTION 3.02. COMPLIANCE WITH TERMS OF INDENTURE.
In case the Company shall desire to exercise such right to
redeem all or any part of said Series B Debentures as
3
<PAGE> 6
hereinbefore provided, it shall comply with all the terms and provisions of
Article III of the Original Indenture applicable thereto, and such redemption
shall be made under and subject to the terms and provisions of said Article III
and in the manner and with the effect therein provided, but at the time or
times and at the respective redemption rates and upon mailing of notice, all as
hereinbefore set forth in Section 3.01 of this Article.
ARTICLE 4
EXTENSION PERIOD
SECTION 4.01 LIMITATION ON RIGHT OF COMPANY TO EXTEND INTEREST PAYMENT
PERIOD.
The Company agrees not to exercise its right under
Section 4.01(b) of the Original Indenture to extend the interest payment
period for the Debentures for up to 60 months until the Additional Payment has
been paid in full. The Company also agrees that no extended interest payment
period shall extend beyond the stated maturity date or redemption date of the
Series B Debentures.
ARTICLE 5
CONCERNING THE TRUSTEE
The Trustee hereby reaffirms acceptance of the trust herein
declared and provided and agrees to perform the same upon the terms and
conditions set forth in the Indenture, as supplemented by this First
Supplemental Indenture, and upon the following terms and conditions:
SECTION 5.01. NOT RESPONSIBLE FOR RECITALS.
The Trustee shall not be responsible in any manner whatsoever
for or in respect of the validity or sufficiency of this First Supplemental
Indenture or the due execution thereof by the Company or for or in respect of
the recitals contained herein, all of which recitals are made solely by the
Company.
SECTION 5.02. QUALIFICATION UNDER TRUST INDENTURE ACT OF 1939.
The Trustee hereby acknowledges that the Company proposes to
qualify this First Supplemental Indenture under the Trust Indenture Act of
1939, as amended.
4
<PAGE> 7
ARTICLE 6
MISCELLANEOUS
SECTION 6.01 TRUST INDENTURE ACT CONTROLS.
If any provision of this First Supplemental 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) as a part of and govern
this First Supplemental Indenture, except as, and to the extent, they are
expressly excluded from this Supplemental Indenture, as permitted by the TIA.
SECTION 6.02 SEVERABILITY CLAUSE.
If any provision in this First Supplemental Indenture or in
the Series B 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 6.03 GOVERNING LAW.
This First Supplemental Indenture and the Series B 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 6.04 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
Series B Debentures or this First Supplemental Indenture or for any claim based
on, in respect of or by reason of such obligations or their creation. By
accepting a Series B Debenture, each Series B Debentureholder shall waive and
release all such liability. The waiver and release shall be part of the
consideration for the issue of the Series B Debentures.
SECTION 6.05. USE OF TERM "TRUSTEE".
Unless otherwise clearly required by the context, the term,
"Trustee," or any other equivalent term used in this First
5
<PAGE> 8
Supplemental Indenture shall be held and construed to mean the trustee under
the Indenture for the time being whether the original or a successor trustee.
SECTION 6.06. CONFIRMATION OF ORIGINAL INDENTURE.
As supplemented by this First Supplemental Indenture, the
Original Indenture is in all respects ratified and confirmed, and this First
Supplemental Indenture shall be read, taken and construed as a part of the
Indenture so that all of the rights, remedies, terms, conditions, covenants and
agreements of the Original Indenture shall apply and remain in full force and
effect with respect to this First Supplemental Indenture and to the Series B
Debentures issued hereunder.
SECTION 6.07 SUCCESSORS.
All agreements of the Company in this First Supplemental
Indenture and the Series B Debentures shall bind its successors and assigns.
All agreements of the Trustee in this First Supplemental Indenture shall bind
its successors and assigns.
SECTION 6.08 MULTIPLE ORIGINAL COPIES OF THIS INDENTURE.
The parties may sign any number of copies of this First
Supplemental 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 First Supplemental Indenture.
SECTION 6.09 TABLE OF CONTENTS; HEADINGS, ETC.
The Table of Contents, Cross-Reference Table, and headings of
the Articles and Sections of this First Supplemental 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 6.10 BENEFITS OF THE INDENTURE.
Except as expressly provided in Article 10 of the Original
Indenture, nothing in this First Supplemental Indenture or in the Series B
Debentures, express or implied, shall give to any Person, other than the
parties hereto and their successors hereunder, the Series B Holders and the
Special Representative, any benefit or any legal or equitable right, remedy or
claim under this First Supplemental Indenture.
6
<PAGE> 9
SECTION 6.11. DATE OF INDENTURE.
This First Supplemental Indenture is dated as of __________ 1,
1995, but was actually executed and delivered on __________ __, 1995.
7
<PAGE> 10
SIGNATURES
IN WITNESS WHEREOF, the undersigned, being duly authorized,
have executed this First Supplemental 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.
8
<PAGE> 11
EXHIBIT A
_____% DEFERRABLE INTEREST SUBORDINATED DEBENTURES,
SERIES B DUE 2025
No. 1
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 PECO Energy Capital, L.P. or
registered assigns, the principal sum of ______________________________________
__________________________________ Dollars on _______ __, 2025, and to pay
interest on said principal sum from __________ ___, 1995 (the "Issue Date") 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
__________ 1, 1995 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 Company also promises to pay to PECO
Energy Capital, L.P. or registered assigns on _________, 1995 an amount (the
"Additional Payment") equal to interest on the principal amount hereof at the
rate of 7.96% per annum from and including November 1, 1995 through but not
including the Issue Date. If at any time PECO Energy Capital, L.P. ("PECO
Energy Capital") would be required to pay any taxes, duties, or other
governmental charges (other than withholding taxes) imposed by the United
States, or any other taxing authority, then, in any such case, the Company 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, or other governmental charges will not be less than the amounts
PECO Energy Capital would have received had no such taxes, duties, assessments
or other governmental charges been imposed.
The amount of interest payable on any Interest Payment Date
(and the Additional Payment) 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 B 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,
A-1
<PAGE> 12
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
fifteenth day of the month of, or in the case of an Interest Payment Date which
is on the first Business Day of a month, the fifteenth day of the month 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 or agency of the Company maintained for that purpose in
Wilmington, Delaware 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) and interest (including the Additional Payment and
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 its behalf to take
such action as may be necessary or appropriate to acknowledge or effectuate the
subordination so provided and (c) appoints the Trustee its attorney-in-fact for
any and all such purposes. Each Holder hereof, by its 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.
A-2
<PAGE> 13
This Debenture is one of a duly authorized series of
Debentures of the Company (herein sometimes referred to as the "Series B
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 July 1, 1994, as supplemented by a First Supplemental Indenture, dated as
of __________ 1, 1995 (as supplemented, 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 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 B 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
(ii) in whole or in part upon a redemption of the
Series B 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 B Preferred Securities redeemed.
At the option of the Company, the Series B Debentures are
subject to redemption prior to maturity (i) at any time on or after October 1,
1997 at the option of the Company, in whole or in part, and (ii) if a Tax Event
shall occur and be continuing, in whole (but not in part), and in each case at
100% of the principal amount thereof plus accrued interest to the redemption
date. "Tax Event" shall mean that PECO Energy Capital shall have received an
opinion of counsel (which may be regular counsel to the Company 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 original issuance of the
Series B 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
A-3
<PAGE> 14
received on the Debentures or PECO Energy Capital will otherwise not be taxed
as a partnership, (ii) interest payable by the Company to PECO Energy Capital
on the Series B Debentures will not be deductible for United States Federal
income tax purposes or (iii) PECO Energy Capital is subject to more than a de
minimis amount of other taxes, duties or other governmental charges.
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 B Debentures may
be amended with the written consent of the Holders of a majority in aggregate
principal amount of the Series B 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 B 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 or the Securities
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 Debenture at the time and place and at
the rate and in the money herein prescribed.
A-4
<PAGE> 15
After payment in full of the Additional Payment, the Company
shall have the right at any time during the term of the Series B 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 B
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 Registrar
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 its 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 hereon, or otherwise
in respect hereof, or based on or in
A-5
<PAGE> 16
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
(Seal)
By:
--------------------------
Name:
Title:
Attest:
-----------------------
Dated: , 1995
------- --
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
THIS IS ONE OF THE DEBENTURES REFERRED
TO IN THE WITHIN-MENTIONED INDENTURE.
MERIDIAN TRUST COMPANY, as Trustee
By:
--------------------------
Name
- ------------------------------
Authorized Signatory
A-6
<PAGE> 1
EXHIBIT 4-8
CERTIFICATE OF TRUST
OF PECO ENERGY CAPITAL TRUST I
THIS Certificate of Trust of PECO Energy Capital Trust I (the
"Trust"), dated as of October 20, 1995, is being duly executed and filed by PNC
Bank, Delaware, a Delaware banking corporation, as trustee, to form a business
trust under the Delaware Business Trust Act (12 Del. C. Section 3801 et seq.)
1. Name. The name of the business trust formed hereby
is PECO Energy Capital Trust I.
2. Delaware Trustee. The name and business address of
the trustee of the Trust in the State of Delaware are PNC Bank, Delaware, 222
Delaware Avenue, Wilmington, New Castle County, Delaware 19801.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of
the Trust, has executed this Certificate of Trust as of the date first-above
written.
PNC Bank, Delaware, not in its
individual capacity, but
solely as trustee
By: /s/ MICHAEL B. MCCARTHY
--------------------------
Name: Michael B. McCarthy
Title: Vice President
<PAGE> 1
EXHIBIT 4-9
TRUST AGREEMENT
This TRUST AGREEMENT of PECO Energy Capital Trust I (the "Trust"),
dated as of October 20, 1995, between PECO Energy Capital, L.P., a Delaware
limited partnership (the "Depositor"), PNC Bank, Delaware, a Delaware bank, not
in its individual capacity but solely in its capacity as trustee of the Trust
(the "Trustee"). The Depositor and the Trustee hereby agree as follows:
1. The trust created hereby shall be known as "PECO
Energy Capital Trust I," for which the Trustee, or the Depositor to
the extent provided herein, may conduct the business of the Trust,
make and execute contracts, and sue and be sued.
2. The Depositor hereby assigns, transfers, conveys and
sets over to the Trustee the sum of $10. The Trustee hereby
acknowledges receipt of such amount in trust from the Depositor, which
amount shall constitute the initial trust estate. The Trustee hereby
declares that it will hold the trust estate in trust for the
Depositor. It is the intention of the parties hereto that the Trust
created hereby constitutes a business trust under Chapter 38 of Title
12 of the Delaware Code, 12 Del. C. Section 3801 et seq. (the
"Business Trust Act"), and that this document constitutes the
governing instrument of the Trust. The Trustee is hereby authorized
and directed to execute and file a certificate of trust with the
Delaware Secretary of State in accordance with the provisions of the
Business Trust Act.
3. The Depositor and the Trustee will enter into an
amended and restated Trust Agreement, in form and substance
satisfactory to each such party and substantially in the form included
as Exhibit 4.9 to the 1933 Act Registration Statement referred to
below, to provide for, among other things, the issuance of the Trust
Receipts of the Trust referred to therein. Prior to the execution and
delivery of such amended and restated Trust Agreement, the Trustee
shall not have duty or obligation hereunder or with respect to the
trust estate, except as otherwise required by applicable law or as may
be necessary to obtain prior to such execution and delivery of any
licenses, consents or approval as required by applicable law or
otherwise.
4. The Depositor is hereby authorized and directed, as
the sponsor of the Trust, (i) to file with the Securities and Exchange
Commission (the "Commission") and execute, in
<PAGE> 2
each case on behalf of the Trust, (a) the Registration Statement on
Form S-4 (the "1933 Act Registration Statement"), including any
pre-effective or post-effective amendments to such 1933 Act
Registration Statement (including the offering circular/prospectus and
the exhibits contained therein), relating to the registration under
the Securities Act of 1933, as amended, or the Trust Receipts of the
Trust and certain other securities and (b) a Registration Statement on
Form 8-A (the "1934 Act Registration Statement") (including all
pre-effective and post-effective amendments thereto) relating to the
registration of the Trust Receipts of the Trust under Section 12(b) of
the Securities Exchange Act of 1934, as amended; (ii) to file with the
New York Stock Exchange or Philadelphia Stock Exchange (each an
"Exchange") and execute on behalf of the Trust one or more listing
applications and all other applications, statements, certificates,
agreements and other instruments as shall be necessary or desirable to
cause the Trust Receipts of the Trust to be listed on any of the
Exchanges; (iii) to file and execute on behalf of the Trust such
applications, reports, surety bonds, irrevocable consents,
appointments of attorney for service of process and other papers and
documents as shall be necessary or desirable to register the Trust
Receipts under the securities or "Blue Sky" laws of such jurisdictions
as the Depositor, on behalf of the Trust, may deem necessary or
desirable and (iv) to execute on behalf of the Trust that certain
Dealer Manager Agreement relating to the Trust Receipts, among the
Trust, the Depositor and the several Dealer Managers named therein,
substantially in the form included as Exhibit 1 to the 1933 Act
Registration Statement. In the event that any filing referred to in
clauses (i), (ii) and (iii) above is required by the rules and
regulations of the Commission, the Exchange or state securities or
"Blue Sky" laws, to be executed on behalf of the Trust by the Trustee,
then the Trustee, not in its individual capacity, but solely in its
capacity as trustee of the Trust, is hereby authorized and directed to
join in any such filing and to execute on behalf of the Trust any and
all of the foregoing. In connection with all of the foregoing, the
Depositor hereby constitutes and appoints J. Barry Mitchell as its
true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for the Depositor or in the
Depositor's name, place and stead, in any and all capacities, to sign
any and all amendments (including post-effective amendments) to the
1933 Act Registration Statement and the 1934 Act Registration
Statement and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Commission, granting unto
said attorney-in-fact and agent full power and authority to do and
perform each and every
2
<PAGE> 3
act and thing requisite and necessary to be done in connection
therewith, as fully to all intents and purposes as the Depositor might
or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his respective substitute or
substitutes, shall do or cause to be done by virtue hereof.
5. This Trust Agreement may be executed in one or more
counterparts.
6. The number of trustees of the Trust initially shall
be one (1) and thereafter the number of trustees of the Trust shall be
such number as shall be fixed from time to time by a written
instrument signed by the Depositor which may increase or decrease the
number of trustees; provided, however, that to the extent required by
the Business Trust Act, one trustee shall either be a natural person
who is a resident of the State of Delaware or, if not a natural
person, an entity which has its principal place of business in the
State of Delaware and otherwise meets the requirements of applicable
Delaware law; and provided, further, that the addition of any
co-trustee shall be approved by the Trustee, which approval shall not
be unreasonably withheld. Subject to the foregoing, the Depositor is
entitled to appoint or remove without cause the Trustee or any
co-trustee at any time. The Trustee may resign upon thirty days prior
notice to the Depositor.
7. This Trust Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware
(without regard to conflict of laws of principles).
8. To the fullest extent permitted by law, PECO Energy
Capital Corp., the general partner of the Depositor (the "General
Partner"), agrees to indemnify and defend the Trustee, the registrar
and any paying agent and their directors, officers, employees and
agents against, and hold each of them harmless from, any liability,
costs and expenses (including reasonable attorneys' fees) that may
arise out of or in connection with the Trustee acting as Trustee or
the registrar or paying agent, respectively, under this Trust
Agreement and the Receipts, except for any liability arising out of
negligence, bad faith or willful misconduct on the part of any such
Person or Persons.
9. In the event that the Trustee is uncertain as to
application or interpretation of any provision of this Trust Agreement
or must choose between alternative courses of action, the Trustee may
seek the instructions of the Depositor by written notice requesting
instructions. The Trustee shall take and be protected in taking such
action as
3
<PAGE> 4
has been directed by the Depositor provided that if the Trustee does
not receive instructions within 10 days or such shorter time as is set
forth in the Trustee notice, the Trustee shall be under no duty to
take or refrain from taking such action not inconsistent with this
Trust Agreement as it shall deem advisable.
The Trustee shall not be liable for any action or
any failure to act by it in reliance upon the advice of or information
from legal counsel, accountants or any other Person believed by it in
good faith to be competent to give such advice or information. The
Trustee may rely and shall be protected in acting upon any written
notice, request, direction or other document believed by it to be
genuine and to have been signed or presented by the proper party or
parties.
4
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be duly executed as of the day and year first above written.
PECO ENERGY CAPITAL, L.P.
By: PECO Energy Capital Corp.,
its general partner
By: /s/ J. B. MITCHELL
---------------------------
Name: J. B. Mitchell
Title: President
PNC BANK, Delaware, not in its
individual capacity, but solely
in its capacity as Trustee
By: /s/ MICHAEL B. MCCARTHY
---------------------------
Name: Michael B. McCarthy
Title: Vice President
5
<PAGE> 6
The General Partner joins in this Trust Agreement solely for
the purposes of obligating itself under Section 8 of this Trust Agreement and
not as grantor, trustee or beneficiary.
PECO ENERGY CAPITAL CORP.
By: /s/ J.B. MITCHELL
---------------------------
Authorized Officer
6
<PAGE> 1
EXHIBIT 4-10
================================================================================
AMENDED AND RESTATED
TRUST AGREEMENT
OF
PECO ENERGY CAPITAL TRUST I
PECO ENERGY CAPITAL, L.P.,
as Grantor
and
PNC BANK, DELAWARE
as Trustee
Dated as of ___________, 1995
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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<S> <C> <C>
ARTICLE I
DEFINITIONS
ARTICLE II
CONTINUATION OF TRUST
SECTION 2.01. Continuation of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.02. Trust Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.03. Title to Trust Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.04. Situs of Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.05. Powers of Trustee Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.06. Liability of Holders of Receipts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE III
FORM OF RECEIPTS, EXECUTION AND
DELIVERY, TRANSFER, AND SURRENDER OF RECEIPTS
SECTION 3.01. Form and Transferability of Receipts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 3.02. Issuance of Receipts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 3.03. Registration, Transfer and Exchange of Receipts . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 3.04. Lost or Stolen Receipts, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 3.05. Cancellation and Destruction of Surrendered Receipts . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 3.06. Surrender of Receipts and Withdrawal of Preferred Securities . . . . . . . . . . . . . . . . . . . . . 9
SECTION 3.07. Redeposit of Preferred Securities; Execution and Delivery of
Receipts in Response Thereof . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 3.08. Filing Proofs, Certificates, and Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE IV
DISTRIBUTIONS AND OTHER RIGHTS OF HOLDERS OF RECEIPTS
SECTION 4.01. Distributions of Monthly Distributions on Preferred Securities . . . . . . . . . . . . . . . . . . . . 12
SECTION 4.02. Redemptions of Preferred Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 4.03. Distributions in Liquidation of Grantor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 4.04. Fixing of Record Date for Holders of Receipts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 4.05. Payment of Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 4.06. Special Representative and Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 4.07. Changes Affecting Preferred Securities and Reclassifications, Recapitalizations, Etc. . . . . . . . . . 15
ARTICLE V
THE GUARANTEE
SECTION 5.01. The Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
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<S> <C> <C>
ARTICLE VI
THE TRUSTEE
SECTION 6.01. Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 6.02. Obligations of the Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 6.03. Resignation and Removal of the Trustee, Appointment of Successor Trustee . . . . . . . . . . 18
SECTION 6.04. Corporate Notices and Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 6.05. Status of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 6.06. Appointment of Grantor to File on Behalf of the Trust . . . . . . . . . . . . . . . . . . . .
SECTION 6.07. Indemnification by the General Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 6.08. Fees, Charges and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 6.09. Appointment of Co-Trustee or Separate Trustee. . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE VII
AMENDMENT AND TERMINATION
SECTION 7.01. Supplemental Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 7.02. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE VIII
MERGER, CONSOLIDATION, ETC. OF GRANTOR
SECTION 8.01. Limitation on Permitted Merger Consolidation, Etc. of Grantor . . . . . . . . . . . . . . . . 23
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 9.02. Exclusive Benefits of Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 9.03. Invalidity of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 9.04. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 9.05. Trustee's Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 9.06. Holders of Receipts Are Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 9.07. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 9.08. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 9.09. Receipts Non-Assessable and Fully Paid . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 9.10. No Preemptive Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
TESTIMONIUM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
EXHIBIT A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
</TABLE>
ii
<PAGE> 4
AMENDED AND RESTATED
TRUST AGREEMENT
AMENDED AND RESTATED TRUST AGREEMENT, dated as of __________,
1995 (as amended from time to time, this "Trust Agreement") among PECO ENERGY
CAPITAL, L.P., a Delaware limited partnership, as grantor (the "Grantor"), PNC
BANK, DELAWARE, a Delaware banking corporation, as trustee (the "Trustee"), and
joined in by PECO ENERGY CAPITAL CORP., a Delaware corporation and the general
partner of the Grantor, not as a grantor, trustee or beneficiary but solely for
the purposes stated herein (the "General Partner").
W I T N E S S E T H:
WHEREAS, the Trustee and the Grantor established the Trust (as
defined below) under the Delaware Business Trust Act (12 Del. C. Section 3801,
et seq.) (as amended from time to time, the "Business Trust Act"), pursuant to
a Trust Agreement, dated as of October 20, 1995 (the "Original Trust
Agreement"), and a Certificate of Trust filed with the Secretary of State of the
State of Delaware on October 20, 1995; and
WHEREAS, the Trustee and the Grantor hereby desire to continue
the Trust and to amend and restate in its entirety the Original Trust
Agreement; and
WHEREAS, PECO Energy Company ("PECO Energy") proposes to
effect the exchange (the "Exchange") of Receipts each representing a ___%
Cumulative Monthly Income Preferred Security, Series B, representing a limited
partner interest of the Grantor (the "Preferred Securities"), for Depositary
Shares (as hereinafter defined), each representing a one-fourth interest in a
share of $7.96 Cumulative Preferred Stock of PECO Energy; and
WHEREAS, to facilitate the Exchange, PECO Energy requests the
Grantor to issue one Preferred Security for each Depositary Share accepted in
the Exchange and to deposit the Preferred Securities in trust for the benefit
of the holders of the Depositary Shares tendering shares which have been
accepted in the Exchange; and
WHEREAS, interests in the Trust are to be evidenced by Receipt
certificates issued by the Trustee in accordance with this Trust Agreement,
which are to be delivered to the Exchange Agent (as hereinafter defined) for
distribution to the holders of the Depositary Shares which have been accepted
in the Exchange;
<PAGE> 5
NOW, THEREFORE, in consideration of the premises contained
herein and intending to be legally bound hereby, it is agreed by and among the
parties hereto to amend and restate in its entirety the Original Trust
Agreement as follows:
ARTICLE I
DEFINITIONS
The following definitions shall apply to the respective terms
(in the singular and plural forms of such terms) used in this Trust Agreement
and the Receipts:
"Affiliate" of any specified Person means any other Person
controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" when used with respect
to any specified Person means the power to direct the management and policies
of such Person, directly or indirectly whether through the ownership of voting
securities, by contract or otherwise, and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Business Day" means any day other than a day on which banking
institutions in the City of New York or the State of Delaware are closed for
business.
"Business Trust Act" shall have the meaning set forth in the
recitals to this Trust Agreement.
"Commission" shall have the meaning set forth in Section 6.06.
"Corporate Office" means the office of the Trustee at which at
any particular time its business in respect of matters governed by this Trust
Agreement shall be administered, which at the date of this Trust Agreement is
located at 222 Delaware Avenue, Wilmington, Delaware 19801.
"Depositary Shares" mean receipts issued pursuant to a Deposit
Agreement dated as of October 20, 1992 among Philadelphia Electric Company (now
PECO Energy), First Chicago Trust Company of New York, as Depositary, and the
holders of such receipts, each evidencing a one-fourth interest in a share of
$7.96 Cumulative Preferred Stock of PECO Energy.
"Exchange" shall have the meaning set forth in the recitals
to this Trust Agreement.
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"Exchange Agent" means First Chicago Trust Company of New York
in its capacity as the Exchange Agent under an Exchange Agreement dated as of
_____________, 1995 between PECO Energy and the Exchange Agent to effect the
exchange of Depository Shares for Receipts.
"General Partner" means PECO Energy Capital Corp., a Delaware
corporation, as general partner of the Grantor, and any successor thereto
pursuant to the terms of the Partnership Agreement.
"Grantor" means PECO Energy Capital, L.P., a Delaware limited
partnership, and its successors.
"Guarantee" means the Payment and Guarantee Agreement dated as
of __________, 1995, as amended from time to time with respect to the Preferred
Securities delivered by PECO Energy to the Grantor.
"Holder" means the Person in whose name a certificate
representing one or more Receipts is registered on the Register maintained by
the Registrar for such purposes.
"Partnership Agreement" means the Amended and Restated Limited
Partnership Agreement of the Grantor dated as of July 25, 1994, as amended from
time to time, together with any Action (as defined in the Partnership
Agreement) established by the General Partner.
"Paying Agent" means the Person from time to time acting as
Paying Agent as provided in Section 4.05.
"PECO Energy" means PECO Energy Company, a Pennsylvania
corporation.
"Person" means 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 Securities" means the ___% Cumulative Monthly
Income Preferred Securities, Series B, representing limited partner interests
of the Grantor, or any Successor Securities issued to the Trust and held by the
Trustee (unless withdrawn under Section 3.06) from time to time under this
Trust Agreement for the benefit of the Holders.
"Receipt" shall mean a trust receipt issued hereunder
representing an interest in the Trust equal to and representing a
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Preferred Security and evidenced by a certificate issued by the Trustee
pursuant to Article III.
"Register" shall have the meaning set forth in Section 3.03
of this Trust Agreement.
"Registrar" shall mean any bank or trust company appointed to
register Receipt certificates and to register transfers thereof as herein
provided.
"Special Representative" shall have the meaning set forth in
Section 13.02(d) of the Partnership Agreement.
"Successor Securities" shall have the meaning set forth in
Section 13.02(e) of the Partnership Agreement.
"Tendering Holders" means the holders of the Depositary Shares
which have been validly tendered to the Exchange Agent and accepted by the
Company for exchange.
"Trust" means the trust governed by this Trust Agreement.
"Trust Agreement" shall mean this Amended and Restated Trust
Agreement, as the same may be amended, modified, or supplemented from time to
time.
"Trust Estate" means all right, title and interest of the
Trust in and to the Preferred Securities (including any Successor Securities),
and all distributions and payments with respect thereto, including payments by
PECO Energy under the Guarantee. "Trust Estate" shall not include any amounts
paid or payable to the Trustee pursuant to this Trust Agreement, including,
without limitation, fees, expenses and indemnities.
"Trustee" shall mean PNC Bank, Delaware, a Delaware banking
corporation, in its capacity as Trustee and not in its individual capacity and
any successor as trustee hereunder.
ARTICLE II
CONTINUATION OF TRUST
SECTION 2.01. Continuation of Trust.
(a) The Trust continued hereby shall be known as
"PECO Energy Capital Trust I." The Trust exists for the sole purpose of
issuing Receipts representing the Preferred Securities held by the Trust and
performing functions directly related
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thereto. The Grantor hereby delivers to the Trustee for deposit in the Trust a
certificate representing _____ Preferred Securities for the benefit of the
Holders. Each Holder is intended by the Grantor to be the beneficial owner of
the number of Preferred Securities represented by the Receipts held by such
Holder, not to hold an undivided interest in all of the Preferred Securities.
To the fullest extent permitted by law, without the need for any other action
of any Person, including the Trustee and any other Holder, each Holder shall be
entitled to enforce in the name of the Trust the Trust's rights under the
Preferred Securities represented by the Receipts held by such Holder and any
recovery on such an enforcement action shall belong solely to such Holder who
brought the action, not to the Trust, Trustee or any other Holder individually
or to Holders as a group. Subject to Section 7.02, this Trust shall be
irrevocable.
(b) The Trustee hereby acknowledges receipt of
the Preferred Securities, registered in the name of the Trust, and its
acceptance on behalf of the Trust of the Preferred Securities, and declares
that it shall hold the Preferred Securities (including any Successor
Securities) in the Trust for the benefit of the Holders.
SECTION 2.02. Trust Account. The Trustee shall open an
account entitled "PECO Energy Capital Trust I - Trust Account." All funds
received by the Trustee on behalf of the Trust from the Preferred Securities or
pursuant to Article V will be deposited in such account by the Trustee until
distributed as provided in Article IV.
SECTION 2.03. Title to Trust Property. Legal title to all
of the Trust Estate shall be vested at all times in the Trustee.
SECTION 2.04. Situs of Trust. The situs of the Trust shall
be in Wilmington, Delaware. The Trust's bank account shall be maintained with
a bank in the State of Delaware. The Trustee shall cause to be maintained the
books and records of the Trust at the Corporate Office. The Trust Estate shall
be held in the State of Delaware. Notwithstanding the foregoing, the Trustee
may transfer such of the books and records of the Trust to a Co-Trustee
appointed pursuant to Section 6.09 or to such agents as it may appoint in
accordance with the Section 9.05 hereof, as shall be reasonably necessary (and
for so long as may be reasonably necessary) to enable such Co-Trustee or agents
to perform the duties and obligations for which such Co-Trustee or agents may
be so employed.
SECTION 2.05. Powers of Trustee Limited. The Trustee shall
have no power to create, assume or incur indebtedness or other liabilities in
the name of the Trust. The Trustee shall
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have full power to conduct the business of the Trust of holding the Preferred
Securities for the Holders and taking the other actions provided by this Trust
Agreement.
SECTION 2.06. Liability of Holders of Receipts. With
respect to the Trust, Holders of Receipts shall be entitled to the same
limitation of personal liability to which stockholders of private corporations
for profit organized under the General Corporation Law of the State of Delaware
are extended.
ARTICLE III
FORM OF RECEIPTS, EXECUTION AND
DELIVERY, TRANSFER, AND SURRENDER OF RECEIPTS
SECTION 3.01. Form and Transferability of Receipts.
(a) Receipts shall be evidenced by certificates engraved
or printed or lithographed with steel-engraved borders and underlying tint in
substantially the form set forth in Exhibit A annexed to this Trust Agreement,
with the appropriate insertions, modifications, and omissions, as hereinafter
provided.
(b) Certificates evidencing Receipts shall be executed by
the Trustee by the manual signature of a duly authorized signatory of the
Trustee, provided, however, that such signature may be a facsimile if a
Registrar (other than the Trustee) shall have countersigned the Receipts by
manual signature of a duly authorized signatory of the Registrar. No
certificate evidencing one or more Receipts shall be entitled to any benefit
under this Trust Agreement or be valid or obligatory for any purpose unless it
shall have been executed as provided in the preceding sentence. The Registrar
shall record on the Register each Receipt certificate executed as provided
above and delivered as hereinafter provided.
(c) Certificates evidencing Receipts shall be in
denominations of any whole number of Preferred Securities. All Receipt
certificates shall be dated the date of their execution or countersignature.
(d) Certificates evidencing Receipts may be endorsed with
or have incorporated in the text thereof such legends or recitals or changes
not inconsistent with the provisions of this Trust Agreement as may be required
by the Trustee or required to comply with any applicable law or regulation or
with the rules and regulations of any securities exchange upon which the
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Receipts may be listed or to conform with any usage with respect thereto.
(e) Title to any Receipt certificate that is properly
endorsed or accompanied by a properly executed instrument of transfer or
endorsement shall be transferable by delivery with the same effect as in the
case of a negotiable instrument; provided, however, that until the transfer
shall be registered on the Register as provided in Section 3.03, the Trust, the
Trustee, the Registrar and the Grantor may, notwithstanding any notice to the
contrary, treat the Holder thereof at such time as the absolute owner thereof
for the purpose of determining the Person entitled to distributions or to any
notice provided for in this Trust Agreement and for all other purposes.
SECTION 3.02. Issuance of Receipts. In connection with the
Exchange, upon receipt by the Trustee on behalf of the Trust of a certificate
or certificates for the Preferred Securities, subject to the terms and
conditions of this Trust Agreement, the Trustee on behalf of the Trust shall
execute and deliver to the Exchange Agent certificates evidencing the Receipts
for distribution to the former holders of Depositary Shares who shall thereupon
be Holders of Receipts.
SECTION 3.03. Registration, Transfer and Exchange of
Receipts. The Trustee shall cause the Register to be kept at the office of the
Registrar in which, subject to such reasonable regulations as the Trustee and
the Registrar may prescribe, the Trustee shall provide for the registration of
Receipt certificates and of transfers and exchanges of Receipt certificates as
herein provided. The Grantor hereby appoints First Chicago Trust Company of
New York as the Registrar. The Registrar shall also act as transfer agent.
The Grantor may remove the Registrar and, upon removal or resignation of the
Registrar, appoint a successor Registrar. Subject to the terms and conditions
of this Trust Agreement, the Registrar shall register the transfers on the
Register from time to time of Receipt certificates upon any surrender thereof
by the Holder in person or by a duly authorized attorney, properly endorsed or
accompanied by a properly executed instrument of transfer or endorsement,
together with evidence of the payment of any transfer taxes as may be required
by law. Upon such surrender, the Trustee shall execute a new Receipt
certificate representing the same number of Preferred Securities in accordance
with Section 3.01(b) and deliver the same to or upon the order of the Person
entitled thereto.
At the option of a Holder, Receipt certificates may be
exchanged for other Receipt certificates representing the same number of
Preferred Securities. Upon surrender of a Receipt certificate at the office of
the Registrar or such other office
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as the Trustee may designate for the purpose of effecting an exchange of
Receipt certificates, subject to the terms and conditions of this Trust
Agreement, the Trustee shall execute and deliver a new Receipt certificate
representing the same number of Preferred Securities as the Receipt certificate
surrendered.
As a condition precedent to the registration of the transfer
or exchange of any Receipt certificate, the Registrar may require (i)
production of proof satisfactory to it as to the identity and genuineness of
any signature; and (ii) compliance with such regulations, if any, as the
Trustee or the Registrar may establish not inconsistent with the provisions of
this Trust Agreement.
No service charge shall be made to a Holder of Receipts for
any registration of transfer or exchange of Receipt certificates, but the
Trustee or the Registrar shall require payment of a sum sufficient to cover any
tax or governmental charge that may be imposed in connection with any transfer
or exchange of Receipt certificates.
Neither the Trustee nor the Registrar shall be required (a) to
register the transfer of or exchange any Receipt certificate for a period
beginning at the opening of business ten days preceding any selection of
Receipts to be redeemed and ending at the close of business on the day of the
mailing a notice of redemption of Receipts or (b) to register the transfer of
or exchange of Receipts called or being called for redemption in whole or in
part, except as provided in Section 4.02.
SECTION 3.04. Lost or Stolen Receipts, Etc. In case any
Receipt certificate shall be mutilated or destroyed or lost or stolen and in
the absence of notice to the Trustee that such Receipt has been acquired by a
bona fide purchaser, the Trustee shall execute and deliver a Receipt
certificate of like form and tenor in exchange and substitution for such
mutilated Receipt certificate or in lieu of and in substitution for such
destroyed, lost or stolen Receipt certificate, provided, however, that the
Holder thereof provides the Trustee with (i) evidence satisfactory to the
Trustee of such destruction, loss or theft of such Receipt certificate, of the
authenticity thereof and of his ownership thereof, (ii) reasonable
indemnification satisfactory to the Trustee and (iii) payment of any expense
(including fees, charges and expenses of the Trustee) in connection with such
execution and delivery. Any duplicate Receipt certificate issued pursuant to
this Section 3.04 shall constitute complete and indefeasible evidence of
ownership in the Trust, as if originally issued, whether or not the lost,
stolen or destroyed Receipt certificate shall be found at any time.
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SECTION 3.05. Cancellation and Destruction of Surrendered
Receipts. All Receipt certificates surrendered to the Trustee shall be
cancelled by the Trustee. Except as prohibited by applicable law or
regulation, at any time after six years from the date of surrender of any
Receipt certificate, the Trustee may destroy such cancelled Receipt
certificates.
SECTION 3.06. Surrender of Receipts and Withdrawal of
Preferred Securities. Any Holder of a Receipt or Receipts may withdraw any or
all of the Preferred Securities (but only in whole numbers of Preferred
Securities) represented by such Receipt or Receipts by surrendering the
certificate evidencing such Receipt or Receipts accompanied by a written
instrument of transfer and an agreement to be bound by the terms of the
Partnership Agreement at the Corporate Office or at such other office as the
Trustee may designate for such withdrawals. After such surrender, without
unreasonable delay, the Trustee shall transfer to such Holder, or to the Person
or Persons designated by such Holder as hereinafter provided, the whole number
of Preferred Securities represented by the Receipt or Receipts so surrendered;
provided, however, that the Trustee shall not issue any fractional number of
Preferred Securities. If the Receipt or Receipts delivered by the Holder to
the Trustee in connection with such withdrawal shall evidence a number of
Preferred Securities in excess of the number of Preferred Securities to be
withdrawn, the Trustee shall at the same time, in addition to such number of
Preferred Securities to be withdrawn, execute in accordance with Section 3.01
and deliver to such Holder, a new Receipt or Receipts evidencing such excess
number of Preferred Securities. If a Holder withdraws in accordance with this
Section 3.06 all of the Preferred Securities represented by its Receipt or
Receipts, such Holder shall cease to be a Holder under this Trust Agreement and
shall cease to be a beneficial owner in the Trust. Delivery of the Preferred
Securities may be made by the delivery of such certificates, documents of title
and other instruments as the Trustee may deem appropriate, which, if required
by the Holder, shall be properly endorsed or accompanied by proper instruments
of transfer.
If the Preferred Securities being withdrawn are to be
delivered to a Person or Persons other than the record holder of the Receipt or
Receipts being surrendered for withdrawal of Preferred Securities, such Holder
shall execute and deliver to the Trustee a written order so directing the
Trustee and the Trustee may require that the certificate evidencing the Receipt
or Receipts surrendered by such Holder for withdrawal of such Preferred
Securities be properly endorsed in blank or accompanied by a properly executed
instrument of transfer or endorsement in blank.
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A Holder who surrenders its Receipts in accordance with this
Section 3.06, or the Person or Persons designated by such Holder in the
immediately preceding paragraph, will be required to provide the Grantor with a
completed Form W-8 or such other documents or information as are requested by
the Grantor for tax reporting purposes and thereafter shall be admitted to the
Grantor as a preferred partner of the Grantor upon such Holder's receipt of a
certificate evidencing such Preferred Securities registered in such Holder's
name.
The Trustee shall deliver the Preferred Securities represented
by the Receipts surrendered to the Holder in accordance with this Section 3.06
at the Corporate Office, except that, at the request, risk and expense of the
Holder surrendering such Receipt or Receipts and for the account of the Holder
thereof, such delivery may be made at such other place as may be designated by
such Holder.
Notwithstanding anything in this Section 3.06 to the contrary,
if the Preferred Securities represented by a Receipt or Receipts have been
called for redemption in accordance with the Partnership Agreement, no Holder
of such Receipt or Receipts may withdraw any or all of the Preferred Securities
represented by such Receipt or Receipts.
SECTION 3.07. Redeposit of Preferred Securities; Execution
and Delivery of Receipts in Response Thereof. Subject to the terms and
conditions of this Trust Agreement, any holder of Preferred Securities may
redeposit withdrawn Preferred Securities under this Trust Agreement by delivery
to the Trust, of a certificate or certificates for the Preferred Securities to
be deposited, properly endorsed or accompanied, if required by the Trust, by a
properly executed instrument of transfer or endorsement in form satisfactory to
the Trustee and in compliance with the terms of the Partnership Agreement,
together with (i) all such certifications as may be required by the Trustee in
accordance with the provisions of this Trust Agreement and (ii) a written order
directing the Trustee to execute in accordance with Section 3.01 and deliver to
or upon the written order of the Person or Persons stated in such order a
certificate evidencing a Receipt or Receipts for the number of Preferred
Securities so deposited.
If required by the Trustee, Preferred Securities presented for
deposit at any time shall also be accompanied by an agreement or assignment, or
other instrument satisfactory to the Trustee, that will provide for the prompt
transfer to the Trustee or its nominee of any distribution or other right that
any Person in whose name the Preferred Securities are registered may thereafter
receive upon or in respect of such deposited Preferred
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Securities, or in lieu thereof such agreement of indemnity or other agreement
as shall be satisfactory to the Trustee.
Upon receipt by the Trustee of a certificate or certificates
for Preferred Securities to be deposited hereunder, together with the other
documents specified above, the Trustee shall, as soon as transfer and
registration can be accomplished in accordance with the terms of the
Partnership Agreement, present such certificate or certificates to the General
Partner of the Grantor for transfer and registration in the name of the Trustee
or its nominee of the Preferred Securities being deposited. Deposited
Preferred Securities shall be held by the Trustee on behalf of the Trust for
the benefit of the Holders.
Upon receipt by the Trustee of a certificate or certificates
for Preferred Securities to be deposited hereunder, together with the other
documents specified above, the Trust, subject to the terms and conditions of
this Trust Agreement, shall execute in accordance with Section 3.01 and deliver
to or upon the order of the Person or Persons named in the written order
delivered to the Trustee referred to in the first or second paragraph of this
Section 3.07 a Receipt or Receipts for the number of Preferred Securities so
deposited by such Person or Persons. The Trustee shall execute and deliver
such Receipt or Receipts at the Corporate Office, except that, at the request,
risk and expense of any Person requesting such delivery, such delivery may be
made at such other place as may be designated by such Person. In each case,
delivery will be made only upon payment by such Person to the Trustee of all
taxes and other governmental charges and any fees payable in connection with
such deposit and the transfer of the deposited Preferred Securities.
SECTION 3.08. Filing Proofs, Certificates, and Other
Information. Any Person presenting Preferred Securities for redeposit in
accordance with Section 3.07 may be required from time to time to file such
proof of residence or other information, to execute such Preferred Security
certificates and to make such representations and warranties as the Trustee may
reasonably deem necessary or proper. The Trustee may withhold or delay the
delivery of any Receipt or Receipts, the transfer, redemption or exchange of
any Receipt or Receipts or the making of any distribution until such proof or
other information is filed, such certificates are executed or such
representations and warranties are made.
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ARTICLE IV
DISTRIBUTIONS AND OTHER RIGHTS OF HOLDERS OF RECEIPTS
SECTION 4.01. Distributions of Monthly Distributions on
Preferred Securities. Whenever the Trustee shall receive any cash distribution
representing a monthly distribution on the Preferred Securities (whether or not
distributed by the Grantor on the regular monthly distribution date therefor)
or payment under the Guarantee in respect thereof pursuant to Article V of this
Agreement, the Trustee acting directly or through any Paying Agent shall
distribute to Holders of Receipts on the record date fixed pursuant to Section
4.04, such amounts in proportion to the respective numbers of Preferred
Securities represented by the Receipts held by such Holders.
SECTION 4.02. Redemptions of Preferred Securities. Whenever
the Grantor shall elect or is required to redeem Preferred Securities in
accordance with the Partnership Agreement, it shall (unless otherwise agreed in
writing with the Trustee) give the Trustee not less than 40 days' prior notice
thereof. The Trustee shall, as directed by the Grantor, mail, or cause to be
mailed, first-class postage prepaid, notice of the redemption of Preferred
Securities and the proposed simultaneous redemption of the Receipts to be
redeemed in connection herewith, not less than 30 and not more than 60 days
prior to the date fixed for redemption (the "Redemption Date") of the Receipts.
Such notice shall be mailed to the Holders of the Receipts to be redeemed, at
the addresses of such Holders as the same appear on the records of the
Registrar. No defect 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. The Grantor shall provide the Trustee with such
notice, and each such notice shall state: the Redemption Date; the redemption
price at which the Receipts and the Preferred Securities are to be redeemed;
that all outstanding Receipts are to be redeemed or, in the case of
a redemption of fewer than all outstanding Receipts in connection with a
partial redemption of Preferred Securities, the number of such Receipts held by
such Holder to be so redeemed; the place or places where Receipts to be
redeemed are to be surrendered for redemption; and specifying the CUSIP number
assigned to the Receipts. In case fewer than all the outstanding Receipts are
to be redeemed, the Receipts to be redeemed shall be selected by lot or pro
rata (as nearly as may be practicable without creating fractional shares) or by
any other equitable method determined by the Trustee.
The Grantor agrees that if a partial redemption of the
Preferred Securities would result in a delisting of the Receipts
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from any national exchange on which the Receipts are then listed, the Grantor
will only redeem the Preferred Securities in whole.
On the date of any such redemption of Preferred Securities,
provided that the Grantor (or PECO Energy pursuant to the Guarantee) shall then
have deposited with the Trustee the aggregate amount payable upon redemption of
the Preferred Securities to be redeemed, the Trustee shall redeem (using the
funds so deposited with it) Receipts representing the same number of Preferred
Securities redeemed by the Grantor.
Notice having been mailed by the Trustee as aforesaid, from
and after the Redemption Date (unless the Grantor shall have failed to redeem
the Preferred Securities to be redeemed by it as set forth in the Grantor's
notice provided for in this Section 4.02 and PECO Energy shall have failed to
pay the redemption price of the Preferred Securities under the Guarantee), the
Receipts called for redemption shall be deemed no longer to be outstanding and
all rights of the Holders of Receipts (except the right to receive cash upon
surrender of Receipts) shall cease and terminate. Upon surrender in accordance
with said notice of the Receipts endorsed or assigned for transfer, if the
Trustee shall so require, the Holders of such Receipts shall receive for each
such Receipt an amount equal to the redemption price for each Preferred
Security, in addition to accrued and unpaid distributions thereon to the date
fixed for redemption.
If fewer than all of the Receipts of any Holder are called for
redemption, the Registrar will deliver to the Holder of such Receipts upon
surrender of the certificate evidencing such Receipts a new certificate
evidencing the number of Receipts not called for redemption.
SECTION 4.03. Distributions in Liquidation of Grantor. Upon
receipt by the Trust of any distribution from the Grantor upon the liquidation
of the Grantor or any payment under the Guarantee in respect thereof pursuant
to Article V of this Trust Agreement, after satisfaction of creditors of the
Trust as required by applicable law, the Trustee shall distribute to the
Holders of Receipts on the record date fixed pursuant to Section 4.04, such
amounts in proportion to the respective number of Preferred Securities which
were represented by the Receipts held by such Holders.
SECTION 4.04. Fixing of Record Date for Holders of Receipts.
Whenever any distribution (other than upon any redemption) shall become
payable, or whenever the Trustee shall receive notice of any meeting at which
holders of Preferred Securities are entitled to vote or of which holders of
Preferred Securities are entitled to notice, the Trustee shall in each such
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instance fix a record date (which shall be the same date as the record date
fixed by the General Partner with respect to the Preferred Securities) for the
determination of the Holders of Receipts who shall be entitled (i) to receive
such distribution, and (ii) to receive notice of, and to give instructions for
the exercise of voting rights at, any such meeting.
SECTION 4.05. Payment of Distributions. The Grantor shall
appoint one or more Paying Agents for the purpose of paying monthly
distributions on, the redemption price of, and distributions in liquidation on
the Receipts. The Grantor hereby appoints First Chicago Trust Company of New
York to act as Paying Agent and designates the __________ office of the Paying
Agent as the place of payment of the redemption price of and to distribution in
liquidation on the Receipts. The aforesaid appointment and designation shall
remain in effect until changed by the Grantor. Payments of monthly
distributions on the Receipts shall be payable by check mailed to the addresses
of the Holders thereof on the record date therefor. Payments of the redemption
price of Receipts and distributions in liquidation shall be made upon surrender
of such Receipts at the office of the Paying Agent. The Trustee is hereby
authorized to direct the Grantor to pay monthly distributions on, the
redemption price of, and distributions in liquidation on, the Preferred
Securities directly to the Paying Agent for distribution in accordance with the
terms of this Trust Agreement.
SECTION 4.06. Special Representative and Voting Rights.
(a) If the holders of the Preferred Partner Interests (as
defined in the Partnership Agreement), acting as a single class, are entitled
to appoint and authorize a Special Representative pursuant to Section 13.02(d)
of the Partnership Agreement, the Trustee shall notify the Holders of the
Receipts of such right, request direction of each Holder of a Receipt as to the
appointment of a Special Representative and vote the Preferred Securities
represented by such Receipt in accordance with such direction. If the General
Partner fails to convene a general meeting of the Partnership as required in
Section 13.02(d) of the Partnership Agreement, the Trustee shall notify the
Holders of the Receipts and, if so directed by the Holders of Receipts
representing Preferred Securities constituting at least 10% of the aggregated
stated liquidation preference of the outstanding Preferred Partner Interests
(as defined in the Partnership Agreement) shall convene such meeting.
(b) Upon receipt of notice of any meeting at which the
Holders of Preferred Securities are entitled to vote, the Trustee shall, as
soon as practicable thereafter, mail to the Holders of Receipts a notice, which
shall be provided by the General Partner
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and which shall contain (i) such information as is contained in such notice of
meeting, (ii) a statement that the Holders of Receipts at the close of business
on a specified record date fixed pursuant to Section 4.04 will be entitled,
subject to any applicable provision of law or of the Partnership Agreement, to
instruct the Trustee as to the exercise of the voting rights pertaining to the
amount of Preferred Securities represented by their respective Receipts, and
(iii) a brief statement as to the manner in which such instructions may be
given. Upon the written request of a Holder of a Receipt on such record date,
the Trustee shall vote or cause to be voted the number of Preferred Securities
represented by the Receipts evidenced by such Receipt in accordance with the
instructions set forth in such request. The Grantor hereby agrees to take all
reasonable action that may be deemed necessary by the Trustee in order to
enable the Trustee to vote such Preferred Securities or cause such Preferred
Securities to be voted. In the absence of specific instructions from the
Holder of a Receipt, the Trustee will abstain from voting to the extent of the
Preferred Securities represented by such Receipt.
SECTION 4.07. Changes Affecting Preferred Securities and
Reclassifications, Recapitalizations, Etc. Upon any consolidation,
amalgamation, merger, replacement, or conveyance, transfer or lease by the
Partnership of its properties and assets as an entirety in accordance with
Section 13.02(e) of the Partnership Agreement, the Trustee shall, upon the
instructions of the Grantor, treat any Successor Securities or other property
(including cash) that shall be received by the Trustee in exchange for or upon
conversion of or in respect of the Preferred Securities as part of the Trust
Estate and Receipts then outstanding shall thenceforth represent the
proportionate interests of Holders thereof in the new deposited property so
received in exchange for or upon conversion or in respect of such Preferred
Securities.
ARTICLE V
THE GUARANTEE
SECTION 5.01. The Guarantee. In connection with the issuance
of the Preferred Securities, PECO Energy has delivered to the General Partner
the Guarantee for the benefit of the holders of the Preferred Securities. If
the General Partner or the Grantor receives any payment under the Guarantee,
the General Partner or the Grantor, as the case may be, will immediately
transfer such payment to the Trustee. All rights to enforce the Guarantee
shall remain in the General Partner, except to the extent set forth in Section
2.04 of the Payment and Guarantee
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Agreement executed by PECO Energy Company on October __, 1995 for the benefit
of the holders of the Preferred Securities.
ARTICLE VI
THE TRUSTEE
SECTION 6.01. Eligibility. This Trust Agreement shall at all
times have a Trustee which is a bank that has its principal place of business
in the State of Delaware and shall have a combined capital and surplus of at
least $50,000,000. If such corporation publishes reports of conditions at
least annually, pursuant to law or to the requirements of Federal, State,
Territorial or District of Columbia supervising or examining authority, then
for the purposes of this Section 6.01, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of conditions so published.
In case at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section 6.01, the Trustee shall resign
immediately in the manner and with the effect specified in Section 6.03.
The Trustee shall make available for inspection by Holders of
Receipts at the Corporate Office and at such other places as it may from time
to time deem advisable during normal business hours any reports and
communications received from the Grantor, the General Partner or PECO Energy by
the Trustee as the holder of Preferred Securities.
Promptly upon request from time to time by the Grantor, the
Trustee shall cause the Registrar to furnish to it a list, at the sole expense
of the General Partner, as of a recent date, of the names, addresses and
holdings of all Persons in whose names Receipts are registered on the Register.
SECTION 6.02. Obligations of the Trustee. The Trustee does
not assume any obligation nor shall it be subject to any liability under this
Trust Agreement or any Receipt to Holders of Receipts other than that it agrees
to use good faith in the performance of such duties as are specifically
assigned to the Trustee in this Trust Agreement.
The Trustee shall not be under any obligation to appear in,
prosecute or defend any action, suit or other proceeding with respect to
Preferred Securities or Receipts that in its opinion may involve it in expense
or liability, unless indemnity
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satisfactory to it against all expense and liability be furnished as often as
may be required.
In the event that the Trustee is uncertain as to application
or interpretation of any provision of this Trust Agreement or must choose
between alternative courses of action, the Trustee may seek the instructions of
the Grantor (or the Special Representative if one has been appointed) by
written notice requesting instructions. The Trustee shall take and be
protected in taking such action as has been directed by the Grantor (or the
Special Representative if one has been approved) provided that if the Trustee
does not receive instructions within 10 days or such shorter time as is set
forth in the Trustee notice, the Trustee shall be under no duty to take or
refrain from taking such action not inconsistent with this Trust Agreement as
it shall deem advisable and in the interest of the Holders.
The Trustee shall not be liable for any action or any failure
to act by it in reliance upon the advice of or information from legal counsel,
accountants, any Holder of a Receipt or any other Person believed by it in good
faith to be competent to give such advice or information. The Trustee may rely
and shall be protected in acting upon any written notice, request, direction or
other document believed by it to be genuine and to have been signed or
presented by the proper party or parties.
The Trustee, its parent, Affiliates, or subsidiaries may own,
buy, sell, or deal in any class of securities of the Grantor, the General
Partner or PECO Energy and its Affiliates and in Receipts or become pecuniarily
interested in any transaction in which the Grantor, the General Partner or PECO
Energy or its Affiliates may be interested or contract with or lend money to or
otherwise act as fully or as freely as if it were not the Trustee hereunder.
The Trustee may also act as transfer agent or registrar of any of the
securities of the Grantor, the General Partner or PECO Energy and its
Affiliates or act in any other capacity for PECO Energy or its Affiliates.
The Trustee (and its officers, directors, employees, and
agents) makes no representation nor shall it have any responsibility with
respect to the Exchange or as to the validity of the registration statement
pursuant to which the Receipts are registered under the Securities Act, the
Preferred Securities, the Guarantee or the Receipts (except for its
counter-signatures thereon) or any instruments referred to therein or herein,
or as to the correctness of any statement made therein or herein; provided,
however, that the Trustee is responsible for its representations in this Trust
Agreement.
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The Trustee assumes no responsibility for the correctness of
the description that appears in the Receipts, which can be taken as a statement
of the Grantor summarizing certain provisions of this Trust Agreement.
Notwithstanding any other provision herein or in the Receipts, the Trustee
makes no warranties or representations as to the validity, genuineness or
sufficiency of any Preferred Securities or the Guarantee or of the Receipts, as
to the validity or sufficiency of this Trust Agreement, as to the value of the
Receipts or as to any right, title or interest of the Holders of Receipts,
except that the Trustee hereby represents and warrants as follows: (i) the
Trustee has been duly organized and is validly existing and in good standing
under the laws of the State of Delaware, with full power, authority and legal
right under such laws to execute, deliver and carry out the terms of this Trust
Agreement; (ii) this Trust Agreement has been duly authorized, executed and
delivered by the Trustee; and (iii) this Trust Agreement constitutes a valid
and binding obligation of the Trustee enforceable against the Trustee in
accordance with its terms subject to equitable principles and laws affecting
the enforcement of creditors' rights generally.
SECTION 6.03. Resignation and Removal of the Trustee,
Appointment of Successor Trustee. The Trustee may at any time resign as
Trustee hereunder by notice of its election to do so delivered to the Grantor
and the General Partner, such resignation to take effect upon the appointment
of a successor trustee and its acceptance of such appointment as hereinafter
provided.
The Trustee may at any time be removed by the Grantor by
notice of such removal delivered to the Trustee, such removal to take effect
upon the appointment of a successor trustee and its acceptance of such
appointment as hereinafter provided.
In case at any time the Trustee acting hereunder shall resign
or be removed, the Grantor shall, within 45 days after the delivery of the
notice of resignation or removal, as the case may be, appoint a successor
trustee, which shall be a bank or trust company, or an Affiliate of a bank or
trust company, having its principal office in the State of Delaware and having
a combined capital and surplus of at least $50,000,000. If a successor Trustee
shall not have been appointed in 45 days, the resigning Trustee may petition a
court of competent jurisdiction to appoint a successor trustee. Every
successor trustee shall execute and deliver to its predecessor and to the
Grantor and the General Partner an instrument in writing accepting its
appointment hereunder, and thereupon such successor trustee, without any
further act or deed, shall become fully vested with all the rights, powers,
duties, and obligations of its predecessor and for all purposes shall be the
Trustee under this Trust Agreement,
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and such predecessor, upon payment of all sums due it and on the written
request of the Grantor, shall promptly execute and deliver an instrument
transferring to such successor all rights and powers of such predecessor
hereunder, shall duly assign, transfer and deliver all rights, title and
interest in the Preferred Securities and any moneys or property held hereunder
to such successor and shall deliver to such successor a list of the Holders of
all outstanding Receipts. Any successor depositary shall promptly mail notice
of its appointment to the Holders of Receipts.
Any Person into or with which the Trustee may be merged,
consolidated or converted, or any Person succeeding to the corporate trust
business of the Trustee, shall be the successor of such Trustee without the
execution or filing of any document or any further act, provided such Person
shall be eligible under the provisions of the immediately preceding paragraph.
SECTION 6.04. Corporate Notices and Reports. The General
Partner agrees that it will give timely notice to the Trustee and any Paying
Agent of any record date for the Preferred Securities and that it will deliver
to the Trustee, and the Trustee will, promptly after receipt thereof, transmit
to the Holders of Receipts, in each case at the address recorded on the
Register, copies of all notices and reports (including financial statements)
required by law, by the rules of any national securities exchange upon which
the Receipts are listed or by the Partnership Agreement to be furnished to
holders of Preferred Securities. Such transmission will be at the expense of
the General Partner and the General Partner will provide the Trustee with such
number of copies of such documents as the Trustee may reasonably request. In
addition, the Trustee will transmit to the Holders of Receipts at the Grantor's
expense such other documents as may be requested by the Grantor.
SECTION 6.05. Status of Trust. It is intended that the
Trust shall not be an "investment company" under the Investment Company Act of
1940, as amended. While it is expressly understood and agreed that the Trustee
is acting only in a ministerial capacity hereunder, the Securities and Exchange
Commission (the "Commission") has determined that as of the date hereof, the
Trust is an issuer under the Federal securities laws and is thus required to
sign any registration statement filed or to be filed in connection with the
Receipts.
SECTION 6.06. Appointment of Grantor to File on Behalf of
Trust. The Grantor and the Trustee hereby authorize and direct the Grantor, as
the sponsor of the Trust (i) to file with the Commission and execute, in each
case on behalf of the Trust, (a) the Registration Statement on Form S-4 (the
"1933 Act
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Registration Statement"), including any pre-effective or post-effective
amendments to such 1933 Act Registration Statement (including the offering
circular/prospectus and the exhibits contained therein), relating to the
registration under the Securities Act of 1933, as amended, of the Receipts of
the Trust and certain other securities; (b) a Registration Statement on Form
8-A (the "1934 Act Registration Statement"), including all pre-effective and
post-effective amendments thereto relating to the registration of the Receipts
under Section 12(b) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"); and (c) any reports or other papers on documents required to
be filed by, or desirable to be filed with, the Commission, under the Exchange
Act ("Exchange Act Reports"); (ii) to file with the New York Stock Exchange or
Philadelphia Stock Exchange (each an "Exchange") and execute on behalf of the
Trust one or more listing applications and all other applications, statements,
certificates, agreements and other instruments as shall be necessary or
desirable to cause the Receipts to be listed on any of the Exchanges; (iii) to
file and execute on behalf of the Trust such applications, reports, surety
bonds, irrevocable consents, appointments of attorney for service of process
and other papers and documents as shall be necessary or desirable to register
the Receipts under the securities or "Blue Sky" laws of such jurisdictions as
the Grantor, on behalf of the Trust, may deem necessary or desirable and (iv)
to execute on behalf of the Trust that certain Dealer Manager Agreement
relating to the Receipts, among the Trust, the Grantor and the Dealer Managers
named therein, substantially in the form included as Exhibit 1 to the 1933 Act
Registration Statement.
SECTION 6.07. Indemnification by the General Partner. To the
fullest extent permitted by law, the General Partner agrees to indemnify and
defend the Trustee, the Registrar and any Paying Agent and their directors,
officers, employees and agents against, and hold each of them harmless from,
any liability, costs and expenses (including reasonable attorneys' fees) that
may arise out of or in connection with its acting as the Trustee or the
Registrar or Paying Agent, respectively, under this Trust Agreement and the
Receipts, except for any liability arising out of negligence, bad faith or
willful misconduct on the part of any such Person or Persons.
SECTION 6.08. Fees, Charges and Expenses. No fees, charges,
or expenses of the Trustee or any Trustee's agent hereunder or of any Registrar
shall be payable by any Person other than the General Partner, provided that if
the Trustee incurs fees, charges or expenses for which it is not otherwise
liable under this Trust Agreement due to any action taken at the election of a
Holder of Receipts or other Person, such Holder or other Person will be liable
for such fees, charges and expenses.
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SECTION 6.09. Appointment of Co-Trustee or Separate Trustee.
(a) Notwithstanding any other provisions of this Trust
Agreement, at any time, for the purpose of meeting any legal requirements of
any jurisdiction in which any party of the Trust must at the time be located,
the Trustee shall have the power and may execute and deliver all instruments to
appoint one or more Persons to act as co-trustee or co-trustees, or separate
trustee or separate trustees, of all or any part of the Trust, and to vest in
such Person or Persons, in such capacity and for the benefit of the Holders,
such title to the Trust, or any part thereof, and, subject to the other
provisions of this Section 6.09, such powers, duties, obligations, rights and
trusts as the Trustee may consider necessary or desirable. No co-trustee or
separate trustee hereunder shall be required to meet the terms of eligibility
as successor trustee under Section 6.03 and no notice to the Holders of the
appointment of any co-trustee or separate trustee shall be required.
(b) Every separate trustee and co-trustee shall, to the
extent permitted by law, be appointed and act subject to the following
provisions and conditions:
(i) all rights, powers, duties and obligations
conferred or imposed upon and exercised or performed by the Trustee
and such separate trustee or co-trustee jointly (it being understood
that such separate trustee or co-trustee is not authorized to act
separately without the Trustee joining in such act), except to the
extent that under any laws of any jurisdiction in which any particular
act or acts are to be performed, the Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights,
powers, duties and obligations (including the holding of title to the
Trust or any portion thereof in any such jurisdiction) shall be
exercised and performed singly by such separate trustee or co-trustee,
but solely at the direction of the Trustee;
(ii) no Trustee hereunder shall be personally liable
by reason of any act or omission of any other trustee hereunder; and
(iii) the Trustee may at any time accept the
resignation of or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the
Trustee shall be deemed to have been given to each of the then separate
trustees and co-trustees, as effectively as if given to each of them. Every
instrument appointing any separate trustee or co-trustee shall refer to this
Trust Agreement. Each separate
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trustee and co-trustee, upon its acceptance of the trusts conferred, shall be
vested with the estates or property specified in its instrument of appointment,
either jointly with the Trustee or separately, as may be provided therein,
subject to all the provisions of this Trust Agreement, specifically including
every provision of this Trust Agreement relating to the conduct of, affecting
the liability of, or affording protection to, the Trustee. Every such
instrument shall be filed with the Trustee and a copy thereof given to the
Grantor.
(d) Any separate trustee or co-trustee may at any time
constitute the Trustee as its agent or attorney-in-fact with full power and
authority, to the extent not prohibited by law, to do any lawful act under or
in respect to this Trust Agreement on its behalf and in its name. If any
separate trustee or co-trustee shall die, become incapable of acting, resign or
be removed, all of its estates, properties, rights, remedies and trusts shall
vest in and be exercised by the Trustee, to the extent permitted by law,
without the appointment of a new or successor trustee.
ARTICLE VII
AMENDMENT AND TERMINATION
SECTION 7.01. Supplemental Trust Agreement. The Grantor or
the General Partner may, and the Trustee shall, at any time and from time to
time, without the consent of the Holders, enter into one or more agreements
supplemental hereto, in form satisfactory to the Trustee, for any of the
following purposes:
(a) to evidence the succession of another
partnership, corporation or other entity to the Grantor or the General Partner
and the assumption by any such successor of the covenants of the Grantor or the
General Partner herein contained; or
(b) to add to the covenants of the Grantor or the
General Partner for the benefit of the Holders, or to surrender any right or
power herein conferred upon the Grantor or the General Partner; or
(c) (i) to correct or supplement any provision
herein which may be defective or inconsistent with any other provision herein
or (ii) to make any other provisions with respect to matters or questions
arising under this Trust Agreement, provided that any such action taken under
subsection (c)(ii) hereof shall not materially adversely affect the interests
of the Holders; or
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(d) to cure any ambiguity or correct any mistake.
Any other amendment or agreement supplemental hereto must be
in writing and approved by Holders of 66-2/3% of the then-outstanding Receipts.
SECTION 7.02. Termination. The Trust Agreement shall
terminate on the date that all outstanding Receipts have been redeemed or there
has been a final distribution in respect of the Preferred Securities in
connection with any liquidation, dissolution or winding up of the Grantor and
such distribution has been made to the Holders of the Receipts. Except as
provided in Section 6.07 and Section 6.08, upon termination of this Trust
Agreement and the Trust in accordance with the foregoing, the respective
obligations and responsibilities of the Trustee, the Grantor and the General
Partner created hereby shall terminate.
ARTICLE VIII
MERGER, CONSOLIDATION, ETC. OF GRANTOR
SECTION 8.01. Limitation on Permitted Merger Consolidation,
Etc. of Grantor. The Grantor agrees that it will not consolidate, amalgamate,
merge with or into, or be replaced by, or convey, transfer or lease its
properties and assets substantially in their entirety to any corporation or
other entity without the consent of the Holders of 66-2/3% of the Receipts
unless permitted by Section 13.02(e) of the Partnership Agreement and (i) such
merger, consolidation, amalgamation, replacement, conveyance, transfer or lease
does not cause the Receipts to be delisted by any national securities exchange
or other organization on which the Receipts are then listed, (ii) such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease does
not cause the Receipts 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 of 1933, as amended, and
(iii) prior to such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, PECO Energy has 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 Holders of
outstanding Receipts will not recognize any gain or loss for Federal income tax
purposes as a result of the merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease.
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ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Counterparts. This Trust Agreement may be
executed by the Grantor, the Trustee and the General Partner in separate
counterparts, each of which counterparts, when so executed and delivered shall
be deemed an original, but all such counterparts taken together shall
constitute one and the same instrument. Delivery of an executed counterpart of
a signature page to this Trust Agreement by telecopier shall be effective as
delivery of a manually executed counterpart of this Trust Agreement. Copies of
this Trust Agreement shall be filed with the Trustee and the Trustee's agents
and shall be open to inspection during business hours at the Corporate Office
and the respective offices of the Trustee's agents, if any, by any Holder of a
Receipt.
SECTION 9.02. Exclusive Benefits of Parties. This Trust
Agreement is for the exclusive benefit of the parties hereto and the Holders of
the Receipts and the holders of Series B Preferred Securities, and their
respective successors hereunder, and shall not be deemed to give any legal or
equitable right, remedy or claim to any other Person whatsoever.
SECTION 9.03. Invalidity of Provisions. In case any one or
more of the provisions contained in this Trust Agreement or in the Receipts
should be or become invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein or therein shall in no way be affected, prejudiced or disturbed thereby.
SECTION 9.04. Notices. Any notices to be given to the
Grantor or the General Partner hereunder shall be in writing and shall be
deemed to have been duly given if personally delivered or sent by mail, or by
telegram or telex or telecopier confirmed by letter, addressed to the General
Partner at 1013 Centre Road, Suite 350F, Wilmington, Delaware 19805, Attention:
President, or at any other place to which the General Partner may have
transferred its principal executive office.
Any notices to be given to the Trustee hereunder or under the
Receipts shall be in writing and shall be deemed to have been duly given if
personally delivered or sent by mail, or by telegram or telex or telecopier
confirmed by letter, addressed to the Trustee at the Corporate Office.
Any notices given to any Holder of a Receipt hereunder or
under the Receipts shall be in writing and shall be deemed to
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have been duly given if personally delivered or sent by mail, or by telegram or
telex or telecopier confirmed by letter, addressed to such Holder at the
address of such record holder as it appears on the books of the Trustee or, if
such holder shall have timely filed with the Trustee a written request that
notices intended for such holder be mailed to some other address, at the
address designated in such request.
Delivery of a notice sent by mail, or by telegram or telex or
telecopier shall be deemed to be effected at the time when a duly addressed
letter containing the same (or a duly addressed letter confirming an earlier
notice in the case of a telegram or telex or telecopier message) is deposited,
postage prepaid, in a post office letter box. The Trustee may, however, act
upon any telegram or telex or telecopier message received by it from the other
or from any Holder of a Receipt, notwithstanding that such telegram or telex or
telecopier message shall not subsequently be confirmed by letter as aforesaid.
SECTION 9.05. Trustee's Agents. The Trustee may from time to
time appoint agents to act in any respect for the Trustee for the purposes of
this Trust Agreement. The Trustee shall have no liability for the acts or
omissions of agents selected by it with due care. The Trustee will notify the
General Partner prior to any such action.
SECTION 9.06. Holders of Receipts Are Parties.
Notwithstanding that Holders of Receipts have not executed and delivered this
Trust Agreement or any counterpart thereof, the Holders of Receipts from time
to time shall be bound by all of the terms and conditions hereof and of the
Receipts by acceptance of delivery of Receipts.
SECTION 9.07. Governing Law. This Trust Agreement and the
Receipts and all rights hereunder and thereunder and provisions hereof and
thereof shall be governed by, and construed in accordance with, the law of the
State of Delaware without giving effect to principles of conflict of laws.
SECTION 9.08. Headings. The headings of articles and
sections of this Trust Agreement and in the form of the Receipt set forth in
Exhibit A hereto have been inserted for convenience only and are not to be
regarded as part of this Trust Agreement or to have any bearing upon the
meaning or interpretation of any provision contained herein or in the Receipts.
SECTION 9.09. Receipts Non-Assessable and Fully Paid. The
Holders of the Receipts shall not be personally liable for obligations of the
Trust, the interests in the Trust represented by the Receipts shall be
non-assessable for any losses or expenses of the Trust or for any reason
whatsoever, and the
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Receipts upon delivery thereof by the Trustee pursuant to this Trust Agreement
are and shall be deemed fully paid.
SECTION 9.10. No Preemptive Rights. No Holder 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 interest in
the Trust, whether now or hereafter authorized and whether issued for cash or
other consideration or by way of distribution.
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IN WITNESS WHEREOF, the Grantor and the Trustee and the
General Partner have duly executed this Trust Agreement as of the day and year
first above set forth.
PECO ENERGY CAPITAL, L.P.
By: PECO ENERGY CAPITAL CORP.,
its general partner
By
----------------------------
Authorized Officer
PNC BANK, DELAWARE
By
----------------------------
Authorized Signatory
The General Partner joins in this Trust Agreement solely for the
purposes of obligating itself under Sections 6.04, 6.07 and 6.08 of this Trust
Agreement and not as grantor, trustee or beneficiary.
PECO ENERGY CAPITAL CORP.
By
----------------------------
Authorized Officer
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EXHIBIT A
TRUST RECEIPTS
OF PECO ENERGY CAPITAL TRUST I,
a Delaware Business Trust,
each Representing a ___% Cumulative
Monthly Income Preferred Security, Series B of
PECO Energy Capital, L.P. (a Delaware limited partnership)
No. _________ ___________ Receipts
PNC Bank, Delaware, a Delaware banking corporation, not in its
individual capacity, but solely as Trustee (the "Trustee"), hereby certifies
that ______________ is the registered owner of __________ Receipts (the
"Receipts"), each representing a ___% Cumulative Monthly Income Preferred
Security, Series B (the "Preferred Securities") of PECO Energy Capital, L.P., a
Delaware limited partnership (the "Grantor"), deposited in trust by the Grantor
with the Trustee pursuant to an Amended and Restated Trust Agreement of PECO
Energy Capital Trust I dated as of __________ (as amended or supplemented from
time to time, the "Trust Agreement") among the Grantor, the Trustee and PECO
Energy Capital Corp., the general partner of the Grantor (the "General
Partner"). Subject to the terms of the Trust Agreement, the registered Holder
hereof is entitled to a full interest in the same number of Preferred
Securities held by the Trustee under the Trust Agreement, as are represented by
the Receipts including the distribution, voting, liquidation, and other rights
of the Preferred Securities specified in the Amended and Restated Limited
Partnership Agreement of the Grantor, as amended, a copy of which is on file at
the Corporate Office.
1. The Trust Agreement. The Receipts are issued upon
the terms and conditions set forth in the Trust Agreement. The Trust Agreement
(a copy of which is on file at the Corporate Office of the Trustee) sets forth
the rights of Holders of Receipts and the rights and duties of the Trustee, the
Grantor and the General Partner. The statements made on the face and the
reverse hereof are summaries of certain provisions of the Trust Agreement and
are subject to the detailed provisions thereof, to which reference is hereby
made. In the event of any conflict or discrepancy between the provisions
hereof and the provisions of the Trust Agreement, the provisions of the Trust
Agreement will govern. Unless otherwise expressly herein provided, all defined
terms used herein shall have the meanings ascribed thereto in the Trust
Agreement.
2. Enforcement of Rights; Withdrawal of Preferred
Securities. To the fullest extent permitted by law, without the need for any
other action of any Person, including the Trustee
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and any other Holder, each Holder shall be entitled to enforce in the name of
the Trust the Trust's rights under the Preferred Securities represented by the
Receipts held by such Holder and any recovery on such an enforcement action
shall belong solely to such Holder who brought the action, not to the Trust,
Trustee or any other Holder individually or to Holders as a group. Any Holder
of a Receipt or Receipts may withdraw any or all of the Preferred Securities
(but only in whole numbers of Preferred Securities) represented by such Receipt
or Receipts by surrendering the certificate evidencing such Receipt or Receipts
accompanied by a written instrument of transfer and an agreement to be bound by
the terms of the Partnership Agreement at the Corporate Office or at such other
office as the Trustee may designate for such withdrawals; provided, however,
that the Trustee shall not issue any fractional number of Preferred Securities.
If the Receipt or Receipts delivered by the Holder to the Trust in connection
with such withdrawal shall evidence a number of Preferred Securities in excess
of the number of Preferred Securities to be withdrawn, the Trustee shall at the
same time, in addition to such number of Preferred Securities to be withdrawn,
deliver to such Holder, a new Receipt or Receipts evidencing such excess number
of Preferred Securities.
3. Distributions of Monthly Distributions on Preferred
Securities. Whenever the Trustee shall receive any cash distribution
representing a monthly distribution on the Preferred Securities (whether or not
distributed by the Grantor on the regular monthly distribution date therefor)
or payment by PECO Energy Company ("PECO Energy") under the Payment and
Guarantee Agreement dated as of ___________, 1995 (the "Guarantee") in respect
thereof, the Trustee acting directly or through any Paying Agent shall
distribute to record Holders of Receipts on the record date therefor, such
amounts in proportion to the respective numbers of Preferred Securities
represented by the Receipts held by such Holders.
4. Redemptions of Preferred Securities. Whenever the Grantor
shall elect or is required to redeem Preferred Securities in accordance with
the Partnership Agreement, it shall (unless otherwise agreed in writing with
the Trustee) give the Trustee not less than 40 days' prior notice thereof.
The Trustee shall, as directed by the Grantor, mail, first-class postage
prepaid, notice of the redemption of Preferred Securities and the proposed
simultaneous redemption of the Receipts to be redeemed, not less than 30 and
not more than 60 days prior to the date fixed for redemption (the "redemption
date") of such Preferred Securities and Receipts. Such notice shall be mailed
to the Holders of the Receipts, at the addresses of such Holders as the same
appear on the records of the Trustee. No defect in the notice of redemption or
in the mailing or delivery thereof or publication of its contents shall affect
the validity of the redemption
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proceedings. In case fewer than all the outstanding Receipts are to be
redeemed, the Receipts to be redeemed shall be selected by lot or pro rata (as
nearly as may be practicable without creating fractional shares) or by any
other equitable method determined by the Grantor. On the date of any such
redemption of Preferred Securities, provided that the Grantor (or PECO Energy
pursuant to the Guarantee) shall then have deposited with the Trustee the
aggregate amount payable upon redemption of the Preferred Securities to be
redeemed, the Trustee shall redeem (using the funds so deposited with it)
Receipts representing the same number of Preferred Securities to be redeemed by
the Grantor.
5. Distributions in Liquidation. Upon receipt by the
Trustee of any distribution from the Grantor upon the liquidation of the
Grantor or any payment under the Guarantee in respect thereof, after
satisfaction of creditors of the Trust required by applicable law, the Trustee
shall distribute to record Holders of Receipts on the record date therefor,
such amounts in proportion to the respective number of Preferred Securities
which were represented by the Receipts held by such Holders.
6. Fixing of Record Date for Holders of Receipts.
Whenever any distribution (other than upon any redemption) shall become
payable, or whenever the Trustee shall receive notice of any meeting at which
holders of Preferred Securities are entitled to vote or of which holders of
Preferred Securities are entitled to notice, the Trustee shall in each such
instance fix a record date (which shall be the same date as the record date
fixed by the General Partner with respect to the Preferred Securities) for the
determination of the record holders of Receipts who shall be entitled (i) to
receive such distribution or (ii) to receive notice of, and to give
instructions for the exercise of voting rights at, any such meeting.
7. Payment of Distributions. Payments of monthly
distributions on the Receipts shall be payable by check mailed to the addresses
of the Holders thereof on the record date therefor. Payments of the redemption
price of Receipts and distributions in liquidation shall be made against
surrender of such Receipts at the office of First Chicago Trust Company of New
York, as the Paying Agent.
8. Special Representative; Voting Rights. (a) If
the holders of the Preferred Partner Interests (as defined in the Partnership
Agreement), acting as a single class, are entitled to appoint and authorize a
Special Representative pursuant to Section 13.02(d) of the Partnership
Agreement, the Trustee shall notify the Holders of the Receipts of such right,
request direction of each Holder of a Receipt and vote the Preferred Securities
represented by such Receipt in accordance with such direction. If the General
Partner fails to convene a general
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<PAGE> 34
meeting of the Partnership as required in Section 13.02(d) of the Partnership
Agreement, the Trustee shall notify the Holders of the Receipts and, if so
directed by the Holders of Receipts representing Preferred Securities
constituting at least 10% of the aggregated stated liquidation preference of
the outstanding Preferred Partner Interests (as defined in the Partnership
Agreement) shall convene such meeting.
(b) Upon receipt of notice of any meeting at
which the holders of Preferred Securities are entitled to vote, the Trustee
shall, as soon as practicable thereafter, mail to the Holders of Receipts a
notice, which shall be provided by the Grantor and which shall contain (i) such
information as is contained in such notice of meeting, (ii) a statement that
the Holders of Receipts at the close of business on a specified record date
therefor will be entitled, subject to any applicable provision of law or of the
Partnership Agreement, to instruct the Trustee as to the exercise of the voting
rights pertaining to the amount of Preferred Securities represented by their
respective Receipts, and (iii) a brief statement as to the manner in which such
instructions may be given. Upon the written request of a Holder of a Receipt
on such record date, the Trustee shall vote or cause to be voted the number of
Preferred Securities represented by the Receipts in accordance with the
instructions set forth in such request. In the absence of specific
instructions from the Holder of a Receipt, the Trustee will abstain from voting
to the extent of the Preferred Securities represented by such Receipt.
9. Changes Affecting Preferred Securities and
Reclassifications, Recapitalizations, Etc. Upon any consolidation,
amalgamation, merger, replacement, or conveyance, transfer or lease by the
Grantor of its properties and assets in their entirety in accordance with
Section 13.02(e) of the Partnership Agreement, the Trustee shall, upon the
instructions of the Grantor, treat any Successor Securities or other property
that shall be received by the Trustee in exchange for or upon conversion of or
in respect of the Preferred Securities as part of the Trust Estate, and
Receipts then outstanding shall thenceforth represent the proportionate
interests of Holders thereof in the new deposited property so received in
exchange for or upon conversion or in respect of such Preferred Securities.
10. Transfer and Exchange of Receipts. Subject to the
terms and conditions of the Trust Agreement, the Trustee shall register the
transfer on its books from time to time of Receipt certificates upon any
surrender thereof by the Holder in person or by a duly authorized attorney,
properly endorsed or accompanied by a properly executed instrument of transfer
or endorsement, together with evidence of the payment of any transfer taxes as
may be required by law. Upon such surrender,
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<PAGE> 35
the Trustee shall execute a new Receipt representing the same aggregate number
of the Receipts surrendered in accordance with the Trust Agreement and deliver
the same to or upon the order of the Person entitled thereto.
Upon surrender of a Receipt at the Corporate Office or such
other office as the Trustee may designate for the purpose of effecting an
exchange of Receipt certificates, subject to the terms and conditions of the
Trust Agreement, the Trustee shall execute and deliver a new Receipt
certificate representing the same number of Preferred Securities as the Receipt
certificate surrendered.
As a condition precedent to the registration of transfer or
exchange of any Receipt certificate, the Registrar, may require (i) the
production of proof satisfactory to it as to the identity and genuineness of
any signature; and (ii) compliance with such regulations, if any, as the
Trustee or the Registrar may establish not inconsistent with the provisions of
the Trust Agreement.
Neither the Trustee nor the Registrar shall be required (a) to
register the transfer of or exchange any Receipt certificate for a period
beginning at the opening of business ten days next preceding any selection of
Receipts to be redeemed and ending at the close of business on the day of the
mailing a notice of redemption of Receipts or (b) to transfer or exchange of
Receipts called or being called for redemption in whole or in part.
11. Title to Receipts. It is a condition of the Receipt,
and every successive Holder hereof by accepting or holding the same consents
and agrees, that title to this Receipt certificate, when properly endorsed or
accompanied by a properly executed instrument of transfer or endorsement, is
transferable by delivery with the same effect as in the case of a negotiable
instrument; provided, however, that until the transfer of this Receipt
certificate shall be registered on the books of the Trustee, the Trustee may,
notwithstanding any notice to the contrary, treat the Holder hereof at such
time as the absolute owner hereof for the purpose of determining the Person
entitled to distributions or to any notice provided for in the Trust Agreement
and for all other purposes.
12. Reports, Inspection of Transfer Books. The Trustee
shall make available for inspection by Holders of Receipts at the Corporate
Office and at such other places as it may from time to time deem advisable
during normal business hours any reports and communications received by the
Trustee as the record holder of Preferred Securities. The Registrar shall keep
books at the corporate office for the registration and
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<PAGE> 36
registration of transfer of Receipts, which books at all reasonable times will
be open for inspection by the record Holders of Receipts as and to the extent
provided by applicable law.
13. Supplemental Trust Agreement. The Grantor or the
General Partner may, and the Trustee shall, at any time and from time to time,
without the consent of the Holders, enter into one or more agreements
supplemental hereto, in form satisfactory to the Trustee, for any of the
following purposes: (a) to evidence the succession of another partnership,
corporation or other entity to the Grantor or the General Partner and the
assumption by any such successor of the covenants of the Grantor or the General
Partner herein contained; or (b) to add to the covenants of the Grantor or the
General Partner for the benefit of the Holders, or to surrender any right or
power herein conferred upon the Grantor or the General Partner; or (c)(i) to
correct or supplement any provision herein which may be defective or
inconsistent with any other provision herein or (ii) to make any other
provisions with respect to matters or questions arising under this Trust
Agreement, provided that any such action taken under subsection (ii) hereof
shall not materially adversely affect the interests of the Holders; or (d) to
cure any ambiguity or correct any mistake. Any other amendment or agreement
supplemental hereto must be in writing and approved by Holders of 66-2/3% of
the then-outstanding Trust Receipts.
14. Governing Law. The Trust Agreement and this Receipt
and all rights thereunder and hereunder and provisions thereof and hereof shall
be governed by, and construed in accordance with, the law of the State of
Delaware without giving effect to principles of conflict of laws.
15. Receipt Non-Assessable and Fully Paid. Holders of
Receipts shall not be personally liable for obligations of the Trust, the
interest in the Trust represented by the Receipts shall be non-assessable for
any losses or expenses of the Trust or for any reason whatsoever, and the
Receipts upon delivery thereof by the Trustee pursuant to the Trust Agreement
are and shall be deemed fully paid.
16. Liability of Holders of Receipts. Holders of
Receipts shall be entitled to the same limitation of personal liability
extended to stockholders of private corporations for profit organized under the
General Corporation Law of the State of Delaware.
17. No Preemptive Rights. No Holder 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 interest in the Trust,
whether now or hereafter
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<PAGE> 37
authorized and whether issued for cash or other consideration or by way of
distribution.
This Receipt certificate shall not be entitled to any benefits
under the Trust Agreement or be valid or obligatory for any purpose unless this
Receipt certificate shall have been executed manually or, if a Registrar for
the Receipts (other than the Trustee) shall have been appointed, by facsimile
signature of a duly authorized signatory of the Trustee and, if executed by
facsimile signature of the Trustee, shall have been countersigned manually by
such Registrar by the signature of a duly authorized signatory.
THE TRUSTEE IS NOT RESPONSIBLE FOR THE VALIDITY OF ANY
PREFERRED SECURITIES. THE TRUSTEE ASSUMES NO RESPONSIBILITY FOR THE
CORRECTNESS OF THE FOREGOING DESCRIPTION WHICH CAN BE TAKEN AS A STATEMENT OF
THE GRANTOR SUMMARIZING CERTAIN PROVISIONS OF THE TRUST AGREEMENT. THE TRUSTEE
MAKES NO WARRANTIES OR REPRESENTATIONS AS TO THE VALIDITY, GENUINENESS OR
SUFFICIENCY OF PREFERRED SECURITIES OR OF THE RECEIPTS; AS TO THE VALIDITY OR
SUFFICIENCY OF THE TRUST AGREEMENT; AS TO THE VALUE OF THE RECEIPTS OR AS TO
ANY RIGHT, TITLE OR INTEREST OF THE RECORD HOLDERS OF THE RECEIPTS IN AND TO
THE RECEIPTS.
Dated:
PNC BANK, DELAWARE, as Trustee,
By
------------------------------
Authorized Officer
Countersigned by
First Chicago Trust Company
of New York, as Registrar
By
--------------------------------
Authorized Officer
A-7
<PAGE> 38
[FORM OF ASSIGNMENT]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and
transfers unto ____________________ the within Receipt and all rights and
interests represented by the Receipts evidenced thereby, and hereby irrevocably
constitutes and appoints ____________________ attorney, to transfer the same on
the books of the within-named Trustee, with full power of substitution in the
premises.
Dated: Signature:
------------------ ------------------------
NOTE: The signature to this assignment
must correspond with the name as
written upon the face of the Receipt
in every particular, without
alteration or enlargement, or any
change whatever.
Signature Guarantee:
- ------------------------------
A-8
<PAGE> 1
EXHIBIT 4-11
PAYMENT AND GUARANTEE AGREEMENT
THIS PAYMENT AND GUARANTEE AGREEMENT ("Guarantee Agreement"),
dated as of ________________, 1995, is executed and delivered by PECO Energy
Company, a Pennsylvania corporation (the "Guarantor"), for the benefit of the
Holders (as defined below) of the Series B 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 B (the "Series B Preferred Securities"), and the Guarantor
desires to enter into this Guarantee Agreement for the benefit of the Holders,
as provided herein;
WHEREAS, the Guarantor will issue Series B Subordinated
Debentures (as defined below) in accordance with the Indenture (as defined
below) to PECO Energy Capital in an amount equal to the aggregate stated
liquidation preference of the Series B Preferred Securities and the capital
contribution of the General Partner to PECO Energy Capital (the "G.P. Capital
Contribution"); and
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, unless the context otherwise requires, shall 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 July 25, 1994 (as amended from
time to time, the "Limited Partnership Agreement").
<PAGE> 2
"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 B Preferred
Securities out of moneys legally available therefor held by PECO Energy
Capital, (ii) the Redemption Price (as defined below) payable with respect to
any Series B Preferred Securities called for redemption by PECO Energy Capital
out of moneys legally available therefor held by PECO Energy Capital, (iii)
upon 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 the Holders in liquidation of PECO Energy
Capital, and (iv) a cash distribution at the rate of 7.96% per annum of the
stated liquidation preference of $25 per Series B Preferred Security
accumulating from November 1, 1995 through but not including , 1995.
"Holders" shall mean the persons or entities in whose name any
Series B Preferred Securities are registered on the registration books
maintained by PECO Energy Capital; provided, however, that in determining
whether the Holders of the requisite percentage of Series B 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 as of July 1,
1994 (the "Original Indenture"), as supplemented by the Supplemental Indenture,
between the Guarantor and Meridian Trust Company, pursuant to which the
Guarantor has issued and will issue its Deferrable Interest Subordinated
Debentures in series.
"Liquidation Distribution" shall mean the aggregate of the
stated liquidation preference of $25 per Series B Preferred Security and all
accumulated and unpaid distributions to the date of payment.
"Preferred Trust Receipts" shall mean the trust receipts
issued by the Trust each representing a Series B Preferred Security.
"Redemption Price" shall mean the aggregate of $25 per Series
B Preferred Security and all accumulated and unpaid distributions to the date
fixed for redemption.
"Special Representative" shall mean any representative of the
Holders appointed pursuant to Section 13.02(d) of the Limited Partnership
Agreement.
"Supplemental Indenture" shall mean the First Supplemental
Indenture, dated as of ________, 1995, between the Guarantor and Meridian Trust
Company, pursuant to which the Guarantor has issued its __% Deferrable Interest
Subordinated Debentures, Series B (the "Series B Subordinated Debentures") in
2
<PAGE> 3
an amount equal to the aggregate stated liquidation preference of the Series B
Preferred Securities and the G.P. Capital Contribution.
"Trust" shall mean PECO Energy Capital Trust I, a Delaware
business trust.
"Trust Agreement" shall mean the Amended and Restated Trust
Agreement of PECO Energy Capital Trust I, as amended from time to time, among
PECO Energy Capital, L.P., as Grantor and PNC Bank, Delaware, as Trustee,
dated as of _______, 1995.
"Trustee" shall mean PNC Bank, Delaware or a successor trustee
under the Trust 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, the General Partner, the Trust or the Trustee. The Guarantor's
obligation to make a 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 B Subordinated
Debentures and the Guarantor shall not be obligated hereunder to pay during an
Extension Period any monthly distributions on the Series B 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, covenant, term or condition relating to the
Series B 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,
3
<PAGE> 4
Redemption Price, Liquidation Distribution or any other sums payable under the
terms of the Series B Preferred Securities or the extension of time for the
performance of any other obligation under, arising out of, or in connection
with, the Series B 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 B
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 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 B 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 Preferred Trust
Receipts, together with the holders of the Series B Preferred Securities other
than the Trust, representing not less than 10% in aggregate stated liquidation
preference of the Series B 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 directions to the
General Partner or the Special Representative as the case may be; and (v) if
the General Partner or the Special Representative fails to enforce this
Guarantee Agreement as above provided, any holder of Preferred Trust Receipts,
together with the holders of the Series B Preferred Securities other than the
Trust, representing Series B Preferred Securities may institute a legal
proceeding directly against the Guarantor to enforce its rights under this
Guarantee
4
<PAGE> 5
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. The General Partner or 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 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 B 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 B 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 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
5
<PAGE> 6
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 B 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 Guarantee 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.
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 B
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 the Holders must restore payments of any sums paid under
the Series B 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 3.02, 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 B
Preferred Securities then outstanding.
6
<PAGE> 7
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 B Preferred Securities remain outstanding, any amendment that
materially adversely affects the Holders, 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 Preferred Trust
Receipts, together with the holders of Series B Preferred Securities other than
the Trust, representing not less than 66 2/3% of the aggregate liquidation
preference of all Series B 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 like 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.
SECTION 5.04. This Guarantee Agreement is solely for the
benefit of the Holders and is not separately transferable from the Series B
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 the conflict of law principles
thereof.
7
<PAGE> 8
THIS GUARANTEE AGREEMENT is executed as of the day and year
first above written.
PECO ENERGY COMPANY
By:
-----------------------------------
Name:
Title:
8
<PAGE> 1
EXHIBIT 5-1
[LETTERHEAD OF BALLARD SPAHR ANDREWS & INGERSOLL]
October 24, 1995
PECO Energy Company
2301 Market Street
Philadelphia, PA 19103
Re: Cumulative Monthly Income Preferred Securities,
Series B 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 by PECO Energy Capital, L.P., a Delaware
limited partnership ("PECO Energy Capital"), of its Cumulative Monthly Income
Preferred Securities, Series B (the "Preferred Securities"), representing
limited partner interests in PECO Energy Capital, and, in connection therewith,
the execution and delivery by the Company of the Payment and Guarantee
Agreement (the "Guarantee") for the benefit of the holders of the Preferred
Securities and the issuance by the Company of its Deferrable Interest
Subordinated Debentures, Series B (the "Subordinated Debentures"), and the
registration of the Preferred Trust Receipts, the Guarantee and the Subordinated
Debentures under the Securities Act of 1933, as amended. The Subordinated
Debentures will be issued under an Indenture between the Company and Meridian
Trust Company, as trustee (the "Indenture"), as supplemented by a First
Supplemental Indenture (the "Supplemental Indenture") between the Company and
Meridian Trust Company, as trustee.
The opinions expressed below are based on the following
assumptions:
(a) The Registration Statement on Form S-4 filed by PECO
Energy Capital Trust I (the "Trust"), the Company and PECO Energy Capital with
the Securities and Exchange Commission with respect to the Preferred
Securities, the Guarantee and the Subordinated Debentures (the "Registration
Statement") will become effective;
<PAGE> 2
PECO Energy Company
October 24, 1995
Page 2
(b) The proposed transactions are carried out on the
basis set forth in the Registration Statement and in 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 the Preferred Securities:
(i) the general partner of PECO Energy Capital
will authorize the issuance of, and determine
the terms of, the Preferred Securities, which
will be deposited in the Trust, and PNC Bank,
Delaware, as trustee of the Trust (the
"Trustee"), will issue the Preferred Trust
Receipts;
(ii) the Supplemental 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 Subordinated Debentures;
(iii) the Guarantee 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;
(iv) the Amendment and Restated Trust Agreement
will have been executed and delivered by
PECO Energy Capital Corp., on its own
behalf and on behalf of PECO Energy Capital,
the Sponsor of the Trust, and the Trustee; and
(d) The Indenture is and the Supplemental 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 and the Supplemental Indenture, the
Subordinated Debentures will be legally issued, valid and binding obligations
of the Company.
2. When executed and delivered by the Company, the
Guarantee will be a valid and binding obligation 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 headings
"Legal Matters" and "United States Taxation" in the Prospectus included in the
Registration Statement.
Very truly yours,
Ballard Spahr Andrews & Ingersoll
<PAGE> 1
EXHIBIT 5-2
[Letterhead of Richards, Layton & Finger]
October 24, 1995
PECO Energy Capital, L.P.
1013 Centre Road, Suite 350F
Wilmington, DE 19805
PECO Energy Capital Trust I
c/o PNC Bank, Delaware
222 Delaware Avenue
Wilmington, DE 19801
Re: PECO Energy Capital, L.P. and PECO
Energy Capital Trust I
Ladies and Gentlemen:
We have acted as special Delaware counsel for PECO
Energy Capital, L.P., a Delaware limited partnership (the
"Partnership"), and PECO Energy Capital Trust I, a Delaware
business trust (the "Trust"), 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:
<PAGE> 2
PECO Energy Capital, L.P.
PECO Energy Capital Trust I
October 24, 1995
Page 2
(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) The Amended and Restated Limited Partnership
Agreement of the Partnership, dated as of July 25, 1994 (the
"Amended Agreement");
(d) Amendment No. 1 to the Amended Agreement, dated
as of October 20, 1995 (the "Partnership Amendment") (the
Amended Agreement as amended by the Partnership Amendment being
hereinafter referred to as the "Partnership Agreement");
(e) A form of Action of PECO Energy Capital Corp.,
a Delaware corporation and the general partner of the Partnership
(the "General Partner"), relating to the Preferred Partner
Interests (as defined below) (the "Action");
(f) The Certificate of Trust of the Trust, dated as
of October 20, 1995 (the "Trust Certificate"), as filed in the
office of the Secretary of State on October 20, 1995;
(g) The Trust Agreement of the Trust, dated as of
October 20, 1995, between the Partnership and PNC Bank,
Delaware, as trustee of the Trust (the "Trustee");
(h) A form of Amended and Restated Trust Agreement
of the Trust (the "Trust Agreement"), to be entered into among
the Partnership, the Trustee and, for limited purposes, the
General Partner, attached as an exhibit to the Registration
Statement (as defined below);
(i) Amendment No. 1 to the Registration Statement
(the "Registration Statement") on Form S-4, including a related
offering circular/prospectus (the "Prospectus"), relating to the
___% Cumulative Monthly Income Preferred Securities, Series B, of
the Partnership (each, a "Preferred Partner Interest" and
collectively, the "Preferred Partner Interests") and to the trust
receipts of the Trust (each, a "Trust Receipt" and collectively,
the "Trust Receipts"), as proposed to be filed by PECO
<PAGE> 3
PECO Energy Capital, L.P.
PECO Energy Capital Trust I
October 24, 1995
Page 3
Energy Company, a Pennsylvania corporation, the Partnership and the
Trust with the Securities and Exchange Commission on or about
October 24, 1995;
(j) A Certificate of Good Standing for the
Partnership, dated October 24, 1995, obtained from the Secretary
of State; and
(k) A Certificate of Good Standing for the Trust,
dated October 24, 1995, obtained from the Secretary of State.
The Partnership 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 (k) above. In particular, we have not reviewed any
document (other than the documents listed in paragraphs (a)
through (k) above) that is referred to in or incorporated by
reference into the documents reviewed by us. 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) that the Trust
Agreement constitutes the entire agreement among the parties
thereto with respect to the subject matter thereof, including
with respect to the creation, operation and termination of the
Trust, and that the Trust Agreement and the Trust Certificate are
in full force and effect and have not been amended, (iii) except
to the extent provided in paragraphs 1 and 4 below, the due
creation or the due organization or due formation, as
<PAGE> 4
PECO Energy Capital, L.P.
PECO Energy Capital Trust I
October 24, 1995
Page 4
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 creation or organization or formation, (iv) the
legal capacity of natural persons who are parties to the
documents examined by us, (v) 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, (vi) the due authorization, execution and delivery by
all parties thereto of all documents examined by us, (vii) the
receipt by each Person to whom a Preferred Partner Interest is to
be issued by the Partnership (each, a "Preferred Partner" and
collectively, the "Preferred Partners") of a Certificate and the
payment for the Preferred Partner Interests acquired by it, in
accordance with the LP Agreement and the Registration Statement,
(viii) the receipt in connection with the Exchange (as defined in
the Trust Agreement) by each Person to whom a Trust Receipt is to
be issued by the Trust (collectively, the "Holders") of a
certificate substantially in the form of the trust
certificate attached to the Trust Agreement as Exhibit A,
in accordance with the Trust Agreement and the Registration
Statement, (ix) 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 "Partnership Act"),
including all information with respect to all Persons to be
admitted as Partners and their contributions to the Partnership,
(x) that the Preferred Partner Interests are issued and sold to
the Preferred Partners in accordance with the Registration
Statement and the LP Agreement, and (xi) that the Trust Receipts
are issued and sold to the Holders in accordance with the
Registration Statement and the Trust 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 Partnership Act.
<PAGE> 5
PECO Energy Capital, L.P.
PECO Energy Capital Trust I
October 24, 1995
Page 5
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 Preferred Partners, as
limited partners of the Partnership, to be deemed to be
participating in the control of the business of the Partnership.
4. The Trust has been duly created and is validly
existing in good standing as a business trust under the Delaware
Business Trust Act (12 Del. C. Section 3801, et seq.)
5. The Trust Receipts will represent valid and,
subject to the qualifications set forth in paragraph 6 below,
fully paid and nonassessable interests in the Trust.
6. The Holders, in their capacity as such, will be
entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under
the General Corporation Law of the State of Delaware. We note
that the Holders may be obligated to make payments as set forth
in the Trust Agreement.
We consent to the filing of this opinion with the
Securities and Exchange Commission as an exhibit to the
Registration Statement. We also consent to Ballard Spahr Andrews
& Ingersoll's relying as to matters of Delaware law upon this
opinion in connection with an opinion to be rendered by it in
connection with the Registration Statement. In addition, 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
<PAGE> 6
PECO Energy Capital, L.P.
PECO Energy Capital Trust I
October 24, 1995
Page 6
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 for
any purpose.
Very truly yours,
PMA/BJK/ab
<PAGE> 1
EXHIBIT 8
October 24, 1995
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 Preferred Trust Receipts representing
Cumulative Monthly Income Preferred Securities, Series B of PECO Energy
Capital, L.P., a Delaware limited partnership and the registration of the
related Payment and Guarantee Agreement and Deferrable Interest Subordinated
Debentures, Series B of the Company and hereby confirm to you our opinion as
set forth under the heading "United States Taxation" in the Offering
Circular/Prospectus included in the Registration Statement filed on Form S-4.
Very truly yours,
Ballard Spahr Andrews & Ingersoll
<PAGE> 1
EXHIBIT 23-1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form S-4, as
amended, with respect to the offer to exchange Trust Receipts for up to
5,400,000 depositary shares each representing a one-fourth interest in a share
of $7.96 Cumulative Preferred Stock of our report dated January 30, 1995, on
our audits of the consolidated financial statements and financial statement
schedules of PECO Energy Company. We also consent to the reference to our firm
under the caption "Experts."
/s/ COOPERS & LYBRAND LLP
- -------------------------
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
October 23, 1995
<PAGE> 1
EXHIBIT 25-2
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------------
AMENDMENT NO. 1 TO
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 G. 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> 2
Item 16. List of Exhibits.
List below all exhibits filed as part of this statement of eligibility
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 Telephone
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 Telephone
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
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 June 30, 1995, published pursuant to
law or the requirement of its supervising or examining
authority.
-2-
<PAGE> 3
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 23rd day of October, 1995.
MERIDIAN TRUST COMPANY
By: /s/ Michael G. Ruppel
---------------------------------
Name: Michael G. Ruppel
Title: Relationship Officer
<PAGE> 4
EXHIBIT T-1-6
SCHEDULE RC - BALANCE SHEET
FROM
REPORT OF CONDITION
Consolidating domestic and foreign subsidiaries of
MERIDIAN TRUST COMPANY
of MALVERN in the state of PENNSYLVANIA
at the close of business on
March 31, 1995
filed in response to call made by
Comptroller of the Currency,
under title 12, United States Code, Section 161
Charter Number 540
Comptroller of the Currency Northeastern District
SCHEDULE RC -- BALANCE SHEET
<TABLE>
<CAPTION>
Thousands
of Dollars
-----------
ASSETS
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin(1)(2) . . . . . . . . . . . . $ 5
Interest-Bearing Balances(3) . . . . . . . . . . . . . . . . . . . . . . . . . . 502
Securities
Held-to-maturity securities (from Schedule RC-B, column A) . . . . . . . . . . . 705
Available-for-sale securities (from Schedule RC-B, column D) . . . . . . . . . . 0
Federal funds sold and securities purchased under
agreements to resell:
Federal funds sold(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Securities purchased under agreements to resell(4) . . . . . . . . . . . . . . . 0
Loans and lease financing receivables:
Loans and leases, net of unearned income (from Schedule RC-C) $134
LESS: Allowance for loan and lease losses 0
LESS: Allocated transfer risk reserve 0
------
Loans and leases, net of unearned income,
allowance and reserve (item 4.a minus 4.b and 4.c) . . . . . . . . . . . . . 134
Trading assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Premises and fixed assets (including capitalized leases) . . . . . . . . . . . . . . . . . 1,021
Other real estate owned (from Schedule RC-M) . . . . . . . . . . . . . . . . . . . . . . . 0
Investments in unconsolidated subsidiaries and
associated companies (from Schedule RC-M) . . . . . . . . . . . . . . . . . . . 0
Customers' liability to this bank on acceptances
outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Intangible assets (from Schedule RC-M) . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Other assets (from Schedule RC-F) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,713
------------
Total Assets (sum of items 1 through 11) . . . . . . . . . . . . . . . . . . . $ 7,080
============
Losses deferred pursuant to 12 U.S.C. 1823(j) . . . . . . . . . . . . . . . . . 0
Total assets and losses deferred pursuant to 12 U.S.C. 1823(j)
(sum of items 12.a and 12.b) . . . . . . . . . . . . . . . . . . . . . . . 7,080
</TABLE>
(1) Includes cash items in process of collection and unposted debits.
(2) The amount reported in this item must be greater than or equal to the sum
of Schedule RC-M, items 3.a and 3.b.
(3) Includes time certificates of deposit not held for trading.
(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 1.
(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> 5
Schedule RC -- Continued
<TABLE>
<CAPTION>
LIABILITIES
<S> <C>
Deposits:
In domestic offices (sum of totals of columns A and C from Schedule RC-E) .................................. 0
Noninterest-bearing(1) ............................................................................ $ 0
Interest-bearing .................................................................................. 0
In foreign offices, Edge and Agreement subsidiaries, and IBFs .................................................
Noninterest-bearing .......................................................................................
Interest-bearing ..........................................................................................
Federal funds purchased and securities sold under agreements to repurchase:
Federal funds purchased (2) ................................................................................ 0
Securities sold under agreements to repurchase(3) .......................................................... 0
Demand notes issued to U.S. Treasury ....................................................................... 0
Trading liabilities ........................................................................................ 0
Other borrowed money
With original maturity of one year or less ................................................................. 0
With original maturity of more than one year ............................................................... 0
Mortgage indebtedness and obligations under capitalized leases ................................................ 0
Bank's liability on acceptances executed and outstanding ...................................................... 0
Subordinated notes and debentures ............................................................................. 0
Other liabilities (from Schedule RC-G) ........................................................................ 3,890
Total liabilities (sum of items 13 through 20) ................................................................ 3,890
Limited-life preferred stock and related surplus .............................................................. 0
EQUITY CAPITAL
Perpetual preferred stock and related surplus ................................................................. 0
Common Stock ................................................................................................. 300
Surplus (exclude all surplus related to preferred stock) ...................................................... 478
Undivided profits and capital reserves ..................................................................... 2,412
Net unrealized holding gains (losses) on available-for-sale securities ..................................... 0
Cumulative foreign currency translation adjustments ...........................................................
Total equity capital (sum of items 23 through 27) .......................................................... 3,190
Losses deferred pursuant to 12 U.S.C. 1823(j) .............................................................. 0
Total equity capital and losses deferred pursuant to 12 U.S.C. 1823(j) (sum of items 28.a
and 28.b) .................................................................................................. 3,190
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) ............................................................. 7,080
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 independent external Number
auditors as of any date during 1994 ....................................................................... 2
</TABLE>
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 saving
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."
<PAGE> 1
EXHIBIT 99-1
LETTER OF TRANSMITTAL
To Tender Depositary Shares (CUSIP No. 693 304 875)
(the "Depositary Shares") each representing a 1/4 share
interest in a share of $7.96 Cumulative Preferred Stock
of
PECO ENERGY COMPANY
Pursuant to the offer by PECO ENERGY COMPANY to
exchange Trust Receipts each representing a
____% Cumulative Monthly Income Preferred
Security, Series B ("Series B Preferred Securities")
of PECO Energy Capital, L.P.,
for up to 5,400,000 Depositary Shares
This Letter of Transmittal relates to the offer by PECO Energy Company
("PECO Energy") to effect the exchange of Trust Receipts (the "Preferred Trust
Receipts"), each representing a __% Cumulative Monthly Income Preferred
Security, Series B (the "Series B Preferred Securities") of PECO Energy
Capital, L.P. ("PECO Energy Capital").
The exchange of Preferred Trust Receipts for Depositary Shares will be
effected by (a) the tendering of the Depositary Shares to FIRST CHICAGO TRUST
COMPANY OF NEW YORK (the "Exchange Agent"), (b) the delivery by PECO Energy of
its __% Deferrable Interest Subordinated Debentures, Series B (the "Series B
Subordinated Debentures") to the Exchange Agent, which will receive the Series
B Subordinated Debentures on behalf of the holders ("Holders") of Depositary
Shares validly tendered and accepted, in exchange for the Depositary Shares,
(c) the delivery by the Exchange Agent (acting pursuant to the directions of
the holders of the Depositary Shares) of the Series B Subordinated Debentures
to PECO Energy Capital in consideration for the issuance and deposit by PECO
Energy Capital of the Series B Preferred Securities with PECO Energy Capital
Trust I (the "Trust") under a Trust Agreement, and (d) the issuance and
delivery by the Trust of the Preferred Trust Receipts to the Exchange Agent for
distribution, either in certificated form or through the facilities of a
depository, to each holder.
The offer is for up to 5,400,000 Depositary Shares, unless reduced by
PECO Energy in its sole discretion. If more than 5,400,000 or Depositary
Shares are validly tendered, acceptance of Depositary Shares of each tendering
holder will be pro rated.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON _____, 1995, UNLESS THE OFFER IS EXTENDED.
<PAGE> 2
The Exchange Agent for the Offer is: FIRST CHICAGO TRUST COMPANY OF NEW YORK
By Hand or Overnight Courier:
First Chicago Trust Company of New York
Tenders & Exchanges
14 Wall Street
8th Floor, Suite 4680-PECO
New York, New York 10005
By Mail:
(Registered or Certified Mail Recommended)
First Chicago Trust Company of New York
Tenders & Exchanges
Suite 4660-PECO
P.O. Box 2559
Jersey City, New Jersey 07303-2559
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED. QUESTIONS AND
REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE OFFERING
CIRCULAR/PROSPECTUS AND THIS LETTER OF TRANSMITTAL MAY BE DIRECTED TO D.F. KING
& CO., INC., THE INFORMATION AGENT FOR THE EXCHANGE OFFER, AT 77 WATER STREET,
NEW YORK, NEW YORK 10005, TELEPHONE (800) 628-8509 (TOLL-FREE) OR (212)
425-1685 (COLLECT).
----------------
This Letter of Transmittal is to be completed by holders of Depositary
Shares, (i) if certificates for Depositary Shares are to be forwarded herewith;
(ii) unless an Agent's Message (as defined in the accompanying Offering
Circular/Prospectus dated ________, 1995 (the "Offering Circular/Prospectus"))
is utilized, if tenders of Depositary Shares are to be made by book-entry
transfer into the account of the Exchange Agent at The Depository Trust Company
("DTC") pursuant to the procedures described under "The Offer-Procedures for
Tendering" in the Offering Circular/Prospectus; or (iii) if tenders of
Depositary Shares are to be made by book-entry transfer into the account of the
Exchange Agent at Philadelphia Depository Trust Company or Midwest Securities
Trust Company (collectively with DTC, the "Depositories" and each individually,
a "Depository") pursuant to the procedures under "The Offer - Procedures for
Tendering" in the Offering Circular/Prospectus. Holders of Depositary Shares
who tender shares by book-entry transfer are referred to herein as "Book-Entry
Shareholders."
Any holder of Depositary Shares who submits this Letter of Transmittal
and tenders Depositary Shares in accordance with the instructions contained
herein prior to the Expiration Date (as defined in the Offering
Circular/Prospectus) will thereby have directed the Exchange Agent to deliver
the Series B Subordinated Debentures to PECO Energy Capital which will deposit
the Series B Preferred Securities in the Trust with PNC Bank, Delaware, as
Trustee, which will issue the Preferred Trust Receipts to such Holder, all as
set forth in the Offering Circular/Prospectus. Tenders of Depositary Shares
pursuant to this Letter of Transmittal are subject to withdrawal as described
in the Offering Circular/Prospectus under the caption "The Offer--Withdrawal of
Tenders".
2
<PAGE> 3
DESCRIPTION OF DEPOSITARY SHARES TENDERED
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF DEPOSITARY SHARES TENDERED
REGISTERED HOLDER(S) (ATTACH ADDITIONAL LIST IF
(PLEASE FILL IN, IF BLANK) NECESSARY)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL NUMBER OF NUMBER OF
DEPOSITARY DEPOSITARY
CERTIFICATE SHARES REPRESENTED SHARES
NUMBER(S)* BY CERTIFICATE(S)* TENDERED**
<S> <C> <C>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
TOTAL SHARES
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by Holders tendering by book-entry transfer.
** Unless otherwise indicated, the holder will be deemed to have tendered
the full number of Depositary Shares represented by the tendered
certificates. See Instruction 4.
/ / CHECK HERE IF TENDERED DEPOSITARY SHARES ARE BEING DELIVERED BY
BOOK-ENTRY TRANSFER TO THE EXCHANGE AGENT'S ACCOUNT AT A DEPOSITORY
AND COMPLETE THE FOLLOWING:
Name of Tendering Institution
-------------------------------
Check box of Book-Entry Transfer Facility
/ / The Depository Trust Company
/ / Philadelphia Depository Trust Company
/ / Midwest Securities Trust Company
Account No.
-------------------------------------------------
Transaction Code No.
----------------------------------------
/ / CHECK HERE IF TENDERED DEPOSITARY SHARES ARE BEING DELIVERED PURSUANT
TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE
AGENT AND COMPLETE THE FOLLOWING:
Name(s) of Tendering Shareholder(s)
-------------------------
3
<PAGE> 4
Date of Execution of Notice of
Guaranteed Delivery
-----------------------------------------
Name of Institution which
Guaranteed Delivery
-----------------------------------------
If delivery by book-entry transfer:
Name of Tendering Institution
-----------------------------
Check box of Book-Entry Transfer Facility
/ / The Depository Trust Company
/ / Philadelphia Depository Trust Company
/ / Midwest Securities Trust Company
Account No.
-------------------------------------------------
Transaction Code No.
--------------------------------------
------------
SOLICITED TENDERS
(SEE INSTRUCTION 11)
PECO Energy will pay to any Soliciting Dealer, as defined in
Instruction 11, a solicitation fee of $0.__ per Depositary Share validly
tendered and accepted for exchange pursuant to the Offer (as herein defined).
The undersigned represents that the Soliciting Dealer which solicited
and obtained this tender is:
Name of Firm:
---------------------------------------------------
(Please Print)
Name of Individual Broker or Financial Consultant:
--------------
- ----------------------------------------------------------------
Identification Number (if known):
-------------------------------
Address:
--------------------------------------------------------
- ----------------------------------------------------------------
(Include Zip Code)
The acceptance of compensation by such Soliciting Dealer will
constitute a representation by it that: (i) it has complied with the applicable
requirements of the Securities Exchange Act of 1934 and the applicable rules
and regulations thereunder in connection with such solicitations; (ii) it is
entitled to such compensation for such solicitation under the terms and
conditions of the Offer; (iii) in soliciting tenders of Depositary Shares, it
has used no soliciting materials other than those furnished by PECO Energy;
and (iv) if it is a foreign broker or dealer not eligible for membership in
the National Association of Securities Dealers, Inc. (the "NASD"), it has
agreed to conform to the NASD's Rules of Fair Practice in making solicitations
outside the United States to the same extent as though it were an NASD member.
If tendered Depositary Shares are being delivered by book-entry
transfer made to an account maintained by the Exchange Agent with a Depository,
the Soliciting Dealer must return a Notice of Solicited Tenders to the Exchange
Agent to receive a solicitation fee.
SOLICITING DEALERS ARE NOT ENTITLED TO A SOLICITATION FEE FOR
DEPOSITARY SHARES BENEFICIALLY OWNED BY SUCH SOLICITING DEALER.
4
<PAGE> 5
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Pursuant to the offer by PECO Energy Company ("PECO Energy"),
the undersigned hereby tenders to PECO Energy each of the above-described
Depositary Shares, each representing a one-fourth (l/4) share interest in PECO
Energy's $7.96 Cumulative Preferred Stock, $100 liquidation preference, in
exchange for trust receipts (the "Preferred Trust Receipts"), issued by PECO
Energy Capital Trust I (the "Trust") with PNC Bank, Delaware, as Trustee (the
"Trustee"), each representing a ___% Cumulative Monthly Income Preferred
Security, Series B (the "Series B Preferred Securities") of PECO Energy
Capital, L.P. ("PECO Energy Capital") on the basis of one Preferred Trust
Receipt for each Depositary Share validly tendered and accepted. PECO Energy
offers to effect exchange of Preferred Trust Receipts for up to 5,400,000
Depositary Shares (the "Exchange"), upon the terms and subject to the
conditions set forth in the Offering Circular/Prospectus, receipt of which is
hereby acknowledged, and in this Letter of Transmittal (which, together with
the Offering Circular/Prospectus, constitute the "Offer"). Depositary Shares
not accepted for exchange because of proration or for any other reason will be
returned. The Preferred Trust Receipts will be issued in either book-entry
form through the facilities of a Depository or in certificated form, depending
on whether the Depositary Shares are tendered in certificated form or by
book-entry transfer.
Distributions, redemption price and stated liquidation
preference on the Series B Preferred Securities, and ultimately the Preferred
Trust Receipts, will be paid from corresponding payments on PECO Energy Company
___% Deferrable Interest Subordinated Debentures, Series B (the "Series B
Subordinated Debentures") issued by PECO Energy in consideration for the
issuance and deposit by PECO Energy Capital of the Series B Preferred
Securities.
The mechanics of the Exchange actually involve a simultaneous
two-step process. In step one, the undersigned, as holder of the Depositary
Shares, exchanges the Depositary Shares for the Series B Subordinated
Debentures of PECO Energy. In step two, the undersigned directs the Exchange
Agent to deliver the Series B Subordinated Debentures to PECO Energy Capital
upon issuance and deposit by PECO Energy Capital of the Series B Preferred
Securities with the Trust and the issuance by the Trustee of Preferred Trust
Receipts to the undersigned. Though the mechanics of the Exchange involve the
undersigned receiving Series B Subordinated Debentures and exchanging Series B
Subordinated Debentures for the Preferred Trust Receipts, the Exchange will
appear to the undersigned as a one-step transaction where the Depositary Shares
are exchanged directly for the Preferred Trust Receipts. The two-step process
will be effected simultaneously by use of the Exchange Agent as described in
the next paragraph. The undersigned acknowledges that it has no right to
retain Series B Subordinated Debentures.
Subject to and effective upon acceptance for exchange of the
Depositary Shares tendered herewith, the undersigned hereby sells, assigns and
transfers to or upon the order of PECO Energy, all right, title and interest in
and to all the Depositary Shares that are being tendered hereby and appoints
the Exchange Agent the true and lawful agent and attorney-in-fact of the
undersigned with respect to such Depositary Shares, with full power of
substitution (such power of attorney, being deemed to be an irrevocable power
coupled with an interest), to (a) accept depositary receipts for such
Depositary Shares or assign or transfer ownership of such Depositary Shares on
the account books maintained by the Depository which holds the Depositary
Shares, together, in any such case, with all accompanying evidences of
5
<PAGE> 6
transfer and authenticity, for deposit by the Depository into the account of
the Exchange Agent, (b) present such Depositary Shares for transfer on the
books of PECO Energy, (c) accept the Series B Subordinated Debentures from PECO
Energy in exchange for the Depositary Shares, (d) deliver the Series B
Subordinated Debentures to PECO Energy Capital, (e) deposit the Preferred Trust
Receipts into the account of the undersigned, or issue certificates for
Preferred Trust Receipts and (f) receive all benefits and otherwise exercise
all rights of beneficial ownership of such Depositary Shares, all in accordance
with the terms of the Offer.
The undersigned hereby represents and warrants that the
undersigned has full power and authority to tender, exchange, assign and
transfer the Depositary Shares tendered hereby and to acquire Preferred Trust
Receipts issuable upon the exchange of such tendered Depositary Shares and
that, when the undersigned's Depositary Shares are accepted for exchange, PECO
Energy will acquire good and unencumbered title to such tendered Depositary
Shares, free and clear of all liens, restrictions, charges and encumbrances and
not subject to any adverse claim. The undersigned will, upon request, execute
and deliver any additional documents deemed by PECO Energy to be necessary or
desirable to complete the exchange, assignment and transfer of tendered
Depositary Shares or transfer ownership of such Depositary Shares.
All authority herein conferred or agreed to be conferred shall
survive the death, bankruptcy or incapacity of the undersigned and every
obligation of the undersigned hereunder shall be binding upon the heirs, legal
representatives, successors, assigns, executors and administrators of the
undersigned. Except as stated in the Offer, this tender is irrevocable.
The undersigned understands that tenders of Depositary Shares
pursuant to any one of the procedures described in "The Offer - Procedures for
Tendering" of the Offering Circular/Prospectus and in the instructions hereto
will constitute agreements between the undersigned and PECO Energy upon the
terms and subject to the conditions of the Offer.
Unless otherwise indicated under "Special Exchange
Instructions", please cause Preferred Trust Receipts to be issued to me in
certificated form or by crediting the account of the undersigned at the
Depository which held my Depositary Shares, and return any Depositary Shares
not tendered or not accepted for exchange, in the name(s) of the undersigned
(and, in the case of Depositary Shares tendered by book-entry transfer, by
credit to the account at the Depository where my Depositary Shares were held).
Similarly, unless otherwise indicated under "Special Delivery Instructions,"
please mail any certificates for Depositary Shares not tendered or not accepted
for exchange (and accompanying documents, as appropriate), to the undersigned
at the address shown below the undersigned's signature(s). If both "Special
Exchange Instructions" and "Special Delivery Instructions" are completed,
please cause the Preferred Trust Receipts to be issued and delivered to, and
return any Depositary Shares not tendered or not accepted for exchange, in the
name(s) of, and deliver any certificates for such Depositary Shares to, the
person(s) so indicated.
6
<PAGE> 7
<TABLE>
<CAPTION>
SPECIAL EXCHANGE INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7) (SEE INSTRUCTIONS 1, 5 AND 7)
<S> <C>
To be completed ONLY if certificates representing Preferred To be completed ONLY if certificates for Depositary
Trust Receipts are to be issued, or certificates for Depositary Shares not tendered or not accepted for exchange, or
Shares not tendered or not accepted for exchange are to be certificates for Preferred Trust Receipts are to be
issued, in the name of someone other than the undersigned. mailed to someone other than the undersigned, or to the
undersigned at an address other than that shown below
Issue / / certificates for Depositary Shares to: the undersigned's signature(s).
Issue / / certificates for Preferred Trust Receipts in name Mail / / certificates for Depositary Shares to:
of:
Name Name
--------------------------------- ---------------------------
(Please Print) (Please Print)
-------------------------------------- -------------------------------
Address Address
------------------------------- ------------------------
-------------------------------------- -------------------------------
(Zip Code) (Zip Code)
--------------------------------------
(Taxpayer Identification No.) Mail / / certificates for Preferred Trust
Receipts to:
Name
---------------------------
(Please Print)
-------------------------------
Address
------------------------
-------------------------------
(Zip Code)
</TABLE>
7
<PAGE> 8
SIGN HERE
(PLEASE COMPLETE SUBSTITUTE FORM W-9 BELOW)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Signature(s) of Owner(s)
Dated , 1995
--------------------------------------------------------------
Name(s)
------------------------------------------------------------------
-------------------------------------------------------------------------
(Please Print)
Capacity (full title)
----------------------------------------------------
Address
------------------------------------------------------------------
-------------------------------------------------------------------------
(Include Zip Code)
Area Code and Telephone No.
----------------------------------------------
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
certificate(s) for Depositary Shares or on a security position listing or by
person(s) authorized to become registered holder(s) by certificates and
documents transmitted herewith. If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation or other
person acting in a fiduciary or representative capacity, please set forth
full title and see Instruction 5.)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
Authorized Signature
----------------------------------------------------
Name
--------------------------------------------------------------------
Title
-------------------------------------------------------------------
Address
-----------------------------------------------------------------
Name of Firm
------------------------------------------------------------
Area Code and Telephone Number
------------------------------------------
Dated , 1995
--------------------------------------------------------------
8
<PAGE> 9
PAYER'S NAME: FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C> <C>
=================================================================================================================================
PAYEE INFORMATION - / / Corporation / / Partnership
check appropriate box: / / Individual/Sole Proprietor / / Other
<CAPTION>
Name(s) as shown above on certificate(s) for Depositary Shares (if joint ownership, list first and circle the name of the
person or entity whose number you enter in Part I below).
- ---------------------------------------------------------------------------------------------------------------------------------
Address (if holder does not complete, signature in Part III below will constitute a certification that the address on the
reverse hereof is correct).
- ---------------------------------------------------------------------------------------------------------------------------------
City, State, and Zip Code
=================================================================================================================================
<S> <C> <C>
Substitute Part I - PLEASE PROVIDE YOUR TIN IN Social Security Number
Form W-9 THE BOX AT RIGHT AND CERTIFY BY OR
Department of the Treasury SIGNING AND DATING BELOW --------------------
Internal Revenue Service Employer Identification Number
TIN Applied for / /
Payer's Request for ---------------------------------------------------------------------------------
Taxpayer Part II -
Identification For Payees exempt from backup
Number (TIN) withholding, write "Exempt" here.
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Part III - Certification. Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a number to be
issued to me), and
(2) I am not subject to backup withholding because (a) I am exempt from backup withholding, (b) I have not been notified
by the Internal Revenue Service (the "IRS") that I am subject to backup withholding as a result of a failure to
report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding.
Certification Instructions. You must cross out item (2) above if you have been notified by the IRS that you are currently
subject to backup withholding because of under reporting interest or dividends on your tax return. However, if you have
been notified by the IRS that you are no longer subject to backup withholding, do not cross item (2).
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C>
SIGNATURE DATE
---------------------------- ------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
9
<PAGE> 10
NOTE: Failure to complete and return this substitute form W-9 may result in
backup withholding of 31% of any payment made to you with respect to the
Preferred Trust Receipts. Please review the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for
additional details.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU
CHECKED THE BOX IN PART I OF SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a Taxpayer Identification Number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a Taxpayer Identification Number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(b) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a Taxpayer Identification Number within
60 days, thirty-one (31) percent of all reportable payments made to me will
be withheld until I provide a properly certified Taxpayer Identification
Number to the Exchange Agent.
------------------------------------------- ------------------------
Signature Date
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
I. GUARANTEE OF SIGNATURES
No signature guarantee is required on this Letter of Transmittal (i)
if tendered Depositary Shares are registered in the name(s) of the undersigned
and the Preferred Trust Receipts to be issued in exchange therefor are to be
issued (and any Depositary Shares not tendered or not accepted for exchange are
to be returned) in the name of the registered holder(s) (which term, for the
purposes described herein, shall include any participant in a Depository whose
name appears on a security listing as the owner of Depositary Shares) and (ii)
such holder(s) have not completed the instruction entitled "Special Exchange
Instructions" or "Special Delivery Instructions" on this Letter of Transmittal.
If the tendered Depositary Shares are registered in the name(s) of someone
other than the undersigned or if the Preferred Trust Receipts to be issued in
exchange therefor are to be issued (or Depositary Shares not tendered or not
accepted for exchange are to be returned) in the name of any other person, such
tendered Depositary Shares must be endorsed or accompanied by written
instruments of transfer in form satisfactory to the Exchange Agent and duly
executed by the registered holder, and the signature on the endorsement or
instrument of transfer must be guaranteed by a financial institution (including
most banks, savings and loan associations and brokerage houses) that is a
participant in the Security Transfer Agents Medallion Program or the Stock
Exchange Medallion Program (any of the foregoing hereinafter referred to as an
"Eligible Institution"). See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND DEPOSITARY SHARES.
Depositary receipts for all physically delivered Depositary Shares, or
confirmation of any book-entry transfer to the Exchange Agent's account at a
Depository of Depositary Shares tendered by book-entry transfer (a "Book-Entry
Confirmation"), as well as (i) a properly completed and duly executed copy of
this Letter of Transmittal, and any other documents required by this Letter of
Transmittal, or (2) an Agent's Message in connection with a book-entry
transfer, must be received by the Exchange Agent at either of the addresses set
forth herein prior to the Expiration Date.
10
<PAGE> 11
If a holder of Depositary Shares desires to participate in the Offer
and time will not permit this Letter of Transmittal or Depositary Shares to
reach the Exchange Agent before the Expiration Date or the procedure for
book-entry transfer cannot be completed on a timely basis, a tender may be
effected if the Exchange Agent has received at its office prior to the
Expiration Date, a Notice of Guaranteed Delivery from an Eligible Institution
setting forth the name and address of the tendering Holder, the name(s) in
which the Depositary Shares are registered and, if the Depositary Shares are
held in certificated form, the certificate numbers of the Depositary Shares to
be tendered, and stating that the tender is being made thereby and guaranteeing
that within three New York Stock Exchange, Inc. ("NYSE") trading days after the
date of execution of such Notice of Guaranteed Delivery by the Eligible
Institution, the Depositary Shares in proper form for transfer together with a
properly completed and duly executed Letter of Transmittal (and any other
required documents), or a confirmation of book-entry transfer of such
Depositary Shares into the Exchange Agent's account at the applicable
Depository, along with a Letter of Transmittal (and any other required
documents) or, in the case of DTC, an Agent's Message, will be delivered by
such Eligible Institution. Unless the Depositary Shares being tendered by the
above-described method are deposited with the Exchange Agent within the time
period set forth above or a confirmation of book entry transfer of such
Depositary Shares into the Exchange Agent's account at a Depository in
accordance with such Depository's procedures (accompanied or preceded by a
properly completed Letter of Transmittal and any other required documents), or
in accordance with DTC's Automated Tender Offer Program ("ATOP") procedures
(along with an Agent's message), is received, PECO Energy may, at its option,
reject the tender.
The method of delivery of Depositary Shares and all other required
documents, including delivery through a Depository, is at the option and risk
of the tendering shareholder. If certificates for Depositary Shares are sent
by mail, registered mail with return receipt requested, properly insured, is
recommended. In all cases, sufficient time should be allowed to ensure timely
delivery.
No alternative, conditional or contingent tenders will be accepted,
and no fractional Depositary Shares will be accepted for exchange. By
executing this Letter of Transmittal, the tendering holder waives any right to
receive any notice of the acceptance of the Depositary Shares for exchange.
3. INADEQUATE SPACE.
If the space provided herein is inadequate, the certificate numbers
and/or the number of Depositary Shares should be listed on a separate signed
schedule attached hereto.
4. PARTIAL TENDERS.
(Not applicable to Book-Entry Shareholders). If fewer than all the
Depositary Shares represented by any certificate delivered to the Exchange
Agent are to be tendered, fill in the number of Depositary Shares which are to
be tendered in the box entitled "Number of Shares Tendered." In such case, a
new certificate for the remainder of the Depositary Shares represented by the
old certificate will be sent to the person(s) signing this Letter of
Transmittal, unless otherwise provided in the appropriate box on this Letter of
Transmittal, as promptly as practicable following the Expiration Date. All
Depositary Shares represented by certificates delivered to the Exchange Agent
will be deemed to have been tendered unless otherwise indicated.
11
<PAGE> 12
5. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS.
If this Letter of Transmittal is signed by the registered holder(s) of
the Depositary Shares tendered hereby, the signature(s) must correspond with
the name(s) as written on the face of the certificates without alteration
enlargement or any change whatsoever.
If any of the Depositary Shares tendered hereby are held of record by
two or more persons, all such persons must sign this Letter of Transmittal.
If any of the Depositary Shares tendered hereby are registered in
different names on different certificates, it will be necessary to complete,
sign and submit as many separate Letters of Transmittal as there are different
registrations of certificates.
If this Letter of Transmittal is signed by the registered holder(s) of
the Depositary Shares tendered hereby, no endorsements of certificates or
separate stock powers are required unless Preferred Trust Receipts issued in
exchange therefor are to be issued, or Depositary Shares not tendered or not
exchanged are to be returned, in the name of any person other than the
registered holder(s). Signatures on any such certificates or stock powers must
be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Depositary Shares tendered hereby, certificates
must be endorsed or accompanied by appropriate stock powers, in either case,
signed exactly as the name(s) of the registered holder(s) appear(s) on the
certificates for such Depositary Shares. Signature(s) on any such certificates
or stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal or any certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or
representative capacity, such person should so indicate when signing, and
proper evidence satisfactory to the Exchange Agent of the authority of such
person so to act must be submitted.
6. STOCK TRANSFER TAXES.
PECO Energy will pay all stock transfer taxes, if any, applicable to
the exchange of any Depositary Shares pursuant to the Offer. If, however,
Depositary Shares not tendered or accepted for exchange are to be issued in the
name of any person other than the registered holder of the Depositary Shares
tendered or if a transfer tax is imposed for any reason other than the exchange
of Depositary Shares pursuant to the Offer, then the amount of any such
transfer taxes (whether imposed on the registered holder or any other Persons)
will be payable by the holder. If satisfactory evidence of payment of such
taxes or exemption therefrom is not submitted with this Letter of Transmittal,
the amount of such transfer taxes will be billed directly to such tendering
holder.
7. SPECIAL EXCHANGE AND DELIVERY INSTRUCTIONS.
If any Depositary Shares not tendered or not accepted for exchange are
to be issued or to be returned to, a person other than the person(s) signing
this Letter of Transmittal or certificates for Depositary Shares not tendered
or not accepted for exchange are to be mailed to someone other than the
person(s) signing this Letter of Transmittal or to the person(s) signing this
Letter of Transmittal at an address other than that shown above, the
appropriate boxes on this Letter of Transmittal should be completed.
12
<PAGE> 13
8. SUBSTITUTE FORM W-9.
Under the federal income tax laws, the Exchange Agent may be required
to withhold 31% of the amount of any payments made to certain shareholders
pursuant to the Offer. In order to avoid such backup withholding, each
tendering shareholder, and, if applicable, each other payee, must provide such
shareholder's or payee's correct taxpayer identification number and certify
that such holder of Depositary Shares or payee is not subject to such backup
withholding by completing the Substitute Form W-9 set forth above. In general,
if a holder of Depositary Shares or payee is an individual, the taxpayer
identification number is the Social Security number of such individual.
Certain holders of Depositary Shares or payees (including, among others, all
corporations and certain foreign individual(s)) are not subject to these backup
withholding and reporting requirements. In order to satisfy the Exchange Agent
that a foreign individual qualifies as an exempt recipient, such holder of
Depositary Shares or payee must submit a statement, signed under penalties of
perjury, attesting to that individual's exempt status. Such statements can be
obtained from the Exchange Agent. For further information concerning backup
withholding and instructions for completing the Substitute Form W-9 (including
how to obtain a taxpayer identification number if you do not have one and how
to complete the Substitute Form W-9 if Shares are held in more than one name),
consult the enclosed Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
9. WAIVER OF CONDITIONS.
The conditions of the Offer may be waived by PECO Energy from
time to time in accordance with, and subject to the limitations described in,
the Offering Circular/Prospectus, provided that acceptance of Depositary Shares
validly tendered in the Offer is subject to the condition that as of the
Expiration Date there be at least 1,000,000 Preferred Trust Receipts to be
issued and 400 record or beneficial holders of Preferred Trust Receipts to be
issued in exchange of such Depositary Shares, which condition may not be waived.
10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES.
Requests for assistance or additional copies of the Offering
Circular/Prospectus and this Letter of Transmittal may be obtained from the
Information Agent at its telephone number set forth below.
11. SOLICITED TENDERS.
PECO Energy will pay to a Soliciting Dealer (as defined herein) a
solicitation fee of $0.__ per Depositary Share validly tendered and accepted
for exchange pursuant to the Offer. For purposes of this Instruction 11,
"Soliciting Dealer" includes (i) any broker or dealer in securities, including
a Dealer Manager in its capacity as a dealer or broker, who is a member of
any national securities exchange or of the National Association of Securities
Dealers, Inc. (the "NASD"), (ii) any foreign broker or dealer not eligible for
membership in the NASD who agrees to conform to the NASD's Rules of Fair
Practice in soliciting tenders outside the United States to the same extent as
though it were an NASD member, or (iii) any bank or trust company, any one of
whom has solicited and obtained a tender pursuant to the Offer. No
Solicitation Fee shall be payable to a Soliciting Dealer with respect to the
tender of Depositary Shares by a holder unless the Letter of Transmittal
accompanying such tender designates such Soliciting Dealer as such in the box
captioned "Solicited Tenders".
If tendered Depositary Shares are being delivered by book-entry
transfer made to an account maintained by the Exchange Agent with a Depository,
the Soliciting Dealer must return a Notice of Solicited Tenders to the Exchange
13
<PAGE> 14
Agent within three NYSE trading days after the Expiration Date in order to
receive a Solicitation Fee. No Solicitation Fee shall be payable to a
Soliciting Dealer in respect of Depositary Shares (i) beneficially owned by
such Soliciting Dealer or (ii) registered in the name of such Soliciting
Dealer unless such Depositary Shares are held by such Soliciting Dealer as
nominee and such Depositary Shares are being tendered for the benefit of one
or more beneficial owners identified on the Letter of Transmittal or the
Notice of Solicited Tenders. No Solicitation Fee shall be payable to the
Soliciting Dealer with respect to the tender of Depositary Shares by the holder
of record, for the benefit of the beneficial owner, unless the beneficial owner
has designated such Soliciting Dealer.
14
<PAGE> 15
The Information Agent for the Offer is:
D. F. KING & CO., INC.
77 Water Street
New York, New York 10005
Banks and Brokers Call Collect:
(212) 425-1685
All Others Call Toll-Free:(800) 628-8509
The Dealer Managers for the Offer are:
MERRILL LYNCH & CO. SMITH BARNEY INC.
World Financial Center 388 Greenwich Street
250 Vesey Street New York, New York 10013
South Tower
New York, New York 10281-1201
Marketing Support Liability Management Group
(212) 236-4565 (800) 813-3754
October __, 1995
15
<PAGE> 1
EXHIBIT 99-2
NOTICE OF GUARANTEED DELIVERY
This form, or a form substantially equivalent to this form, must be
used to accept the Offer (as defined below) if (i) Depositary Shares each
representing a one-fourth (1/4) interest in PECO Energy Company ("PECO Energy")
$7.96 Cumulative Preferred Stock (the "Depositary Shares") cannot be delivered
to the Exchange Agent by the Expiration Date (as defined in the Offering
Circular/Prospectus dated ____ __, 1995 (the "Offering Circular/Prospectus")),
(ii) the procedure for book-entry transfer of Depositary Shares (as set out in
the Offering Circular/Prospectus) cannot be completed by the Expiration Date or
(iii) the Letter of Transmittal or Agent's Message and all other required
documents cannot be delivered to the Exchange Agent prior to the Expiration
Date. This form, properly completed and duly executed, may be delivered by
hand or facsimile transmission or mail to the Exchange Agent. See the Offering
Circular/Prospectus.
TO: FIRST CHICAGO TRUST COMPANY OF NEW YORK, EXCHANGE AGENT
By Hand or Overnight By Mail:
Courier: (registered or certified mail
recommended)
First Chicago Trust Company
of New York First Chicago Trust Company of New
Tenders & Exchanges York
14 Wall Street Tenders & Exchanges
8th Floor, Suite 4680 - PECO Suite 4660 - PECO
New York, New York 10005 P.O. Box 2559
Jersey City, NJ 07303-2559
By Facsimile Transmission: Confirm Receipt of Notice
(For Eligible Institutions Only) of Guaranteed Delivery by Telephone:
(201) 222-4270 or 4721 (201) 222-4707
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION TO A
NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to PECO Energy Company upon the terms
and conditions set forth in the Offering Circular/Prospectus dated ________ __,
1995 and the related Letter of Transmittal (which constitute the "Offer"),
receipt of which is hereby acknowledged, the number of Depositary Shares set
forth below, pursuant to the guaranteed delivery procedure set forth in the
Offering Circular/Prospectus.
Number of shares of Depositary SIGN HERE
Shares tendered:
-----------------------------------
Certificate Nos. (if available)
-----------------------------------
----------------------------------- (Signature(s))
-----------------------------------
-----------------------------------
(Name(s)) (Please Print)
If Depositary Shares will be
tendered by book-entry transfer: -----------------------------------
(Address)
Name of Tendering Institution: -----------------------------------
----- (Zip Code)
----------------------------------- -----------------------------------
----------------------------------- (Area Code and Telephone No.)
Check Box of Book-Entry Transfer Facility
/ / The Depository Trust Company
/ / Philadelphia Depository Trust
Company
/ / Midwest Securities Trust
Company
Account No.
------------------------
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, a firm that is a member of a registered national
securities exchange or the National Association of Securities Dealers, Inc., or
a commercial bank or trust company having an office branch or agency in the
United States, guarantees (a) that the above named-person(s) own(s) the
Depositary Shares "tendered" hereby as such term is defined within Rule 14e-4
under the Securities Exchange Act of 1934, as amended, (b) that such tender of
Depositary Shares complies with Rule 14e-4 and (c) to deliver to the Exchange
Agent either the Depositary Shares tendered hereby, in proper form for
transfer, or confirmation of the book-entry transfer of the Depositary Shares
tendered hereby into the account of the Exchange Agent at The Depository Trust
Company ("DTC"), Midwest Securities Trust Company or Philadelphia Depository
Trust Company, in each case together with a properly completed and duly
executed Letter(s) of Transmittal, with any required signature guarantees (or
in the case of DTC, an Agent's Message (as defined
2
<PAGE> 3
in the Offering Circular/Prospectus)) and any other required documents within
three New York Stock Exchange trade days after the date of execution of this
Notice.
--------------------------------------
(Name of Firm)
--------------------------------------
(Authorized Signature)
--------------------------------------
(Name)
--------------------------------------
(Address)
--------------------------------------
(Zip Code)
--------------------------------------
(Area Code and Telephone No.)
Dated:
--------------------------
DO NOT SEND STOCK CERTIFICATES WITH THIS FORM. YOUR STOCK CERTIFICATES MUST BE
SENT WITH THE LETTER OF TRANSMITTAL.
3
<PAGE> 1
EXHIBIT 99-3
PECO ENERGY COMPANY
OFFER TO EXCHANGE PREFERRED TRUST RECEIPTS
EACH REPRESENTING A
___% CUMULATIVE MONTHLY INCOME PREFERRED SECURITY, SERIES B
OF PECO ENERGY CAPITAL, L.P.
(stated liquidation preference $25 per Preferred Security)
FOR UP TO 5,400,000 OUTSTANDING DEPOSITARY SHARES
EACH REPRESENTING A 1/4 INTEREST IN A SHARE OF
$7.96 CUMULATIVE PREFERRED STOCK
OF
PECO ENERGY COMPANY
October __, 1995
To Brokers, Dealers, Commercial
Banks, Trust Companies and
Other Nominees
We have been appointed by PECO Energy Company, a Pennsylvania
corporation ("PECO Energy"), and PECO Energy Capital, L.P., a Delaware limited
partnership ("PECO Energy Capital"), to act as Dealer Managers in connection
with the offer by PECO Energy to exchange, upon the terms and subject to the
conditions set forth in the Offering Circular/Prospectus referred to below and
the related Letter of Transmittal (which together constitute the "Offer"),
Trust Receipts (the "Preferred Trust Receipts"), each representing a ____%
Cumulative Monthly Income Preferred Security, Series B ("Series B Preferred
Securities"), representing a limited partner interest issued by PECO Energy
Capital, for up to 5,400,000 of outstanding Depositary Shares, each
representing a one-fourth (1/4) interest in a share of PECO Energy's $7.96
Cumulative Preferred Stock (the "Depositary Shares"). In connection with the
Offer, PECO Energy will deliver its ____% Deferrable Interest Subordinated
Debentures, Series B ("Series B Subordinated Debentures"), to First Chicago
Trust Company of New York (the "Exchange Agent"), which will receive the Series
B Subordinated Debentures on behalf of the holders of the Depositary Shares in
exchange for Depositary Shares; the Exchange Agent (acting pursuant to the
directions of the holders of the Depositary Shares) will deliver the Series B
Subordinated Debentures to PECO Energy Capital in consideration for the
issuance and deposit by PECO Energy Capital of the Series B Preferred
Securities with PECO Energy Capital Trust I (the "Trust"); and the Trust will
issue the Preferred Trust Receipts to the Exchange Agent for distribution to
the former holders of the Depositary Shares.
Pursuant to the Offer, exchanges will be made on the basis of one
Preferred Trust Receipt for each Depositary Share validly tendered and
<PAGE> 2
accepted for exchange in the Offer. Depositary Shares not accepted for
exchange because of proration or any other reason will be returned.
The Exchange Agent, on behalf of PECO Energy, will accept for exchange
all Depositary Shares validly tendered and not withdrawn, up to 5,400,000
shares (or, if decreased as described in the Offering Circular/Prospectus, such
lesser number as PECO Energy may elect to exchange pursuant to the Offer), upon
the terms and subject to the conditions of the Offer, including the provisions
thereof relating to proration described in the Offering Circular/Prospectus
dated October __, 1995 (the "Offering Circular/Prospectus").
PECO Energy will upon request, reimburse brokers, dealers, commercial
banks and trust companies for reasonable and necessary costs and expenses
incurred by them in forwarding materials to their customers. PECO Energy will
pay all stock transfer taxes applicable to the acceptance of Depositary Shares
pursuant to the Offer, subject to Instruction 6 of the Letter of Transmittal.
Soliciting Dealers should take care to ensure proper record-keeping to
document their entitlement to any solicitation fee.
Any inquiries you may have with respect to the Offer should be
addressed to, and additional copies of the enclosed materials may be obtained
from, the Information Agent or the undersigned at the addresses and telephone
numbers set forth in the back cover of the Offering Circular/Prospectus.
For your information and for forwarding to your clients for whom you
hold Depositary Shares registered in your name or in the name of your nominee,
we are enclosing the following documents:
1. Offering/Circular Prospectus dated October __, 1995;
2. Letter of Transmittal for your use and for the information of
your clients, together with GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9
providing information relating to backup federal income tax
withholding;
3. Notice of Guaranteed Delivery to be used to accept the Offer
if the Depositary Shares and all other required documents
cannot be delivered to the Exchange Agent by the Expiration
Date (as defined in the Offering/Circular Prospectus), or the
book-entry transfer of the Depositary Shares cannot be
completed by the Expiration Date;
4. A form of letter that may be sent to your clients of whose
accounts you hold Depositary Shares registered in your name or
in the name of your nominee, with space provided for obtaining
such clients' instructions and designation of Soliciting
Dealer with regard to the Offer;
5. A Questions and Answers Pamphlet that may be sent to your
clients;
2
<PAGE> 3
6. A letter from the Chairman of PECO Energy to holders of
Depositary Shares; and
7. Return envelope addressed to FIRST CHICAGO TRUST COMPANY OF
NEW YORK, the Exchange Agent.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE.
THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON _____, 1995, UNLESS THE OFFER IS EXTENDED.
NO RECOMMENDATION TO HOLDERS OF DEPOSITARY SHARES AS TO WHETHER TO
TENDER OR REFRAIN FROM TENDERING IN THE OFFER IS MADE BY PECO ENERGY, THE BOARD
OF DIRECTORS OF PECO ENERGY, PECO ENERGY CAPITAL, ITS GENERAL PARTNER, THE
TRUST OR ITS TRUSTEE. HOLDERS OF DEPOSITARY SHARES ARE URGED TO CONSULT THEIR
FINANCIAL AND TAX ADVISERS IN MAKING THEIR DECISIONS ON WHAT ACTION TO TAKE IN
LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES.
PECO Energy will pay a solicitation fee of $_____ per Depositary Share
(the "Solicitation Fee") for any Depositary Shares tendered by physically
delivering depositary receipts which are accepted for exchange and exchanged
pursuant to the Offer and covered by a Letter of Transmittal which designates,
as having solicited and obtained the tender, the name of (i) any broker or
dealer in securities, including each Dealer Manager in its capacity as a broker
or dealer, which is a member of any national securities exchange or of the
National Association of Securities Dealers, Inc. (the "NASD"), (ii) any foreign
broker or dealer not eligible for membership in the NASD which agrees to
conform to the NASD's Rules of Fair Practice in soliciting tenders outside the
United States to the same extent as though it were an NASD member, or (iii) any
bank or trust company (each of which is referred to herein as a "Soliciting
Dealer"). No Solicitation Fee shall be payable to a Soliciting Dealer with
respect to the tender of depositary receipts evidencing Depositary Shares by a
holder unless the Letter of Transmittal accompanying such tender designates
such Soliciting Dealer as such in the box captioned "Solicited Tenders".
If tendered Depositary Shares are being delivered by book-entry
transfer made to an account maintained by the Exchange Agent with DTC, the
Soliciting Dealer must return a Notice of Solicited Tenders to the Exchange
Agent within three New York Stock Exchange trading days after the Expiration
Date in order to receive a Solicitation Fee. No Solicitation Fee shall be
payable to a Soliciting Dealer in respect of Depositary Shares (i) beneficially
owned by such Soliciting Dealer or (ii) registered in the name of such
Soliciting Dealer unless such Depositary Shares are held by such Soliciting
Dealer as nominee and such Depositary Shares are being tendered for the benefit
of one or more beneficial owners identified on the Letter of Transmittal or the
Notice of Solicited Tenders. No Solicitation Fee shall be payable to the
Soliciting Dealer with respect to the tender of Depositary Shares by the holder
of record, for the benefit of the beneficial owner, unless the beneficial owner
has designated such Soliciting Dealer.
3
<PAGE> 4
No Solicitation Fee shall be payable to a Soliciting Dealer if such
Soliciting Dealer is required for any reason to transfer any portion of such
fee to a tendering holder (other than itself). No broker, dealer, bank, trust
company or fiduciary shall be deemed to be the agent of PECO Energy, the
Exchange Agent, the Information Agent or the Dealer Managers for purposes of
the Offer.
Very truly yours,
Merrill Lynch & Co. Smith Barney Inc.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE
YOU THE AGENT OF PECO ENERGY, PECO ENERGY CAPITAL, THE GENERAL PARTNER OF PECO
ENERGY CAPITAL, THE DEALER MANAGERS, THE INFORMATION AGENT OR THE EXCHANGE
AGENT, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY
STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE
DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS CONTAINED THEREIN.
4
<PAGE> 5
NOTICE OF SOLICITED TENDERS
Listed below are the number of Depositary Shares whose tender you have
solicited. All Depositary Shares beneficially owned by a beneficial owner,
whether in one account or several, and in however many capacities, must be
aggregated for purposes of completing the tables below. Any questions as to
what constitutes beneficial ownership should be directed to the Exchange Agent.
If the space below is inadequate, list the Depositary Shares in a separate
signed schedule and affix the list to this Notice of Solicited Tenders. Please
do not complete the sections of the table headed "TO BE COMPLETED ONLY BY
EXCHANGE AGENT."
ALL NOTICES OF SOLICITED TENDERS SHOULD BE RETURNED TO THE EXCHANGE
AGENT AT THE ADDRESS SET FORTH ON THE BACK COVER OF THE OFFERING
CIRCULAR/PROSPECTUS. ALL QUESTIONS CONCERNING THE NOTICES OF SOLICITED TENDERS
SHOULD BE DIRECTED TO THE INFORMATION AGENT AT THE TELEPHONE NUMBER SET FORTH
ON THE BACK COVER OF THE OFFERING CIRCULAR/PROSPECTUS.
SOLICITED TENDERS OF DEPOSITARY SHARES NOT
BENEFICIALLY OWNED BY SOLICITING DEALER
<TABLE>
<CAPTION>
TO BE COMPLETED TO BE COMPLETED TO BE COMPLETED TO BE COMPLETED
BY THE SOLICITING BY THE SOLICITING ONLY BY ONLY BY
DEALER DEALER EXCHANGE AGENT EXCHANGE AGENT
----------------- ----------------- --------------- ---------------
NUMBER OF SHARES NUMBER OF SHARES FEE
BENEFICIAL OWNERS TENDERED VOI TICKET NUMBER* ACCEPTED $0.__ PER SHARE
----------------- ---------------- ------------------ ---------------- ---------------
<S> <C> <C> <C> <C>
Beneficial Owner No. 1 . . .
---------- ---------- ---------- ----------
Beneficial Owner No. 2 . . .
---------- ---------- ---------- ----------
Beneficial Owner No. 3 . . .
---------- ---------- ---------- ----------
Beneficial Owner No. 4 . . .
---------- ---------- ---------- ----------
Beneficial Owner No. 5 . . .
---------- ---------- ---------- ----------
Total . . . . . . . .
---------- ---------- ---------- ----------
</TABLE>
- -------------------
* Complete if Depositary Shares delivered by book-entry transfer.
All questions as to the validity, form and eligibility (including time
of receipt) of Notices of Solicited Tenders will be determined by the Exchange
Agent, in its sole discretion, which determination will be final and binding.
Neither the Exchange Agent nor any other person will be under any duty to give
notification of any defects or irregularities in any Notice of Solicited
Tenders or incur any liability for failure to give such notification.
The undersigned hereby confirms that: (i) it has complied with the
applicable requirements of the Securities Exchange Act of 1934, and the
<PAGE> 6
applicable rules and regulations thereunder, in connection with such
solicitation; (ii) it is entitled to such compensation for such solicitation
under the terms and conditions of the Offering Circular/Prospectus; (iii) in
soliciting tenders of Depositary Shares, it has used no soliciting materials
other than those furnished by PECO Energy; and (iv) if it is a foreign broker
or dealer not eligible for membership in the NASD, it has agreed to conform to
the NASD's Rules of Fair Practice in making solicitations outside the United
States to the same extent as though it were an NASD member.
<TABLE>
<S> <C>
- --------------------------- -----------------------------
Printed Firm Name Address
------------------------------
City, State and Zip Code
- --------------------------- -----------------------------
Authorized Signature Area Code and Telephone Number
</TABLE>
2
<PAGE> 1
EXHIBIT 99-4
PECO Energy Company
Offer to Exchange
Trust Receipts ("TOPrS(SM)") each representing a
__% Cumulative Monthly Income Preferred Security,
Series B of PECO Energy Capital, L.P.
(stated liquidation preference $25 per Preferred Security)
For up to 5,400,000 Outstanding Depositary Shares
Each Representing a One-Fourth Interest in a Share of $7.96
Cumulative Preferred Stock
of
PECO Energy Company
October __, 1995
To Our Clients:
Enclosed for your consideration are the Offering Circular/Prospectus
dated October __, 1995 (the "Offering Circular/Prospectus") and the related
Letter of Transmittal (which together constitute the "Offer") in connection
with the Offer by PECO Energy Company, a Pennsylvania corporation ("PECO
Energy"), to effect the exchange of trust receipts, (the "Preferred Trust
Receipts"), each representing a ____% Cumulative Monthly Income Preferred
Security, Series B, (the "Series B Preferred Securities") representing a
limited partner interest issued by PECO Energy Capital, L.P., a limited
partnership formed under the laws of the State of Delaware ("PECO Energy
Capital") for up to 5,400,000 of outstanding depositary shares ("the Depositary
Shares") each representing a one-fourth interest in a share of $7.96 Cumulative
Preferred Stock of PECO Energy. In connection with the Offer, PECO Energy will
deliver its % Deferrable Interest Subordinated Debentures, Series B (the
"Series B Subordinated Debentures") to First Chicago Trust Company of New York
(the "Exchange Agent"), which will receive the Series B Subordinated Debentures
on behalf of the holders of the Depositary Shares in exchange for Depositary
Shares; the Exchange Agent (acting pursuant to the directions of the holders of
the Depositary Shares) will deliver the Series B Subordinated Debentures to
PECO Energy Capital in consideration for the issuance and deposit by PECO
Energy Capital of the Series B Preferred Securities with PECO Energy Capital
Trust I (the "Trust"); and the Trust will issue the Preferred Trust Receipts to
the Exchange Agent for distribution to the former holders of the Depositary
Shares.
- --------------------
"Trust Originated Preferred Securities" and "TOPrS(SM)" are service marks of
Merrill Lynch & Co.
<PAGE> 2
Pursuant to the Offer, exchanges will be made on the basis of one (1)
Preferred Trust Receipt for each Depositary Share validly tendered and accepted
for exchange in the Offer. Depositary Shares not accepted for exchange because
of proration or otherwise will be returned.
PECO Energy will accept for exchange Depositary Shares validly
tendered (or defectively tendered but as to which PECO Energy has waived the
defect) and not withdrawn, upon the terms and subject to the conditions of the
Offer, including the provisions thereof relating to proration described in the
Offering Circular/Prospectus. We are the holder of record of Depositary Shares
held for your account. A tender of such Depositary Shares can be made only by
us as the holder of record and pursuant to your instructions. The Letter of
Transmittal is furnished to you for your information only and cannot be used by
you to tender Depositary Shares held by us for your account.
We request instructions as to whether you wish us to tender any or all
of the Depositary Shares held by us for your account, upon the terms and
subject to the conditions set forth in the Offering Circular/Prospectus and the
Letter of Transmittal. We also request that you designate, in the box
captioned "Soliciting Tenders", any Soliciting Dealer who solicited your tender
of Depositary Shares.
Your attention is invited to the following:
1. The Offer and withdrawal rights expire at 12:00 Midnight, New York
City time, on ___________ __, 1995, unless the Offer is extended.
2. Subject to the next sentence, PECO Energy expressly reserves the
right to extend, amend or modify the terms of the Offer, and withdraw or
terminate and not accept for exchange any Depositary Shares, at any time prior
to the date of expiration of the Offer for any reason, including (without
limitation) if holders of fewer than 2,800,000 Depositary Shares are tendered
(which condition may be waived by PECO Energy). In addition, acceptance of
Depositary Shares validly tendered in the Offer is subject to the condition
that there be at least 1,000,000 Trust Receipts to be issued and 400 record or
beneficial holders of Preferred Trust Receipts to be issued in exchange for
Depositary Shares, which conditions may not be waived.
3. Any stock transfer taxes applicable to the exchange of Depositary
Shares pursuant to the Offer will be paid by PECO Energy, except as otherwise
provided in Instruction 6 of the Letter of Transmittal.
2
<PAGE> 3
Please note that a Questions and Answers pamphlet regarding the Exchange Offer
is enclosed for your information.
If you wish to have us tender any or all of your Depositary Shares
please so instruct us by completing, executing, detaching and returning to us
the instruction form on the detachable part hereof. An envelope to return your
instructions to us is enclosed. If you authorize tender of your Depositary
Shares, all such Depositary Shares will be tendered unless otherwise specified
on the detachable part hereof. Your instructions should be forwarded to us in
ample time to permit us to submit a tender on your behalf by the Expiration
Date.
As described in the Offering Circular/Prospectus, if fewer than all
Depositary Shares validly tendered prior to the Expiration Date are to be
accepted by PECO Energy, PECO Energy will accept Depositary Shares from each
tendering holder on a pro rata basis, subject to adjustment to avoid the
acceptance for exchange of fractional shares.
THE OFFER IS NOT BEING MADE TO, NOR WILL TENDERS BE ACCEPTED FROM OR
ON BEHALF OF, HOLDERS OF DEPOSITARY SHARES IN ANY JURISDICTION IN WHICH THE
MAKING OF THE OFFER OR ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE
LAWS OF SUCH JURISDICTION. IN THOSE JURISDICTIONS THE LAWS OF WHICH REQUIRE
THAT THE OFFER BE MADE BY A LICENSED BROKER OR DEALER, THE OFFER SHALL BE
DEEMED TO BE MADE ON BEHALF OF PECO ENERGY BY MERRILL LYNCH & CO., SMITH BARNEY
INC. OR ONE OR MORE REGISTERED BROKERS OR DEALERS LICENSED UNDER THE LAWS OF
SUCH JURISDICTION.
Instructions with Respect to the Offer
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offering Circular/Prospectus dated ______________ __, 1995 and the related
Letter of Transmittal in connection with the Offer by PECO Energy to effect the
exchange of the Preferred Trust Receipts for up to 5,400,000 shares of
outstanding Depositary Shares each representing a one-fourth interest in a
share of $7.96 Cumulative Preferred Stock of PECO Energy that are validly
tendered and accepted for exchange. Pursuant to the Offer, exchanges will be
made on the basis of one Preferred Trust Receipt for each Depositary Share
validly tendered and accepted for exchange in the Offer. Depositary Shares not
accepted for exchange because of proration or otherwise will be returned.
This will instruct you to tender the number of Depositary Shares
indicated below held by you for the account of the undersigned, upon the terms
and subject to the conditions set forth in the Offering Circular/Prospectus and
the related Letter of Transmittal.
3
<PAGE> 4
By checking this box, all Depositary Shares held by you for our account,
including fractional shares, will be tendered in the Offer. If fewer than
all Depositary Shares are to be tendered, we have checked the box and
indicated below the aggregate number of Depositary Shares to be tendered by
you.
shares*
--------
----------------------------------
- -------------------
* Unless otherwise indicated, it will be assumed that all Depositary
Shares held by us for your account are to be tendered.
4
<PAGE> 5
Please designate in the box below any Soliciting Dealer who
solicited your tender.
SOLICITED TENDERS
The undersigned represents that the Soliciting
Dealer who solicited and obtained this tender is:
Name of Firm:
-----------------------------------------------------------
(Please Print)
Name of Individual Broker or Financial Consultant:
-----------------------------------------------------------
Identification Number (if known):
-----------------------------------------------------------
Address:
-------------------------------------------------
-----------------------------------------------------------
(Include Zip Code)
SIGN HERE
-----------------------------------------------------------------
-----------------------------------------------------------------
Signature(s) Please print name(s) and address(es) here
Dated
----------------
5
<PAGE> 1
EXHIBIT 99-5
DEPOSITARY AGREEMENT
EXCHANGE OFFER
October __, 1995
If by mail:
First Chicago Trust Company of New York
Tenders & Exchanges
Suite 4660
P. O. Box 2507
Jersey City, NJ 07303-2559
Attn:
If by hand or overnight delivery:
First Chicago Trust Company of New York
14 Wall Street
Tenders & Exchanges
8th Floor, Suite 4680 - PECO
New York, NY 10005
Attn:
Ladies and Gentlemen:
PECO Energy Company ("PECO Energy") is offering to effect the
exchange of Trust Receipts ("Preferred Trust Receipts") issued by PECO Energy
Capital Trust I (the "Trust"), each representing a ____% Cumulative Monthly
Income Preferred Security, Series B (in the aggregate, the "Series B Preferred
Securities") of PECO Energy Capital, L.P. ("PECO Energy Capital") for up to
5,400,000 Depositary Shares (the "Depositary Shares"), each representing a
one-fourth interest in a share of $7.96 Cumulative Preferred Stock of PECO
Energy, upon the terms and conditions set forth in the Offering
Circular/Prospectus and the Letter of Transmittal annexed hereto as Exhibit A
and B, respectively (collectively, the "Offering Documents").
PECO Energy hereby appoints you to act as Exchange Agent in
connection with the offer, as described in the Offering Documents (the
"Offer").
<PAGE> 2
First Chicago Trust Company
of New York
October __, 1995
Page 2
The Offer is being made by PECO Energy to holders of 5,600,000
Depositary Shares commencing on or about _______________, 1995. The Letter of
Transmittal that will accompany the Offering Circular/Prospectus is to be used
by the holders of Depositary Shares to accept the Offer, and contains
instructions with respect to the delivery of certificates or book-entry
transfer for Depositary Shares tendered, provided that an Agent's Message (as
defined in the Offering Documents) may be used under certain circumstances to
accept the Offer.
In carrying out your duties as Exchange Agent in connection
with the Offer, you are to act in accordance with the following:
1. The Offer shall expire at 12:00 midnight, New York
time on _______________, 1995 (the "Initial Expiration Date"), or at any
subsequent time to which PECO Energy may extend the Offer. PECO Energy
expressly reserves the right to extend, amend or modify the Offer from
time-to-time. The Offer may be extended by PECO Energy giving written notice
to you before _______________, 1995. The later of the Initial Expiration Date
or the latest time and date to which the Offer may be so extended is herein
referred to as the "Expiration Date." In addition, PECO Energy may terminate
the Offer for any reason, including, but not limited to, certain circumstances
set forth in the Offering Documents.
2. You will establish Book Entry Accounts with DTC and
the various other Depositories (as defined in the Offering Documents) for the
Depositary Shares for purposes of the Offer by _______________, 1995 and any
financial institution that is a participant in any of the Depositories may make
book-entry delivery of the Depositary Shares by causing the Depository to
transfer such Depositary Shares into the account maintained by you pursuant to
this paragraph in accordance with procedures for such transfer. However,
although delivery of the Depositary Shares may be effected through book-entry
transfer, the Letter of Transmittal, or in the case of book-entry transfer
through DTC, an Agent's Message, with any required signature guarantees and any
other documents must, in any case, be received by you in order for Depositary
Shares to be properly tendered.
3. You are to examine the Letters of Transmittal,
Agent's Messages (as defined in the Offering Documents), certificates
representing the Depositary Shares and the other documents delivered or mailed
to you in connection with the Offer to ascertain whether they are completed and
executed in accordance with instructions set forth in the Letter of
Transmittal. In each case where the Letter of Transmittal has
<PAGE> 3
First Chicago Trust Company
of New York
October __, 1995
Page 3
been improperly filled out or executed or, for any other reason, is not in
proper form, or the certificates for Depositary Shares or the book-entry
confirmations, as the case may be, accompanying such Letter of Transmittal are
not in proper form for transfer (as required by the aforesaid instructions), or
if some other irregularity in connection with any tender of Depositary Shares
exists, you shall endeavor to take such action as may be necessary to cause
such irregularity to be corrected. With the written approval of an Officer of
PECO Energy, or any party designated by PECO Energy, you are authorized to
waive irregularities in connection with the acceptance of the Offer. PECO
Energy has reserved the absolute right to reject any or all offers which it
determines do not comply with the terms of the Offer, which determination shall
be final and binding. Unless waived by PECO Energy, all Depositary Shares must
be tendered in accordance with the terms and conditions set forth in the
Offering Documents.
4. If a shareholder desires to tender Depositary Shares
pursuant to the Offer and such shareholder's certificates for Depositary Shares
are not immediately available or time will not permit all required documents to
reach you on or prior to the Expiration Date or the procedure for book-entry
tender cannot be completed on a timely basis, such Depositary Shares may
nevertheless be tendered if all the following conditions are satisfied:
(a) the tender is made by or through an Eligible
Institution (as defined in the Offering Circular/Prospectus);
(b) a properly completed and duly executed Notice
of Guaranteed Delivery is received by you as provided below on or prior to the
Expiration Date; and
(c) the certificates for all tendered Depositary
Shares, in proper form for transfer (or a book-entry confirmation), together
with a properly completed and duly executed Letter of Transmittal or an Agent's
Message, in the case of a book-entry transfer effected through DTC's Automated
Tender Offer Program ("ATOP") and any other documents required by the Letter of
Transmittal are received by you within three New York Stock Exchange ("NYSE")
trading days after the date of execution of the Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or
transmitted by letter, telegram, or facsimile transmission to you and must
include a guarantee by an Eligible Institution in the form set forth in such
Notice of Guaranteed Delivery.
<PAGE> 4
First Chicago Trust Company
of New York
October __, 1995
Page 4
Notwithstanding any other provisions hereof, exchange for
Depositary Shares exchanged pursuant to the Offer will, in all cases, be made
only after timely receipt by you of certificates for such Depositary Shares (or
a book-entry confirmation), a properly completed and duly executed Letter of
Transmittal and any other documents required by the Letter of Transmittal or,
in the case of a book-entry transfer through DTC's ATOP procedure, an Agent's
Message.
5. On each business day up to the Expiration Date, you
shall advise by telephone, not later than 5:00 P.M., New York City time, and on
the Expiration Date, as promptly thereafter as may be practicable, Diann
Sweeney of PECO Energy (215) 841-6996, Susan Klein of Merrill Lynch & Co. at
(212) 449-2760, Kimberly Blue of Smith Barney Inc. at (212) 723-7615 and such
other persons as Ms. Sweeney may direct, of the number of Depositary Shares
which have been tendered, the names and addresses of the holders who have so
tendered their Depositary Shares, the number about which you have questions
concerning validity, form, eligibility (including timeliness of receipt) and
the cumulative number of Depositary Shares tendered through the time of such
telephone call. Promptly thereafter (but no later than the close of the
next day), you shall confirm such information to each of the above persons in
writing, to be transmitted by facsimile. You shall take all responsible
action with respect to the Offer as may from time to time be requested by PECO
Energy. You are authorized to cooperate with and furnish information,
including, without limitation, the names and addresses of registered holders of
tendered Depositary Shares to Merrill Lynch & Co., Smith Barney Inc., D.F. King
& Co., Inc., any of their representatives or any other organization (or its
representatives) designated from time to time by PECO Energy, in any manner
reasonably requested by any of them in connection with the Offer and tenders
thereunder.
6. Any Letters of Transmittal received after the
Expiration Date shall be stamped by you as of the date and time of receipt
thereof and returned to the signatories thereof provided that copies of such
Letters of Transmittal shall be preserved by you as permanent records until you
are otherwise instructed by PECO Energy.
7. You shall follow and act upon any amendments,
modifications or supplements to these instructions, and upon any further
written instructions in connection with the Offer, any of which may be given to
you by PECO Energy or such other persons as it may authorize.
<PAGE> 5
First Chicago Trust Company
of New York
October __, 1995
Page 5
8. PECO Energy will exchange shares duly tendered on the
terms and subject to the conditions set forth in the Offering Documents.
9. PECO Energy shall deposit or cause to be deposited
with you, as agent for tendering holders of the Depositary Shares, within a
reasonable time after PECO Energy's acceptance for exchange of the Depositary
Shares, the ___% Deferrable Interest Subordinated Debentures, Series B ("Series
B Debentures") of PECO Energy, in exchange for Depositary Shares tendered and
accepted for exchange. You will then deposit such Series B Debentures with
PECO Energy Capital in accordance with the instructions of PECO Energy. PECO
Energy Capital will then issue its Series B Preferred Securities to the Trust,
which will in turn issue its Trust Receipts and deliver such Trust Receipts to
you for distribution, either in certificated form or through the facilities of
a depository, to each holder.
10. As soon as practicable following acceptance of
Depositary Shares tendered for exchange, you shall make payment in accordance
with the terms of the Offer to any broker or dealer that is a member of the
national securities exchange in the United States or of the National
Association of Securities Dealers, Inc., or to any foreign broker or dealer not
eligible for membership in such Association that agrees to conform to the Rules
of Fair Practice of such Association in soliciting tenders in the United
States, or to any commercial bank or trust company located in the United States
whose name appears in the appropriate space in the Letter of Transmittal,
subject to the conditions set forth in the Offering Documents, of a
solicitation fee of __________ for each Depositary Share validly tendered and
accepted for exchange pursuant to the Offer. The payment is subject to a
maximum solicitation fee of $__________ in respect of shares tendered by or on
behalf of any shareholder that were owned of record by such shareholder on the
date the Offer is made. Federal funds will be deposited with you on the date
checks are mailed. PECO Energy will wire funds to First National Bank of
Chicago ABA #07100-0001-3 for the account of First Chicago Trust Company of New
York Cash Funding Account #93-00007.
A list of brokers, dealers and banks entitled to payment
should be prepared by you detailing name, address, number of shares tendered
and fee payable. You shall not make payment unless the aforesaid list (or
adjusted list) is approved by PECO Energy.
11. Shares tendered pursuant to the Offer may be
withdrawn at any time prior to the Expiration Date and, unless
<PAGE> 6
First Chicago Trust Company
of New York
October __, 1995
Page 6
accepted for exchange, may be withdrawn at any time after __________, 1995.
12. PECO Energy shall not be required to exchange any
shares tendered if (i) the Exchange shall not result in (a) the issuance of at
least 1,000,000 Preferred Trust Receipts to be issued and (b) 400 record or
beneficial holders of Preferred Trust Receipts to be issued in exchange for
such Depositary Shares, (ii) fewer than 2,800,000 Depositary Shares are
tendered for exchange or (iii) any of the other conditions set forth in the
Offering Documents are not satisfied. Notice of any decision by PECO Energy
not to exchange any Depositary Shares tendered shall be given in writing by
PECO Energy to you.
13. If, pursuant to the Offer, PECO Energy does not
accept for exchange all or part of the Depositary Shares tendered, you shall
promptly return the deposited certificates for Depositary Shares, with any
related required documents and the Letter of Transmittal relating thereto that
are in your possession, to the persons who deposited the same, together with a
notice explaining the reasons for their return.
14. Certificates for unexchanged or new Depositary Shares
shall be forwarded by (i) first class mail under a blanket surety bond
protecting you and PECO Energy from loss or liability arising out of the
non-receipt or non-delivery of such certificates for shares, or (ii) by
registered mail insured separately for the replacement value of such
certificates for Depositary Shares.
15. As Exchange Agent and Depository hereunder, you:
(a) shall have no duties or obligations other
than those specifically set forth herein;
(b) will be regarded as making no representations
and having no responsibilities as to the validity, sufficiency, value or
genuineness of any certificates or the shares represented thereby deposited
with you hereunder, and will not be required to and will make representation as
to the validity, value or genuineness of the Offer;
(c) shall not be obligated to take any legal
action hereunder which might, in your judgement, involve any expense or
liability, unless you shall have been furnished with such indemnity as shall be
reasonably satisfactory to you;
(d) may rely on and shall be protected in acting
in reliance upon any certificate, instrument, opinion, notice,
<PAGE> 7
First Chicago Trust Company
of New York
October __, 1995
Page 7
letter, telegram or other document or security delivered to you and believed by
you to be genuine and to have been signed by the proper party or parties;
(e) may rely on and shall be protected in acting
upon written instructions from Diana Moy Kelly of PECO Energy;
(f) may consult counsel satisfactory to you
(including counsel for PECO Energy) and the opinion of each counsel shall be
full and complete authorization and protection in respect to any action taken,
suffered or omitted by you hereunder in good faith and in accordance with the
opinion of such counsel; and
(g) shall not be called upon at any time to
advise any person tendering hereunder as to the wisdom of making such tender or
as to the market value or decline or appreciation in market value of any share.
16. You agree that upon receipt thereof you will deliver
the Preferred Trust Receipts on a one for one basis for each Depositary Share
validly tendered and accepted for exchange to the holders of such Depositary
Shares.
17. PECO Energy covenants and agrees to indemnify and
hold you harmless against any loss, liability or expense incurred on your part
arising out of or in connection with the administration of your duties
hereunder, including the cost and expenses of defending yourself against any
claim or liability, provided that such covenant and agreement does not extend
to, and you shall not be indemnified with respect to, such costs, expenses,
losses and damages incurred or suffered by you as a result of, or arising out
of, your negligence, bad faith or willful failure to perform your obligations
hereunder. Promptly after you have received any written assertion of a claim
or have been served with summons or other first legal process giving
information as to the nature and basis of the claim, you shall notify PECO
Energy, by letter or by facsimile transmission confirmed by letter, of the
written assertion of such claim against you or of any action commenced against
you or of the service of any summons on you, or other first legal process
giving information as to the nature and basis of the claim. In no case shall
PECO Energy be liable under this indemnity with respect to any action,
proceeding, suit or claim against you unless PECO Energy shall be notified by
you as set forth in this Section 17, but failure so to notify PECO Energy shall
not relieve PECO Energy of any liability which it may otherwise have on account
of this Agreement. PECO Energy will be entitled to
<PAGE> 8
First Chicago Trust Company
of New York
October __, 1995
Page 8
participate at its own expense in the defense of any such claim. If PECO
Energy so elects at any time after receipt of such notices and agrees in
writing that such claim is a claim for which you are entitled to be indemnified
and held harmless hereunder or if you in such notice request and PECO Energy
agrees, PECO Energy will assume the defense of any suit brought to enforce any
such claim. In the event PECO Energy assumes the defense of any such suit,
PECO Energy may select counsel of its own choosing for such purpose and PECO
Energy will not be liable for the fees and expenses of any additional counsel
thereafter retained by you. PECO Energy shall not be liable for any settlement
of any such claim effected without its prior written consent.
18. This agreement and appointment as Exchange Agent and
Depository shall be construed and enforced in accordance with the laws of the
State of New York applicable to agreements made and to be performed entirely
within such state, and shall inure to the benefit of, and the obligations
created hereby shall be binding upon, the successors and assigns of the parties
hereto. THIS AGREEMENT MAY NOT BE MODIFIED ORALLY.
19. You will arrange to comply with Internal Revenue
Service ("IRS") regulations with regard to due diligence in obtaining a
certified Tax Identification Number (TIN). We understand that you are required
to deduct 31% on payments (a) to holders who have not supplied their correct
TIN and the required certification and (b) to holders who you have been
instructed by the IRS to deduct. You will forward appropriate funds to the
IRS.
On or before January 31, 1996, you will issue a Form 1099B to
each holder of Depositary Shares whose Depositary Shares are tendered and
accepted.
You are further instructed as follows:
U.S. Citizens: A substitute Form W-9 must be
properly completed and delivered to you prior to payment, otherwise 31% of the
gross payment must be deducted as described above.
Foreign Shareholders: Form W-8 must be properly
completed and delivered to you prior to payment, otherwise 31% of the gross
payment must be deducted as described above.
<PAGE> 9
First Chicago Trust Company
of New York
October __, 1995
Page 9
NOTE: YOU MAY CONSULT WITH (NAME) (TELEPHONE
NUMBER), BEFORE MAKING THE REQUIRED DEDUCTION, IF YOU
DEEM IT NECESSARY, FOR ANY CLARIFICATION,
INTERPRETATION, ETC.
Should any issue arise regarding federal income tax reporting
or withholding, you will take such action as PECO Energy instructs you in
writing.
20. It is understood and agreed that the securities,
money, assets or property (the "Property") to be deposited with or received by
you from PECO Energy or pursuant to Sections 9 and 16 hereof as Depository
constitute a special, segregated account, held solely for the benefit of PECO
Energy and shareholders tendering Depositary Shares, as their interests may
appear, and the Property shall not be commingled with the securities, money,
assets or properties of you or any other person, firm, corporation or entity.
You hereby waive any and all rights of lien, attachment or set-off whatsoever,
if any, against the Property so to be deposited, whether such rights arise by
reason of statutory or common law, by contract or otherwise.
21. For services rendered as Depository hereunder, you
shall be entitled to fees of $1,000 for administrative set-up costs, $10 for
each Letter of Transmittal submitted, $8 for curing each defective Letter of
Transmittal, $15 for each Notice of Guaranteed Delivery, $15 per withdrawal,
$.50 per item for IRS reporting, $.50 for each check reconciliation, $4 for
each Letter of Transmittal returned and $4 per late submission, together with
other reasonable and customary expenses.
22. Unless terminated earlier by the parties hereto in
writing, this Agreement shall terminate 30 days after the earlier of the
termination by PECO Energy of the Offer or the Expiration Date, as may be
extended by PECO Energy from time to time. Upon any termination of this
Agreement, you shall promptly deliver to PECO Energy any certificates, funds or
property then held by you as Depository under this Agreement, and after such
time any party entitled to such certificates, funds or property shall look
solely to PECO Energy and not the Depository therefore, and all liability of
the Depository with respect thereto shall cease, provided, however, that the
Depositary, before being required to make such delivery to PECO Energy, may at
the expense of PECO Energy cause to be published in a newspaper of general
circulation in the City of New York, or mail to each person who has tendered
Depositary Shares but not received payment, or both, notice that such
certificates, funds or property remain unclaimed and that after a date
specified therein, which shall not be less
<PAGE> 10
First Chicago Trust Company
of New York
October __, 1995
Page 10
than 30 days from the date of publication or mailing, any unclaimed balance of
such certificates, funds or property will be delivered to PECO Energy.
23. If any provision of this Agreement shall be held
illegal, invalid or unenforceable by any court, this Agreement shall be
construed and enforced as if such provision had not been contained herein and
shall be deemed an agreement between us to the full extent permitted by
applicable law.
24. This Agreement may be executed in separate
counterparts, each of which when executed and delivered shall be an original,
but all such counterparts shall together constitute one and the same
instrument.
<PAGE> 11
First Chicago Trust Company
of New York
October __, 1995
Page 11
Please acknowledge receipt of this agreement and confirm the
arrangements herein provided by signing and returning the enclosed copy.
Sincerely,
PECO ENERGY COMPANY
By:
-------------------------------------
Name:
Title:
ACCEPTED AS OF
FIRST CHICAGO TRUST COMPANY OF NEW YORK
By:
-------------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 99-6
__________ __, 1995
Mr. J. Barry Mitchell
Vice President, Finance and
Treasurer
PECO Energy Company
2301 Market Street (S21-1)
Philadelphia, PA 19109
Dear Mr. Mitchell:
This Letter Agreement sets forth the terms and conditions pursuant to
which PECO Energy Company (the "Company") has retained D. F. King & Co., Inc.
("King") in connection with a proposed exchange offer.
The Company proposes to offer to exchange Trust Receipts of PECO
Energy Capital Trust I (the "Trust"), each representing a ___% Cumulative
Monthly Income Preferred Security, Series B ("Series B Preferred Security") of
PECO Energy Capital, L.P. ("PECO Energy Capital"), for up to 5,400,000
outstanding Depository Shares (the "Depository Shares"), each representing a
one-fourth interest in a share of $7.96 Cumulative Preferred Stock of the
Company and subject to the terms and conditions set forth in the Offering
Circular/Prospectus. The offer to exchange is herein referred to as the
"Exchange Offer".
1. The Company hereby retains King as Information Agent for
advisory and consulting services in connection with the Exchange Offer and
requests and authorizes King to contact, and to provide information with
respect to the Exchange Offer to, holders of the Depositary Shares. For this
purpose, King is authorized to use, and will be supplied by the Company with as
many copies as King may reasonably request of, the following materials filed
with the Securities and Exchange Commission (the "Commission") or publicly
released (or to be filed or publicly released) by the Company in connection
with the Exchange Offer (collectively, the "Exchange Offer Materials"): (i) an
Offering Circular/Prospectus; (ii) a Letter of Transmittal; (iii) press
releases and newspaper advertisements; (iv) letter to securities dealers, banks
and trust companies, and letter from securities dealers, banks and trust
companies to their customers; and (v) any and all amendments or supplements to
any of the foregoing. In no event will King make any recommendation to
<PAGE> 2
Mr. J. Barry Mitchell
PECO Energy Company
__________ __, 1995
Page 2
anyone regarding whether to exchange or refrain from exchanging the Depositary
Shares. If such advice is requested, King will respond that it is not
authorized to give such advice and shall recommend to the person requesting
such advice that such person consult with his or her financial advisor or
broker. In addition, King will cooperate with Merrill Lynch & Co. and Smith
Barney Inc., as dealer managers for the Exchange Offer (each a "Dealer
Manager"), in all respects reasonably requested by the Dealer Managers.
2. The Company agrees to pay King as compensation for its
services a fee of $6,000 (which includes incoming calls from holders of the
Depository Shares to King), $3,000 of which is due upon execution of this
agreement, and the balance of which is due upon the completion, expiration or
termination, as the case may be, of the Exchange Offer. Further, the Company
agrees to pay King $3.50 for each completed outgoing telephone contact in
connection with the Exchange Offer. In the event the Company requests King to
provide additional services, the Company agrees to pay King reasonable and
customary compensation, in an amount, if any, to be mutually agreed upon. The
Company further agrees to reimburse King for all out-of-pocket expenses
(including counsel's fees and disbursements) incurred by King in retention
hereunder. The Company will meet these expenses from an Expense Advance
Account (the "Account") established with King by an immediate advance of
$4,000. The Account will be replenished by the Company from time-to-time,
promptly upon King's request, up to an additional $1,000 accompanied by a
summary of prior expenses. Once the Company has advanced King an aggregate of
$5,000, any out-of-pocket expenses incurred by King which individually exceed
$200.00 and each aggregate of $1,000 of expenses thereafter, shall be approved
in advance by the Company. Any unused portion of the Account will be returned
promptly to the Company at the end of the term of this engagement. The Company
agrees and acknowledges that its obligation under this paragraph 2 is not in
any way conditional upon the successful consummation of the Exchange Offer or
dependent upon the amount of Preferred Stock acquired by the Company pursuant
to the Exchange Offer.
3. King will check, itemize and pay on behalf of the Company,
from funds provided by King, the charges of brokers and banks for forwarding
material relating to the Exchange Offer to beneficial owners. For this
service, the Company will reimburse King in accordance with paragraph 2, but
shall pay no additional charge.
4. The Company agrees that King shall have the right to pass upon
and approve any and all references to King in the Exchange Offer Materials.
The Company shall not file with the Commission, any other governmental or
regulatory authority or
<PAGE> 3
Mr. J. Barry Mitchell
PECO Energy Company
__________ __, 1995
Page 3
body or any court, or otherwise make public, any document containing any
reference to King unless and until King shall have approved such reference.
5. The Company represents and warrants to King that:
(i) this letter agreement is a valid and
binding agreement on the Company's part;
(ii) all necessary corporate action will be duly
taken by the Company prior to the commencement of the Exchange Offer to
authorize the Exchange Offer, and the exchange of Trust Receipts of the Trust,
each representing a Series B Preferred Security of PECO Energy Capital, for up
to 5,400,000 outstanding Depositary Shares, each representing a one-fourth
interest in a share of $7.96 Cumulative Preferred Stock of the Company;
(iii) all Exchange Offer Materials will comply, in
all material respects, with the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission thereunder, and none of the
Exchange Offer Materials, and no other report, filing, document, release or
communication published or filed in connection with the Exchange Offer, will
contain any untrue or misleading statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements made therein not misleading in light of the circumstance under which
they were made;
(iv) the Exchange Offer, and the exchange of
Trust Receipts of the Trust, each representing a Series B Preferred Security of
PECO Energy Capital, for up to 5,400,000 outstanding Depositary Shares, each
representing a one-fourth interest in a share of $7.96 Cumulative Preferred
Stock of the Company, will comply, in all material respects, with all
applicable requirements of law including the applicable rules or regulations of
any governmental or regulatory authority or body, and no material consent or
approval of, or filing with, any governmental or regulatory authority or body
is required in connection with the making or consummation of the Exchange Offer
(or, if any such material consent, approval or filing is required it will be
duly obtained or made prior to the commencement of the Exchange Offer); and
(v) the Exchange Offer, and the exchange of Trust
Receipts of the Trust, each representing a Series B Preferred Security of PECO
Energy Capital, for up to 5,400,000 outstanding Depositary Shares, each
representing a one-fourth interest in a share of $7.96 Cumulative Preferred
Stock of the Company, and or execution, delivery and performance of this letter
agreement, will not conflict with or result in a breach of or constitute a
default under the Company's articles of
<PAGE> 4
Mr. J. Barry Mitchell
PECO Energy Company
__________ __, 1995
Page 4
incorporation or by-laws, or any material agreement, indenture, mortgage, note
or other instrument by which the Company is bound.
6. The Company will advise King promptly of the occurrence of any
event which would cause it not to proceed with, or to withdraw or abandon the
Exchange Offer. The Company will also advise King promptly of any proposal or
requirement to amend or supplement any of the Exchange Offer Materials.
7. The Company hereby agrees to indemnify and hold harmless King,
King's controlling persons, officers, directors, employees, agents and
representatives (collectively, the "Indemnified Persons") from and against any
and all losses, claims, damages, liabilities and expenses whatsoever (including
but not limited to, all counsel fees, disbursements and other out-of-pocket
expenses) incurred by such Indemnified Persons in investigating, preparing to
defend or defending (or appearing or preparing for appearance as a witness in
connection with) any claim, litigation, proceeding, investigation, or
governmental or stock exchange inquiry, commenced or threatened or any claim
whatsoever: (i) arising out of or based upon any facts or circumstances
constituting a violation of, or in conflict with, any of the representations
and warranties set forth in paragraph 5 above; or (ii) arising out of, relating
to or in connection with the Exchange Offer except for the Indemnified
Person's willful misconduct, negligence or a breach of this agreement. The
Company shall reimburse such Indemnified Persons for such counsel fees and
disbursements and other out-of-pocket expenses at such time as they are paid or
incurred by such Indemnified Persons. The foregoing indemnity shall be in
addition to any liability which the Company might otherwise have to the
Indemnified Persons.
8. King agrees to notify the Company promptly of the assertion of
any claim against any of the Indemnified Persons in connection with the
Exchange Offer; and the Company agrees to notify King promptly of the assertion
of any claim against the Company or any of its officers, directors, employees
or agents in connection with the Exchange Offer. At the Company's election,
unless there is a conflict of interest, the defense of the Indemnified Persons
shall be conducted by the Company's counsel who shall be satisfactory to King
and the Indemnified Persons who are defendants in the action or proceeding.
Notwithstanding the Company's election to assume the defense of such action or
proceeding, an Indemnified Person may employ separate counsel to represent it
or defend it in such action or proceeding and the Company will pay the
reasonable fees and expenses of such counsel as set forth above if such
Indemnified Person reasonably determines that there are defenses available to
such Indemnified Person which are different from, or in addition to, those
available to the Company, or if a conflict of interest exists
<PAGE> 5
Mr. J. Barry Mitchell
PECO Energy Company
__________ __, 1995
Page 5
which makes representation by counsel chosen by the Company not advisable;
provided however, unless there are actual or potential conflicts of interest
among the Indemnified Persons, the Company will not be required to pay the fees
and expenses of more than one separate counsel for all Indemnified Persons in
any jurisdiction in any single action or proceeding. In any action or
proceeding the defense of which the Company assumes, the Indemnified Persons
shall nevertheless be entitled to participate in such action or proceeding and
retain its own counsel at such Indemnified Person's own expense. The Company
shall not settle or compromise any such action or proceeding without the
Indemnified Person's prior written consent, unless the terms of the settlement
or compromise include an unconditional release of any such Indemnified Person
from all liability or loss arising out of such action or proceeding.
9. The representations and warranties contained in paragraph 5
above and the indemnity agreement contained in paragraphs 7 and 8 above shall
remain operative and in full force and effect regardless of: (i) the
termination or consummation of the Exchange Offer; and (ii) any investigation
made by or on behalf of any party.
10. King agrees to preserve the confidentiality of all non-public
information provided by the Company or its agents for use by King in providing
services under this Agreement and any information developed by King based upon
such non-public information.
11. This agreement shall be construed and enforced in accordance
with the laws of the Commonwealth of Pennsylvania. It is agreed that any
action, suit or proceeding arising out of or based upon this agreement shall be
brought in the United States District Court for the Eastern District of
Pennsylvania or any court of the Commonwealth of Pennsylvania of competent
jurisdiction located in such District, and the parties hereto hereby consent to
the in personam jurisdiction and venue of any such court and to service of
process by certified mail, return receipt requested.
If any provision of this agreement shall be held illegal or invalid by
any court, this agreement shall be construed and enforced as if such provision
had not been contained herein and shall be deemed an agreement between the
parties hereto to the fullest extent permitted by law.
If the foregoing correctly sets forth the understanding between the
Company and King, please indicate acceptance thereof
<PAGE> 6
Mr. J. Barry Mitchell
PECO Energy Company
__________ __, 1995
Page 6
in the space provided below for the purpose, whereupon this letter and the
Company's acceptance shall constitute a binding agreement between the parties
hereto.
D. F. KING & CO., INC.
By:
-------------------------
John L. Bibas
Vice President
Accepted as of the date first above written:
PECO Energy Company
By:
----------------------------
J. Barry Mitchell
Title: Vice President, Finance and
Treasurer
<PAGE> 1
Exhibit 99-7
This is neither an offer to exchange or to sell nor a solicitation of an offer
to exchange or buy any of these securities. This Offer is made only by the
Offering Circular/Prospectus and the related Letter of Transmittal and the
Offer is not being made to, nor will tenders be accepted from or on behalf of,
holders of these securities in any jurisdiction in which the making or
acceptance thereof would not be in compliance with the securities or blue sky
laws of such jurisdiction. In any jurisdiction where the securities or blue sky
laws require the Offer to be made by a licensed broker or dealer, the Offer is
being made on behalf of PECO Energy Company by Merrill Lynch & Co. and Smith
Barney Inc. or one or more other brokers or dealers which are licensed under
the laws of such jurisdiction.
NOTICE OF OFFER TO HOLDERS OF
PECO ENERGY COMPANY
DEPOSITARY SHARES EACH REPRESENTING A ONE-FOURTH INTEREST
IN A SHARE OF $7.96 CUMULATIVE PREFERRED STOCK
PECO Energy Company, a Pennsylvania corporation ("PECO Energy"), is
offering , upon the terms and subject to the conditions set forth in its
Offering Circular / Prospectus dated ___, 1995 (the "Offering Circular /
Prospectus") and the accompanying Letter of Transmittal (the "Letter of
Transmittal" which, together with the Offering Circular / Prospectus constitute
the "Offer"), to effect the exchange of Trust Receipts ("TOPrS" or "Preferred
Trust Receipts"), each representing a % Cumulative Monthly Income Preferred
Security, Series B ("Series B Preferred Securities"), representing limited
partner interests of PECO Energy Capital, L.P., a limited partnership formed
under the laws of the State of Delaware ("PECO Energy Capital"), for up to
5,400,000 Depositary Shares (the "Depositary Shares"), each representing a
one-fourth interest in a share of $7.96 Cumulative Preferred Stock of PECO
Energy. Exchanges will be made on the basis of one Preferred Trust Receipt for
each Depositary Share validly tendered and accepted for exchange in the Offer.
In connection with the Offer, PECO Energy will issue its ___% Deferrable
Interest Subordinated Debentures, Series B ("Series B Subordinated Debentures")
which will be delivered to First Chicago Trust Company of New York (the
"Exchange Agent") (on behalf of the holders of the Depositary Shares) and the
Exchange Agent will deposit the Series B Subordinated Debentures with PECO
Energy Capital in consideration for PECO Energy Capital issuing the Series B
Preferred Securities as set forth in the Offering Circular / Prospectus.
THE OFFER WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON ______, 1995
UNLESS EXTENDED.
NO RECOMMENDATION TO HOLDERS OF DEPOSITARY SHARES AS TO WHETHER TO TENDER OR
REFRAIN FROM TENDERING IN THE OFFER IS MADE BY THE BOARD OF DIRECTORS OF PECO
ENERGY, PECO ENERGY, THE GENERAL PARTNER OF PECO ENERGY CAPITAL, PECO ENERGY
CAPITAL, THE TRUST OR THE TRUSTEE. EACH HOLDER OF DEPOSITARY SHARES MUST MAKE
ITS OWN DECISION ON WHAT ACTION TO TAKE IN LIGHT OF ITS OWN PARTICULAR
CIRCUMSTANCES.
Upon the terms and conditions of the Offer, including the provisions relating
to proration described in the Offering Circular / Prospectus, PECO Energy will
accept for exchange up to 5,400,000 Depositary Shares validly tendered and not
withdrawn prior to 12:00 midnight, New York City time on, _______, 1995, or if
the Offer is extended by PECO Energy, in its sole discretion, the latest date
and time applicable to such extension (the "Expiration Date"). Tenders
of Depositary Shares pursuant to the Offer may be withdrawn at any time prior
to the Expiration Date and, unless accepted for exchange by PECO Energy, may be
withdrawn at any time after 40 business days after _____, 1995. Depositary
Shares validly tendered and not accepted because of proration or otherwise will
be returned to the tendering holders at PECO Energy's expense as promptly as
practicable following the Expiration Date.
Subject to the next sentence, PECO Energy expressly reserves the right
to extend, amend or modify the terms of the Offer, for any reason. PECO Energy
may opt, subject to certain conditions, not to accept for exchange any
Depositary Shares, including (without limitation) if holders tender fewer than
2,800,000 Depositary Shares (which condition may be waived by PECO Energy). In
addition, acceptance of Depositary Shares validly tendered in the Offer is
subject to the condition that there be at least 1,000,000 Preferred Trust
Receipts to be issued or 400 record or beneficial owners of Preferred Trust
Receipts to be issued in exchange for Depositary Shares, which condition may
not be waived.
The purpose of the Offer is to reduce the after-tax financing costs of PECO
Energy through the replacement of Depositary Shares with Preferred Trust
Receipts.
<PAGE> 2
The Offering Circular / Prospectus and Letter of Transmittal contain important
information which should be read before any actions are taken by holders of
Depositary Shares. Tenders may be made only by a properly completed and
executed Letter of Transmittal or Agent's Message (as described in the Offering
Circular / Prospectus).
PECO Energy will pay to Soliciting Dealers (as defined in the Offering Circular
/ Prospectus) designated by the registered or beneficial owner, as appropriate,
of the Depositary Shares, a solicitation fee of $ per Depositary Share
validly tendered and accepted for exchange pursuant to the Offer, subject to
certain conditions. Soliciting Dealers are not entitled to a solicitation fee
for Depositary Shares beneficially owned by such Soliciting Dealer.
The information required to be disclosed by paragraph (d)(1) of Rule 13e-4 of
the General Rules and Regulations under the Securities Exchange Act of 1934, as
amended, is contained in the Offering Circular / Prospectus and is incorporated
herein by reference.
The Offering Circular / Prospectus and the related Letter of Transmittal are
first being sent to holders of Depositary Shares on ____, 1995 and are being
furnished to brokers, dealers, banks and similar persons whose name or whose
nominees appear on the lists of holders of the Depositary Shares or , if
applicable, who are listed as participants in a clearing agency's security
position listing for subsequent transmittal to beneficial owners of Depositary
Shares.
Any questions or requests for assistance may be directed to the Information
Agent and the Dealer Managers at the addresses and telephone numbers set forth
below. Requests for copies of the Offering Circular / Prospectus or of the
Letter of Transmittal or the Notice of Guaranteed Delivery may be directed to
D.F. King & Co., Inc., the Information Agent at (800) 628-8509, and copies
will be forwarded promptly at PECO Energy's expense. Shareholders may also
contact their broker, dealer, commercial bank or trust company for assistance
concerning the Offer.
The Information Agent for this Offer is:
D.F. KING & CO., INC.
77 Water Street
New York, New York, 10005
Banks and Brokers Call Collect: (212) 269-5550
or
All Others Call Toll Free: (800) 628-8509
The Dealer Managers for the Offer are:
MERRILL LYNCH & CO. SMITH BARNEY INC.
World Financial Center 388 Greenwich Street
North Tower New York, New York 10013
New York, New York 10281-1305 Liability Management Group
Call Collect: (212) 236-4565 (800) 813-3754
_____ ____, 1995
(SM)"TOPrS" is a service mark of
Merrill Lynch & Co.
<PAGE> 1
EXHIBIT 99-9
[PECO ENERGY LETTERHEAD]
October , 1995
To Holders of Depositary Shares,
each representing a one-fourth
interest in a share of $7.96 Cumulative
Preferred Stock of PECO Energy Company
PECO Energy Company ("PECO Energy") is offering to exchange Trust Receipts,
each representing a ___% Cumulative Monthly Income Preferred Security, Series
B, representing a limited partner interest issued by PECO Energy Capital, L.P.
("PECO Energy Capital"), for up to 5,400,000 depositary shares (the
"Depositary Shares"), each representing a one-fourth interest in a share of
$7.96 Cumulative Preferred Stock of PECO Energy. Depositary Shares not
accepted for exchange because of proration or otherwise will be returned.
Enclosed with this letter are an Offering Circular/Prospectus and a Letter of
Transmittal which explain the exchange offer, including the terms and
conditions thereof. If you want to participate in the exchange offer, the
instructions for doing so are set forth in detail in the enclosed materials.
I encourage you to read these materials carefully before making any decision
with respect to the exchange offer and to consult your financial adviser.
Neither PECO Energy nor the Board of Directors of PECO Energy makes any
recommendation whether or not you should participate in the exchange offer.
Sincerely,
Enclosures
<PAGE> 1
EXHIBIT 99-10
QUESTIONS AND ANSWERS
RELATING TO THE EXCHANGE OFFER (THE "OFFER") BY
PECO ENERGY COMPANY ("PECO ENERGY")
TO EXCHANGE PREFERRED TRUST RECEIPTS ("TOPRS(SM)") EACH REPRESENTING A
___% CUMULATIVE MONTHLY INCOME PREFERRED SECURITY, SERIES B OF PECO ENERGY
CAPITAL, L.P. FOR UP TO 5,400,000 OUTSTANDING DEPOSITARY SHARES
EACH REPRESENTING A ONE-FOURTH INTEREST IN A SHARE OF $7.96 CUMULATIVE
PREFERRED STOCK
PLEASE NOTE THAT THE FOLLOWING INFORMATION IS PART OF THE OFFERING
CIRCULAR/PROSPECTUS DATED ____________________, 1995 AND THE LETTER OF
TRANSMITTAL WHICH TOGETHER CONSTITUTE THE OFFER. THIS INFORMATION SHOULD BE
READ ONLY IN CONJUNCTION WITH AND IS SUBJECT IN ALL RESPECTS TO THE OFFERING
CIRCULAR/PROSPECTUS AND THE LETTER OF TRANSMITTAL. PLEASE REFER TO THE
OFFERING CIRCULAR/PROSPECTUS FOR THE DEFINITIONS OF THE CAPITALIZED TERMS USED
HEREIN WHICH ARE NOT OTHERWISE DEFINED.
Q: WHAT ARE THE TERMS OF THE OFFER?
A: Upon the terms and subject to the conditions set forth in the Offering
Circular/Prospectus and in the Letter of Transmittal, PECO Energy will
offer to effect an exchange of one Preferred Trust Receipt for each
Depositary Share validly tendered and accepted for exchange.
If more than 5,400,000 Depositary Shares (or if decreased, such lesser
number) have been validly tendered and not withdrawn prior to the
expiration of the offering, PECO Energy will accept for exchange
Depositary Shares from each holder on a pro rata basis, subject to
adjustment to avoid the acceptance for exchange of fractional shares. See
"The Offer - Terms of the Offer" in the Offering Circular/Prospectus.
Q: WHAT ARE PREFERRED TRUST RECEIPTS?
A: Each Preferred Trust Receipt corresponds to a Series B Preferred
Security. Preferred Trust Receipts pay monthly distributions
corresponding to the interest rate and the payment dates for the Series B
Subordinated Debentures. See "Description of the Preferred Trust Receipts"
in the Offering Circular/Prospectus.
Q: WHY ARE PREFERRED TRUST RECEIPTS BEING ISSUED IN EXCHANGE FOR THE
DEPOSITARY SHARES INSTEAD OF DIRECTLY ISSUING THE SERIES B PREFERRED
SECURITIES TO HOLDERS?
A: The Preferred Trust Receipts are being issued in exchange for the
Depositary Shares instead of directly issuing the Series B Preferred
Securities to Holders so that a holder of Preferred Trust Receipts will
receive a Form 1099 to report interest income for Federal income tax
purposes, rather than a Form K-1 which would have been required if the
Series B Preferred Securities were held directly by investors.
Q: WHAT IS THE PURPOSE OF THE OFFER?
A: The purpose of the Offer is to reduce the after-tax financing costs of
PECO Energy through the replacement of Depositary Shares with Preferred
Trust Receipts. Although the Distribution rate on the Preferred Trust
Receipts will be higher than the dividend rate on the Depositary Shares,
PECO Energy will deduct interest payable on the Series B Subordinated
Debentures for federal income tax purposes; dividends payable on the
Depositary Shares are not deductible by PECO Energy for federal income tax
purposes.
Q: WILL THE PREFERRED TRUST RECEIPTS BE LISTED?
A: Application has been made to list the Preferred Trust Receipts on the New
York Stock Exchange ("NYSE"). Listing will be subject to meeting the
requirements of the NYSE. If such application is approved, trading of the
Preferred Trust Receipts on the NYSE is expected to commence within a
30-day period after the initial delivery of the Preferred Trust Receipts.
Q: HOW ARE THE PREFERRED TRUST RECEIPTS GUARANTEED?
A: Payments of monthly distributions on the Preferred Trust Receipts and on
liquidation or redemption are guaranteed on a subordinated basis by PECO
Energy, only if and to the extent payments have been made on the Series B
Subordinated Debentures. See "Description of the Series B Guarantee" in
the Offering Circular/Prospectus.
<PAGE> 2
Q: ARE THE REDEMPTION PROVISIONS OF THE PREFERRED TRUST RECEIPTS DIFFERENT
FROM THE DEPOSITARY SHARES?
A: Yes. While the Depositary Shares have no maturity date, the Preferred
Trust Receipts will be redeemed following repayment of the Series B
Subordinated Debentures upon their _________, 2025 final maturity date or
earlier redemption. Like the Depositary Shares, the Series B Subordinated
Debentures are redeemable at the option of the Company on or after October
1, 1997. See "Comparison of the Preferred Trust Receipts and Depositary
Shares" and "Description of the Preferred Trust Receipts" in the Offering
Circular/Prospectus.
DIVIDEND MATTERS
Q: HOW DOES THE DISTRIBUTION RATE ON THE PREFERRED TRUST RECEIPTS COMPARE TO
THE DIVIDEND RATE ON THE DEPOSITARY SHARES?
A: The rate of Distributions on the Preferred Trust Receipts will be ___
basis points greater than the dividend rate on the Depositary Shares; the
annual rate of Distributions on the Preferred Trust Receipts is ___%
versus 7.96% on the Depositary Shares.
Q: WILL DISTRIBUTIONS ON THE PREFERRED TRUST RECEIPTS BE PAID ON THE SAME
SCHEDULE AS DIVIDENDS ON THE DEPOSITARY SHARES?
A: No, there is a different payment schedule. Distributions on the Preferred
Trust Receipts will be payable monthly in arrears on the last day of each
calendar month. Dividends on the Depositary Shares are payable quarterly
on February 1, May 1, August 1 and November 1 of each year out of funds
legally available therefor, when, as and if declared by PECO Energy's
Board of Directors.
Q: THE NEXT SCHEDULED PAYMENT DATE ON THE DEPOSITARY SHARES IS NOVEMBER 1,
1995; WILL THE HOLDERS THAT PARTICIPATE IN THE OFFER BE ELIGIBLE FOR THAT
DIVIDEND?
A: Yes. Dividends accumulated after October 31, 1995 on the Depositary
Shares which have been accepted for exchange in the Offer, however, will
not be paid. In lieu thereof, holders of the Preferred Trust Receipts
will be entitled to an additional distribution at the rate of 7.96% per
annum (equal to the dividend rate on the Depositary Shares) from and
including November 1, 1995 up to but not including the Exchange Date,
payable at the time of the first Distribution Payment on the Preferred
Trust Receipts.
Q: EXPLAIN THE 60 MONTH DISTRIBUTION DEFERRAL ON THE PREFERRED TRUST
RECEIPTS.
A: At the option of PECO Energy, monthly interest payments on the Series B
Subordinated Debentures may be deferred for one or more periods of up to
60 consecutive months each. In the case of such deferral, distributions
on the Preferred Trust Receipts will be similarly deferred. The Series B
Subordinated Debentures have a maturity date which may not be extended.
See "Description of the Preferred Trust Receipts - Distributions" in the
Offering Circular/Prospectus. Quarterly dividend payments on the
Depositary Shares are payable only if declared by PECO Energy's Board of
Directors, and such dividends may be deferred indefinitely.
Deferred Preferred Trust Receipt distributions continue to accrue and, if
in arrears for more than one month, compound monthly at a rate equal to
___% per annum. However, while dividends on the Depositary Shares accrue
if dividends are suspended, there is no such compounding feature. During
such a deferral, PECO Energy Capital will continue to accrue interest
income (as original issue discount) in respect of the Series B Subordinated
Debentures which will be taxable to beneficial owners of the Preferred
Trust Receipts. As a result, beneficial owners of the Preferred Trust
Receipts during such a deferral will include their pro rata share of the
interest in gross income in advance of the receipt of cash.
TAX ISSUES
Q: WILL THE EXCHANGE OF PREFERRED TRUST RECEIPTS FOR DEPOSITARY SHARES
CONSTITUTE A TAXABLE EVENT?
A: Yes. The Company recommends that each holder read the section entitled
"United States Taxation" in the Offering Circular/Prospectus and consult
his/her own tax advisor.
Q: WHAT WILL BE THE INITIAL TAX BASIS FOR THE PREFERRED TRUST RECEIPTS?
A: An Initial Holder's aggregate tax basis in his pro rata share of the
Series B Preferred Securities (represented by the Preferred Trust
Receipts) will be equal to his tax basis for the Depositary Shares
surrendered in the Exchange increased by the amount of any gain or reduced
by the amount of any loss recognized in the Exchange.
Q: HOW WILL DISTRIBUTIONS ON THE PREFERRED TRUST RECEIPTS BE REPORTED TO THE
IRS?
A: Distributions on the Preferred Trust Receipts will be reported on Form
1099.
Q: CORPORATE HOLDERS CAN CLAIM THE 70% DIVIDENDS-RECEIVED DEDUCTION FOR
DIVIDENDS ON THE DEPOSITARY SHARES. ARE DISTRIBUTIONS ON THE PREFERRED
TRUST RECEIPTS ELIGIBLE FOR THE DIVIDENDS-RECEIVED DEDUCTION FOR CORPORATE
HOLDERS?
A: No.
<PAGE> 3
PROCEDURES FOR EXCHANGING DEPOSITARY SHARES
Q: IF DEPOSITARY SHARES ARE REGISTERED IN MY NAME, HOW DO I PARTICIPATE IN
THE OFFER?
A: You should have received a package from First Chicago Trust Company of New
York consisting of this Questions and Answers Sheet and:
- Offering Circular/Prospectus dated _______________, 1995,
- Letter of Transmittal form (printed on yellow paper) bearing a
pre-printed label with your account name and address,
- Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9,
- Notice of Guaranteed Delivery,
- Letter from the Chairman of PECO Energy, and
- Return envelope addressed to First Chicago Trust Company of New York.
If, after reviewing these materials carefully, you decide to participate
in the Offer, complete the Letter of Transmittal form and send it with
your certificate(s) representing Depositary Shares to First Chicago Trust
Company of New York as Exchange Agent at either of the addresses shown on
the Letter of Transmittal. It is recommended that you use registered or
certified mail.
Holders of record may also contact their broker to exchange their
Depositary Shares on their behalf. If you cannot deliver your
certificate(s) to the Exchange Agent before the Expiration Date, then you
must arrange for your broker to guarantee delivery of your Depositary
Shares.
Q: IF MY DEPOSITARY SHARES ARE HELD BY A BROKER OR A BANK FOR MY ACCOUNT,
HOW DO I PARTICIPATE IN THE OFFER?
A: If your Depositary Shares are held by a broker or bank for your account,
you should have received a package from them as a holder of record
containing, along with this Questions and Answers sheet, the following:
- Offering Circular/Prospectus dated _______________, 1995,
- Letter of Transmittal for information only,
- Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9,
- Notice of Guaranteed Delivery,
- Letter from the Chairman of PECO Energy, and
- Cover letter or notice from your broker or bank.
If you decide to participate in the Offer, you must contact your nominee
to tender your Depositary Shares on your behalf. See "The Offer-
Procedures for Tendering- Special Procedure for Beneficial Owners" in the
Offering Circular/Prospectus.
Q: ONCE I HAVE TENDERED MY DEPOSITARY SHARES, OR INSTRUCTED MY BROKER OR BANK
TO TENDER THEM ON MY BEHALF, MAY I WITHDRAW THEM FROM THE OFFER?
A: Yes, tenders of Depositary Shares may be withdrawn at any time prior to
the Expiration Date and, unless accepted for exchange, at any time after
40 Business Days from the date of the Offering Circular/Prospectus.
Q: HOW AM I AFFECTED IF I ELECT NOT TO EXCHANGE?
A: The terms (issuer, dividend rate, payment dates and redemption features)
of the outstanding Depositary Shares are unaffected by the Offer; however,
the liquidity and trading market for Depositary Shares which are not
exchanged could be adversely affected by the reduction in the number of
publicly traded Depositary Shares resulting from the Offer.
Furthermore, payments of interest and principal on the Series B
Subordinated Debentures which will fund distributions on the Series B
Preferred Securities, represented by the Preferred Trust Receipts, will
rank senior in right of payment to the Depositary Shares which are not
exchanged.
Q: WHEN DOES THE OFFER EXPIRE?
A: At 12:00 p.m. Midnight, New York City time on ____________, 1995 unless
extended by PECO Energy in its sole discretion or as required by law.
PECO Energy may also amend or terminate the Offer as described in the
Offering Circular/Prospectus.
FOR ADDITIONAL DETAILS, OR IF YOU HAVE ANY QUESTIONS,
PLEASE CALL THE INFORMATION AGENT,
D.F. KING & COMPANY, INC.
1-800-628-8509
<PAGE> 1
EXHIBIT 99-11
To: Holders of Depositary Shares
Each Representing a One-Fourth
Interest in the 7.96%
Cumulative Preferred Stock of
PECO Energy Company
From:
At: Merrill Lynch & Co.
Date: , 1995
[MERRILL LYNCH LOGO]
- --------------------------------------------------------------------------------
Subject: PECO ENERGY COMPANY TOPrS EXCHANGE OFFER
PECO Energy Company offers to exchange Preferred Trust Receipts ("TOPrS(SM)")
each representing a __% Cumulative Monthly Income Preferred Security, Series B
of PECO Energy Capital, L.P. for up to 5,400,000 outstanding Depositary Shares
each representing a one-fourth interest in a share of $7.96 Cumulative
Preferred Stock of PECO Energy Company.
Upon the terms and subject to the conditions set forth in the Offering
Circular/Prospectus and in the Letter of Transmittal, PECO Energy will offer to
effect an exchange of one Preferred Trust Receipt for each Depositary Share
validly tendered and accepted for exchange. The rate of Distributions on the
Preferred Trust Receipts will be ___ basis points greater than the dividend
rate on the Depositary Shares; the annual rate of Distributions on the
Preferred Trust Receipts is ___% versus 7.96% on the Cumulative Preferred Stock.
This Exchange Offer will expire at 12:00 Midnight, New York City time on ____,
1995 unless extended by PECO Energy in its sole discretion or as required by
law. In order to ensure that your shares are tendered timely, Merrill Lynch
will be available to answer any questions you may have on the mechanics of
tendering your shares. Tendered Shares may be withdrawn at any time before the
expiration date of the Offer.
You should have received detailed information regarding this Offer under
separate cover. Merrill Lynch, as co-Dealer Manager for this Offer, is readily
prepared to assist you in this matter should assistance be desired. If you
would like additional information pertaining to this Offer, please call the
following number: _________________.
Sincerely,
- ----------------------
Financial Consultant
