<PAGE>
As filed with the Securities and Exchange Commission on May 23, 1997
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
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<TABLE>
<CAPTION>
PECO Energy Company PECO Energy Capital, L.P. PECO Energy Capital Trust II
<S> <C> <C>
(Exact name of registrant (Exact name of registrant as specified in (Exact name of registrant as specified
as specified in its charter) its Certificate of Limited Partnership) in its Certificate of Trust)
Pennsylvania Delaware Delaware
(State or other jurisdiction of incorporation or organization)
4931 6799 6799
(Primary Standard Industrial Classification Code Number)
23-0970240 51-0355322 (to be applied for)
(I.R.S. Employer Identification No.)
P.O. Box 8699, 1013 Centre Road, Suite 350F c/o First Union Trust Company,
2301 Market Street Wilmington, DE 19805 National Association
Philadelphia, PA 19101 (302) 998-0592 One Rodney Square
(215) 841-4000 920 King Street, 1st Floor
Wilmington, DE 19801
(302) 888-7500
</TABLE>
(Address, including zip code, and telephone number, including area code, of
registrants' principal executive offices)
J. B. MITCHELL
Vice President - Finance and Treasurer
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)
JAMES W. DURHAM, ESQ.
Senior Vice President and General Counsel
P.O. Box 8699, 2301 Market Street, Philadelphia, PA 19101
with copies to:
ROBERT C. GERLACH, ESQ. ROBERT M. JONES, JR., ESQ.
Ballard Spahr Andrews & Ingersoll Drinker Biddle & Reath LLP
1735 Market Street, 51st Floor 1345 Chestnut Street
Philadelphia, PA 19103-7599 Philadelphia, PA 19107-3496
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the Registration Statement becomes effective.
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<PAGE>
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
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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CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
Proposed
Proposed Maximum
Maximum Aggregate Amount of
Title of Each Class of Amount to be Offering Price Offering Registration
Securities to be Registered Registered(1) Per Unit(2)(3) Price(2)(3) Fee(4)
<S> <C> <C> <C> <C>
Trust Receipts issued by PECO Energy Capital
Trust II representing PECO Energy Capital,
L.P.
% Cumulative Monthly Income Preferred
Securities, Series C ........................ $ % $ $
PECO Energy Capital, L.P. % Cumulative
Monthly Income Preferred Securities, Series C $ % $ $
PECO Energy Company Guarantee with respect to
PECO Energy Capital, L.P. % Cumulative
Monthly Income Preferred Securities, Series $ % $ $
C(5) .
PECO Energy Company, % Deferrable Interest
Subordinated Debentures, Series C ............ $ % $ $
Total ....................................... $50,000,000 100% $50,000,000 $15,152
</TABLE>
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(1) There are being registered hereunder a presently indeterminate number of
Trust Receipts, each representing a % Cumulative Monthly Income Preferred
Security, Series C of PECO Energy Capital, L.P., with an aggregate initial
offering price not to exceed $50,000,000 and related Guarantee and %
Deferrable Interest Subordinated Debentures, Series C 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 C Preferred Securities under
the Guarantee and certain backup undertakings related thereto as described
in the Registration Statement.
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus 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.
SUBJECT TO COMPLETION, DATED MAY ___, 1997
PROSPECTUS
PECO ENERGY CAPITAL TRUST II
Trust Receipts each representing a
____% Cumulative Monthly Income Preferred Security,
Series C of PECO Energy Capital, L.P.
(stated liquidation preference $25 per Preferred Security)
guaranteed to the extent PECO Energy Capital, L.P.
has funds as set forth herein by
PECO ENERGY COMPANY
The Trust Receipts (the "Preferred Trust Receipts") offered hereby by PECO
Energy Capital Trust II, a statutory business trust created under the laws of
the State of Delaware (the "Trust") each represent a ____% Cumulative Monthly
Income Preferred Security, Series C (a "Series C Preferred Security") of PECO
Energy Capital, L.P., a limited partnership formed under the laws of the State
of Delaware ("PECO Energy Capital"). The Trust will use the
(continued on next page)
See "Risk Factors" commencing on page 5 for certain information relevant to
an investment in the Preferred Trust Receipts, including the period during which
and circumstances under which Distributions on the Preferred Trust Receipts may
be deferred and the related federal income tax consequences.
Application has been made to list the Preferred Trust Receipts on the New
York Stock Exchange. If approved for listing, trading of the Preferred Trust
Receipts is expected to commence within a 30-day period after the initial
delivery thereof.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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<TABLE>
<CAPTION>
Initial Public Underwriting Proceeds to
Offering Price Commission(1) the Trust(2)(3)
---------------- --------------- ----------------
<S> <C> <C> <C>
Per Preferred Trust Receipt ...... $25.00 (2) $25.00
Total ........................... $ (2) $
</TABLE>
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(1) PECO Energy and PECO Energy Capital have agreed to indemnify the several
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriting."
(2) Under the Underwriting Agreement, PECO Energy will pay to the Underwriters
$__________ per Preferred Trust Receipt (or $__________ in the aggregate);
provided, that such compensation will be $0.50 per Preferred Trust Receipt
sold to certain institutions. See "Underwriting."
(3) Expenses of the offering, which are payable by PECO Energy, are estimated to
be $410,000.
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The Preferred Trust Receipts offered hereby are offered severally by the
Underwriters, as specified herein, subject to receipt and acceptance by them and
subject to their right to reject any order in whole or in part. It is expected
that delivery of the Preferred Trust Receipts will be made in book-entry-only
form through the facilities of The Depository Trust Company on or about
_________, 1997.
Smith Barney Inc. Lehman Brothers
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The date of this Prospectus is _______, 1997.
<PAGE>
(continued from previous page)
proceeds from the sale of its Preferred Trust Receipts to purchase the Series C
Preferred Securities, which will be the sole assets of the Trust. PECO Energy
Capital will lend the proceeds from the sale of its Series C Preferred
Securities, plus the capital contribution made by PECO Energy Capital Corp., a
Delaware corporation and the sole general partner of PECO Energy Capital (the
"General Partner"), to PECO Energy Company, a Pennsylvania corporation ("PECO
Energy"), which loan will be evidenced by PECO Energy's ____% Deferrable
Interest Subordinated Debentures, Series C, due 2037 (the "Series C Subordinated
Debentures").
Whenever the Trust receives any cash distribution representing a monthly
distribution on the Series C Preferred Securities (whether or not distributed by
PECO Energy Capital on the regular monthly distribution date therefor) or
payment under the Payment and Guarantee Agreement (the "Series C Guarantee")
issued by PECO Energy for the benefit of the holders of the Series C Preferred
Securities (collectively, "Distributions"), the Trust will distribute such
amounts to the holders of the Preferred Trust Receipts in proportion to their
respective number of Series C Preferred Securities represented by such Preferred
Trust Receipts. Under the Indenture dated as of July 1, 1994 between PECO Energy
and First Union National Bank, as successor trustee (as supplemented, the
"Indenture"), PECO Energy has the right at any time, so long as an Event of
Default under the Indenture has not occurred and is continuing, to extend the
interest payment period for all Deferrable Interest Subordinated Debentures
issued thereunder ("Subordinated Debentures") for up to 60 consecutive months
(an "Extension Period"). During any Extension Period, no Distributions will be
made on the Series C Preferred Securities represented by the Preferred Trust
Receipts. See "Description of the Series C Subordinated Debentures and the
Indenture--Option to Extend Interest Payment Period."
PECO Energy has, through the Series C Guarantee, the Amended and Restated
Trust Agreement relating to the Trust (the "Trust Agreement"), the Indenture and
the Series C Subordinated Debentures, taken together, fully, irrevocably and
unconditionally guaranteed all of PECO Energy Capital's obligations under the
Series C Preferred Securities. Under the Series C Guarantee, PECO Energy
guarantees payment of accumulated and unpaid monthly Distributions, amounts
payable upon redemption and amounts payable upon liquidation with respect to the
Series C 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 C Subordinated Debentures, PECO Energy Capital will not have sufficient
funds to pay Distributions on the Series C Preferred Securities. The Series C
Guarantee does not cover payment of Distributions when PECO Energy Capital does
not have sufficient funds to pay such Distributions. In such event, the holders
of Preferred Trust Receipts representing the Series C Preferred Securities would
be required to seek enforcement of PECO Energy Capital's rights against PECO
Energy pursuant to the terms of the Indenture as provided under "Description of
the Series C Preferred Securities--Voting Rights." The obligations of PECO
Energy under the Series C Guarantee are subordinate and junior in right of
payment to all general liabilities of PECO Energy and its obligations under the
Series C Subordinated Debentures are subordinate and junior in right of payment
to all present and future Senior Indebtedness of PECO Energy (as defined
herein), which aggregated approximately $4.698 billion at March 31, 1997.
The Preferred Trust Receipts are subject to mandatory redemption upon any
redemption of Series C Preferred Securities, which are subject to optional
redemption after June ___, 2002 and upon the occurrence of certain tax events,
and which are subject to mandatory redemption upon payment at maturity or
redemption of the Series C Subordinated Debentures and the occurrence of certain
events under the Investment Company Act of 1940, as amended. See "Description of
the Series C Preferred Securities--Optional Redemption," "--Mandatory
Redemption," and "--Special Event Redemptions."
In the event of the liquidation of PECO Energy Capital, the Trust will
distribute to the holders of Preferred Trust Receipts, after satisfaction of
creditors of the Trust as required by law, the amounts received by the Trust
from PECO Energy Capital representing the lesser of the Partnership Liquidation
Distribution (as defined herein) or the amount of assets of PECO Energy Capital
legally available therefor, in either case, in proportion to the respective
number of Series C Preferred Securities represented by such Preferred Trust
Receipts. Upon any voluntary or involuntary dissolution or winding up of PECO
Energy Capital, the holders of Series C Preferred Securities will be entitled to
receive out of the assets of PECO Energy Capital, after satisfaction of
liabilities to creditors and before distribution of assets is made to holders of
its general partner interests, the sum of their $25.00 stated liquidation
preference
<PAGE>
and all accumulated and unpaid Distributions to the date of payment. All assets
of PECO Energy Capital remaining after payment of the liquidation distribution
to the holders of all Cumulative Monthly Income Preferred Securities of PECO
Energy Capital ("Preferred Securities") will be distributed to the general
partner of PECO Energy Capital.
The Preferred Trust Receipts will be represented by global securities
registered in the name of The Depository Trust Company ("DTC") or its nominee.
Beneficial interests in the Preferred Trust Receipts will be shown on, and
transfers thereof will be effected only through, records maintained by
participants in DTC. Preferred Trust Receipts in certificated form will not be
issued in exchange for the global securities. See "Description of the Preferred
Trust Receipts--Book-Entry-Only Issuance--The Depository Trust Company."
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE PREFERRED TRUST
RECEIPTS, INCLUDING ENTERING STABILIZING BIDS, EFFECTING SYNDICATE COVERING
TRANSACTIONS AND IMPOSING PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES,
SEE "UNDERWRITING."
3
<PAGE>
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. In addition, registration
statements and certain other filings made with the SEC through its Electronic
Data Gathering, Analysis and Retrieval ("EDGAR") system are publicly available
through the SEC's site on the Internet's World Wide Web, located at
http://www.sec.gov. The Registration Statement, including all exhibits thereto
and amendments thereof, has been filed with the SEC through EDGAR. 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."
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,
1996;
2. PECO Energy's Quarterly Report on Form 10-Q for the quarter ended March
31, 1997; and
3. PECO Energy's Current Reports on Form 8-K dated January 23, 1997, January
24, 1997, January 30, 1997, February 21, 1997, February 27, 1997, March
25, 1997, April 1, 1997, April 14, 1997, April 25, 1997, May 8, 1997, May
12, 1997 and May 22, 1997.
Each document filed subsequent to the date of this Prospectus pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act and prior to the
termination of the offering shall be deemed to be incorporated by reference in
this Prospectus and shall be a part hereof from the date of filing of such
document. Any statement contained herein or in a document all or a portion of
which is incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
This 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 a Prospectus is
delivered, upon written or oral request of such person, a copy of any or all
documents described above under "Incorporation of Certain Documents by
Reference," other than exhibits to such documents. Such requests should be
directed to PECO Energy Company, Financial Division, S21-1, P.O. Box 8699,
Philadelphia, PA 19101, (215) 841-5678.
4
<PAGE>
RISK FACTORS
Prospective purchasers of Preferred Trust Receipts should carefully review
the information contained elsewhere in this Prospectus and should particularly
consider the following matters:
Subordinate Obligations of Series C Guarantee and Series C Subordinated
Debentures
PECO Energy's obligations under the Series C Guarantee are subordinate and
junior in right of payment to all general liabilities of PECO Energy and its
obligations under the Series C Subordinated Debentures are subordinate and
junior in right of payment to all Senior Indebtedness of PECO Energy (as defined
under "Description of the Series C Subordinated Debentures and the
Indenture--Subordination"). At March 31, 1997, the Senior Indebtedness of PECO
Energy aggregated approximately $4.698 billion. There are no terms in the Series
C Subordinated Debentures or the Series C Guarantee that limit PECO Energy's
ability to incur additional indebtedness, including indebtedness that ranks
senior to the Series C Subordinated Debentures and the Series C Guarantee. The
Series C Guarantee guarantees payment of accumulated and unpaid monthly
Distributions, amounts payable on redemption, and amounts payable on liquidation
with respect to the Series C 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 C Subordinated Debentures, PECO Energy
Capital would lack legally available funds for the payment of Distributions or
amounts payable on redemption of the Series C Preferred Securities or upon
liquidation of PECO Energy Capital, and in such event, the holders of the
Preferred Trust Receipts representing the Series C Preferred Securities would
not be able to rely upon the Series C Guarantee for payment of such amounts.
Instead, holders of the Preferred Trust Receipts representing the Series C
Preferred Securities would be required to seek enforcement of PECO Energy
Capital's rights against PECO Energy pursuant to the terms of the Indenture as
provided in "Description of the Series C Preferred Securities--Voting Rights."
See "Description of the Series C Guarantee--Status of the Series C Guarantee"
and "Description of the Series C 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 the interest
payment period on all Subordinated Debentures for up to 60 consecutive months,
and, as a consequence, monthly Distributions on the Series C Preferred
Securities may be deferred by PECO Energy Capital during any such Extension
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 period on the Series C Subordinated Debentures, PECO Energy may not
declare dividends on any shares of its capital stock during such Extension
Period. See "Description of the Series C Subordinated Debentures and the
Indenture--Option to Extend Interest Payment Period."
Should an Extension Period occur, a holder of Preferred Trust Receipts will
accrue interest income (as original issue discount) on an economic accrual basis
in respect of its pro rata share of the Series C Preferred Securities held by
the Trust. As a result, a holder of Preferred Trust Receipts will include such
interest in gross income for federal income tax purposes in advance of the
receipt of cash, and will not receive the cash related to such income from the
Trust if the holder disposes of the Preferred Trust Receipts prior to the record
date for the payment of Distributions. See "United States Taxation--Taxability
of Distributions."
PECO Energy has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the Series C
Subordinated Debentures. However, should PECO Energy exercise such right in the
future, the market price of the Preferred Trust Receipts is likely to be
affected. An owner who disposes of Preferred Trust Receipts during an Extension
Period might not receive the same return on investment as an owner who continues
to hold Preferred Trust Receipts. In addition, as a result of the mere existence
of PECO Energy's right to defer interest payments on the Series C Subordinated
Debentures, the market price of the Preferred Trust Receipts may be more
volatile than other securities that are not subject to such deferrals.
Special Event Redemptions
Upon the occurrence and continuation of a Tax Event (as defined in
"Description of the Series C Preferred Securities--Special Event Redemptions"),
the General Partner has the right to redeem the Series C Preferred
5
<PAGE>
Securities, in whole or in part, and upon the occurrence of an Investment
Company Act Event (as defined in "Description of the Series C Preferred
Securities--Special Event Redemptions"), the General Partner must redeem the
Series C Preferred Securities in whole but not in part, and in either case,
cause a mandatory redemption of the Preferred Trust Receipts at a redemption
price equal to the liquidation amount plus accumulated and unpaid Distributions,
within 90 days following the occurrence of such Tax Event or Investment Company
Event. A holder of Series C Preferred Securities will recognize gain or loss
upon such a redemption for federal income tax purposes to the extent that the
liquidation amount differs from such holder's adjusted tax basis for the Series
C Preferred Securities. Any accumulated and unpaid Distributions also will be
taxable to the extent that such holder has not already taken such Distributions
into account. See "United States Taxation--Disposition of the Preferred Trust
Receipts."
Proposed Tax Law Changes
In late 1995, President Clinton proposed certain tax law changes that
would, among other things, generally deny interest deductions to corporate
issuers if the debt instrument has a term exceeding 20 years and is not
reflected as indebtedness on such issuer's consolidated balance sheet. Because
the term of the Series C Subordinated Debentures exceeds 20 years, this
proposal, were it to become effective, would prevent PECO Energy from deducting
interest on the Series C Subordinated Debentures. However, on March 29, 1996,
the Chairmen of the Senate Finance Committee and the House Ways and Means
Committee issued a joint statement to the effect that it was their intention
that the effective date of the President's legislative proposals, if adopted,
will be no earlier than the date of appropriate Congressional action. The
Clinton Administration renewed these proposals as part of its fiscal 1998 budget
and would make them effective upon the date of first committee action. The
revised proposals as proposed by the Clinton Administration would apply to debt
instruments with terms exceeding 15 years. In the opinion of special tax counsel
to PECO Energy and PECO Energy Capital, under current law, interest on the
Series C Subordinated Debentures is deductible by PECO Energy. There can be no
assurance, however, that such proposals, subsequent proposals or final
legislation will not affect the ability of PECO Energy to deduct interest on the
Series C Subordinated Debentures which in turn could give rise to a Tax Event
and, accordingly, the General Partner's optional right to redeem the Series C
Preferred Securities, as described under "Description of the Series C Preferred
Securities--Special Event Redemptions" and "United States Taxation."
Rights Under the Series C Guarantee
Under the Series C Guarantee, PECO Energy agrees to pay (i) any accumulated
and unpaid Distributions on the Series C 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 C Preferred Securities
called for redemption by PECO Energy Capital to the extent that PECO Energy
Capital has funds on hand legally available therefor, and (iii) upon
liquidation of PECO Energy Capital, the lesser of (a) the portion of the
Partnership Liquidation Distribution (as defined herein) applicable to the
Series C Preferred Securities and (b) the amount of assets of PECO Energy
Capital legally available for distribution to holders of Series C Preferred
Securities in liquidation of PECO Energy Capital. For the purposes hereof
"Partnership Liquidation Distribution" shall mean the stated liquidation
preference of all Preferred Securities and all accumulated and unpaid
Distributions to the date of payment for such series of Preferred Securities.
See "Description of the Series C Guarantee--General." If PECO Energy were to
default on its obligation to pay amounts payable on the Series C Subordinated
Debentures, PECO Energy Capital would lack funds for the payment of
Distributions or amounts payable on redemption of the Series C Preferred
Securities or upon liquidation of PECO Energy Capital, and, in each such event,
holders of Preferred Trust Receipts would not be able to rely upon the Series C
Guarantee for payment of such amounts. The holders of Preferred Trust Receipts,
together with the holders of Series C Preferred Securities other than the Trust,
representing not less than 10% aggregate liquidation preference of the Series C
Preferred Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available in respect of the Series C
Guarantee, including the right to direct the General Partner or the Special
Representative (as defined under "Description of the Series C Preferred
Securities--Voting Rights"), as the case may be. If the General Partner or
Special Representative fails to enforce the Series C Guarantee, any holder of
the Preferred Trust Receipts may institute a legal proceeding directly against
PECO Energy to enforce its rights under the Series C Guarantee without first
instituting a legal proceeding against PECO Energy Capital or any other person
or entity. See "Description of the Series C Guarantee--Status of the Series C
Guarantee" and "Description of the Series C Subordinated Debentures and the
Indenture--Subordination."
6
<PAGE>
Limited Voting Rights
Holders of Preferred Trust Receipts have limited voting rights and are only
entitled to appoint and authorize a Special Representative to enforce PECO
Energy Capital's rights against PECO Energy upon the occurrence of the
following: (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 any
Payment and Guarantee Agreement issued by PECO Energy for the benefit of the
holders of Preferred Securities (a "Guarantee"). See "Description of the Series
C Preferred Securities--Voting Rights."
Trading Characteristics of the Preferred Trust Receipts
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 C
Subordinated Debentures. An owner of Preferred Trust Receipts who disposes of
Preferred Trust Receipts between record dates for payments of Distributions will
nevertheless be required to include accrued but unpaid interest on the Series C
Subordinated Debentures through the date of disposition in income as ordinary
income and to add such amount to its adjusted tax basis of the Preferred Trust
Receipts so disposed. Such owner 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 its 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 federal income tax purposes. See
"United States Taxation."
PECO ENERGY
PECO Energy, incorporated in Pennsylvania in 1929, is an operating utility
which provides electric and gas service to the public in southeastern
Pennsylvania and buys and sells power in the wholesale generation market
throughout North America. The total area served by PECO Energy covers 2,107
square miles. Retail electric service is supplied in an area of 1,972 square
miles with a population of about 3.6 million, including 1.6 million in the City
of Philadelphia. Approximately 94% of the electric service area and 64% of
retail kilowatt hour sales are in the suburbs around Philadelphia, and 6% of the
service area and 36% of such sales are in the City of Philadelphia. Natural gas
service is supplied in a 1,475-square-mile area of southeastern Pennsylvania
adjacent to Philadelphia with a population of 1.9 million.
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., a wholly owned subsidiary of PECO Energy, 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 in series 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 II is a statutory business trust recently created
under the laws of the State of Delaware. The Trust exists for the sole purpose
of issuing the Preferred Trust Receipts representing the Series C Preferred
Securities held by the Trust and performing functions directly related thereto.
The Series C Preferred Securities are the only assets of the Trust. All expenses
and liabilities of the Trust will be paid by the General Partner, provided that
if the trustee of the Trust (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.
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COVERAGE RATIOS
PECO Energy's Ratio of Earnings to Fixed Charges for each of the periods
indicated was as follows:
Three Months
ended
Years ended December 31, March 31,
- -------------------------------------------------- --------------
1992 1993 1994 1995 1996 1996 1997
- -------------- ------ ------ ------ ------ ------ -----
2.43 3.15 2.66 3.41 3.29 3.59 3.24
The Ratio of Earnings to Fixed Charges represents, on a pre-tax basis, the
number of times earnings cover fixed charges. Earnings consist of net income to
which has been added fixed charges and taxes based on income of PECO Energy.
Fixed charges consist of interest on funded indebtedness, other interest,
amortization of net gain on reacquired debt and net discount on debt and the
interest portion of all rentals charged to income.
PECO Energy's Ratio of Earnings to Combined Fixed Charges and Preferred
Stock Dividends for each of the periods indicated was as follows:
Three Months
ended
Years ended December 31, March 31,
- -------------------------------------------------- --------------
1992 1993 1994 1995 1996 1996 1997
- -------------- ------ ------ ------ ------ ------ -----
2.06 2.67 2.32 3.12 3.04 3.33 2.97
The Ratio of Earnings to Combined Fixed Charges and Preferred Stock
Dividends represents, on a pretax basis, the number of times earnings cover
fixed charges and preferred stock dividends. Earnings consist of net income to
which has been added fixed charges and taxes based on income of PECO Energy.
Combined fixed charges and preferred stock dividends consist of interest on
funded indebtedness, other interest, amortization of net gain on reacquired debt
and net discount on debt, preferred stock dividends (increased to reflect the
pre-tax earnings required to cover such dividend requirements) and the interest
portion of all rentals charged to income.
USE OF PROCEEDS
The net proceeds from the sale of Preferred Trust Receipts will be used by
the Trust to purchase the Series C Preferred Securities from PECO Energy
Capital. PECO Energy Capital will lend the proceeds from the sale of the Series
C Preferred Securities, plus the capital contribution made by the General
Partner, to PECO Energy, which loan will be evidenced by the Series C
Subordinated Debentures. These funds will be used by PECO Energy in connection
with its redemption of $50,000,000 aggregate liquidation value of PECO Energy's
outstanding depositary shares each representing a one-fourth interest in a share
of $7.96 Cumulative Preferred Stock, after such depositary shares become subject
to redemption at the election of PECO Energy on October 1, 1997.
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. Reference is made to the Trust Agreement
which is an exhibit to the Registration Statement of which this 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 C Preferred
Security. Each Series C Preferred Security has a stated liquidation preference
of $25. The Preferred Trust Receipts will be issued in book-entry form through
DTC or such other depository at which PECO Energy may have established an
account. Preferred Trust Receipts may be exchanged for the underlying Series C
Preferred Securities as described under "--Withdrawal of Series C Preferred
Securities."
The Trust is a statutory business trust created under the Delaware Business
Trust Act. The Trustee will hold the Series C Preferred Securities deposited in
the Trust for the benefit of the holders of the Preferred Trust Receipts. The
Trust Agreement provides that, to the fullest extent permitted by law, without
the need for any
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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
C Preferred Securities represented by the Preferred Trust Receipts held by such
holder.
It is anticipated that the assets of the Trust available for distribution
to the holders of the Preferred Trust Receipts will be limited to payments from
PECO Energy Capital under the Series C Preferred Securities, which payments by
PECO Energy Capital will be limited to payments from PECO Energy on the Series C
Subordinated Debentures. See "Description of the Series C Subordinated
Debentures and the Indenture." If PECO Energy fails to make a payment on the
Series C Subordinated Debentures or if PECO Energy Capital fails to make a
Distribution on the Series C Preferred Securities, the Trust will not have
sufficient funds to make related payments, including Distributions, on the
Preferred Trust Receipts.
Distributions
Whenever the Trust shall receive any cash distribution representing a
monthly distribution on the Series C Preferred Securities (whether or not
distributed by PECO Energy Capital on the regular monthly distribution date
therefor) or payment under the Series C 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 C Preferred Securities represented
by such Preferred Trust Receipts. Under the Indenture, PECO Energy shall have
the right at any time, 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 C
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 C Subordinated Debentures and the Indenture--Option
to Extend Interest Payment Period."
Redemption of Preferred Trust Receipts
Whenever PECO Energy Capital shall elect or is required to redeem Series C
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 C Preferred Securities and the Preferred Trust Receipts
to the holders of the Preferred Trust Receipts. On the date of redemption of the
Series C Preferred Securities, provided that PECO Energy Capital (or PECO Energy
pursuant to the Series C Guarantee) shall have deposited with the Trustee the
aggregate amount payable upon redemption of all Series C Preferred Securities
held by the Trust to be redeemed, the Trustee shall redeem Preferred Trust
Receipts representing the same number of such Series C Preferred Securities
redeemed by PECO Energy Capital at the same redemption price at which such
Series C 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 C 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 C 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 C
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 C Preferred Securities represented by such Preferred Trust Receipts.
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Withdrawal of Series C Preferred Securities
Any beneficial owner of Preferred Trust Receipts may withdraw all, but not
less than all, of the Series C Preferred Securities represented by such
Preferred Trust Receipts by providing a written notice and agreement to be bound
by the terms of the Partnership Agreement to the Trustee, with evidence of
beneficial ownership in form satisfactory to the Trustee. Within a reasonable
period after such request has been made, the Trustee shall instruct DTC to
reduce the number of Preferred Trust Receipts represented by the global
certificate held by DTC by the amount equal to the number of Preferred Trust
Receipts to be so withdrawn by the withdrawing owner, the Trustee shall issue to
the withdrawing owner a certificate representing the number of Series C
Preferred Securities so withdrawn and the Trustee shall reduce the number of
Series C Preferred Securities represented by the global certificate held by the
Trustee by a like amount; provided, that the Trustee shall not issue any
fractional number of Series C Preferred Securities. The Series C Preferred
Securities will only be issued in certificated form.
Any holder of Series C Preferred Securities may redeposit withdrawn Series
C Preferred Securities by delivery to the Trustee of a certificate or
certificates for the Series C Preferred Securities to be deposited, properly
endorsed or accompanied, if required by the Trustee, 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 all such
certifications as may be required by the Trustee in its sole discretion and in
accordance with the provisions of the Trust Agreement. Within a reasonable
period after such deposit is properly made, the Trustee shall instruct DTC to
increase the number of Preferred Trust Receipts represented by the global
certificate held by DTC by an amount equal to the Series C Preferred Securities
to be deposited. The Preferred Trust Receipts will not be issued in certificated
form.
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 C 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 by any national securities exchange or other organization on which
the Preferred Trust Receipts are then listed, downgraded by any "nationally
recognized statistical rating organization," as that term is defined by the SEC
for purposes of Rule 436(g)(2) under the Securities Act of 1933, as amended (the
"Securities Act"), or the holders thereof would recognize any gain or loss for
federal income tax purposes as a result of such consolidation, amalgamation,
merger, conveyance or transfer.
Upon receipt of notice of any meeting at which the holders of Series C
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 C 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 C Preferred Securities represented by
such Preferred Trust Receipts in accordance with the instructions set forth in
such request.
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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 C Preferred
Securities and such distribution has been delivered to the holders of the
Preferred Trust Receipts.
Expenses of the Trust
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 the 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.
Book-Entry-Only Issuance--The Depository Trust Company
DTC will initially act as securities depositary for all of the Preferred
Trust Receipts. The Preferred Trust Receipts will be issued only as
fully-registered securities registered in the name of Cede & Co. (DTC's nominee)
as the holder thereof. One or more fully-registered global securities will be
issued for the Preferred Trust Receipts and will be deposited with DTC. The
Preferred Trust Receipts will not be available in certificated form.
DTC is a limited purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its participants ("Participants") deposit with DTC. DTC
also facilitates the settlement among Participants of securities transactions,
such as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates.
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Direct participants include securities brokers and dealers, banks, trust
companies, clearing corporations and certain other organizations ("Direct
Participants"). DTC is owned by a number of its Direct Participants and by the
New York Stock Exchange, the American Stock Exchange, Inc. and the National
Association of Securities Dealers, Inc. Access to the DTC system is also
available to others such as securities brokers and dealers, banks and trust
companies that clear through or maintain custodial relationships with Direct
Participants, either directly or indirectly ("Indirect Participants"). The rules
applicable to DTC and its Participants are on file with the SEC.
Purchases of Preferred Trust Receipts within the DTC system must be made by
or through Direct Participants, which will receive a credit for the Preferred
Trust Receipts on DTC's records. The ownership interest of each actual purchaser
of each Preferred Trust Receipt ("Beneficial Owner") is in turn to be recorded
on the Direct and Indirect Participants' records. Beneficial Owners will not
receive written confirmation from DTC of their purchases, but Beneficial Owners
are expected to receive written confirmations providing details of the
transactions, as well as periodic statements of their holdings, from the Direct
or Indirect Participants through which the Beneficial Owners purchased Preferred
Trust Receipts. Transfers of ownership interests in the Preferred Trust Receipts
are to be accomplished by entries made on the books of Participants acting on
behalf of Beneficial Owners. Beneficial Owners will not receive certificates
representing their ownership interests in Preferred Trust Receipts, except in
the event that use of the book-entry system for the Preferred Trust Receipts is
discontinued.
DTC has no knowledge of the actual Beneficial Owners of the Preferred Trust
Receipts; DTC's records reflect only the identity of the Direct Participants to
whose accounts such Preferred Trust Receipts are credited, which may or may not
be the Beneficial Owners. The Participants will remain responsible for keeping
account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants and by Direct and
Indirect Participants to Beneficial Owners will be governed by arrangements
among them, subject to any statutory or regulatory requirements as may be in
effect from time to time.
Redemption notices shall be sent to Cede & Co. as the registered holder of
the Preferred Trust Receipts. If less than all of the Preferred Trust Receipts
are being redeemed, DTC's practice is to determine by lot the amount of the
interest of each Direct Participant to be redeemed.
Although voting with respect to the Preferred Trust Receipts is limited to
the holders of record of the Preferred Trust Receipts, in those instances in
which a vote is required, neither DTC nor Cede & Co. will itself consent or vote
with respect to the Preferred Trust Receipts. Under its usual procedures, DTC
would mail an omnibus proxy (the "Omnibus Proxy") to the Trustee as soon as
possible after the record date. The Omnibus Proxy assigns Cede & Co.'s
consenting or voting rights to those Direct Participants to whose accounts such
Preferred Trust Receipts are credited on the record date (identified in a
listing attached to the Omnibus Proxy).
Distributions on the Preferred Trust Receipts will be made in immediately
available funds by the Trustee on behalf of the Trust to DTC. DTC's practice is
to credit Direct Participants' accounts on the relevant payment date in
accordance with their respective holdings shown on DTC's records unless DTC has
reason to believe that it will not receive payments on such payment date.
Payments by Participants to Beneficial Owners will be governed by standing
instructions and customary practices will be the responsibility of such
Participant and not of DTC, the Trustee, the Trust or PECO Energy, subject to
any statutory or regulatory requirements as may be in effect from time to time.
Payment of Distributions to DTC is the responsibility of the Trustee on behalf
of the Trust, disbursement of such payments to Direct Participants is the
responsibility of DTC and disbursements of such payments to the Beneficial
Owners is the responsibility of the Direct and Indirect Participants.
DTC may discontinue providing its services as securities depositary with
respect to the Preferred Trust Receipts at any time by giving reasonable notice
to the Trustee and PECO Energy. In the event that a successor securities
depositary is not obtained, definitive Preferred Trust Receipt certificates
representing such Preferred Trust Receipts are required to be printed and
delivered. PECO Energy, at its option, may decide to discontinue use of the
system of book-entry transfers through DTC (or a successor depositary) as a
result of such discontinuance or as a result of DTC's ineligibility to so act,
in which case definitive certificates for such Preferred Trust Receipts will be
issued. Upon distribution of definitive Preferred Trust Receipts certificates,
owners of such Preferred Trust Receipts will become the registered holders of
such Preferred Trust Receipts.
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The information set forth above concerning DTC and DTC's book-entry system
has been obtained from sources that PECO Energy Capital and PECO Energy believe
to be accurate, but PECO Energy Capital and PECO Energy assume no responsibility
for the accuracy thereof. None of the Trust, PECO Energy Capital nor PECO Energy
has any responsibility for the performance by DTC or its Participants of their
respective obligations as described herein or under the rules and procedures
governing their respective operations.
In the event that the book-entry-only system is discontinued, the Trustee
shall keep the registration books for such Preferred Trust Receipts at its
corporate office. Such Preferred Trust Receipts may be transferred or exchanged
for one or more Preferred Trust Receipts upon surrender thereof at the corporate
office of the Trustee by the holders or their duly authorized attorneys or legal
representatives. Upon surrender of any Preferred Trust Receipts to be
transferred or exchanged, the Trustee shall record the transfer or exchange in
the registration books and shall deliver new Preferred Trust Receipts
appropriately registered. The Trustee shall not be required to register the
transfer of any Preferred Trust Receipts that have been called for redemption on
or after the liquidation date of PECO Energy Capital. The Trust and the Trustee
shall be entitled to treat the holders of the Preferred Trust Receipts, as their
names appear in the registration books, as the owners of those Preferred Trust
Receipts for all purposes under the Trust Agreement.
DESCRIPTION OF THE SERIES C PREFERRED SECURITIES
The following is a summary of certain terms and provisions of the Series C
Preferred Securities represented by the Preferred Trust Receipts. Reference is
made to the Partnership Agreement which is an exhibit to the Registration
Statement of which this Prospectus forms a part.
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 C 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 C 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 C Preferred Securities will be cumulative, will accrue from the original
date of issuance, and, except as otherwise described below, will be payable
monthly in arrears, on the last day of each month of each year, commencing on
June 30, 1997. Distributions in arrears after the monthly payment date therefor
will accumulate additional Distributions thereon at the rate of ____% per annum.
PECO Energy Capital has issued Series A Preferred Securities and Series B
Preferred Securities, which have an aggregate stated liquidation preference of
$221,250,000 and $78,104,575, respectively.
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 C Preferred Securities and any other outstanding Preferred
Securities of PECO Energy Capital.
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PECO Energy has the right under the Indenture to extend the interest
payment period from time to time on all Subordinated Debentures to a period not
exceeding 60 consecutive months; provided that such Extension Period shall not
extend beyond the stated maturity date or redemption date of any series of
Subordinated Debentures, including the Series C Subordinated Debentures. As a
consequence, monthly Distributions on the Series C Preferred Securities would be
deferred (but would continue to accumulate with Distributions thereon) by PECO
Energy Capital during any such Extension 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 all series of
Subordinated Debentures, PECO Energy may elect to extend the interest payment
period again, subject to the above requirements. Following an Extension Period
of 18 months or more, the holders of Preferred Securities, including the Series
C Preferred Securities, shall have the right to appoint a Special Representative
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 C Subordinated Debentures and the Indenture--Option to Extend
Interest Payment Period" and "--Interest."
Distributions on the Series C 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 C
Subordinated Debentures. See "Description of the Series C 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 C
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 C 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 C 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 C 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 June
___, 2002, at $25 per Series C Preferred Security, plus accumulated and unpaid
Distributions (whether or not declared), if any, to the date fixed for
redemption (the "Redemption Price").
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Mandatory Redemption
If at any time PECO Energy redeems the Series C Subordinated Debentures or
pays the Series C Subordinated Debentures at maturity, the Series C Preferred
Securities will be subject to mandatory redemption at the Redemption Price.
The Series C 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
C Preferred Securities will be subject to redemption, at the option of the
General Partner, in whole or in part at the Redemption Price within 90 days
following the occurrence of such Tax Event. "Tax Event" means that PECO Energy
Capital shall have received an opinion of counsel (which may be regular counsel
to PECO Energy or an affiliate but not an employee thereof) experienced in such
matters to the effect that, as a result of any amendment to, or change
(including any announced prospective change) in, the laws (or any regulations
thereunder) of the United States or any political subdivision or taxing
authority thereof or therein affecting taxation, or as a result of any official
administrative pronouncement or judicial decision interpreting or applying such
laws or regulations, which amendment or change is effective or such
interpretation or pronouncement is announced on or after the date of issuance of
the Series C Preferred Securities, there is more than an insubstantial risk that
(i) PECO Energy Capital is subject to federal income tax with respect to
interest received on the Series C Subordinated Debentures or PECO Energy Capital
will otherwise not be taxed as a partnership, (ii) interest payable by PECO
Energy on the Series C Subordinated Debentures will not be deductible for
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 Event (as defined below) shall occur and be
continuing, the Series C Preferred Securities will be subject to mandatory
redemption in whole at the Redemption Price within 90 days following the
occurrence of such Investment Company Event. "Investment Company 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 C Preferred Securities; provided, that no
Investment Company 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 C Preferred Securities unless
all accumulated and unpaid Distributions have been paid on all Series C
Preferred Securities for all monthly distribution periods terminating on or
prior to the date of redemption.
Notice of any redemption of the Series C Preferred Securities will be given
by PECO Energy Capital by mail or delivery to each record holder of Series C
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 C Preferred Securities. Notices of redemption shall be addressed to the
record holders of the Series C Preferred Securities at the addresses of the
holders appearing in the books and records of PECO Energy Capital.
If notice of redemption shall have been given and payment shall have been
made by PECO Energy Capital to the Trust and any other holder of Series C
Preferred Securities, then, upon the date of such payment all rights of owners
of the Series C Preferred Securities so called for redemption will cease. In the
event that any date fixed for redemption of Series C Preferred Securities is not
a business day, then payment of the Redemp-
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tion 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 lesser of the
Partnership Liquidation Distribution or the amount of assets of PECO Energy
Capital legally available for distribution to the holders of Preferred
Securities. All assets of PECO Energy Capital remaining after payment thereof
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 otherwise 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 PECO Energy Capital in 2093, (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
all series of Subordinated Debentures to fund the Partnership Liquidation
Distribution.
The amount per share payable on the Series C 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 662/3% 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
Guarantees 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 or other organization 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
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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 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 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 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 C Guarantee--Amendments" and as
otherwise required by law and the Partnership Agreement, the holders of the
Series C Preferred Securities 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 any
Guarantee, then the holders of the Preferred Securities, acting as a single
class, will be entitled by a vote of the majority of the aggregate stated
liquidation preference of the outstanding Preferred Securities to appoint a
special representative (the "Special Representative") to enforce PECO Energy
Capital's rights against PECO Energy under the Subordinated Debentures and the
Indenture and the obligations undertaken by PECO Energy under the Guarantees
issued in conjunction with the issuance of the Preferred Securities, 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 a Guarantee) shall have paid in full
all accumulated and unpaid Distributions on the Preferred Securities or such
Event of Default under the Indenture or default under the Guarantee 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
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of the holders of not less than 662/3% 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.
So long as any series of 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 Trustee
under the Indenture (the "Indenture Trustee"), 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 662/3% 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 any series of 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 federal income tax purposes and
so that all series of 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 C GUARANTEE
The following is a summary of certain provisions of the Series C Guarantee
which will be executed and delivered by PECO Energy concurrently with the
issuance of the Series C Preferred Securities. Reference is made to the Series C
Guarantee, which is filed as an exhibit to the Registration Statement of which
this Prospectus forms a part.
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General
Under the Series C Guarantee, PECO Energy will agree to pay (i) any
accumulated and unpaid Distributions on the Series C 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 C Preferred
Securities called for redemption by PECO Energy Capital to the extent that PECO
Energy Capital has funds on hand legally available therefor and (iii) upon a
liquidation of PECO Energy Capital, the lesser of (a) the portion of the
Partnership Liquidation Distribution applicable to the Series C Preferred
Securities and (b) the amount of assets of PECO Energy Capital legally available
for distribution to holders of Series C Preferred Securities in liquidation of
PECO Energy Capital (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 setoff 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 C Preferred Securities or by causing PECO Energy Capital to pay such
amounts to such holders.
Status of the Series C Guarantee
The Series C 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 C Guarantee will constitute a guarantee of payment and not of
collection. The Series C Guarantee will be held by the General Partner for the
benefit of the holders of the Series C Preferred Securities. In the event of the
appointment of a Special Representative, the Special Representative may enforce
the Series C Guarantee. If no Special Representative has been appointed to
enforce the Series C Guarantee, the General Partner has the right to enforce the
Series C Guarantee on behalf of the holders of the Series C Preferred
Securities. The holders of Preferred Trust Receipts, together with the holders
of the Series C Preferred Securities other than the Trust, representing not less
than 10% in aggregate stated liquidation preference of the Series C 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 C 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 C Guarantee as above provided, any
holder of Preferred Trust Receipts representing Series C Preferred Securities,
and any holder of Series C Preferred Securities other than the Trust, may
institute a legal proceeding directly against PECO Energy to enforce its rights
under the Series C Guarantee without first instituting a legal proceeding
against PECO Energy Capital or any other person or entity. The Series C
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 C Guarantee.
Relationship among Series C Guarantee, Series C Subordinated Debentures and
Series C Preferred Securities
In addition to the obligations of PECO Energy under the Series C 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 C 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 C Preferred Securities as set forth
above.
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Certain Covenants of PECO Energy
Under the Series C Guarantee, PECO Energy will covenant that, so long as
any Series C Preferred Securities remain outstanding, neither PECO Energy nor
any majority-owned subsidiary of PECO Energy shall declare or pay any dividend
on, or redeem, purchase, acquire or make a liquidation payment with respect to,
any of its capital stock (other than dividends by a wholly owned subsidiary) if
at such time PECO Energy shall be in default with respect to its payment
obligations under the Series C 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 C Preferred Securities (in which case no vote
will be required), the Series C Guarantee may be amended only with the prior
approval of the holders of Preferred Trust Receipts representing not less than
662/3% of the aggregate stated liquidation preference of the outstanding Series
C Preferred Securities.
Merger of PECO Energy
So long as the Series C 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 C Guarantee.
Termination of the Series C Guarantee
The Series C Guarantee will terminate and be of no further force and effect
upon full payment of the Redemption Price of all Series C Preferred Securities
or upon full payment of the amounts payable with respect to the Series C
Preferred Securities upon liquidation of PECO Energy Capital. The Series C
Guarantee will continue to be effective or will be reinstated, as the case may
be, if at any time any holder of Series C Preferred Securities must restore
payments of any sums paid under the Series C Preferred Securities or the Series
C Guarantee.
DESCRIPTION OF THE SERIES C SUBORDINATED
DEBENTURES AND THE INDENTURE
The following is a summary of certain terms and provisions of the Series C
Subordinated Debentures and the Indenture. Reference is made to the Indenture,
which is filed as an exhibit to the Registration Statement of which this
Prospectus forms a part.
General
The Series C Subordinated Debentures will be unsecured subordinated
obligations of PECO Energy issued under the Indenture. The Series C Subordinated
Debentures will be in a principal amount equal to the aggregate stated
liquidation preference of the Series C Preferred Securities plus the General
Partner's capital contribution in PECO Energy Capital, will bear interest at a
rate equal to the Distribution rate on the Series C Preferred Securities payable
on the Distribution dates, will have maturity and redemption provisions
corresponding to the redemption provisions of the Series C 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 C Subordinated
Debentures will become due and payable, together with any accrued and unpaid
interest thereon, on June ___, 2037.
PECO Energy will deliver the Series C Subordinated Debentures to the
General Partner to be held on behalf of the holders of the Series C Preferred
Securities. The Series C Subordinated Debentures will be delivered by PECO
Energy to evidence the loan by PECO Energy Capital to PECO Energy of an amount
equal to the proceeds received from the sale of the Series C Preferred
Securities, plus the General Partner's concurrent capital contribution in PECO
Energy Capital.
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Redemption
Except as provided below, the Series C Subordinated Debentures may not be
redeemed prior to June ___, 2002. PECO Energy shall have the right to redeem the
Series C Subordinated Debentures, in whole or in part, from time to time, on or
after June ___, 2002, 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 C Subordinated
Debentures at any time upon the occurrence of a Tax Event if certain conditions
are met as described under "Description of the Series C Preferred
Securities--Special Event Redemptions." The Series C Subordinated Debentures
will be subject to mandatory redemption upon the dissolution of PECO Energy
Capital or upon redemption of the Series C Preferred Securities.
If PECO Energy gives a notice of redemption in respect of Series C
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 C 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 C Subordinated Debentures called for
redemption and such Series C Subordinated Debentures will no longer be deemed to
be outstanding.
Interest
The Series C Subordinated Debentures will bear interest at an annual rate
of ____% plus Additional Interest (as defined herein), if any, from the original
date of issuance. Interest will be payable monthly in arrears on the last day of
each month of each year, commencing on June 30, 1997, to PECO Energy Capital.
PECO Energy will make additional interest payments on any overdue
installment of interest on the Series C Subordinated Debentures to PECO Energy
Capital at the same rate per annum as the annual rate payable on the Series C
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 "Company Obligated Manditorily Redeemable Preferred
Securities of a Partnership, which holds Solely Subordinated Debentures of the
Company" 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 ("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, 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 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 Exten-
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sion 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 New York Stock Exchange 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 Extension 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 C 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 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
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<PAGE>
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 the holders of the Preferred Securities) 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 C 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 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 662/3% 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.
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 662/3% 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 Subordinated
Debentures 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.
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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 C 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 C Subordinated
Debentures, to declare the principal and interest on the Series C Subordinated
Debentures due and payable and to enforce the obligations of PECO Energy under
the Series C 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.
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 C 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
Series C Subordinated Debentures then outstanding on the dates such payments are
due in accordance with the terms of the Series C 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
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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.
First Union National Bank, the Indenture Trustee, has from time to time
engaged in transactions with, or performed services for, PECO Energy and its
affiliates in the ordinary course of business and is the Trustee under PECO
Energy's First and Refunding Mortgage, dated May 1, 1923.
UNITED STATES TAXATION
In the opinion of Ballard Spahr Andrews & Ingersoll, special tax counsel to
PECO Energy, the following are the material federal income tax consequences (and
certain Pennsylvania tax considerations) 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. 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 PROSPECTIVE INVESTORS ARE ADVISED TO CONSULT THEIR TAX ADVISERS
REGARDING THE FEDERAL INCOME TAX CONSEQUENCES 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.
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 the Partnership
Agreement and the Trust Agreement, (i) PECO Energy Capital will be classified
for United States federal income tax purposes as a partnership and not as a
business entity taxable as a corporation and (ii) the Trust will be classified
as a grantor trust and not as a business entity taxable as a corporation.
As a consequence, each holder of Preferred Trust Receipts (a
"Securityholder") will be considered the owner of a pro rata portion of the
Series C 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 C Subordinated Debentures held by PECO Energy
Capital and allocated by 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.
Taxability of Distributions
PECO Energy Capital will be required to include stated interest on the
Series C Subordinated Debentures in its gross income as it accrues. Each
Securityholder, including a taxpayer who otherwise uses the cash method of
accounting, will be required to include his pro rata share of such interest
income in his gross income. 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 should equal the sum of the daily accruals of income for
such interest period.
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Potential Extension of Payment Period
Under the terms of the Indenture, PECO Energy will be permitted to extend
the interest payment period on the Series C Subordinated Debentures for 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
Extension 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
Extension Period, over the length of the Extension Period.
During an Extension Period, PECO Energy Capital will be required to include
original issue discount on the Series C Subordinated Debentures in its gross
income as it accrues, in accordance with a constant yield method based on a
compounding of interest. 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 in gross income. 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 Extension Period, Securityholders
will be required to include interest in gross income in advance of the receipt
of cash, 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 include interest in gross income but will not
receive any cash related thereto from the Trust. The tax basis of a Series C
Preferred Security will be increased by the amount of any interest that is
included in income without a corresponding 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.
Withdrawal of Series C Preferred Securities
The receipt of Series C 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 C Preferred Securities immediately after the
exchange will equal the Securityholder's tax basis and holding period for the
Preferred Trust Receipts (or Series C Preferred Securities, as applicable)
surrendered in the exchange. Income earned from the Series C 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 for 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 C 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 and Philadelphia Personal Property Taxes
In the opinion of Ballard Spahr Andrews & Ingersoll, the Preferred Trust
Receipts are exempt from existing personal property taxes in Pennsylvania and
Philadelphia.
United States Alien Holders
For purposes of this discussion, a "United States Alien Holder" is any
holder or beneficial owner who or which is (i) a nonresident alien individual or
(ii) a foreign corporation, partnership, estate or trust, in either case not
subject to federal income tax on a net income basis in respect of a Series C
Preferred Security.
Under present federal income tax law, subject to the discussions below with
respect to backup withholding, payments by the Trust or any of its paying agents
to any United States Alien Holder will not be subject to the United States
withholding tax provided that (i) 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, (ii) the
beneficial owner of the Preferred Trust Receipt is not a controlled foreign
corporation that is
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related to PECO Energy through stock ownership, and (iii) 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.
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 Trust Receipts 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
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 Trust Receipts 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.
Proposed Tax Law Changes
In late 1995, President Clinton proposed certain tax law changes that
would, among other things, generally deny interest deductions to corporate
issuers if the debt instrument has a term exceeding 20 years and is not
reflected as indebtedness on such issuer's consolidated balance sheet. Because
the term of the Series C Subordinated Debentures exceeds 20 years, this
proposal, were it to become effective, would prevent PECO Energy from deducting
interest on the Series C Subordinated Debentures. However, on March 29, 1996,
the Chairmen of the Senate Finance Committee and the House Ways and Means
Committee issued a joint statement to the effect that it was their intention
that the effective date of the President's legislative proposals, if adopted,
will be no earlier than the date of appropriate Congressional action. The
Clinton Administration renewed these proposals as part of its fiscal 1998 budget
and would make them effective upon the date of first committee action. The
revised proposals of the Clinton Administration would apply to debt instruments
with terms exceeding 15 years. In the opinion of special tax counsel to PECO
Energy and PECO Energy Capital, under current law, interest on the Series C
Subordinated Debentures is deductible by PECO Energy. There can be no assurance,
however, that such proposals, subsequent proposals or final legislation will not
affect the ability of PECO Energy to deduct interest on the Series C
Subordinated Debentures which in turn could give rise to a Tax Event and,
accordingly, the General Partner's optional right to redeem the Series C
Preferred Securities, as described under "Description of the Series C Preferred
Securities--Special Event Redemptions."
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UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, PECO
Energy and PECO Energy Capital have agreed to cause the Trust to sell to each of
the Underwriters named below, and each of such Underwriters, for whom Smith
Barney Inc. and Lehman Brothers Inc. are acting as Representatives (the
"Representatives"), has severally agreed to purchase from the Trust, the
respective number of Preferred Trust Receipts set forth opposite its name below:
Number of
Underwriter Preferred Trust Receipts
- ---------------------------- -------------------------
Smith Barney Inc. .........
Lehman Brothers Inc. ......
Total .....................
Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and pay for all of the Preferred Trust
Receipts offered hereby, if any are taken.
The Underwriters propose to offer the Preferred Trust Receipts in part
directly to the public at the initial public offering price set forth on the
cover page of this Prospectus, and in part to certain securities dealers at such
price less a concession of $____ per Preferred Trust Receipt, except that such
concession will be $0.50 per Preferred Trust Receipt sold to certain
institutions. The Underwriters may allow, and such dealers may reallow, a
concession not in excess of $____ per Preferred Trust Receipt to certain brokers
and dealers. After the Preferred Trust Receipts are released for sale to the
public, the offering price and other selling terms may from time to time be
varied by the Representatives.
Under the Underwriting Agreement, PECO Energy has agreed to pay to the
Underwriters an underwriting commission of $______ per Preferred Trust Receipt,
except that such commission will be $0.50 per Preferred Trust Receipt sold to
certain institutions.
Prior to this offering, there has been no public market for the Preferred
Trust Receipts. Application has been made to list the Preferred Trust Receipts
on the New York Stock Exchange. Trading of the Preferred Trust Receipts on the
New York Stock Exchange is expected to commence within a 30-day period after the
initial delivery thereof. In order to meet one of the requirements for listing
the Preferred Trust Receipts on the New York Stock Exchange, the Underwriters
will undertake to sell lots of 100 or more Preferred Trust Receipts to a minimum
of 400 beneficial owners. The Representatives have advised PECO Energy that they
intend to make a market in the Preferred Trust Receipts prior to commencement of
trading on the New York Stock Exchange, but are not obligated to do so and may
discontinue market making at any time without notice. No assurance can be given
as to the liquidity of the trading market for the Preferred Trust Receipts.
PECO Energy and the PECO Energy Capital have agreed, during the period
beginning from the date of the Underwriting Agreement and continuing to and
including the earlier of (i) the date on which the distribution of the Preferred
Trust Receipts ceases, as determined by the Representatives, or (ii) 30 days
after the closing date, not to offer, sell, contract to sell or otherwise
dispose of any Preferred Trust Receipts, Preferred Securities or any preferred
stock or any other securities of PECO Energy which are substantially similar to
the Preferred Trust Receipts or the Series C Preferred Securities, including any
guarantee of such securities, or any securities convertible into or exchangeable
for or representing the right to receive any of the foregoing securities,
without the prior written consent of the Representatives.
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PECO Energy and PECO Energy Capital have agreed to indemnify the several
Underwriters against certain liabilities, including liabilities under the
Securities Act.
LEGAL MATTERS
Certain matters of Delaware law relating to the validity of the Series C
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 and the
Trust. The validity of the Series C Guarantee and the Series C 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 Underwriters by Drinker Biddle & Reath LLP, Philadelphia,
Pennsylvania, counsel to the Underwriters. Ballard Spahr Andrews & Ingersoll and
Drinker Biddle & Reath LLP will rely on Richards, Layton & Finger, P.A. as to
certain matters of Delaware law.
ACCOUNTING TREATMENT
The financial statements of PECO Energy Capital will be consolidated with
PECO Energy's financial statements, with the Series C Preferred Securities shown
on PECO Energy's consolidated financial statements as "Company Obligated
Manditorily Redeemable Preferred Securities of a Partnership, which holds Solely
Subordinated Debentures of the Company." PECO Energy's financial statements will
include a footnote that discloses, among other things, that the sole asset of
PECO Energy Capital consists of Subordinated Debentures and will specify the
principal amount, interest rate and maturity date of each series of Subordinated
Debentures.
EXPERTS
The consolidated financial statements and schedule of PECO Energy
incorporated by reference in this 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, 1996. The consolidated financial statements and schedule
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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- --------------------------------------------------------------------------------
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus and, if given or
made, such information or representations must not be relied upon as having been
authorized. This Prospectus does not constitute an offer to sell or the
solicitation of any offer to buy any securities other than the securities
described in this Prospectus or an offer to sell or the solicitation of an offer
to buy such securities in any circumstances in which such offer or solicitation
is unlawful. Neither the delivery or this Prospectus nor any sale made hereunder
shall, under any circumstances, create any implication that the information
contained herein is correct as of any time subsequent to the date of such
information.
-----------------------------------
TABLE OF CONTENTS
Page
-----
Available Information ..................... 4
Incorporation of Certain Documents by
Reference ................................. 4
Risk Factors ................................. 5
PECO Energy ................................. 7
PECO Energy Capital ........................ 7
The Trust .................................... 7
Coverage Ratios .............................. 8
Use of Proceeds .............................. 8
Description of the Preferred Trust Receipts . 8
Description of the Series C Preferred
Securities ................................. 13
Description of the Series C Guarantee ...... 18
Description of the Series C Subordinated
Debentures and the Indenture ............... 20
United States Taxation ..................... 25
Underwriting ................................. 28
Legal Matters .............................. 29
Accounting Treatment ........................ 29
Experts .................................... 29
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
----------------- Trust Receipts
PECO Energy Capital
Trust II
each representing a
------ % Cumulative Monthly
Income Preferred
Security, Series C
of PECO Energy Capital, L.P.
guaranteed to the extent
PECO Energy Capital, L.P. has funds
as set forth herein by
PECO ENERGY COMPANY
[LOGO]
Smith Barney Inc.
Lehman Brothers
Representatives of the Underwriters
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.*
Expenses in connection with the issuance and distribution of the Securities
being registered hereunder other than underwriting commissions and expenses, are
estimated below.
Filing Fees - Securities and Exchange Commission ...... $ 15,152
Printing ............................................. 75,000
New York Stock Exchange listing fees .................. 30,000
Legal fees and Blue Sky fees ........................... 165,000
Accounting fees ....................................... 60,000
Trustee fees and expenses .............................. 10,000
Rating agencies fees and expenses ..................... 30,000
Miscellaneous .......................................... 24,848
---------
Total ................................................ $410,000
=========
- ------------
*Estimated
Item 15. Indemnification of Directors and Officers.
PECO Energy's Bylaws provide that PECO Energy is obligated to indemnify
directors and officers and other persons designated by the Board of Directors
against any liability including any damage, judgment, amount paid in settlement,
fine, penalty, cost or expense (including, without limitation, attorneys' fees
and disbursements) incurred in connection with any proceeding. The Bylaws
provide that no indemnification shall be made where the act or failure to act
giving rise to the claim for indemnification is determined by arbitration or
otherwise to have constituted willful misconduct or recklessness or attributable
to receipt from PECO Energy of a personal benefit to which the recipient it 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 Person'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
II-1
<PAGE>
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 and its 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 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.
Item 16. Exhibits
<TABLE>
<CAPTION>
Exhibit
Numbers Exhibit
- --------- -----------------------------------------------------------------------------------------------------
<S> <C>
1-1 Form of Underwriting Agreement.
3-1 Amended and Restated Articles of Incorporation of PECO Energy (incorporated by reference to
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 Reg-
istration 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 No. 1 to Amended and Restated Limited Partnership Agreement of PECO Energy Capi-
tal (incorporated by reference to Exhibit 10-8 of PECO Energy's 1995 Annual Report on Form 10-K,
File No. 1-1401).
4-3 Amendment No. 2 to Amended and Restated Limited Partnership Agreement of PECO Energy Capi-
tal (incorporated by reference to Exhibit 10-9 of PECO Energy's 1995 Annual Report on Form 10-K,
File No. 1-1401).
4-4 Form of Action of General Partner creating Series C Preferred Securities.
4-5 Form of Series C Preferred Security Certificate (included in Exhibit 4-1).
4-6 Subordinated Debenture Indenture dated as of July 1, 1994 (incorporated by reference to Exhibit 4-5
of PECO Energy's 1994 Annual Report on Form 10-K, File No. 1-1401).
4-7 Form of Series C Subordinated Debenture (included in Exhibit 4-9).
4-8 First Supplemental Indenture to Subordinated Debenture Indenture, dated as of December 1, 1995
(incorporated by reference to Exhibit 4-7 of PECO Energy's 1995 Annual Report on Form 10-K, File
No. 1-1401).
4-9 Form of Second Supplemental Indenture to Subordinated Debenture Indenture.
4-10 Certificate of Trust for the Trust.
4-11 Trust Agreement for the Trust.
4-12 Form of Amended and Restated Trust Agreement for the Trust.
4-13 Form of Payment and Guarantee Agreement.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Numbers Exhibit
- --------- -----------------------------------------------------------------------------------------------------
<S> <C>
4-14 Form of Certificate Representing the Preferred Trust Receipts (included in Exhibit 4-12).
5-1 Opinion of Ballard Spahr Andrews & Ingersoll relating to the legality of the Series C Subordinated
Debentures and Series C Guarantee, including consent.
5-2 Opinion of Richards, Layton & Finger, P.A. relating to the legality of the Preferred Trust Receipts
and the Series C Preferred Securities, including consent.
8 Opinion of Ballard Spahr Andrews & Ingersoll as to tax matters.
12-1 Computations of PECO Energy's Ratio of Earnings to Fixed Charges and Ratio of Earnings to Com-
bined Fixed Charges and Preferred Stock Dividend Requirements for the years ended December 31,
1992-1996 and for the three months ended March 31, 1996 and March 31, 1997 (incorporated by
reference to Exhibits 12-1 and 12-2, respectively, of PECO Energy's 1996 Annual Report on Form
10-K, File No. 1-1401 and PECO Energy's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1996 and March 31, 1997).
13 PECO Energy's Annual Report on Form 10-K for the fiscal year ended December 31, 1996 and
Quarterly Report on Form 10-Q for the quarter ended March 31, 1997 (incorporated by reference,
File No. 1-1401).
21 List of Subsidiaries of PECO Energy (incorporated by reference to Exhibit 21 of PECO Energy's
1996 Annual Report on Form 10-K, File No. 1-1401).
23-1 Consent of Independent Accountants.
23-2 Consent of Ballard Spahr Andrews & Ingersoll (included in Exhibit 5-1).
23-3 Consent of Richards, Layton & Finger, P.A. (included in Exhibit 5-2).
24 Powers of Attorney.
25 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of First Union National
Bank, as Trustee under the Second Supplemental Indenture.
</TABLE>
Item 17. Undertakings
(1) 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.
(2) The Trust hereby undertakes to provide the underwriter at the closing
specified in the underwriting agreement certificates in such dominations and
registered in such names as required by the underwriter to permit prompt
delivery to each purchaser.
(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.
II-3
<PAGE>
(4) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(5) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus 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-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant,
PECO Energy Company, certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, hereunto
duly authorized in the City of Philadelphia, Commonwealth of Pennsylvania, on
May 23, 1997.
PECO Energy Company
/s/ C.A. McNeill, Jr.
By: ---------------------------
C.A. McNeill, Jr.
President and Chief Executive
Officer
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
- --------------------------------- ------------------------------- -------------
<S> <C> <C>
/s/ J.F. Paquette, Jr. Chairman of the Board and May 23, 1997
----------------------------- Director
J.F. Paquette, Jr.
/s/ C.A. McNeill, Jr. President, Chief Executive May 23, 1997
----------------------------- Officer and Director
C.A. McNeill, Jr. (Principal Executive Officer)
/s/ K.G. Lawrence Senior Vice President-Finance May 23, 1997
----------------------------- and Chief Financial Officer
K.G. Lawrence (Principal Financial and
Accounting Officer)
</TABLE>
This Registration Statement has also been signed by C.A. McNeill, Jr.,
Attorney-in-Fact, on behalf of the following Directors on the date indicated:
Susan W. Catherwood Kinnaird R. McKee
M. Walter D'Alessio Joseph J. McLaughlin
G. Fred DiBona John M. Palms
R. Keith Elliott Ronald Rubin
Richard G. Gilmore Robert Subin
Richard H. Glanton
James A. Hagen
/s/ C.A. McNeill, Jr.
By: --------------------------- May 23, 1997
C.A. McNEILL, JR.,
ATTORNEY-IN-FACT
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant,
PECO Energy Capital, L.P., certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3 and has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
hereunto duly authorized in the City of Philadelphia, Commonwealth of
Pennsylvania, on May 23, 1997.
PECO Energy Capital, L.P.
By: PECO Energy Capital Corp.,
its general partner
/s/ J.B. Mitchell
By: ---------------------------
J.B. Mitchell
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------------------------------- ----------------------------- -------------
<S> <C> <C>
/s/ J.B. Mitchell President and Director May 23, 1997
----------------------------- (Principal Executive Officer
J.B. Mitchell and Principal Financial and
Accounting Officer)
/s/ K.G. Lawrence Director May 23, 1997
-----------------------------
K.G. Lawrence
/s/ N.E. Descano Director May 23, 1997
-----------------------------
N.E. Descano
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant,
PECO Energy Capital Trust II, certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form S-3 and has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, hereunto duly authorized in the City of Philadelphia, Commonwealth
of Pennsylvania, on May 23, 1997.
PECO Energy Capital Trust II
By: PECO Energy Capital, L.P.,
as grantor
By: PECO Energy Capital Corp.,
as general partner
/s/ J.B. Mitchell
By: ---------------------------
J.B. Mitchell
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------------------------------- ------------------------------ -------------
<S> <C> <C>
/s/ J.B. Mitchell (Principal Executive Officer May 23, 1997
----------------------------- and Principal Financial and
J.B. Mitchell Accounting Officer)
/s/ K.G. Lawrence Director May 23, 1997
-----------------------------
K.G. Lawrence
/s/ N.E. Descano Director May 23, 1997
-----------------------------
N.E. Descano
</TABLE>
<PAGE>
Exhibit 1-1
$50,000,000
PECO ENERGY CAPITAL TRUST II
PECO ENERGY CAPITAL, L.P.
PECO ENERGY COMPANY
TRUST RECEIPTS
representing an equal number of
__% Cumulative Monthly Income Preferred Securities, Series C
of
PECO Energy Capital, L.P.
UNDERWRITING AGREEMENT
June , 1997
SMITH BARNEY INC.
LEHMAN BROTHERS
As Representatives of the Several Underwriters
c/o SMITH BARNEY INC.
388 Greenwich Street
New York, NY 10013
Dear Sirs:
PECO Energy Capital Trust II, a statutory business trust created under
the laws of the state of Delaware (the "Trust"), PECO Energy Capital, L.P., a
limited partnership organized under the laws of Delaware (the "Company"), and
PECO Energy Company, a Pennsylvania corporation, as guarantor and provider of
certain undertakings (the "Guarantor"), propose, subject to the terms and
conditions stated herein, that the Trust issue and sell to the Underwriters
named in Schedule I hereto (the "Underwriters") an aggregate of 2,000,000 Trust
Receipts (the "Trust Receipts"), representing an equal number of the Company's
___% Cumulative Monthly Income Preferred Securities, Series C (liquidation
preference $25.00 per share) (the "Series C Preferred Securities") guaranteed by
the Guarantor on a limited basis as to the payment of accumulated and unpaid
monthly distributions for the benefit of the holders of the Series C Preferred
Securities, and as to payments on liquidation or redemption and benefiting from
certain additional undertakings of the Guarantor pursuant to a certain Payment
and Guarantee Agreement entered into by the Guarantor. The Guarantor's guarantee
and undertakings are herein referred to collectively as the "Guarantee," and the
Guarantee, the Trust Receipts and the Series C Preferred Securities are herein
referred to collectively as the "Securities." Concurrently with each issuance of
the Series C Preferred Securities to the Trust, the Company will lend the
proceeds thereof plus the Guarantor's Capital Contribution to the
<PAGE>
Company to the Guarantor and to evidence each such loan the Guarantor will issue
and deliver to the Company the Guarantor's % Deferrable Interest Subordinated
Debentures, Series C due 2037 (the "Subordinated Debentures").
1. Each of the Company and the Guarantor jointly and
severally represents and warrants to, and agrees with, each of the
Underwriters that:
(a) A registration statement on Form S-3 (File No. 333-____)
in respect of the Securities has been filed with the Securities and Exchange
Commission (the "Commission"); such registration statement and any
post-effective amendment thereto, each in the form heretofore delivered to you,
and, excluding exhibits thereto but including all documents incorporated by
reference in the prospectus included therein, have been declared effective by
the Commission in such form; no other document with respect to such registration
statement or document incorporated by reference therein has heretofore been
filed with the Commission; and no stop order suspending the effectiveness of
such registration statement has been issued and no proceeding for that purpose
has been initiated or threatened by the Commission (any preliminary prospectus
included in such registration statement or filed with the Commission pursuant to
Rule 424(b) of the rules and regulations of the Commission under the Securities
Act of 1933, as amended (the "Act"), being hereinafter called a "Preliminary
Prospectus"; the various parts of such registration statement, including all
exhibits thereto and the documents incorporated by reference in the prospectus
contained in the registration statement at the time such part of the
registration statement became effective, each as amended at the time such part
of the registration statement became effective, being hereinafter called the
"Registration Statement"; such final prospectus, in the form first filed
pursuant to Rule 424(b) under the Act, being hereinafter called the
"Prospectus"; any reference herein to any Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 under the Act, as of the date
of such Preliminary Prospectus or Prospectus, as the case may be; and any
reference to any amendment or supplement to the Registration Statement, any
Preliminary Prospectus or the Prospectus shall be deemed to refer to and include
any documents filed after the effective date of the Registration Statement or
the date of such Preliminary Prospectus or Prospectus, as the case may be, under
the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), and
incorporated by reference in such Registration Statement, Preliminary Prospectus
or Prospectus, as the case may be);
2
<PAGE>
(b) No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission, and each Preliminary
Prospectus, at the time of filing thereof, conformed in all material respects to
the requirements of the Act and the rules and regulations of the Commission
thereunder, and did not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, provided, however, that this representation and warranty
shall not apply to any statement or omission made in reliance upon and in
conformity with information regarding any Underwriter or the arrangements with
respect to the underwriting of the offering of the Securities contemplated
hereby furnished in writing to the Trust, the Company or the Guarantor by an
Underwriter through you expressly for use therein;
(c) The Registration Statement conforms, and the Prospectus
and any further amendments or supplements to the Registration Statement or the
Prospectus will conform, in all material respects to the requirements of the Act
and the rules and regulations of the Commission thereunder; the Registration
Statement does not and will not, as of the applicable effective date as to the
Registration Statement and any amendment thereto, contain an untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading; and the Prospectus
does not and will not, as of the applicable filing date as to the Prospectus and
any amendment or supplement thereto, contain an untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading; provided, however, that this representation and warranty shall not
apply to any statements or omissions made in reliance upon and in conformity
with information regarding any Underwriter or the arrangements with respect to
the underwriting of the offering of the Securities contemplated hereby furnished
in writing to the Trust, the Company or the Guarantor by an Underwriter through
you expressly for use therein;
(d) The documents incorporated by reference in the
Registration Statement and the Prospectus, when they became effective or were
filed (or, if an amendment with respect to any such document was filed or became
effective, when such amendment was filed or became effective) with the
Commission, as the case may be, conformed in all material respects to the
requirements of the Exchange Act and the rules and regulations thereunder, and
any further documents so filed and incorporated by reference will, when they
become effective or are filed with the Commission, as the case may be, conform
in all material respects to the requirements of the Exchange Act and the rules
and regulations thereunder; none of such documents, when it became effective or
was filed (or, if an amendment with respect to any such documents was filed or
became
3
<PAGE>
effective, when such amendment was filed or became effective) contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading; and no such
further document, when it becomes effective or is filed, will contain an untrue
statement of a material fact or will omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(e) Coopers & Lybrand L.L.P. are independent certified public
accountants as required by the Act and the rules and regulations of the
Commission thereunder;
(f) 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 Prospectus, and will not be required
to be authorized to do business in any other jurisdiction. The Trust has all
requisite power and authority to issue the Trust Receipts and purchase the
Series C Preferred Securities as described in the Prospectus.
(g) The Company is a validly existing limited partnership in
good standing under the laws of the State of Delaware. The Company has all
requisite power and authority to issue the Series C Preferred Securities to the
Trust and lend the proceeds thereof to the Guarantor as described in the
Prospectus;
(h) The Guarantor is a validly existing and subsisting
corporation under the laws of the Commonwealth of Pennsylvania. Each of the
Guarantor's subsidiaries ("Subsidiaries") which constitutes a "gas utility
company" or an "electric utility company," as defined in the Public Utility
Holding Company Act of 1935, as amended (a "Utility Subsidiary"), is a validly
existing corporation under the laws of its jurisdiction of incorporation. The
Guarantor and each Utility Subsidiary have all requisite power and authority to
own and occupy their respective properties and carry on their respective
businesses as presently conducted and as described in the Prospectus and are
duly qualified as foreign corporations to do business and in good standing in
every jurisdiction in which the nature of the business conducted or property
owned by them makes such qualification necessary and in which the failure to so
qualify would have a materially adverse effect on the Guarantor;
4
<PAGE>
(i) The Guarantee has been duly authorized and executed by the
Guarantor, and when issued and delivered will constitute a legal, valid and
binding obligation of the Guarantor, enforceable in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditor's rights and to general equity principles;
(j) The Subordinated Debentures have been duly authorized and
when issued and delivered to the Company will constitute the legal, valid and
binding obligations of the Guarantor, enforceable in accordance with their
terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditor's rights and to general equity principles;
(k) The Trust Receipts have been duly authorized by the Trust
and will conform to the description thereof in the Prospectus; and when the
Trust Receipts are executed and delivered to the Underwriters and are paid for
by the Underwriters in accordance with the terms of this Agreement, the Trust
Receipts will be validly issued, fully paid and non-assessable beneficial
interests in the Trust, and not subject to any preemptive rights;
(l) The Series C Preferred Securities have been duly
authorized by the Company and will conform to the description thereof in the
Prospectus; and when the Series C Preferred Securities are executed and
delivered to the Trust and are paid for by the Trust in accordance with the
terms of this Agreement, the Series C Preferred Securities will be duly issued,
fully paid and non-assessable, and free of preemptive rights;
(m) The issue and sale of the Trust Receipts by the Trust, the
issue of the Series C Preferred Securities by the Company to the Trust, the
issue of the Subordinated Debentures by the Guarantor to the Company, the
compliance by the Company and the Guarantor with all of the provisions of this
Agreement, the execution, delivery and performance by the Guarantor of the
Guarantee, and the consummation of the transactions herein and therein
contemplated will not conflict with or result in a breach or violation of any of
the terms or provisions of, or constitute a default under, any trust agreement,
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Trust, the Guarantor, the Company or any other
Subsidiary is a party or by which the Trust, the Guarantor, the Company or any
other Subsidiary is bound or to which any of the property or assets of the
Trust, the Guarantor, the Company or any other Subsidiary is subject, which
breach, violation or default would be material to the issue and sale of the
Securities or would have a material adverse effect on the general affairs,
management, prospectus, financial position, stockholders' equity (or partnership
net worth, as applicable) or results of operations of the Trust, the Company
5
<PAGE>
or the Guarantor and its Subsidiaries taken as a whole, nor will such action
result in any violation of the provisions of the Articles of Incorporation or
Bylaws of the Guarantor or the Trust's Certificate of Trust or the Amended and
Restated Trust Agreement (the "Trust Agreement") among the Company, as grantor,
First Union Trust Company, National Association (the "Trustee") and PECO Energy
Capital Corp., the sole general partner of the Company, for the limited purpose
stated therein or the Certificate of Limited Partnership or Limited Partnership
Agreement of the Company or any statute, order, rule or regulation of any court
or governmental agency or body having jurisdiction over the Trust, the
Guarantor, the Company or any other Subsidiary or any of their properties;
(n) Except (i) for the order of the Commission making the
Registration Statement effective, (ii) for the Notice of Registration of a
Securities Certificate by the Pennsylvania Public Utility Commission in respect
of the issuance of the Trust Receipts, (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 Second
Supplemental Indenture to the indenture (as supplemented, the "Indenture")
between the Guarantor and First Union National Bank, as trustee, under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"), and 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 Trust, the Company and
Guarantor and the consummation of the transactions contemplated hereby;
(o) This Agreement has been duly authorized, executed and
delivered by the Company and by the Guarantor; and
(p) All of the issued general partner interests of the Company
have been duly and validly authorized and issued and are fully paid and
non-assessable and are owned by the Guarantor or a wholly owned subsidiary of
the Guarantor and free of preemptive rights.
2. (a) (i) Subject to the terms and conditions herein set forth, the
Guarantor and the Company shall cause the Trust to issue and sell to each of the
Underwriters, and each of the Underwriters agrees, severally and not jointly, to
purchase from the Trust, at a purchase price per Trust Receipt of $25.00, the
number of Trust Receipts set forth opposite the name of such Underwriter in
Schedule I hereto.
(ii) The Guarantor hereby guarantees the timely
performance by the Trust of the issue and sale of the Trust Receipts.
6
<PAGE>
(b) The Guarantor agrees to execute and deliver to the Company
the Guarantee concurrently with the issue and sale of the Trust Receipts.
(c) As compensation to the Underwriters for their commitments
hereunder, and in light of the fact that the proceeds of the sale of the Trust
Receipts will be applied to the purchase of the Series C Preferred Securities
and the proceeds of the sale of the Series C Preferred Securities will, in turn,
be lent by the Company to the Guarantor, the Guarantor agrees to pay at the Time
of Delivery (as defined in Section 4 hereof) to Smith Barney Inc. for the
accounts of the several Underwriters, an amount equal to $_______ per Trust
Receipt; provided that such compensation will be $0.50 per Trust Receipt sold to
certain institutions.
3. Upon the authorization by you of the release of the Trust Receipts,
the several Underwriters propose to offer the Trust Receipts for sale upon the
terms and conditions set forth in the Prospectus.
4. (a) Certificates, on original issuance, will be issued in the form
of one or more global certificates registered in the name of The Depository
Trust Company or its nominee for the accounts of the Underwriters representing
the Trust Receipts. Such certificates shall be delivered by or on behalf of the
Trust to The Depository Trust Company for the account of each Underwriter,
against payment by such Underwriter or on its behalf of the purchase price
therefor by certified or official bank check or checks, payable to the order of
the Trust in Philadelphia Clearing House (next day) funds, all at the office of
the Guarantor or, in the case of delivery of the said certificates at such other
place or places as shall be agreed upon by the Guarantor and Smith Barney Inc.
The time and date of such delivery and payment shall be, with respect to the
Trust Receipts, 9:30 a.m., Philadelphia time, on _______, 1997, or at such other
time and date as you and the Trust may agree upon in writing. The time and date
for the delivery of the Trust Receipts is herein called the "Time of Delivery."
Such certificates will be made available for checking and packaging at least
twenty-four hours prior to the Time of Delivery at the office of The Depository
Trust Company, 55 Water Street, New York, New York 10004.
(b) At the Time of Delivery, the Guarantor will pay, or cause
to be paid, the commission payable to the Underwriters under Section 2 hereof by
certified or official bank check or checks, payable to the order of Smith Barney
Inc. in next day funds.
5. Each of the Company and the Guarantor jointly and severally agrees
with each of the Underwriters:
(a) To complete the Prospectus in a form approved by you and
to file the Prospectus pursuant to Rule 424(b) under the Act
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not later than the Commission's close of business on the second business day
following the execution and delivery of this Agreement; to furnish you, without
charge, three signed copies of the Registration Statement (or copies thereof),
including exhibits, and, during the period mentioned in paragraph (d) below, as
many copies of the Prospectus and any supplements and amendments thereto as you
may reasonably request.
(b) Other than pursuant to filings under the Exchange Act
incorporated in the Registration Statement and the Prospectus by reference,
before amending or supplementing the Registration Statement or the Prospectus,
to furnish to you a copy of each such proposed amendment or supplement and not
to file any such proposed amendment or supplement to which you reasonably object
in writing.
(c) As soon as the Company and the Guarantor are advised
thereof, to promptly advise you orally, and (if requested by you) to confirm
such advice in writing, (i) when any amendment to the Registration Statement has
become effective or any amendment or supplement to the Prospectus has been
filed, (ii) when any stop order has been issued under the Act with respect to
the Registration Statement or any proceedings therefor have been instituted or
are threatened; and to make every reasonable effort to secure the prompt removal
of any stop order, if issued, (iii) of the suspension of the Securities for
offering or sale in any jurisdiction, and (iv) of the happening of any event
during the period mentioned in subparagraph (d) below which in the judgment of
the Company and the Guarantor makes any statement made in the Registration
Statement or the Prospectus untrue and which requires the making of any changes
in the Registration Statement or the Prospectus in order to make the statements
therein not misleading.
(d) If, during such period after the first date of the public
offering of the Securities (not exceeding nine months) as in the opinion of your
counsel the Prospectus is required by law to be delivered in connection with
sales by an Underwriter or dealer, any event shall occur as a result of which it
is necessary to amend or supplement the Prospectus in order to make the
statements therein, in the light of the circumstances when the Prospectus is
delivered to a purchaser, not misleading, or if it is necessary to amend or
supplement the Prospectus to comply with law, forthwith to prepare and duly file
with the Commission an appropriate supplement or amendment thereto, and furnish,
at its own expense, to you such reasonable number of copies thereof as you shall
reasonably request. If any Underwriter is required to deliver a Prospectus after
the expiration of the aforesaid period, the Trust, the Company and Guarantor
will, if requested by such Underwriter and in each case at the expense of such
Underwriter, furnish Prospectuses and supplements and amendments thereto, as
aforesaid, or furnish a reasonable quantity of a supplemented prospectus or of
supplements to the Prospectus complying with Section 10(a)(3) of the Act.
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<PAGE>
(e) To cooperate with you and counsel for the Underwriters to
qualify the Securities for offer and sale under the securities or Blue Sky laws
of such jurisdictions as you shall reasonably request, provided that none of the
Trust, the Company nor the Guarantor shall be required to qualify as a foreign
corporation in any jurisdiction where it is not now so qualified or to take any
action which would subject it to general service of process in any jurisdiction
where it is not now so subject, and to pay all expenses (including fees and
disbursements of counsel) in connection therewith as well as all fees payable in
connection with the review (if any) of the offering of the Securities by the
National Association of Securities Dealers, Inc.
(f) In the case of the Guarantor, to make generally available
to the Guarantor's security holders a consolidated earnings statement (which
need not be audited) for the first full twelve consecutive months ended after
the date deemed to be the effective date of the Registration Statement pursuant
to Rule 158 promulgated under the Securities Act, or successor provision of law,
rule or regulation, as soon as is reasonably practicable after the end of such
period, which earnings statement shall satisfy the provisions of Section 11(a)
of the Securities Act.
(g) During the period beginning from the date hereof and
continuing to and including the earlier of (i) the date, after the last Time of
Delivery, on which the distribution of the Securities ceases, as determined by
Smith Barney Inc. or (ii) the date which is 30 days after the last Time of
Delivery, not to offer, sell, contract to sell or otherwise dispose of any
Securities, any preferred stock or any other securities (including any
undertakings relating to any securities substantially similar to the Trust
Receipts or Series C Preferred Securities) of the Trust, the Company or the
Guarantor which are substantially similar to the Trust Receipts, the Series C
Preferred Securities or the Guarantee, any securities convertible into or
exchangeable for Trust Receipts, the Series C Preferred Securities, the
Guarantee, preferred stock or such substantially similar securities of the
Trust, the Company or the Guarantor (other than pursuant to employee stock
option plans of the Guarantor existing, or on the conversion of convertible
securities outstanding, on the date of this Agreement), without the prior
written consent of Smith Barney Inc.
(h) During a period of five years from the effective date of
the Registration Statement, to furnish to the representatives of the
Underwriters copies of all reports or other communications (financial or other)
furnished to all stockholders of the Guarantor, and deliver to you (i) as soon
as they are available, copies of any reports and financial statements furnished
to or filed with the Commission or any national securities exchange on which a
class of securities of the Guarantor, the Trust or the Company is listed; and
(ii) such additional information concerning the business and financial condition
of the Guarantor, the Trust
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<PAGE>
and the Company as you may from time to time reasonably request (such financial
statements to be on a consolidated basis to the extent the accounts of the
Guarantor and its Subsidiaries are consolidated in reports furnished to its
stockholders generally or to the Commission).
(i) To use its best efforts to list, subject to notice of
issuance, the Trust Receipts on the New York Stock Exchange, subject to the
Underwriters making the required distribution of the Trust Receipts.
6. The Company and the Guarantor jointly and severally covenant and
agree with the several Underwriters that the Trust, the Company and the
Guarantor will pay or cause to be paid the following: (i) the fees,
disbursements and expenses of the Trust's, the Company's and the Guarantor's
counsel and accountants in connection with the registration of the Securities
under the Act and other expenses in connection with the preparation, printing
and filing of the Registration Statement, any Preliminary Prospectus and the
Prospectus and amendments and supplements thereto and the mailing and delivering
of copies thereof to the Underwriters and dealers; (ii) the cost of printing or
producing any Agreement among the Underwriters, this Agreement, the Blue Sky and
Legal Investment Memoranda, if any, and any other documents in connection with
the offering, purchase, sale and delivery of the Securities; (iii) all expenses
in connection with the qualification of the Securities for offering and sale
under state securities and insurance securities laws as provided in Section 5(e)
hereof, including the fees and disbursements of counsel for the Underwriters in
connection with such qualification and in connection with the Blue Sky and Legal
Investment Memoranda; (iv) any fees charged by securities rating services for
rating the Securities; (v) the cost of preparing certificates for the Trust
Receipts; (vi) the cost and charges of any transfer agent or registrar; (vii)
the cost of qualifying the Trust Receipts and the Series C Preferred Securities
with The Depository Trust Company; (viii) listing fees; and (ix) all other costs
and expenses incident to the performance of its obligations hereunder which are
not otherwise specifically provided for in this Section. It is understood,
however, that, except as provided in this Section, Section 8 and Section 11
hereof, the Underwriters will pay all of their own costs and expenses, including
the fees of their counsel, transfer taxes on resale of any of the Trust Receipts
by them, and any advertising expenses in connection with offers they may make.
7. (a) The several obligations of the Underwriters hereunder, as to
Trust Receipts to be delivered at the Time of Delivery, are subject to the
following conditions:
(i) At the Time of Delivery, there shall be in full
force and effect a Notice of Registration of a Securities
Certificate of the Guarantor in respect to the issuance of its
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<PAGE>
Subordinated Debentures and the Guarantee in connection with the issuance of the
Trust Receipts and the transactions relating thereto substantially in accordance
with the terms and conditions herein set forth and containing no provision
unacceptable to you, it being understood that the Notice in effect as of the
date of this Agreement (a copy of which has been delivered to you) does not
contain any such unacceptable provision, and that no subsequent Notice shall be
deemed to contain any such unacceptable provision, unless you, within 24 hours
after receiving a copy thereof from the Guarantor, shall give notice to the
Guarantor to the effect that such Notice contains an unacceptable provision.
(ii) At the Time of Delivery:
(A) no stop order suspending the
effectiveness of the Registration Statement shall be in
effect, and no proceedings for that purpose shall be pending
before, or threatened by, the Commission;
(B) the Indenture shall have become and be
qualified under the Trust Indenture Act;
(C) subsequent to the date of the most
recent financial statements incorporated by reference in the
Prospectus as of the date of this Agreement, there shall have
been no material adverse change or development which it is
reasonable to believe will result in a material adverse change
in the financial condition, business or results of operations
of the Guarantor and its Subsidiaries, considered as a whole,
except as set forth in the Registration Statement and the
Prospectus, including the documents incorporated by reference
therein, as of the effective date of this Agreement;
(D) the Company and the Guarantor shall have
performed all agreements contained herein to be performed by
them at or prior to such date, including delivery of the
Securities; and
(E) the representations and warranties of
the Company and the Guarantor contained herein shall be true
and correct in all material respects.
(iii) At the Time of Delivery and simultaneously
with each issuance and sale of the Trust Receipts, you shall be furnished with
each of the following opinions or letters:
(A) a favorable opinion, dated at the Time
of Delivery, of Ballard Spahr Andrews & Ingersoll
(Special Counsel for the Company and the Guarantor)
in form and substance reasonably satisfactory to you;
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<PAGE>
(B) a favorable opinion, dated at the Time
of Delivery, of Richards, Layton & Finger, P.A.
(Special Delaware Counsel for the Trust and the
Company) in form and substance reasonably
satisfactory to you;
(C) a favorable opinion, dated at the Time
of Delivery, of corporate counsel for the Guarantor
in form and substance reasonably satisfactory to you;
and
(D) a favorable opinion, dated at the Time
of Delivery, of Drinker Biddle & Reath LLP (Counsel
for the Underwriters), in form and substance
reasonably satisfactory to you.
(iv) At the time that this Agreement is signed and at
the Time of Delivery, Coopers & Lybrand L.L.P. shall have furnished to you a
letter or letters, dated the respective date of delivery thereof, in form and
substance reasonably satisfactory to you.
(v) At the Time of Delivery, the Trust Receipts to be
delivered at the Time of Delivery shall have been duly approved for listing,
subject to notice of issuance, on the New York Stock Exchange.
(vi) The Guarantor shall have furnished or caused to
be furnished to you at the Time of Delivery certificates of officers of the
Guarantor satisfactory to you as to the accuracy of the representations and
warranties of the Company and the Guarantor herein at and as of the Time of
Delivery, as to the performance by the Trust, the Company and the Guarantor of
all of their obligations hereunder to be performed at or prior to the Time of
Delivery, as to the matters set forth in this subsection (a) of this Section 7
and as to such other matters as you may reasonably request.
(vii) After the execution and delivery of this
Agreement and prior to the Time of Delivery (A) trading generally shall not have
been suspended or materially limited on or by, as the case may be, the New York
Stock Exchange or the National Association of Securities Dealers, Inc., (B)
trading of any security issued by the Trust, the Company or the Guarantor shall
not have been suspended on any exchange or in any other over-the-counter market,
(C) there shall not have occurred any downgrading and no notice shall have been
given of "Credit Watch with Negative Implications" in the rating accorded the
Trust Receipts by Moody's Investors Services, Inc. or Standard & Poor's
Corporation, (D) a general moratorium on commercial banking activities in New
York or Pennsylvania shall not have been declared by either Federal or New York
State or Pennsylvania authorities,
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<PAGE>
and (E) there shall not have occurred any outbreak or escalation of hostilities
or any calamity or crisis of comparable magnitude that, in your judgment, is
material and adverse and, in the case of any of the events specified in clauses
(A) through (E), singly or together with any other such event makes it, in your
reasonable judgment, impracticable or inadvisable to market the Trust Receipts
to be delivered at the Time of Delivery on the terms and in the manner
contemplated in the Prospectus or to enforce contracts for the resale of the
Trust Receipts by the Underwriters.
(b) The obligations of the Company and Guarantor to deliver or
cause the Trust to deliver the Securities to be delivered at the Time of
Delivery are subject to the following conditions:
(i) At the Time of Delivery, no stop order suspending
the effectiveness of the Registration Statement shall be in effect and no
proceedings for that purpose shall be pending before, or threatened by, the
Commission.
(ii) At the Time of Delivery, there shall be in full
force and effect a Notice of Registration of a Securities Certificate of the
Guarantor in respect of the issuance of its Subordinated Debentures and the
Guarantee in connection with the issuance of the Trust Receipts and the
transactions relating thereto substantially in accordance with the terms and
conditions herein set forth and containing no provision unacceptable to the
Guarantor, it being understood that the Notice in effect as of the date of this
Agreement does not contain any such unacceptable provision, and that no
subsequent Notice shall be deemed to contain any such unacceptable provision,
unless the Guarantor, within 24 hours after receiving a copy thereof, shall have
given notice to you to the effect that such Notice contains an unacceptable
provision.
(iii) At the Time of Delivery, the Trust shall
receive payment for the Trust Receipts to be delivered at the Time of Delivery.
8. (a) The Company and the Guarantor agree jointly and severally to
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act from and against any and all losses, claims,
damages, liabilities and expenses based upon (x) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(including the Prospectus contained therein and including any amendment or
supplement to any thereof) or any omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading or, (y) to the extent not covered by clause
(x), any untrue statement of a material fact contained in any Preliminary
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<PAGE>
Prospectus, the Prospectus or any amendment or supplement thereto or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, all
in light of the circumstances under which they were made, except in either case
insofar as such losses, claims, damages, liabilities or expenses are caused by
(i) any such untrue statement or omission or alleged untrue statement or
omission based upon information furnished in writing to the Company or Guarantor
by any Underwriter expressly for use therein, or (ii) the failure of any
Underwriter to send to any purchaser to whom it had sent a Preliminary
Prospectus an amended Prospectus as shall have been furnished by the Company or
the Guarantor within the time periods required by the Securities Act and in such
quantities as are required by each Underwriter for such purpose (excluding
documents incorporated therein by reference), if required by the Securities Act,
to the extent that the amended prospectus would have cured the defect in the
Preliminary Prospectus giving rise to such losses, claims, damages or
liabilities, or (iii) any use of the Prospectus by any Underwriter after the
expiration of that period, if any, during which the Underwriter is required by
law to deliver a prospectus, unless the Company and Guarantor shall have been
advised in writing of such intended use.
(b) If any action, suit or proceeding shall be brought against
any Underwriter or any person controlling any Underwriter in respect of which
indemnity may be sought against the Guarantor or the Company, such Underwriter
or such controlling person shall promptly notify the Company and the Guarantor
and the Company and the Guarantor shall assume the defense thereof, including
the employment of counsel and payment of all fees and expenses. Such Underwriter
or any such controlling person shall have the right to employ separate counsel
in any such action, suit or proceeding and to participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such Underwriter or such controlling person unless (i) the Company and Guarantor
have agreed in writing to any such fees and expenses, (ii) the Company and the
Guarantor have failed, within ___ days after the Company and the Guarantor have
been so notified, to assume the defense and employ counsel, or (iii) the named
parties to any such action, suit or proceeding (including any impleaded parties)
include both such Underwriter or such controlling person and the Company and the
Guarantor and such Underwriter or such controlling person shall have been
advised by its counsel that representation of such indemnified party and the
Company and the Guarantor by the same counsel would be inappropriate under
applicable standards of professional conduct (whether or not such representation
by the same counsel has been proposed) due to actual or potential differing
interests among them (in which case the Company and the Guarantor shall not have
the right to assume the defense of such action, suit or proceeding on behalf of
such Underwriter or such controlling person). It is understood, however, that
the Company
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<PAGE>
and the Guarantor shall, in connection with any one such action, suit or
proceeding or separate but substantially similar or related actions, suits or
proceedings in the same jurisdiction arising out of the same general allegations
or circumstances, be liable for the reasonable fees and expenses of only one
separate firm of attorneys (in addition to any local counsel) at any time for
all such Underwriters and controlling persons not having actual or potential
differing interests with you or among themselves, which firm shall be designated
in writing by Smith Barney Inc., and that all such fees and expenses shall be
reimbursed as they become due. The Company and the Guarantor shall not be liable
for any settlement of any such action, suit or proceeding effected without their
written consent, but if settled with such written consent, or if there be a
final judgment for the plaintiff in any such action, suit or proceeding, the
Company and the Guarantor agree to indemnify and hold harmless any Underwriter,
to the extent provided in the preceding paragraph, and any such controlling
person from and against any loss, claim, damage, liability or expense by reason
of such settlement or judgment.
(c) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers who sign
the Registration Statement, and any person who controls the Company within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, the Trust,
the Trustee and its controlling persons and directors and officers, and the
Guarantor and its controlling persons, directors and officers to the same extent
as the foregoing indemnity from the Company and Guarantor to each Underwriter,
but only with respect to information relating to such Underwriter furnished in
writing by or on behalf of such Underwriter through you expressly for use in the
Registration Statement, the Prospectus or any Preliminary Prospectus, or any
amendment or supplement thereto. If any action, suit or proceeding shall be
brought against the Company, the Trust or the Guarantor or any of their
directors, any such officer, or any such controlling person, based on the
Registration Statement, the Prospectus or any Preliminary Prospectus, or any
amendment or supplement thereto, and in respect of which indemnity may be sought
against any Underwriter pursuant to this paragraph (c), such Underwriter shall
have the rights and duties given to the Company and Guarantor by paragraph (b)
above (except that if the Company and Guarantor shall have assumed the defense
thereof such Underwriter shall not be required to do so, but may employ separate
counsel therein and participate in the defense thereof, but the fees and
expenses of such counsel shall be at such Underwriter's expense), and the
Company and Guarantor, its directors, any such officer, and any such controlling
person, shall have the rights and duties given to the Underwriters by paragraph
(b) above. The foregoing indemnity agreement shall be in addition to any
liability which the Underwriters may otherwise have. The Underwriters shall not
be liable for any settlement of any such action, suit or proceeding effected
without their written consent, but if settled
15
<PAGE>
with such written consent, of if there be a final judgement for the plaintiff in
any such action, suit or proceeding, the Underwriters agree to indemnify and
hold harmless the Company and the Guarantor to the extent provided in the
preceding paragraph, and any such controlling person from and against any loss,
claim, damage, liability or expense by reason of such settlement or judgment.
(d) If the indemnification provided for in this Section 8 is
for any reason held to be unenforceable by an indemnified party although
applicable in accordance with its terms (including the terms of subsection (c)
of this Section 8), an indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses in such proportion as is equitable and as shall reflect both the
relative benefit received by the Trust, the Company and the Guarantor on the one
hand and the Underwriter or Underwriters, as the case may be, on the other hand
from the offering of the Securities, and the relative fault, if any, of the
Trust, the Company and Guarantor on the one hand and of the Underwriter or
Underwriters, as the case may be, on the other hand in connection with the
statements or omissions which resulted in such losses, liabilities, claims,
damages or expenses, as well as any other relevant equitable considerations. The
relative benefit received by the Trust, the Company and Guarantor on the one
hand and the Underwriter or Underwriters, as the case may be, on the other hand
in connection with the offering of the Securities shall be deemed to be in the
same proportion as the total net proceeds from the offering of the Securities
(before deducting expenses) received by the Trust, the Company and the Guarantor
bear to the total commissions, concessions and discounts received by the
Underwriter or Underwriters, as the case may be. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Trust, the Company or the
Guarantor on the one hand or the Underwriter or Underwriters, as the case may
be, on the other hand and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
(e) The Company, the Guarantor and the Underwriters agree that
it would not be just and equitable if contribution pursuant to this Section 8
were determined by a pro rata allocation (even if the Underwriters were treated
as one entity for such purpose) or by any other method of allocation that does
not take account of the equitable considerations referred to in paragraph (d)
above. The amount paid or payable by an indemnified party as a result of the
losses, liabilities, claims, damages and expenses referred to in paragraph (d)
above shall be deemed to include, subject to the limitations set forth above,
any legal or other
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<PAGE>
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 8, no Underwriter shall be required to contribute any
amount in excess of the amount by which the total price of the Trust Receipts
underwritten by it and distributed to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations to
contribute pursuant to this Section 8 are several in proportion to the
respective principal amounts of Trust Receipts set forth opposite their names in
Schedule I hereto and not joint.
(f) No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action, suit or proceeding in respect of which any indemnified party
is or could have been a party and indemnity could have been sought hereunder by
such indemnified party, unless such settlement includes an unconditional release
of such indemnified party from all liability on claims that are the subject
matter of such action, suit or proceeding.
(g) Any losses, claims, damages, liabilities or expenses for
which an indemnified party is entitled to indemnification or contribution under
this Section 8 shall be paid by the indemnifying party to the indemnified party
as such losses, claims, damages, liabilities or expenses become due. A successor
to any Underwriter or any person controlling any Underwriter, or to the Trust,
the Guarantor or the Company, their directors or officers, or any person
controlling the Trust, the Guarantor or the Company, shall be entitled to the
benefits of the indemnity, contribution and reimbursement agreements contained
in this Section 8.
9. If any one or more of the Underwriters shall default in its
obligation to purchase the amount of Trust Receipts which it has agreed to
purchase hereunder at the Time of Delivery, in accordance with the terms hereof,
and the aggregate number of Trust Receipts which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase is not more than
one-eleventh of the aggregate number of Trust Receipts to be purchased on such
date, the other Underwriters shall be obligated severally in the proportions
that the number of Trust Receipts which they have respectively agreed to
purchase at the Time of Delivery bears to the aggregate number of Trust Receipts
which all such non-defaulting Underwriters have collectively agreed to purchase
at the Time of Delivery, or in such other proportions as you may specify, to
purchase the Trust Receipts which such defaulting Underwriter or Underwriters
agreed but failed or refused to purchase at the Time of Delivery; provided that
in no event shall
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the number of Trust Receipts that any Underwriter has agreed to purchase at a
Time of Delivery be increased pursuant to this Section 9 by an amount in excess
of one-tenth of such number of Trust Receipts without the written consent of
such Underwriter. If any Underwriter or Underwriters shall fail or refuse to
purchase any Trust Receipts and the aggregate number of Trust Receipts which
such defaulting Underwriter or Underwriters agreed but failed or refused to
purchase exceeds one-eleventh of the aggregate number of Trust Receipts to be
purchased by all Underwriters hereunder at the Time of Delivery and arrangements
satisfactory to you, the Company and Guarantor for the purchase of such Trust
Receipts are not made within 48 hours after such default, this Agreement will
terminate without liability on the part of any non-defaulting Underwriter or the
Company and Guarantor for the purchase or sale of any Trust Receipts under this
Agreement. Any action taken under this Section 9 shall not relieve any
defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
10. The respective indemnities, agreements, representations, warranties
and other statements of the Company, the Guarantor and the several Underwriters,
as set forth in this Agreement or made by or on behalf of them, respectively,
pursuant to this Agreement, shall remain in full force and effect, regardless of
any investigation (or any statement as to the results thereof) made by or on
behalf of any Underwriter or any controlling person of any Underwriter, or the
Company, the Guarantor or any officer or director or controlling person of the
Company or the Guarantor, and shall survive delivery of and payment for the
Trust Receipts.
11. If this Agreement shall be terminated pursuant to Section 9 hereof,
the Company and the Guarantor shall not then be under any liability to any
Underwriter except as provided in Section 6 and Section 8 hereof; but if, for
any other reason, any Securities are not delivered by or on behalf of the Trust,
the Company or the Guarantor as provided herein, the Company and the Guarantor
jointly and severally will reimburse the Underwriters through you for all
out-of-pocket expenses approved in writing by you, including fees and
disbursements of counsel, reasonably incurred by the Underwriters in making
preparations for the purchase, sale and delivery of the Securities not so
delivered, but the Company and the Guarantor shall then be under no further
liability to any Underwriter except as provided in Section 6 and Section 8
hereof.
12. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by you on behalf of the Underwriters.
All statements, requests, notices and agreements hereunder
shall be in writing, and if to the Underwriters shall be delivered
18
<PAGE>
or sent by mail, telex or facsimile transmission to the Underwriters in care of
Smith Barney Inc., 333 West 34th Street, New York, New York 10001, Attention:
Manager, Investment Banking Division; and if to the Trust, the Company or the
Guarantor shall be delivered or sent by mail, telex or facsimile transmission to
the address of the Guarantor set forth in the Registration Statement, Attention:
Secretary.
13. This Agreement shall be binding upon, and inure solely to the
benefit of, the Underwriters, the Trust, the Company, the Guarantor and, to the
extent provided in Section 8 and Section 10 hereof, the Trustee, the officers
and directors of the Company and the Guarantor and each person who controls the
Trust, the Trustee, the Company, the Guarantor or any Underwriter, and their
respective heirs, executors, administrators, successors and assigns, and no
other person shall acquire or have any right under or by virtue of this
Agreement. No purchaser of any of the Trust Receipts from any Underwriter shall
be deemed a successor or assign by reason merely of such purchase.
14. Time shall be of the essence of this Agreement. As used herein, the
term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
15. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
16. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such respective counterparts shall together constitute one and
the same instrument.
If the foregoing is in accordance with your understanding, please sign
and return to us five counterparts hereof, and upon the acceptance hereof by
you, on behalf of each of the Underwriters, this letter and such acceptance
hereof shall constitute a binding agreement between each of the Underwriters, on
the one hand, and the Company and the Guarantor on the other. It is understood
that your acceptance of this letter on behalf of each of the Underwriters is
pursuant to the authority set forth in a form of Agreement among Underwriters,
the form of which shall be submitted
19
<PAGE>
to the Company and the Guarantor for examination upon request, but without
warranty on your part as to the authority of the signers thereof.
Very truly yours,
PECO Energy Capital, L.P.,
By: PECO Energy Capital Corp.,
General Partner
By:_______________________________
PECO Energy Company
By:_______________________________
Accepted, _______, 1997
Smith Barney Inc.
Lehman Brothers Inc.
By: Smith Barney Inc.
By:_____________________
20
<PAGE>
SCHEDULE I
Number of
Trust Receipts
Underwriters To Be Purchased
------------ ---------------
SMITH BARNEY INC.
LEHMAN BROTHERS INC.
TOTAL
=============
21
<PAGE>
Action by the General Partner of PECO Energy Capital, L.P.
Creating the ____% Cumulative Monthly Income
Preferred Securities, Series C
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 Partner Interests, hereby authorizes and establishes such
new series of Preferred Partner Interests 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. Two million (2,000,000) interests with an
aggregate liquidation preference of $50,000,000 of the Preferred Partner
Interests of the Partnership, liquidation preference $25 per Preferred Security,
are hereby designated as "____% Cumulative Monthly Income Preferred Securities,
Series C" (hereinafter the "Series C Preferred Securities").
(b) Distributions.
(i) Holders of the Series C 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 C Preferred Security. Distributions on
the Series C Preferred Securities which accrue from the date of original issue
to June ___, 1997 shall be payable commencing on June 30, 1997.
(ii) Distributions on the Series C 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 available therefor sufficient to permit such payments. Distributions on
the Series C Preferred Securities will be deferred if and for so long as PECO
Energy Company ("PECO Energy") defers payments to the Partnership on the Series
C Debentures (as defined below). Accrued and unpaid distributions on the Series
C 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 C
Preferred Securities. Such Additional Distributions shall be payable at
<PAGE>
the time the related deferred distribution is paid, but in any event by the end
of such deferral period. Distributions declared on the Series C Preferred
Securities will be payable to the holders of Series C 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 C 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 June ___, 2002, at the Redemption Price (as defined below).
(ii) Upon redemption or payment at maturity of the
____% Deferrable Interest Subordinated Debentures due 2037, Series C (the
"Series C Debentures") issued by PECO Energy pursuant to a Second Supplemental
Indenture dated as of June 1, 1997 between PECO Energy and First Union National
Bank, as trustee (the "Supplemental Indenture") to the Indenture dated as of
July 1, 1994 between PECO Energy and First Union National Bank, as successor
trustee, as supplemented by a First Supplemental Indenture dated as of December
1, 1995 (as supplemented, the "Indenture"), the proceeds from such redemption or
payment of the Series C Debentures shall be applied by the Partnership to redeem
the Series C 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 C 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 C 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.
(d) Liquidation Distribution. In the event of any voluntary or
involuntary dissolution and winding up of the Partnership, holders of the Series
C 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 Partner Interests, after satisfaction of liabilities to creditors as
required by the Delaware Act and before any distribution of assets is made to
holders of the general partner interests, but together with holders of every
other series of Preferred Partner Interests outstanding, an amount equal to, in
2
<PAGE>
the case of holders of Series C Preferred Securities, the aggregate of the
stated liquidation preference of $25 per Series C 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 C Preferred
Securities shall have no voting rights except as provided in the Partnership
Agreement.
(f) Subordination. The holders of Series C Preferred
Securities are deemed, by acceptance of such Securities, to have (i) agreed that
the Series C Debentures issued pursuant to the Supplemental Indenture are
subordinate and junior in right of payment to all Senior Indebtedness (as
defined in the Indenture) of PECO Energy and (ii) agreed that the Guarantee
relating to the Series C Preferred Securities is subordinate and junior in right
of payment to all general liabilities of PECO Energy.
(g) Issuance. The Series C Preferred Securities shall be
issued by the Partnership to and initially deposited with First Union Trust
Company, National Association, as trustee of PECO Energy Capital Trust II, 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 C
Debentures with an aggregate principal amount equal to the aggregate liquidation
preference of the Series C Preferred Securities. The Partnership shall initially
be the transfer agent, registrar and paying agent for the Series C Preferred
Securities.
IN WITNESS WHEREOF, the General Partner has executed this
Action effective as of June __, 1997.
PECO Energy Capital Corp.
By:______________________________
Name: J. Barry Mitchell
Title: President
3
<PAGE>
PECO ENERGY COMPANY
AND
First Union National Bank, as Trustee
SECOND SUPPLEMENTAL
INDENTURE
Dated as of June 1, 1997
to
INDENTURE
Dated as of July 1, 1994
Providing for the Issuance of
____% Deferrable Interest Subordinated Debentures, Series C
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE................. 2
SECTION 1.01 Definitions................................................ 2
ARTICLE 2
THE SERIES C DEBENTURES.................................... 2
SECTION 2.01 Form of the Series C Debentures; Denominations............. 2
ARTICLE 3
REDEMPTION................................................. 3
SECTION 3.01 Redemption; Notice to Trustee.............................. 3
SECTION 3.02 Compliance with Terms of Indenture......................... 3
ARTICLE 4
EXTENSION PERIOD........................................... 4
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............................... 4
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......................... 5
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.......................................... 6
(i)
<PAGE>
SECOND SUPPLEMENTAL INDENTURE, dated as of June 1, 1997, by
and between PECO Energy Company, a Pennsylvania corporation (the "Company"), and
First Union National Bank, a national association, as successor trustee (the
"Trustee"), to an Indenture, dated as of July 1, 1994 (the "Original
Indenture"), by and between the Company and the Trustee, which was supplemented
by a First Supplemental Indenture (the "First Supplemental Indenture") dated as
of December 1, 1995 (the Original Indenture, as supplemented, 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.
WHEREAS, the Company has duly executed and delivered to the
Trustee the First Supplemental Indenture authorizing and providing for the
issuance of the second series of Debentures which were designated the 8.72%
Deferrable Interest Subordinated Debentures, Series B.
WHEREAS, the Company desires to authorize and to effect the
issuance of a third series of Debentures in an aggregate principal amount of
$51,546,392 and to designate such series ____% Deferrable Interest Subordinated
Debentures, Series C (the "Series C Debentures") under this Second Supplemental
Indenture.
WHEREAS, all things necessary to make the Series C Debentures
when duly issued and executed by the Company and authenticated and delivered
hereunder, the valid obligations of the Company, and to make this Second
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 C Debentures:
<PAGE>
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01 Definitions.
"Additional Interest", with respect to the Series C
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 C Debentures.
"Issue Date" means June ___, 1997.
"Series C Debentures" means any of the Company's ____%
Deferrable Interest Subordinated Debentures, Series C issued under this Second
Supplemental Indenture.
"Series C Debentureholder" or "Series C Holder" means a Person
in whose name a Series C Debenture is registered on the Registrar's books.
"Series C Preferred Securities" means the ____% Cumulative
Monthly Income Preferred Securities, Series C, 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 C DEBENTURES
SECTION 2.01 Form of the Series C Debentures; Denominations.
The Series C Debentures and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit A attached hereto.
The terms and provisions contained in the Series C Debentures, a form of which
is annexed hereto as Exhibit A, shall constitute, and are hereby expressly made,
a part of this Second Supplemental Indenture. The Company and the Trustee, by
their execution and delivery of this Second 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 C Debentures for original issue in the aggregate principal amount of
$51,546,392 to evidence the Company's obligation with respect to the loan from
PECO Energy
2
<PAGE>
Capital, 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. Such order shall specify the amount of the
Series C Debentures to be authenticated and the date on which the original issue
of Series C Debentures is to be authenticated and delivered to evidence the
Company's obligation with respect to the loan from PECO Energy Capital. The
aggregate principal amount of Series C Debentures outstanding at any time may
not exceed $51,546,392 except as provided in Section 2.09 of the Original
Indenture.
The Series C 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 C 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 C 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 C Debentures as 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.
3
<PAGE>
ARTICLE 4
EXTENSION PERIOD
SECTION 4.01 Limitation on Right of Company to Extend Interest Payment Period.
The Company agrees that no extended interest payment period
shall extend beyond the stated maturity date or redemption date of the Series C
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 the First Supplemental
Indenture and this Second 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 Second 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 Second Supplemental Indenture under the Trust Indenture Act of
1939, as amended.
ARTICLE 6
MISCELLANEOUS
SECTION 6.01 Trust Indenture Act Controls.
If any provision of this Second 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 Second Supplemental Indenture, except as, and to the extent, they are
expressly
4
<PAGE>
excluded from this Second Supplemental Indenture, as permitted by the TIA.
SECTION 6.02 Severability Clause.
If any provision in this Second Supplemental Indenture or in
the Series C 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 Second Supplemental Indenture and the Series C 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 C Debentures or this Second Supplemental Indenture or for any claim based
on, in respect of or by reason of such obligations or their creation. By
accepting a Series C Debenture, each Series C Debentureholder shall waive and
release all such liability. The waiver and release shall be part of the
consideration for the issue of the Series C 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 Second 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 the First Supplemental Indenture and this
Second Supplemental Indenture, the Original Indenture, is in all respects
ratified and confirmed, and this Second 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 Indenture shall
apply and remain in full force and effect with respect to this Second
Supplemental Indenture and to the Series C Debentures issued hereunder.
5
<PAGE>
SECTION 6.07 Successors.
All agreements of the Company in this Second Supplemental
Indenture and the Series C Debentures shall bind its successors and assigns. All
agreements of the Trustee in this Second 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 Second
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 Second 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 Second 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 Second Supplemental Indenture or in the Series C
Debentures, express or implied, shall give to any Person, other than the parties
hereto and their successors hereunder, the Series C Holders and the Special
Representative, any benefit or any legal or equitable right, remedy or claim
under this Second Supplemental Indenture.
SECTION 6.11 Date of Indenture.
This Second Supplemental Indenture is dated as of June 1,
1997, but was actually executed and delivered on June ___, 1997.
6
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, the undersigned, being duly authorized,
have executed this Second Supplemental Indenture on behalf of the respective
parties hereto as of the date first above written.
PECO ENERGY COMPANY
By: _____________________________________
Name: J. Barry Mitchell
Title: Vice President - Finance
FIRST UNION NATIONAL BANK,
as Trustee
By: _____________________________________
Name: ___________________________________
Title: __________________________________
PECO Energy Capital, L.P.
By its General Partner,
PECO Energy Capital Corp.
By: __________________________________
Name: J. Barry Mitchell
Title: President
7
<PAGE>
Exhibit A
____% Deferrable Interest Subordinated Debentures,
Series C due 2037
No. ___
PECO Energy Company, a Pennsylvania corporation (the "Company"), which term
includes any successor corporation under the Indenture, as defined herein), for
value received, hereby promises to pay to PECO Energy Capital, L.P. or
registered assigns, the principal sum of _______________________________
__________________________________ Dollars on June ___, 2037, and to pay
interest on said principal sum from June ____, 1997 (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 June 30, 1997 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. 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
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 C Debentures is
not a Business Day, then payment of interest payable on such date will be made
on the next succeeding day which is a Business Day (and without any interest or
other payment in respect of any such delay), except that, if such Business Day
is in the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on such date. The interest installment so payable, and punctually
paid or duly provided for, on any Interest Payment Date will, as provided in the
Indenture, be paid to the person in whose name this Debenture is registered at
the close of business on the regular record date for such interest installment,
which shall be the 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
A-1
<PAGE>
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. 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 Additional Interest, if any) on 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.
This Debenture is one of a duly authorized series of
Debentures of the Company (herein sometimes referred to as the "Series C
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 December 1, 1995 and a Second Supplemental Indenture dated as of June 1, 1997
(as supplemented, the "Indenture") executed and delivered between the Company
and First Union National Bank, as successor trustee (the "Trustee") to
A-2
<PAGE>
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 C 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 C Preferred Securities, but if in
part, in an aggregate principal amount equal
to the aggregate stated liquidation
preference of the Series C Preferred
Securities redeemed.
At the option of the Company, the Series C Debentures are
subject to redemption prior to maturity (i) at any time on or after June ___,
2002, in whole or in part, and (ii) if a Tax Event shall occur and be
continuing, in whole or 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 C 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 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 C 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
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<PAGE>
unredeemed portion hereof will be issued in the name of the Holder hereof upon
the cancellation hereof.
In case an Event of Default 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 C Debentures may be
amended with the written consent of the Holders of a majority in aggregate
principal amount of the Series C 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 C 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.
So long as an Event of Default has not occurred and is
continuing, the Company shall have the right at any time during the term of the
Series C 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 C 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
A-4
<PAGE>
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 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.
A-5
<PAGE>
All capitalized 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: June ___, 1997
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Debentures referred
to in the within-mentioned Indenture.
FIRST UNION NATIONAL BANK, as Trustee
By: ___________________________________
Name:
Title:
A-6
<PAGE>
CERTIFICATE OF TRUST
OF PECO ENERGY CAPITAL TRUST II
THIS Certificate of Trust of PECO Energy Capital Trust II (the
"Trust"), dated as of May 20, 1997, is being duly executed and filed by First
Union Trust Company, National Association, a national association, 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 II.
2. Delaware Trustee. The name and business address of the
trustee of the Trust with a principal place of business in the State of Delaware
are First Union Trust Company, National Association, 920 King Street, First
Floor, Wilmington, Delaware 19801, Attention: Corporate Trust Administration.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of
the Trust, has executed this Certificate of Trust as of the date first-above
written.
FIRST UNION TRUST COMPANY, NATIONAL
ASSOCIATION
By: /s/ Edward L. Truitt, Jr.
-------------------------------------
Name: Edward L. Truitt, Jr.
Title: Assistant Vice President
<PAGE>
TRUST AGREEMENT
This TRUST AGREEMENT of PECO Energy Capital Trust II (the
"Trust"), dated as of May 20, 1997, between PECO Energy Capital, L.P., a
Delaware limited partnership (the "Depositor"), First Union Trust Company,
National Association, a national association, 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 II," 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 an exhibit to the 1933 Act
Registration Statement referred to below, to provide for, among other things,
the issuance of the 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 any duty or obligation hereunder or with respect to the trust
estate, except as otherwise required by applicable law, and the Depositor shall
take any action 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 each case on behalf of the Trust, (a) the
Registration Statement on Form S-3 (the "1933 Act Registration Statement"),
including any pre-effective or post-effective amendments to such 1933 Act
Registration Statement (including the prospectus and the exhibits contained
therein), relating to the registration under the Securities Act of 1933, as
amended, of the trust receipts of the Trust and certain other securities and (b)
a Registration
<PAGE>
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 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 of the Trust 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 Underwriting Agreement relating to the trust receipts of the Trust,
among PECO Energy Company, a Pennsylvania corporation, the Depositor and the
several Underwriters named therein, substantially in the form included as an
exhibit 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 Exchanges 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 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
2
<PAGE>
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 (30) 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 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 trust receipts
of the Trust or the Trustee acting as Trustee or as the registrar or paying
agent, respectively, under this Trust Agreement, except for any liability
arising out of gross 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 has been directed
by the Depositor provided that if the Trustee does not receive instructions
within ten (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 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.
3
<PAGE>
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
FIRST UNION TRUST COMPANY, NATIONAL
ASSOCIATION, not in its individual
capacity, but solely in its
capacity as Trustee
By: /s/ Edward L. Truitt, Jr.
-----------------------------
Name: Edward L. Truitt, Jr.
Title: Assistant Vice
President
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
-----------------------------
Name: J.B. Mitchell
Title: President
4
<PAGE>
================================================================================
AMENDED AND RESTATED
TRUST AGREEMENT
OF
PECO ENERGY CAPITAL TRUST II
PECO ENERGY CAPITAL, L.P.,
as Grantor
and
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION,
as Trustee
Dated as of June ___, 1997
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
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. ........................... 5
ARTICLE III
FORM OF RECEIPTS, EXECUTION AND
DELIVERY, TRANSFER AND SURRENDER OF RECEIPTS
SECTION 3.01. Form and Transferability of Receipts.......................... 5
SECTION 3.02. Issuance of Receipts.......................................... 6
SECTION 3.03. Registration, Transfer and Exchange of Receipts............... 6
SECTION 3.04. Lost or Stolen Receipts, Etc.................................. 8
SECTION 3.05. Cancellation and Destruction of
Surrendered Receipts.............................. 8
ARTICLE IV
DISTRIBUTIONS AND OTHER RIGHTS OF HOLDERS OF RECEIPTS
SECTION 4.01. Distributions of Monthly Distributions
on Preferred Securities........................... 10
SECTION 4.02. Redemptions of Preferred Securities........................... 10
SECTION 4.03. Distributions in Liquidation of Grantor....................... 11
SECTION 4.04. Fixing of Record Date for Holders of Receipts................. 12
SECTION 4.05. Payment of Distributions.......................... 12
SECTION 4.06. Special Representative and Voting Rights...................... 12
SECTION 4.07. Changes Affecting Preferred Securities
and Reclassifications, Recapitalizations, Etc..... 13
ARTICLE V
THE GUARANTEE
SECTION 5.01. The Guarantee................................................. 13
i
<PAGE>
Page
ARTICLE VI
THE TRUSTEE
SECTION 6.01. Eligibility.................................................. 14
SECTION 6.02. Obligations of the Trustee................................... 14
SECTION 6.03. Resignation and Removal of the
Trustee; Appointment of Successor Trustee........ 16
SECTION 6.04. Corporate Notices and Reports................................ 17
SECTION 6.05. Status of Trust.................................. 17
SECTION 6.07. Indemnification by the General Partner....................... 18
SECTION 6.08. Fees, Charges and Expenses................................... 18
SECTION 6.09. Appointment of Co-Trustee or Separate Trustee................ 18
ARTICLE VII
AMENDMENT AND TERMINATION
SECTION 7.01. Supplemental Trust Agreement................................. 20
SECTION 7.02. Termination.................................................. 20
ARTICLE VIII
MERGER, CONSOLIDATION, ETC. OF GRANTOR
SECTION 8.01. Limitation on Permitted Merger
Consolidation, Etc. of Grantor................... 21
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Counterparts................................................. 21
SECTION 9.02. Exclusive Benefits of Parties................................ 22
SECTION 9.03. Invalidity of Provisions..................................... 22
SECTION 9.04. Notices...................................................... 22
SECTION 9.05. Trustee's Agents............................................. 23
SECTION 9.06. Holders of Receipts Are Parties.............................. 23
SECTION 9.07. Governing Law................................................ 23
SECTION 9.08. Headings..................................................... 23
SECTION 9.09. Receipts Non-Assessable and Fully Paid....................... 23
SECTION 9.10. No Preemptive Rights......................................... 23
ii
<PAGE>
AMENDED AND RESTATED
TRUST AGREEMENT
AMENDED AND RESTATED TRUST AGREEMENT, dated as of June ___,
1997 (as amended from time to time, this "Trust Agreement") is among PECO ENERGY
CAPITAL, L.P., a Delaware limited partnership, as grantor (the "Grantor"), FIRST
UNION TRUST COMPANY, NATIONAL ASSOCIATION, 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 May ___, 1997 (the "Original Trust Agreement"), and
a Certificate of Trust filed with the Secretary of State of the State of
Delaware on May ___, 1997; 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, the Trust proposes to issue Receipts each
representing a ____% Cumulative Monthly Income Preferred Security, Series C,
representing a limited partner interest of the Grantor (the "Preferred
Securities"); 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 Holders;
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
<PAGE>
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
of this Trust Agreement.
"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 1 Rodney Square, 920 King Street, First Floor, Wilmington, Delaware
19801.
"DTC" means the Depositary Trust Company or any successor
thereto.
"Exchange" shall have the meaning set forth in Section 6.06 to
this Trust Agreement.
"Exchange Act" shall have the meaning set forth in Section
6.06 to this Trust Agreement.
"Exchange Act Reports" shall have the meaning set forth in
Section 6.06 to this Trust Agreement.
"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 June ___, 1997, 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.
2
<PAGE>
"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 of this Trust Agreement.
"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 C, 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 Preferred
Security and evidenced by a certificate issued by the Trustee pursuant to
Article III.
"Redemption Date" shall have the meaning set forth in Section
4.02 of this Trust Agreement.
"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.
"Trust" means the trust governed by this Trust Agreement.
3
<PAGE>
"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 First Union Trust Company, National
Association, a Delaware banking corporation, in its capacity as Trustee and not
in its individual capacity and any successor as trustee hereunder.
"1933 Act Registration Statement" shall have the meaning set
forth in Section 6.06 to this Trust Agreement.
"1934 Act Registration Statement" shall have the meaning set
forth in Section 6.06 to this Trust Agreement.
ARTICLE II
CONTINUATION OF TRUST
SECTION 2.01. Continuation of Trust.
(a) The Trust continued hereby shall be known as
"PECO Energy Capital Trust II." The Trust exists for the sole purpose of issuing
Receipts representing the Preferred Securities held by the Trust and performing
functions directly related thereto. The Grantor hereby delivers to the Trustee
for deposit in the Trust a certificate representing 2,000,000 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,
4
<PAGE>
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 II - 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 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) Except as otherwise required by DTC, Receipts shall be
evidenced by certificates engraved or printed or lithographed with
steel-engraved borders
5
<PAGE>
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 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. 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 DTC
certificates evidencing the Receipts in the name of DTC's nominee, who shall
thereupon be the initial Holder of Receipts.
SECTION 3.03. Registration, Transfer and Exchange of
Receipts. The Trustee shall cause the Register to be kept at the
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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 Union Trust
Company, National Association 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 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
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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.
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 beneficial owner of Receipts may withdraw all, but not less than
all, of the Preferred Securities represented by such Receipts by providing a
written notice and an agreement to be bound by the terms of the Partnership
Agreement to the Trustee at the Corporate Office or at such other office as the
Trustee may designate for such withdrawals, with evidence of beneficial
ownership in form satisfactory to the Trustee. Within a reasonable period after
such request has been properly made, the Trustee shall instruct DTC to reduce
the number of Receipts represented by the global certificate held by DTC by an
amount equal to the number of Receipts to be so withdrawn by the withdrawing
owner, the Trustee shall issue to the withdrawing owner a certificate
representing the number of Preferred Securities so withdrawn and the Trustee
shall reduce the number of Preferred Securities represented by the global
certificate held by the Trustee by a like amount; provided, that the Trustee
shall not issue any fractional number of Preferred Securities. If a withdrawing
owner of Receipts withdraws Preferred Securities in accordance with this Section
3.06, such withdrawing owner of Receipts shall cease to be a beneficial owner in
the Trust. The Series C Preferred Securities will only be issued in certificated
form.
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A withdrawing owner who wishes to withdraw Series C Preferred
Securities in accordance with this Section 3.06 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
withdrawing owner's receipt of a certificate evidencing such Preferred
Securities registered in such withdrawing owner's name.
The Trustee shall deliver the Preferred Securities represented
by the Receipts surrendered to the withdrawing owner in accordance with this
Section 3.06 at the Corporate Office, except that, at the request, risk and
expense of the withdrawing owner and for the account of the withdrawing owner
thereof, such delivery may be made at such other place as may be designated by
such withdrawing owner.
Notwithstanding anything in this Section 3.06 to the contrary,
if the Preferred Securities represented by Receipts have been called for
redemption in accordance with the Partnership Agreement, no withdrawing owner of
such Receipts may withdraw any or all of the Preferred Securities represented by
such Receipts.
SECTION 3.07. Redeposit of Preferred Securities. 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 Trustee of a certificate or certificates for the
Preferred Securities to be deposited, properly endorsed or accompanied, if
required by the Trustee, 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 all such certifications as may be
required by the Trustee in its sole discretion and in accordance with the
provisions of this Trust Agreement. Within a reasonable period after such
deposit is properly made, the Trustee shall instruct DTC to increase the number
of Receipts represented by the global certificate held by DTC by an amount equal
to the Preferred Securities to be deposited. The Preferred Trust Receipts will
not be issued in certificated form. The Trustee will only accept the deposit of
such Preferred Securities upon payment by such holder of Preferred Securities 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.
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.
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.
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
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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 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 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
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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 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 Union Trust Company, National
Association to act as Paying Agent and designates the Wilmington office of the
Paying Agent as the place of payment of the redemption price of and of
distributions 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 wire transfer into the
accounts of or 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
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the Holders of the Receipts and, if so directed by the Holders of Receipts
representing Preferred Securities constituting at least 10% of the aggregate
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 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
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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 Guarantee.
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
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may involve it in expense or liability, unless indemnity 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 issuance of Receipts 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 federal law,
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, and such predecessor, upon payment of all sums due it and on the
written request of the Grantor, shall promptly execute and
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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 Trustee 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-3 (the
"1933 Act Registration Statement"), including any pre-effective or
post-effective amendments to such 1933 Act Registration Statement (including the
prospectus and the exhibits contained therein), relating to the registration
under the Securities Act of 1933, as
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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 or 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; and (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.
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.
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
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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 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
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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
(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,
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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.
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
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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 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 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
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,
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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 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: __________________________________
Name: J. Barry Mitchell
Title: President
FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION
By: __________________________________
Name:
Title:
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: __________________________________
Name: J. Barry Mitchell
Title: President
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EXHIBIT A
TRUST RECEIPTS
OF PECO ENERGY CAPITAL TRUST II,
a Delaware Business Trust,
each Representing an ____% Cumulative
Monthly Income Preferred Security, Series C of
PECO Energy Capital, L.P. (a Delaware limited partnership)
No. _________ ___________ Receipts
First Union Trust Company, National Association, 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 C (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 II dated as of June ___, 1997 (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 herein 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 and any other Holder, each
Holder shall be entitled to enforce in the name of the Trust the Trust's rights
under the Preferred
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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 beneficial owner of Receipts may withdraw all, but not less than
all, of the Preferred Securities represented by such Receipts by providing a
written notice and an agreement to be bound by the terms of the Partnership
Agreement to the Trustee at the Corporate Office, with evidence of beneficial
ownership in form satisfactory to the Trustee; provided, however, that the
Trustee shall not issue any fractional 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 June ___, 1997 (the "Guarantee") in respect thereof, the
Trustee acting directly or through any Paying Agent shall distribute to 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 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
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.
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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 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 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 wire transfer into the accounts of or 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 Union
Trust Company, National Association, 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 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
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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 substantially 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, 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.
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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 or exchange of 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
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 of transfer of Receipts, which books at
all reasonable times will be open for inspection by the 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
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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 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 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
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REPRESENTATIONS AS TO THE VALIDITY, GENUINENESS OR SUFFICIENCY OF PREFERRED
SECURITIES OR OF RECEIPTS; AS TO THE VALIDITY OR SUFFICIENCY OF THE TRUST
AGREEMENT; AS TO THE VALUE OF RECEIPTS OR AS TO ANY RIGHT, TITLE OR INTEREST OF
THE HOLDERS OF RECEIPTS IN AND TO RECEIPTS.
Dated: June ___, 1997
First Union Trust Company, National
Association, as Trustee,
By: ___________________________________
Name:
Title:
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[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:
______________________________
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PAYMENT AND GUARANTEE AGREEMENT
THIS PAYMENT AND GUARANTEE AGREEMENT ("Guarantee Agreement"),
dated as of June ___, 1997, 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 C 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
$50,000,000 aggregate stated liquidation preference of limited partner interests
of a series designated the ____% Cumulative Monthly Income Preferred Securities,
Series C (the "Series C 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 C 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 C 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>
"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 C 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
C Preferred Securities called for redemption by PECO Energy Capital out of
moneys legally available therefor held by PECO Energy Capital, and (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.
"Holders" shall mean the persons or entities in whose name any
Series C 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 C 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 First Supplemental Indenture,
dated as of December 1, 1995, between the Guarantor and First Union National
Bank, as successor trustee, and the Second Supplemental Indenture, dated as of
June 1, 1997, between the Guarantor and First Union National Bank, as trustee,
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 C 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 C Preferred Security.
"Redemption Price" shall mean the aggregate of $25 per Series
C 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.
2
<PAGE>
"Supplemental Indenture" shall mean the Second Supplemental
Indenture, dated as of June 1, 1997, between the Guarantor and First Union
National Bank, as trustee, pursuant to which the Guarantor has issued its ____%
Deferrable Interest Subordinated Debentures, Series C (the "Series C
Subordinated Debentures") in an amount equal to the aggregate stated liquidation
preference of the Series C Preferred Securities and the G.P. Capital
Contribution.
"Trust" shall mean PECO Energy Capital Trust II, a Delaware
business trust.
"Trust Agreement" shall mean the Amended and Restated Trust
Agreement of PECO Energy Capital Trust II, as amended from time to time, among
PECO Energy Capital, L.P., as Grantor, First Union National Bank, as trustee,
and the General Partner, for the limited purpose stated therein, dated as of
June ___, 1997.
"Trustee" shall mean First Union National Bank 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 C Subordinated Debentures and the Guarantor shall not be
obligated hereunder to pay during an Extension Period any monthly distributions
on the Series C 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
3
<PAGE>
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
C Preferred Securities to be performed or observed by PECO Energy Capital;
(b) the extension of time for the payment by PECO
Energy Capital of all or any portion of the distributions, Redemption Price,
Liquidation Distribution or any other sums payable under the terms of the Series
C Preferred Securities or the extension of time for the performance of any other
obligation under, arising out of, or in connection with, the Series C 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 C 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 C 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
4
<PAGE>
C Preferred Securities other than the Trust, representing not less than 10% in
aggregate stated liquidation preference of the Series C 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 representing Series C Preferred Securities may institute a legal
proceeding directly against the Guarantor to enforce its rights under this
Guarantee Agreement, without first instituting a legal proceeding against PECO
Energy Capital or any other person or entity.
SECTION 2.05. This is a guarantee of payment and not of
collection. 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 C 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.
5
<PAGE>
ARTICLE III
SECTION 3.01. So long as any Series C 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
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 C 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 C
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 C Preferred Securities or under this Guarantee Agreement for any reason
whatsoever.
6
<PAGE>
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 662/3% of
the aggregate stated liquidation preference of all Series C Preferred Securities
then outstanding.
SECTION 5.02. This Guarantee Agreement may only be amended by
a written instrument executed by the Guarantor; provided that, so long as any of
the Series C 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 C Preferred Securities other than the Trust,
representing not less than 662/3% of the aggregate liquidation preference of all
Series C 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) 557-9885
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 C
Preferred Securities.
7
<PAGE>
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.
THIS GUARANTEE AGREEMENT is executed as of the day and year
first above written.
PECO ENERGY COMPANY
By: _____________________________________
Name: J. Barry Mitchell
Title: Vice President-Finance
8
<PAGE>
[LETTERHEAD OF BALLARD SPAHR ANDREWS & INGERSOLL]
May 23, 1997
PECO Energy Company
2301 Market Street
Philadelphia, PA 19103
Re: Preferred Trust Receipts of PECO Energy Capital
Trust II, Representing Cumulative Monthly Income
Preferred Securities, Series C 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 Trust II (the
"Trust") of its Preferred Trust Receipts (the "Preferred Trust Receipts"), each
representing a Cumulative Monthly Income Preferred Security, Series C
(collectively, the "Preferred Securities") of PECO Energy Capital, L.P. ("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 C (the "Subordinated
Debentures"), and the registration of the Preferred Trust Receipts, the
Preferred Securities, 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 First Union National Bank, as trustee
(the "Indenture"), as supplemented by a Second Supplemental Indenture (the
"Supplemental Indenture") between the Company and First Union National Bank, as
trustee.
The opinions expressed below are based on the following
assumptions:
(a) The Registration Statement on Form S-3 filed by the Trust,
PECO Energy Capital and the Company with the Securities and Exchange Commission
with respect to the Preferred
<PAGE>
PECO Energy Company
May 23, 1997
Page 2
Trust Receipts, the Preferred Securities, the Guarantee and the Subordinated
Debentures (the "Registration Statement") will become effective;
(b) The proposed transactions are carried out on the basis set
forth in the Registration Statement and in 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 Trust Receipts:
(i) the general partner of PECO Energy Capital will
authorize the issuance of, and determine the terms
of, the Preferred Securities, which will be
purchased by the Trust with the proceeds from the
issuance of 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 relating
to the Trust will have been executed and delivered
by First Union Trust Company, National Association,
as trustee, and PECO Energy Capital Corp., on its
own behalf for the limited purpose stated therein
and on behalf of PECO Energy Capital, the grantor of
the Trust; 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
<PAGE>
PECO Energy Company
May 23, 1997
Page 3
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,
/s/ Ballard Spahr Andrews & Ingersoll
-------------------------------------
<PAGE>
PECO Energy Capital, L.P.
PECO Energy Capital Trust II
May 23, 1997
Page 1
[Letterhead of Richards, Layton & Finger]
May 23, 1997
PECO Energy Capital, L.P.
1013 Centre Road, Suite 350F
Wilmington, DE 19805
PECO Energy Capital Trust II
c/o First Union Trust Company, National Association
One Rodney Square
920 King Street, First Floor
Wilmington, DE 19801
Re: PECO Energy Capital, L.P.
and PECO Energy Capital Trust II
--------------------------------
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 II, 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>
PECO Energy Capital, L.P.
PECO Energy Capital Trust II
May 23, 1997
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, including the Action of PECO Energy
Capital Corp., a Delaware corporation and the general partner of the Partnership
(the "General Partner"), dated as of July 25, 1994, relating to the 9%
Cumulative Monthly Income Preferred Securities, Series A, of the Partnership,
and the Action of the General Partner, dated as of December 19, 1995, relating
to the 8.72% Cumulative Monthly Income Preferred Securities, Series B, of the
Partnership (the "Amended Agreement");
(d) Amendment No. 1 to the Amended Agreement, dated as of
October 20, 1995 (the "First Partnership Amendment");
(e) Amendment No. 2 to the Amended Agreement, dated as
of March 1, 1996 (the "Second Partnership Agreement") (the Amended Agreement
as amended by the First Partnership Amendment and the Second Partnership
Agreement being hereinafter referred to as the "Partnership Agreement");
(f) A form of Action of the General Partner, relating to the
Preferred Partner Interests (as defined below) (the "Action");
(g) The Certificate of Trust of the Trust, dated as of May 20,
1997 (the "Trust Certificate"), as filed in the office of the Secretary of State
on May 20, 1997;
(h) The Trust Agreement of the Trust, dated as of May 20,
1997, among the Partnership, First Union Trust Company, National Association, as
trustee of the Trust (the "Trustee"), and, for limited purposes, the General
Partner;
(i) 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);
(j) The Registration Statement (the "Registration Statement")
on Form S-3, including a related prospectus (the "Prospectus"), relating to the
___% Cumulative Monthly Income Preferred Securities, Series C, 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
<PAGE>
PECO Energy Capital, L.P.
PECO Energy Capital Trust II
May 23, 1997
Page 3
be filed by PECO Energy Company, a Pennsylvania corporation, the Partnership and
the Trust with the Securities and Exchange Commission on or about May 23, 1997;
(k) A Certificate of Good Standing for the Partnership, dated
May 23, 1997, obtained from the Secretary of State; and
(l) A Certificate of Good Standing for the Trust, dated May
23, 1997, 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 (l) above.
In particular, we have not reviewed any document (other than the documents
listed in paragraphs (a) through (l) 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 the case may be, and
<PAGE>
PECO Energy Capital, L.P.
PECO Energy Capital Trust II
May 23, 1997
Page 4
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 signatories 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 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 and the payment for the Trust Receipt acquired by it, 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. ss. 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>
PECO Energy Capital, L.P.
PECO Energy Capital Trust II
May 23, 1997
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. ss. 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 Securities and
Exchange Commission thereunder. Except as stated above, without our prior
written
<PAGE>
PECO Energy Capital, L.P.
PECO Energy Capital Trust II
May 23, 1997
Page 6
consent, this opinion may not be furnished or quoted to, or relied upon by, any
other Person for any purpose.
Very truly yours,
/s/ Richards, Layton & Finger
PMA/BJK/jj
<PAGE>
[LETTERHEAD OF BALLARD SPAHR ANDREWS & INGERSOLL]
May 23, 1997
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 to be issued by
PECO Energy Capital Trust II, representing Cumulative Monthly Income Preferred
Securities, Series C of PECO Energy Capital, L.P. and the registration of the
related Payment and Guarantee Agreement and Deferrable Interest Subordinated
Debentures, Series C of the Company and hereby confirm to you our opinion as set
forth under the heading "United States Taxation" in the Prospectus included in
the Registration Statement filed on Form S-3.
Very truly yours,
/s/ Ballard Spahr Andrews & Ingersoll
-------------------------------------
<PAGE>
[LETTERHEAD OF COOPERS & LYBRAND L.L.P.]
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form S-3 of our
report dated February 3, 1997, on our audits of the consolidated financial
statements and financial statement schedule of PECO Energy Company and
Subsidiary Companies. We also consent to the reference to our firm under the
caption "EXPERTS".
/s/ COOPERS & LYBRAND L.L.P.
Philadelphia, Pennsylvania
May 23, 1997
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that I, Susan W. Catherwood of
Bryn Mawr, PA do hereby appoint J. F. PAQUETTE, JR. and C.A. MC NEILL, JR., or
either of them, attorney for me and in my name and on my behalf to sign the
Registration Statement and any amendments thereto of PECO Energy Company, to be
filed with the Securities and Exchange Commission under the Securities Act of
1933, as amended, in connection with the registration of the securities of the
Company, and generally to do and perform all things necessary to be done in the
premises as fully and effectually in all respects as I could do if personally
present.
/s/ Susan W. Catherwood
-----------------------
Date: May 23, 1997
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that I, M. Walter D'Alessio of
Philadelphia, PA do hereby appoint J. F. PAQUETTE, JR. and C.A. MC NEILL, JR.,
or either of them, attorney for me and in my name and on my behalf to sign the
Registration Statement and any amendments thereto of PECO Energy Company, to be
filed with the Securities and Exchange Commission under the Securities Act of
1933, as amended, in connection with the registration of the securities of the
Company, and generally to do and perform all things necessary to be done in the
premises as fully and effectually in all respects as I could do if personally
present.
/s/ M. Walter D'Alessio
-----------------------
Date: May 23, 1997
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that I, G. Fred DiBona of Bryn
Mawr, PA do hereby appoint J. F. PAQUETTE, JR. and C.A. MC NEILL, JR., or either
of them, attorney for me and in my name and on my behalf to sign the
Registration Statement and any amendments thereto of PECO Energy Company, to be
filed with the Securities and Exchange Commission under the Securities Act of
1933, as amended, in connection with the registration of the securities of the
Company, and generally to do and perform all things necessary to be done in the
premises as fully and effectually in all respects as I could do if personally
present.
/s/ G. Fred DiBona
------------------
Date: May 23, 1997
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that I, R. Keith Elliott of
Bryn Mawr, PA do hereby appoint J. F. PAQUETTE, JR. and C.A. MC NEILL, JR., or
either of them, attorney for me and in my name and on my behalf to sign the
Registration Statement and any amendments thereto of PECO Energy Company, to be
filed with the Securities and Exchange Commission under the Securities Act of
1933, as amended, in connection with the registration of the securities of the
Company, and generally to do and perform all things necessary to be done in the
premises as fully and effectually in all respects as I could do if personally
present.
/s/ R. Keith Elliott
--------------------
Date: May 23, 1997
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that I, Richard G. Gilmore of
Sarasota, FL do hereby appoint J. F. PAQUETTE, JR. and C.A. MC NEILL, JR., or
either of them, attorney for me and in my name and on my behalf to sign the
Registration Statement and any amendments thereto of PECO Energy Company, to be
filed with the Securities and Exchange Commission under the Securities Act of
1933, as amended, in connection with the registration of the securities of the
Company, and generally to do and perform all things necessary to be done in the
premises as fully and effectually in all respects as I could do if personally
present.
/s/ Richard G. Gilmore
----------------------
Date: May 23, 1997
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that I, Richard H. Glanton of
Philadelphia, PA do hereby appoint J. F. PAQUETTE, JR. and C.A. MC NEILL, JR.,
or either of them, attorney for me and in my name and on my behalf to sign the
Registration Statement and any amendments thereto of PECO Energy Company, to be
filed with the Securities and Exchange Commission under the Securities Act of
1933, as amended, in connection with the registration of the securities of the
Company, and generally to do and perform all things necessary to be done in the
premises as fully and effectually in all respects as I could do if personally
present.
/s/ Richard H. Glanton
----------------------
Date: May 23, 1997
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that I, James A. Hagen of
Villanova, PA do hereby appoint J. F. PAQUETTE, JR. and C.A. MC NEILL, JR., or
either of them, attorney for me and in my name and on my behalf to sign the
Registration Statement and any amendments thereto of PECO Energy Company, to be
filed with the Securities and Exchange Commission under the Securities Act of
1933, as amended, in connection with the registration of the securities of the
Company, and generally to do and perform all things necessary to be done in the
premises as fully and effectually in all respects as I could do if personally
present.
/s/ James A. Hagen
------------------
Date: May 23, 1997
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that I, Kinnaird R. McKee of
Oxford, MD do hereby appoint J. F. PAQUETTE, JR. and C.A. MC NEILL, JR., or
either of them, attorney for me and in my name and on my behalf to sign the
Registration Statement and any amendments thereto of PECO Energy Company, to be
filed with the Securities and Exchange Commission under the Securities Act of
1933, as amended, in connection with the registration of the securities of the
Company, and generally to do and perform all things necessary to be done in the
premises as fully and effectually in all respects as I could do if personally
present.
/s/ Kinnaird R. McKee
---------------------
Date: May 23, 1997
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that I, Joseph J. McLaughlin of
Rosemont, PA do hereby appoint J. F. PAQUETTE, JR. and C.A. MC NEILL, JR., or
either of them, attorney for me and in my name and on my behalf to sign the
Registration Statement and any amendments thereto of PECO Energy Company, to be
filed with the Securities and Exchange Commission under the Securities Act of
1933, as amended, in connection with the registration of the securities of the
Company, and generally to do and perform all things necessary to be done in the
premises as fully and effectually in all respects as I could do if personally
present.
/s/ Joseph J. McLaughlin
------------------------
Date: May 23, 1997
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that I, John M. Palms of
Columbia, SC do hereby appoint J. F. PAQUETTE, JR. and C.A. MC NEILL, JR., or
either of them, attorney for me and in my name and on my behalf to sign the
Registration Statement and any amendments thereto of PECO Energy Company, to be
filed with the Securities and Exchange Commission under the Securities Act of
1933, as amended, in connection with the registration of the securities of the
Company, and generally to do and perform all things necessary to be done in the
premises as fully and effectually in all respects as I could do if personally
present.
/s/ John M. Palms
-----------------
Date: May 23, 1997
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that I, Ronald Rubin of
Narberth, PA do hereby appoint J. F. PAQUETTE, JR. and C.A. MC NEILL, JR., or
either of them, attorney for me and in my name and on my behalf to sign the
Registration Statement and any amendments thereto of PECO Energy Company, to be
filed with the Securities and Exchange Commission under the Securities Act of
1933, as amended, in connection with the registration of the securities of the
Company, and generally to do and perform all things necessary to be done in the
premises as fully and effectually in all respects as I could do if personally
present.
/s/ Ronald Rubin
----------------
Date: May 23, 1997
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that I, Robert Subin of Blue
Bell, PA do hereby appoint J. F. PAQUETTE, JR. and C.A. MC NEILL, JR., or either
of them, attorney for me and in my name and on my behalf to sign the
Registration Statement and any amendments thereto of PECO Energy Company, to be
filed with the Securities and Exchange Commission under the Securities Act of
1933, as amended, in connection with the registration of the securities of the
Company, and generally to do and perform all things necessary to be done in the
premises as fully and effectually in all respects as I could do if personally
present.
/s/ Robert Subin
----------------
Date: May 23, 1997
<PAGE>
EXHIBIT 25
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE
PURSUANT TO SECTION 305(b)(2)
FIRST UNION NATIONAL BANK
(Name of Trustee)
22-1147033
(I.R.S. Employer Identification No.)
102 PENNSYLVANIA AVENUE, AVONDALE, PENNSYLVANIA
(Address of Principal Executive Offices)
19311
(Zip Code)
PECO ENERGY COMPANY
(Exact name of registrants as specified in their charters)
PENNSYLVANIA
(State of Incorporation)
23-0970240
(I.R.S. Employer Identification No.)
P.O. BOX 8699, 2301 MARKET STREET
PHILADELPHIA, PA. 19101
(215-841-4000)
(Address of Principal Executive Offices)
% DEFERRABLE INTEREST SUBORDINATED DEBENTURES, SERIES C
(Title of Indenture Securities)
<PAGE>
1. General information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervisory authority to
which it is subject:
Comptroller of the Currency
United States Department of the Treasury
Washington, D.C. 20219
Federal Reserve Bank (3rd District)
Philadelphia, Pennsylvania 19106
Federal Deposit Insurance Corporation
Washington, D.C. 20429
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to execise corporate trust powers.
2. Affiliations with obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
The obligor is not an affiliate of the trustee (or any of its
affiliates).
3. Voting securities of the trustee.
Furnish the following information as to each class of voting
securities of the trustee:
Not applicable - see answer to item 13.
4. Trusteeships under other indentures.
If the trustee is a trustee under another indenture under which any
other securities, or certificates of interest or participation in any
other securities, of the obligor are outstanding, furnish the following
information:
Not applicable - see answer to item 13.
5. Interlocking directorates and similar relationships with the obligor
or underwriters.
2
<PAGE>
If the trustee or any of the directors or executive officers of the
trustee is a director, officer, partner, employee, appointee, or representative
of the obligor or of any underwriter for the obligor, identify each such person
having any such connection and state the nature of each such connection.
Not applicable - see answer to item 13.
6. Voting securities of the trustee owned by the obligor or its
officials.
Furnish the following information as to the voting securities of the
trustee owned beneficially by the obligor and each director, partner, and
executive officer of the obligor:
Not applicable - see answer to item 13.
7. Voting securities of the trustee owned by underwriters or their
officials.
Furnish the following information as to the voting securities of the
trustee owned beneficially by each underwriter for the obligor and each
director, partner, and executive officer of each such underwriter:
Not applicable - see answer to item 13.
8. Securities of the obligor owned or held by the trustee.
Furnish the following information as to securities of the obligor
owned beneficially or held as collateral security for obligations in
default by the trustee:
Not applicable - see answer to item 13.
9. Securities of underwriters owned or held by the trustee.
If the trustee owns beneficially or holds as collateral security for
obligations in default any securities of an underwriter for the obligor, furnish
the following information as to each class of securities of such underwriter any
of which are so owned or held by the trustee:
Not applicable - see answer to item 13.
10. Ownership or holdings by the trustee of voting securities of certain
affiliates or security holders of the obligor.
If the trustee owns beneficially or holds as collateral security for
obligations in default voting securities of a person who, to the knowledge of
the trustee (1) owns 10 percent or more of the voting stock of the obligor or
(2) is an affiliate, other than a subsidiary, of the obligor, furnish the
following information as to the voting securities of such person:
3
<PAGE>
Not applicable - see answer to item 13.
11. Ownership or holdings by the trustee of any securities of a person
owning 50 percent or more of the voting securities of the obligor.
If the trustee owns beneficially or holds as collateral security for
obligations in default any securities of a person who, to the knowledge of the
trustee, owns 50 percent or more of the voting securities of the obligor,
furnish the following information as to each class of securities of such person
any of which are so owned or held by the trustee:
Not applicable - see answer to item 13.
12. Indebtedness of the obligor to the trustee.
Except as noted in the instructions, if the obligor is indebted to
the trustee, furnish the following information:
Not applicable - see answer to item 13.
13. Defaults by the obligor.
(a) State whether there is or has been a default with respect to the
securities under this indenture. Explain the nature of any such default.
There is not nor has there been a default with respect to the
securities under this indenture. (See Note on page 6.)
(b) If the trustee is a trustee under another indenture under which any
other securities, or certificates of interest or participation in any other
securities, of the obligor are outstanding, or is trustee for more than one
outstanding series of securities under the indenture, state whether there has
been a default under any such indenture or series, identify the indenture or
series affected, and explain the nature of any such default.
There has not been a default under another indenture under which any
other securities or certificates of interest or participation in any
other securities of the Obligor are outstanding and there has not been
a default under any outstanding securities under this indenture.
(See Note on page 6.)
14. Affiliations with the underwriters.
If any underwriter is an affiliate of the trustee, describe each such
affiliation.
Not applicable - see answer to item 13.
4
<PAGE>
15. Foreign trustee.
Identify the order or rule pursuant to which the trustee is
authorized to act as sole trustee under indentures qualified or to be
qualified under the Act.
Not applicable - trustee is a national banking association organized
under the laws of the United States.
16. List of Exhibits.
List below all exhibits filed as part of this statement of
eligibility.
1. Copy of Articles of Association of the trustee as now in
- ---- effect.**
2. Copy of the Certificate of the Comptroller of the Currency
- ---- dated January 11, 1994, evidencing the authority of the
trustee to transact business.*
3. Copy of the authorization of the trustee to exercise fiduciary
- ---- powers.*
4. Copy of existing by-laws of the trustee.**
- ----
5. Copy of each indenture referred to in Item 4, if the obligor
- ---- is in default, not applicable.
X 6. Consent of the trustee required by Section 321(b) of the Act.
- ----
7. Copy of report of condition of the trustee at the close of
- ---- business on March 31, 1997, published pursuant to the
requirements of its supervising authority.**
8. Copy of any order pursuant to which the foreign trustee is
- ---- authorized to act as sole trustee under indentures qualified
or to be qualified under the Act, not applicable.
9. Consent to service of process required of foreign trustees
- ---- pursuant to Rule 10a-4 under the Act, not applicable.
- -------------------------------------------------------------------------------
*Previously filed with the Securities and Exchange Commission on February 11,
1994 as an exhibit to Form T-1 in connection with Registration Statement No.
22-73340 and ** previously filed with the the Securities and Exchange Commission
on May 5, 1997 as an exhibit to Form T-1 in connection with Registration
Statement No. 333-23791 and incorporated herein by reference.
5
<PAGE>
NOTE
Inasmuch as this Form T-1 is filed prior to the ascertainment by the
Trustee of all facts on which to base responsive answers to Items 5, 6, 7, 8, 9,
10, 11, 13, and 14, the answers to said Items are based on incomplete
information.
Items 5, 6, 7, 8, 9, 10, 11, 13, and 14 may, however, be considered
correct unless amended by an amendment to this Form T-1.
In answering any items in this Statement of Eligibility that related to
matters peculiarly within the knowledge of the Obligor, or its directors or
officers, or an Underwriter for the Obligor (Items 5, 6, 7, 8, 9, 10, 11, and 13
particularly), the Trustee has relied upon information furnished to it by the
Obligor and such Underwriter and the Trustee disclaims responsibility for the
accuracy or completeness of such information.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
trustee, First Union National Bank, a national banking association organized and
existing under the laws of the United States of America, has duly caused this
Statement of Eligibility to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of Philadelphia and Commonwealth of
Pennsylvania, on the 22th day of May, 1997.
FIRST UNION NATIONAL BANK
By: /s/ George J. Rayzis
----------------------------
George J. Rayzis
Vice President
6
<PAGE>
CONSENT OF TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture
Act of 1939, and in connection with the proposed issue of PECO Energy Company we
hereby consent that reports of examinations by Federal, State, Territorial or
District authorities may be furnished by such authorities to the Securities and
Exchange Commission upon request therefor.
FIRST UNION NATIONAL BANK
By: /s/ George J. Rayzis
--------------------------
George J. Rayzis
Vice President
Philadelphia, PA
May 22, 1997
