As filed with the Securities and Exchange Commission on March 16, 1998
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
____________________
PECO ENERGY PECO ENERGY PECO ENERGY
COMPANY CAPITAL, L.P. CAPITAL TRUST III
(Exact name of (Exact name of (Exact name of
registrant as specified registrant as specified registrant as specified
in its charter) in its Certificate of in its Certificate
Limited Partnership) 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 51-0379036
(I.R.S. Employer Identification Number)
P.O. BOX 8699, 1013 CENTRE ROAD, C/O FIRST UNION TRUST COMPANY,
2301 MARKET STREET SUITE 350F NATIONAL ASSOCIATION
PHILADELPHIA, PA 19101 WILMINGTON, DE 19805 ONE RODNEY SQUARE
(215) 841-4000 (302) 998-0592 920 KING STREET, 1ST FLOOR
WILMINGTON, DE 19801
(302) 888-7500
(Address, including zip code, and telephone number,
including area code, of Registrant's 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)
with copies to:
JAMES W. DURHAM, ESQ.
SENIOR VICE PRESIDENT AND GENERAL COUNSEL
P.O. BOX 8699, 2301 MARKET STREET, PHILADELPHIA, PA 19101
ROBERT C. GERLACH, ESQ. ROBERT M. JONES, JR., ESQ.
BALLARD SPAHR ANDREWS & INGERSOLL, LLP 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.
____________________
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. / /
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection
with dividend or interest reinvestment plans, please check the following
box. / X /
<PAGE>
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. / /
____________________
CALCULATION OF REGISTRATION FEE
==============================================================================
PROPOSED
MAXIMUM PROPOSED
TITLE OF OFFERING MAXIMUM
EACH CLASS OF PRICE AGGREGATE AMOUNT OF
SECURITIES AMOUNT TO BE PER UNIT OFFERING REGISTRATION
TO BE REGISTERED REGISTERED (1) (2)(3) PRICE (2)(3) FEE (4)
- ------------------------------------------------------------------------------
Capital Trust Pass-through
Securities issued by
PECO Energy Capital
Trust III representing
PECO Energy Capital,
L.P. ___% Cumulative
Preferred Securities,
Series D ...............
- ------------------------------------------------------------------------------
PECO Energy Capital,
L.P. ___% Cumulative
Preferred Securities,
Series D ...............
- ------------------------------------------------------------------------------
PECO Energy Company
Guarantee with
respect to PECO Energy
Capital, L.P. ___%
Cumulative Preferred
Securities,
Series D(5)............
- ------------------------------------------------------------------------------
PECO Energy Company, ___%
Subordinated Deferrable
Interest Debentures,
Series D...............
- ------------------------------------------------------------------------------
Total.................... $78,105,000 100% $78,105,000 $23,041
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
(1) There are being registered hereunder 78,105 Capital Trust Pass-through
Securities, each representing a __% Cumulative Preferred Security, Series
D of PECO Energy Capital, L.P., with an aggregate initial offering
price not to exceed $78,105,000, and related Guarantee and __%
Subordinated Deferrable Interest Debentures, Series D 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 Capital Trust
Pass-through Securities.
(5) Includes the rights of holders of the ____% Cumulative Preferred
Securities, Series D under the Guarantee and certain backup
undertakings related thereto as described in the Registration
Statement.
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE
REGISTRANTS SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT
THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE
WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
==============================================================================
<PAGE>
SUBJECT TO COMPLETION, DATED MARCH __, 1998
PROSPECTUS
PECO ENERGY CAPITAL TRUST III
78,105 Capital Trust Pass-through Securities(sm) (TruPS(r))*
each representing a ____% Cumulative Preferred Security,
Series D of PECO Energy Capital, L.P.
(stated liquidation preference $1,000 per Preferred Security)
fully and unconditionally guaranteed to the extent PECO Energy Capital, L.P.
has funds as set forth herein by
PECO ENERGY COMPANY
The Capital Trust Pass-through Securities(sm) ("Capital Securities")
offered hereby by PECO Energy Capital Trust III, a statutory business trust
created under the laws of the State of Delaware (the "Trust") each
represent a ____% Cumulative Preferred Security, Series D (a "Series D
Preferred Security") of PECO Energy Capital, L.P., a limited partnership
formed under the laws of the State
(continued on next page)
SEE "RISK FACTORS" COMMENCING ON PAGE 9 FOR CERTAIN INFORMATION
RELEVANT TO AN INVESTMENT IN THE CAPITAL SECURITIES, INCLUDING THE PERIOD
DURING WHICH AND CIRCUMSTANCES UNDER WHICH DISTRIBUTIONS ON THE CAPITAL
SECURITIES MAY BE DEFERRED AND THE RELATED FEDERAL INCOME TAX CONSEQUENCES.
Application has been made to list the Capital Securities on the New
York Stock Exchange. If approved for listing, trading of the Capital
Securities is expected to commence within a 30-day period after the initial
delivery thereof.
____________________
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.
____________________
Initial Public Underwriting Proceeds to
Offering Price Commission(1) the Trust(2)(3)
-------------- ------------- ---------------
Per Capital Security ...... $1,000.00 (2) $1,000.00
Total ..................... $78,105,000 (2) $78,105,000
_______________________
(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 Capital Security (or $__________ in the
aggregate). See "Underwriting."
(3) Expenses of the offering, which are payable by PECO Energy, are
estimated to be $320,000.
_________________________________
The Capital Securities offered hereby are offered severally by the
Underwriters, as specified herein, subject to receipt and acceptance by
them and subject to their right to reject any order in whole or in part.
It is expected that delivery of the Capital Securities will be made in
book-entry-only form through the facilities of The Depository Trust
Company on or about ______________, 1998.
_______________
* Salomon Brothers Inc has filed an application with the United States
Patent and Trademark Office for the registration of the "Capital Trust
Pass-through Securities" service mark. "TruPS" is a registered service
mark of Salomon Brothers Inc.
SALOMON SMITH BARNEY MERRILL LYNCH & CO.
_________________________________
The date of this Prospectus is _____________, 1998.
<PAGE>
(continued from previous page)
of Delaware ("PECO Energy Capital"). The Trust will use the proceeds
from the sale of its Capital Securities to purchase the Series D Preferred
Securities, which will be the sole assets of the Trust. PECO Energy
Capital will lend the proceeds from the sale of its Series D 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
____% Subordinated Deferrable Interest Debentures, Series D, due 2028 (the
"Series D Subordinated Debt Securities").
Holders of the Capital Securities will be entitled to receive
Distributions (as defined below) at the rate of __% of the liquidation
amount of $1,000 per Capital Security accumulating from the date of
original issuance and payable (subject to any Extension Period described
below) semiannually in arrears on __________ and __________ of each year,
commencing __________, 1998. Whenever the Trust receives any cash
distribution representing a semiannual distribution on the Series D
Preferred Securities (whether or not distributed by PECO Energy Capital on
the regular semiannual distribution date therefor) or payment under the
Payment and Guarantee Agreement (the "Series D Guarantee") issued by PECO
Energy for the benefit of the holders of the Series D Preferred Securities,
the Trust will distribute such amounts to the holders of the Capital
Securities in proportion to their respective number of Series D Preferred
Securities represented by such Capital Securities. As used herein, the
terms "Distribution" and "Distributions" shall include, as the context
requires, all semiannual distributions on the Capital Securities and the
Series D Preferred Securities, including any and all payments made under
the Series D Guarantee, as well as interest payments on the Series D
Subordinated Debt Securities. 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 (collectively,
"Subordinated Debt Securities") for up to 60 consecutive months (each, an
"Extension Period"). During any Extension Period, no Distributions will be
made on the Series D Preferred Securities represented by the Capital
Securities. See "Description of the Series D Subordinated Debt Securities
and the Indenture-Option to Extend Interest Payment Period" and "-Events of
Default."
PECO Energy will, through the Series D Guarantee, the Amended and
Restated Trust Agreement relating to the Trust (the "Trust Agreement"), the
Indenture and the Series D Subordinated Debt Securities, taken together,
fully, irrevocably and unconditionally guarantee all of PECO Energy
Capital's obligations under the Series D Preferred Securities. Under the
Series D Guarantee, PECO Energy will guarantee payment of accumulated and
unpaid semiannual Distributions, amounts payable upon redemption and
amounts payable upon liquidation with respect to the Series D 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 D Subordinated Debt Securities, PECO Energy Capital will not have
sufficient funds to pay Distributions on the Series D Preferred Securities.
The Series D 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 Capital Securities representing the Series D
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 D Preferred Securities-Voting
Rights." The obligations of PECO Energy under the Series D Guarantee will
be subordinate and junior in right of payment to all general liabilities of
PECO Energy and its obligations under the Series D Subordinated Debt
Securities will be subordinate and junior in right of payment to all
present and future Senior Indebtedness of PECO Energy (as defined in
"Description of the Series D Subordinated Debt Securities-Subordination"),
which aggregated approximately $4.678 billion at December 31, 1997.
The Capital Securities will be subject to mandatory redemption upon any
redemption of Series D Preferred Securities, which will be subject to
optional redemption upon the occurrence of certain tax events, and which
will be subject to mandatory redemption upon payment at maturity or
redemption of the Series D Subordinated Debt Securities and the occurrence
of certain events under the Investment Company Act of 1940, as amended.
See "Description of the Series D Preferred Securities-Mandatory Redemption"
and "-Special Event Redemptions."
In the event of the liquidation of PECO Energy Capital, the Trust will
distribute to the holders of Capital Securities, 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 in "Risk Factors-Rights Under the
Series D Guarantee") or the amount of assets of PECO Energy Capital legally
available therefor, in either case, in proportion to the respective number
of Series D Preferred Securities represented by such Capital Securities.
Upon any voluntary or involuntary dissolution or liquidation of PECO Energy
Capital, the holders of Series D 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 $1,000 stated
liquidation preference 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 Preferred
Securities of PECO Energy Capital (collectively, "Preferred Securities")
will be distributed to the General Partner.
The Capital Securities will be represented by global securities
registered in the name of The Depository Trust Company ("DTC") or its
nominee. Beneficial interests in the Capital Securities will be shown on,
and transfers thereof will be effected only through, records maintained by
participants in DTC. Capital Securities in certificated form will not be
issued in exchange for the global securities. See "Description of the
Capital Securities-Book-Entry-Only Issuance-The Depository Trust Company."
<PAGE>
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN
TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE
CAPITAL SECURITIES, INCLUDING ENTERING STABILIZING BIDS, EFFECTING
SYNDICATE COVERING TRANSACTIONS AND IMPOSING PENALTY BIDS. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
<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 Capital Securities
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, 1997; and
2. PECO Energy's Current Reports on Form 8-K dated January 9, 1998,
January 15, 1998, January 22, 1998, January 23, 1998 and
January 26, 1998.
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.
3
<PAGE>
SUMMARY
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus.
RISK FACTORS
Prospective investors should carefully consider the matters set forth
under "Risk Factors."
PECO ENERGY
Incorporated in Pennsylvania in 1929, PECO Energy provides retail
electric and natural gas service in southeastern Pennsylvania and, through
pilot programs, natural gas service to areas in Maryland and New Jersey.
PECO Energy also engages in the wholesale marketing of electricity on a
national basis and participates in joint ventures which provide
telecommunication services in the Philadelphia area.
PECO Energy's traditional retail service territory covers 2,107 square
miles. Electric service is furnished to an area of 1,972 square miles with
a population of approximately 3.6 million, including 1.6 million in the
City of Philadelphia. Approximately 94% of the retail electric service
area and 64% of retail kilowatthour sales are in the suburbs around
Philadelphia, and 6% of the retail 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 approximately 1.9 million. Through
Horizon Energy, a wholly owned subsidiary of PECO Energy, and PECO
Energy/EnergyOne, a franchised energy products brand, PECO Energy
participates in Pennsylvania's pilot program for retail competition for
generation. For additional information, see "PECO Energy."
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 Debt Securities issued by PECO Energy in series under
the Indenture. The Subordinated Debt Securities are the only assets of
PECO Energy Capital and the only revenues of PECO Energy Capital are
interest on the Subordinated Debt Securities. 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 III 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 Capital Securities representing
4
<PAGE>
the Series D Preferred Securities to be held by the Trust and
performing functions directly related thereto. The Trust cannot issue
other equity securities or any debt securities. The Series D Preferred
Securities will be 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 Capital Securities or other person, such holder
or other person will be liable for such fees, charges and expenses.
THE OFFERING
Securities Offered .....$78,105,000 aggregate stated liquidation preference
of Capital Securities (liquidation preference $1,000
per Capital Security).
Offering Price .........$1,000 per Capital Security.
General ................Each Capital Security will represent a Series D
Preferred Security issued by PECO Energy Capital.
Such Series D Preferred Securities will represent an
undivided beneficial interest in the assets of PECO
Energy Capital. PECO Energy Capital will use the
proceeds from the sale of its Series D Preferred
Securities to purchase the Series D Subordinated
Debt Securities, which mature on __________,
2028 unless redeemed earlier as described under
"Series D Preferred Securities Special Event
Redemptions."
Distributions ..........The Distributions payable on the Capital Securities
will be fixed at a rate per annum of ____% of the
stated liquidation preference of $1,000 per Capital
Security and will accumulate from the date of
original issuance of the Capital Securities and
(subject to any Extension Period) will be payable
semiannually, in arrears, on ___________ and
___________ of each year, commencing ________,
1998. See "Description of the Capital
Securities Distributions."
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<PAGE>
Option to Extend
Interest Payment
Period ...............So long as no Event of Default has occurred and is
continuing under the Indenture, PECO Energy will
have the right to extend the interest payment period
for all Subordinated Debt Securities pursuant to an
Extension Period. No Extension Period may exceed
60 consecutive months or extend beyond the
maturity date of any Subordinated Debt Securities.
Distributions on the Capital Securities will be
deferred during any Extension Period. See
"Description of the Series D Subordinated Debt
Securities-Option to Extend Interest Payment
Period" and "United States Taxation-Potential
Extension of Payment Period."
Liquidation Preference..In the event of the liquidation of PECO Energy
Capital, the Trust will distribute to the holders of
Capital Securities, 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 in "Risk
Factors-Rights Under the Series D Guarantee") or
the amount of assets of PECO Energy Capital
legally available therefor, in either case, in
proportion to the respective number of Series D
Preferred Securities represented by such Capital
Securities. Upon any voluntary or involuntary
dissolution or liquidation of PECO Energy Capital,
the holders of Series D 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
$1,000 stated liquidation preference and all
accumulated and unpaid Distributions to the date of
payment. See "Description of the Series D Preferred
Securities-Liquidation Distribution."
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<PAGE>
Redemption of Capital
Securities ...........The Series D Preferred Securities are not subject to
redemption except upon the repayment of the
Series D Subordinated Debt Securities at maturity or
upon the occurrence of certain Special Events as
described in "Description of the Series D Preferred
Securities-Mandatory Redemption" and " Special
Event Redemptions." The proceeds from any
redemption of the Series D Preferred Securities will
be used to redeem a like amount of Capital
Securities. See "Description of the Capital
Securities-Redemption."
The Series D Guarantee..Under the Series D Guarantee, PECO Energy will
guarantee payment of accumulated and unpaid
semiannual Distributions, amounts payable on
redemption and amounts payable upon liquidation
with respect to the Series D 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. The
Series D Guarantee does not cover payment of
Distributions when PECO Energy Capital does not
have sufficient funds to pay such Distributions.
PECO Energy will, through the Series D Guarantee,
the Trust Agreement, the Indenture and the Series D
Subordinated Debt Securities taken together, fully,
irrevocably and unconditionally guarantee all of
PECO Energy Capital's obligations under the Series
D Preferred Securities.
Ranking.................The Series D Subordinated Debt Securities will be
subordinate and rank junior in right of payment to
all Senior Indebtedness of PECO Energy. See
"Description of the Series D Subordinated Debt
Securities-Subordination." The Guarantee will be
subordinate and rank junior in right of payment to
all general liabilities of PECO Energy. See
"Description of the Guarantee-Status of the Series
D Guarantee."
Voting Rights...........Holders of Capital Securities will have limited
voting rights. See "Description of the Capital
Securities-Voting Rights."
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<PAGE>
Ratings.................The Capital Securities are expected to be rated Baa2
by Moody's Investors Service, Inc., BBB by
Standard and Poor's Rating Services and BBB+ by
Fitch IBCA, Inc. A security rating is not a
recommendation to buy, sell or hold securities and
may be subject to revision or withdrawal at any time
by the assigning rating organization.
ERISA Considerations....Prospective purchasers should consider the
information set forth under "ERISA
Considerations."
Use of Proceeds.........It is anticipated that PECO Energy will use the
proceeds from the sale of the Series D Subordinated
Debt Securities to redeem a series of outstanding
Preferred Securities. See "Use of Proceeds."
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<PAGE>
RISK FACTORS
Prospective purchasers of Capital Securities should carefully review
the information contained elsewhere in this Prospectus and should
particularly consider the following matters:
RANKING OF SUBORDINATE OBLIGATIONS UNDER THE SERIES D GUARANTEE AND
SERIES D SUBORDINATED DEBT SECURITIES
PECO Energy's obligations under the Series D Guarantee will be
subordinate and junior in right of payment to all general liabilities of
PECO Energy and its obligations under the Series D Subordinated Debt
Securities will be subordinate and junior in right of payment to all Senior
Indebtedness of PECO Energy (as defined under "Description of the Series D
Subordinated Debt Securities and the Indenture-Subordination"). At
December 31, 1997, the Senior Indebtedness of PECO Energy aggregated
approximately $4.678 billion. There are no terms in the Series D
Subordinated Debt Securities or the Series D Guarantee that limit PECO
Energy's ability to incur additional indebtedness, including indebtedness
that ranks senior to the Series D Subordinated Debt Securities and the
Series D Guarantee. The Series D Guarantee guarantees payment of
accumulated and unpaid semiannual Distributions, amounts payable on
redemption and amounts payable on liquidation with respect to the Series D
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 D Subordinated Debt Securities, PECO Energy
Capital would lack legally available funds for the payment of Distributions
or amounts payable on redemption of the Series D Preferred Securities or
upon liquidation of PECO Energy Capital, and in such event, the holders of
the Capital Securities representing the Series D Preferred Securities would
not be able to rely upon the Series D Guarantee for payment of such
amounts. Instead, holders of the Capital Securities representing the
Series D 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 D Preferred Securities-
Voting Rights." See "Description of the Series D Guarantee Status of the
Series D Guarantee" and "Description of the Series D Subordinated Debt
Securities and the Indenture-Subordination."
OPTION TO EXTEND INTEREST PAYMENT PERIOD; TAX CONSIDERATIONS
PECO Energy will have the right under the Indenture to extend the
interest payment period on all Subordinated Debt Securities for up to 60
consecutive months, and, as a consequence, semiannual Distributions on the
Series D Preferred Securities may be deferred by PECO Energy Capital during
any such Extension Period. Distributions in arrears after the semiannual
distribution 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
Subordinated Debt Securities, PECO Energy may not declare dividends on any
shares of its capital stock during such Extension Period. See "Description
of the Series D Subordinated Debt Securities and the Indenture Option to
Extend Interest Payment Period."
Should an Extension Period occur, a holder of Capital Securities will
accrue interest income (as original issue discount) on an economic accrual
basis in respect of its pro rata share of the Series D
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Preferred Securities held by the Trust. As a result, a holder of
Capital Securities 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 Capital Securities 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
D Subordinated Debt Securities. However, should PECO Energy exercise such
right in the future, the market price of the Capital Securities is likely
to be affected. An owner who disposes of Capital Securities during an
Extension Period might not receive the same return on investment as an
owner who continues to hold Capital Securities. In addition, as a result
of the mere existence of PECO Energy's right to defer interest payments on
the Series D Subordinated Debt Securities, the market price of the Capital
Securities may be more volatile than other securities that are not subject
to such deferrals.
TAX EVENT OR INVESTMENT COMPANY EVENT REDEMPTION
Upon the occurrence and continuation of a Tax Event (as defined in
"Description of the Series D Preferred Securities-Special Event
Redemptions"), the General Partner will have the right to redeem the Series
D Preferred Securities, in whole or in part, and upon the occurrence of an
Investment Company Event (as defined in "Description of the Series D
Preferred Securities-Special Event Redemptions"), the General Partner must
redeem the Series D Preferred Securities in whole but not in part, and in
either case, cause a mandatory redemption of the Capital Securities at a
redemption price equal to the liquidation preference of $1,000 plus
accumulated and unpaid Distributions to the date of redemption within 90
days following the occurrence of such Tax Event or Investment Company
Event. A holder of Series D Preferred Securities will recognize gain or
loss upon such a redemption for federal income tax purposes to the extent
that the liquidation preference differs from such holder's adjusted tax
basis for the Series D 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 Capital Securities."
RIGHTS UNDER THE SERIES D GUARANTEE
Under the Series D Guarantee, PECO Energy will agree to pay (i) any
accumulated and unpaid Distributions on the Series D 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 D
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
below) applicable to the Series D Preferred Securities and (b) the amount
of assets of PECO Energy Capital legally available for distribution to
holders of Series D 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 D
Guarantee-General." If PECO Energy were to default on its obligation to
pay amounts payable on the Series D Subordinated Debt Securities, PECO
Energy Capital would lack funds for the payment of Distributions or amounts
payable on
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redemption of the Series D Preferred Securities or upon liquidation of
PECO Energy Capital, and, in each such event, holders of Capital Securities
would not be able to rely upon the Series D Guarantee for payment of such
amounts. The holders of Capital Securities, together with the holders of
Series D Preferred Securities other than the Trust, representing not less
than 10% aggregate liquidation preference of the Series D Preferred
Securities will have the right to direct the time, method and place of
conducting any proceeding for any remedy available in respect of the Series
D Guarantee, including the right to direct the General Partner or the
Special Representative (as defined under "Description of the Series D
Preferred Securities-Voting Rights"), as the case may be. If the General
Partner or Special Representative fails to enforce the Series D Guarantee,
any holder of the Capital Securities may institute a legal proceeding
directly against PECO Energy to enforce its rights under the Series D
Guarantee without first instituting a legal proceeding against PECO Energy
Capital or any other person or entity. See "Description of the Series D
Guarantee-Status of the Series D Guarantee" and "Description of the Series
D Subordinated Debt Securities and the Indenture-Subordination."
The Series D 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 Trust Agreement provides that each
holder of Capital Securities, by acceptance thereof, agrees to the
provisions of the Series D Guarantee, including the subordination
provisions thereof.
LIMITED VOTING RIGHTS
Holders of Capital Securities will have limited voting rights and will
only be entitled, together with the other holders of Preferred Securities,
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 months; (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 D Preferred
Securities-Voting Rights."
TRADING CHARACTERISTICS OF THE CAPITAL SECURITIES
The Capital Securities may trade at a price that does not fully reflect
the value of accrued but unpaid interest with respect to the Series D
Subordinated Debt Securities. An owner of Capital Securities who disposes
of Capital Securities between record dates for payments of Distributions
will nevertheless be required to include accrued but unpaid interest on the
Series D Subordinated Debt Securities through the date of disposition in
income as ordinary income and to add such amount to its adjusted tax basis
of the Capital Securities 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."
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PECO ENERGY
Incorporated in Pennsylvania in 1929, PECO Energy provides retail
electric and natural gas service in southeastern Pennsylvania and, through
pilot programs, natural gas service to areas in Maryland and New Jersey.
PECO Energy also engages in the wholesale marketing of electricity on a
national basis and participates in joint ventures which provide
telecommunication services in the Philadelphia area.
PECO Energy's traditional retail service territory covers 2,107 square
miles. Electric service is furnished to an area of 1,972 square miles with
a population of approximately 3.6 million, including 1.6 million in the
City of Philadelphia. Approximately 94% of the retail electric service
area and 64% of retail kilowatthour sales are in the suburbs around
Philadelphia, and 6% of the retail 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 approximately 1.9 million. Through
Horizon Energy, a wholly owned subsidiary of PECO Energy, and PECO
Energy/EnergyOne, a franchised energy products brand, PECO Energy
participates in Pennsylvania's pilot program for retail competition for
generation.
The electric and gas utility industries are both undergoing fundamental
restructuring. In 1996, the Federal Energy Regulatory Commission issued
Order No. 888 providing for competition in wholesale generation by
requiring that all public utilities file non-discriminatory, open-access
transmission tariffs. In December 1996, Pennsylvania Governor Ridge signed
into law the Electricity Generation Customer Choice and Competition Act
(the "Competition Act") which provides for the restructuring of the
electric utility industry in Pennsylvania, including retail competition for
generation beginning in 1999. At December 31, 1997, the Company
discontinued the use of regulatory accounting in its financial statements
for its electric generation operations.
DEREGULATION
Pursuant to the Competition Act, in April 1997, PECO Energy filed with
the Pennsylvania Public Utility Commission (the "PUC") a comprehensive
restructuring plan detailing its proposal to implement full customer choice
of electric generation supplier. PECO Energy's restructuring plan
identified $7.5 billion of stranded costs (the loss in value of PECO
Energy's electric generation-related assets, which will result from
competition). In August 1997, PECO Energy and various intervenors in PECO
Energy's restructuring proceeding filed with the PUC a Joint Petition for
Partial Settlement (the "Pennsylvania Plan").
In December 1997, the PUC rejected the Pennsylvania Plan and entered an
Opinion and Order, revised in January 1998 (the "PUC Restructuring Order"),
that deregulates PECO Energy's electric generation operations. The PUC
Restructuring Order authorizes PECO Energy to recover stranded costs of
$4.9 billion on a discounted basis, or $5.3 billion on a book-value basis,
over 8-1/2 years beginning in 1999. In January 1998, PECO Energy filed
appeals of the PUC Restructuring Order with the U.S. District Court for
the Eastern District of Pennsylvania (the "Eastern District Court") and the
Commonwealth Court of Pennsylvania (the "Commonwealth Court").
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PECO Energy believes that the PUC Restructuring Order provides
sufficient details regarding the deregulation of PECO Energy's electric
generation operations to require PECO Energy to discontinue the use of
regulatory accounting in its financial statements for those operations.
PECO Energy determined that at December 31, 1997, $5.8 billion of its $7.1
billion of electric generation assets were impaired and it had $2.6 billion
of other electric generation-related regulatory assets. Effective December
31, 1997, PECO Energy recorded an extraordinary charge against income of
$3.1 billion ($1.8 billion net of income taxes) to reflect the amount of
such electric generation-related assets which will not be recovered from
customers either prior to the commencement of competition or under the PUC
Restructuring Order.
On January 25, 1998, PECO Energy's Board of Directors reduced the
quarterly common stock dividend from $0.45 per share to $0.25 per share,
effective with the dividend payable on March 31, 1998. The Board of
Directors concluded that, given the impact of the PUC Restructuring Order,
the dividend reduction was necessary to provide PECO Energy with the
financial flexibility needed to meet the demands of competition. Although
PECO Energy cannot predict the ultimate effect of the PUC Restructuring
Order and competition for electric generation services, PECO Energy
believes that its future financial condition and results of operations will
be adversely affected.
PECO Energy's mailing address is P.O. Box 8699, Philadelphia, PA
19101, and its telephone number is (215) 841-4000.
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 Debt Securities issued by PECO Energy in series under
the Indenture. The Subordinated Debt Securities are the only assets of
PECO Energy Capital and the only revenues of PECO Energy Capital are
interest on the Subordinated Debt Securities. The General Partner pays all
of PECO Energy Capital's operating expenses and has general liability for
all of PECO Energy Capital's obligations. PECO Energy Capital's mailing
address is 1013 Centre Road, Suite 350F, Wilmington, DE 19805, and its
telephone number is (302) 998-0592.
THE TRUST
PECO Energy Capital Trust III 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 Capital Securities representing the Series D
Preferred Securities to be held by the Trust and performing functions
directly related thereto. The Trust cannot issue other equity securities
or any debt securities. The Series D Preferred Securities will be 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
incurs fees, charges or expenses for which it is not otherwise liable under
the Trust Agreement at the election of a holder of Capital Securities or
other
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person, such holder or other person will be liable for such fees,
charges and expenses. The Trust's mailing address is c/o First Union Trust
Company, National Association, One Rodney Square, 920 King Street, 1st
Floor, Wilmington, DE 19801, and its telephone number is (302) 888-7539.
COVERAGE RATIOS
PECO Energy's Ratio of Earnings to Fixed Charges for each of the
periods indicated was as follows:
Years ended December 31,
----------------------------------------------
1993 1994 1995 1996 1997
---- ---- ---- ---- ----
3.15 2.66 3.41 3.29 2.71
The Ratio of Earnings to Fixed Charges represents, on a pre-tax basis,
the number of times earnings cover fixed charges. Earnings consist of net
income to which has been added fixed charges and taxes based on income of
PECO Energy. Fixed charges consist of interest on funded indebtedness,
other interest, amortization of net gain on reacquired debt and net
discount on debt and the interest portion of all rentals charged to income.
PECO Energy's Ratio of Earnings to Combined Fixed Charges and Preferred
Stock Dividends for each of the periods indicated was as follows:
Years ended December 31,
----------------------------------------------
1993 1994 1995 1996 1997
---- ---- ---- ---- ----
2.67 2.32 3.12 3.04 2.50
The Ratio of Earnings to Combined Fixed Charges and Preferred Stock
Dividends represents, on a pre-tax basis, the number of times earnings
cover fixed charges and preferred stock dividends. Earnings consist of net
income to which has been added fixed charges and taxes based on income of
PECO Energy. Combined fixed charges and preferred stock dividends consist
of interest on funded indebtedness, other interest, amortization of net
gain on reacquired debt and net discount on debt, preferred stock dividends
(increased to reflect the pre-tax earnings required to cover such dividend
requirements) and the interest portion of all rentals charged to income.
For purposes of calculating the 1997 ratio of earnings to fixed charges
and ratio of earnings to fixed charges and preferred stock dividends, net
income does not reflect the extraordinary charge against income of $3.1
billion ($1.8 billion net of income taxes). See "PECO Energy."
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ACCOUNTING TREATMENT
The financial statements of PECO Energy Capital will be consolidated
with PECO Energy's financial statements, with the Series D Preferred
Securities shown on PECO Energy's consolidated financial statements as
"Company Obligated Mandatorily 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 Debt Securities and will specify the principal amount,
interest rate and maturity date of each series of Subordinated Debt
Securities.
USE OF PROCEEDS
The net proceeds from the sale of Capital Securities will be used by
the Trust to purchase the Series D Preferred Securities from PECO Energy
Capital. PECO Energy Capital will lend the proceeds from the sale of the
Series D Preferred Securities, plus the capital contribution made by the
General Partner, to PECO Energy, which loan will be evidenced by the Series
D Subordinated Debt Securities. These funds will be used by PECO Energy in
connection with its redemption of $78,104,575 aggregate liquidation value
of Trust Receipts of PECO Energy Capital Trust I, each representing an
8.72% Cumulative Monthly Income Preferred Security, Series B of PECO Energy
Capital.
DESCRIPTION OF THE CAPITAL SECURITIES
The following is a summary of certain terms and provisions of the
Capital Securities 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.
GENERAL
The Capital Securities will be issued by the Trust pursuant to the
Trust Agreement. Each Capital Security will represent a Series D Preferred
Security, with a stated liquidation preference of $1,000. The Capital
Securities will be issued in book-entry form through DTC or such other
depository at which PECO Energy may have established an account. Capital
Securities may be exchanged for the underlying Series D Preferred
Securities as described under "-Withdrawal of Series D Preferred
Securities."
The Trust is a statutory business trust created under the Delaware
Business Trust Act. The Trustee will hold the Series D Preferred
Securities deposited in the Trust for the benefit of the holders of the
Capital Securities. The Trust Agreement provides that, to the fullest
extent permitted by law, without the need for any other action of any
person, including the Trustee and any other holder of Capital Securities,
each holder of Capital Securities shall be entitled to enforce in the name
of the Trust the Trust's rights under the Series D Preferred Securities
represented by the Capital Securities held by such holder.
It is anticipated that the assets of the Trust available for
distribution to the holders of the Capital Securities will be limited to
payments from PECO Energy Capital under the Series D Preferred
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Securities, which payments by PECO Energy Capital will be limited to
payments from PECO Energy on the Series D Subordinated Debt Securities.
See "Description of the Series D Subordinated Debt Securities and the
Indenture." If PECO Energy fails to make a payment on the Series D
Subordinated Debt Securities or if PECO Energy Capital fails to make a
Distribution on the Series D Preferred Securities, the Trust will not have
sufficient funds to make related payments, including Distributions, on the
Capital Securities.
DISTRIBUTIONS
Each Capital Security will represent a Series D Preferred Security of
PECO Energy Capital, and Distributions on the Capital Securities will be
made concurrently with Distributions on the Series D Preferred Securities.
Distributions on the Series D Preferred Securities will be cumulative and
will accumulate from the date of original issuance at the annual rate of
____% of the liquidation preference of $1,000 per Series D Preferred
Security. Distributions will be payable semiannually in arrears on
__________ and __________ of each year, commencing __________, 1998.
Distributions in arrears after the semiannual payment date therefor will
accumulate additional Distributions (to the extent permitted by law)
compounded semiannually at the annual rate of ____% thereof. The term
"Distributions," as used herein, shall include any such additional
Distributions. The amount of Distributions payable for any period will be
compounded on the basis of a 360-day year of twelve 30-day months.
Whenever the Trust shall receive any cash Distribution representing a
semiannual Distribution on the Series D Preferred Securities (whether or
not distributed by PECO Energy Capital on the regular semiannual
Distribution date therefor) or payment under the Series D Guarantee in
respect thereof, the Trust shall distribute such amounts to the holders of
the Capital Securities in proportion to the respective number of Series D
Preferred Securities represented by such Capital Securities. 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 Debt Securities 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 Debt Securities. At the end of the Extension Period, PECO
Energy shall pay all interest then accrued and payable on the Series D
Subordinated Debt Securities (together with interest thereon to the extent
permitted by applicable law at the rate per annum borne by the Series D
Subordinated Debt Securities). During any Extension Period, no
Distributions will be made on the Series D Preferred Securities represented
by the Capital Securities; however, all accrued and payable Distributions
(together with any applicable Distributions on such Distributions) shall be
paid at the end of any such Extension Period. See "Description of the
Series D Subordinated Debt Securities and the Indenture-Option to Extend
Interest Payment Period."
REDEMPTION OF CAPITAL SECURITIES
The Capital Securities will be subject to mandatory redemption upon
redemption of the Series D Preferred Securities. Whenever PECO Energy
Capital shall elect or is required to redeem the Series D 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"), and as provided under "Description of the
Series D Preferred Securities-Special Event Redemptions," 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
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Series D Preferred Securities and the Capital Securities to the holders
of the Capital Securities. On the date of redemption of the Series D
Preferred Securities, provided that PECO Energy Capital (or PECO Energy
pursuant to the Series D Guarantee) shall have deposited with the Trust the
aggregate amount payable upon redemption of all Series D Preferred
Securities held by the Trust to be redeemed, the Trust shall redeem Capital
Securities representing the same number of such Series D Preferred
Securities redeemed by PECO Energy Capital at the same redemption price at
which such Series D Preferred Securities are redeemed. In the event that
fewer than all the outstanding Capital Securities are redeemed, the Capital
Securities 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 will agree that if a partial redemption of the Series D
Preferred Securities would result in a delisting of the Capital Securities
from any national exchange on which the Capital Securities are then listed,
PECO Energy Capital will only redeem the Series D 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 D 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 Capital Securities such amounts in proportion to the
respective number of Series D Preferred Securities represented by such
Capital Securities.
WITHDRAWAL OF SERIES D PREFERRED SECURITIES
Any beneficial owner of Capital Securities may withdraw all, but not
less than all, of the Series D Preferred Securities represented by such
Capital Securities 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 Capital Securities represented by the
global certificate held by DTC by the amount equal to the number of Capital
Securities to be so withdrawn by the withdrawing owner, PECO Energy Capital
shall issue to the withdrawing owner a certificate representing the number
of Series D Preferred Securities so withdrawn and the Trustee shall reduce
the number of Series D Preferred Securities represented by the global
certificate held by the Trust by a like amount; provided that, PECO Energy
Capital shall not issue any fractional number of Series D Preferred
Securities. The Series D Preferred Securities will only be issued in
certificated form.
Any holder of Series D Preferred Securities may redeposit withdrawn
Series D Preferred Securities by delivery to the Trustee of a certificate
or certificates for the Series D 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 Capital Securities
represented by the global certificate held by DTC by an amount equal to the
Series D Preferred Securities to be deposited. The Capital Securities will
not be issued in certificated form.
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VOTING RIGHTS
If the holders of the Preferred Securities, 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
Capital Securities of such right, request direction of each holder of a
Capital Security as to the appointment of a Special Representative and vote
the Series D Preferred Securities represented by such Capital Security 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 Capital Securities
and, if so directed by the holders of the Capital Securities representing
(i) Preferred Securities constituting at least 10% of the aggregate stated
liquidation preference of the outstanding Preferred Securities or (ii)
Series D Preferred Securities constituting 10% of the aggregate stated
liquidation preference of Series D Preferred Securities, shall convene such
meeting. Under the Trust Agreement, PECO Energy Capital will agree that
without the consent of the holders of 66-2/3% in liquidation amount of the
Capital Securities, 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 Capital Securities would be delisted by any national securities
exchange or other organization on which the Capital Securities may be
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 D
Preferred Securities are entitled to vote, the Trustee shall, as soon as
practicable thereafter, mail to the holders of Capital Securities 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 Capital Securities 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 D
Preferred Securities represented by their respective Capital Securities,
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 Capital Security, the
Trustee shall vote or cause to be voted the number of Series D Preferred
Securities represented by such Capital Securities in accordance with the
instructions set forth in such request.
AMENDMENT AND TERMINATION OF TRUST AGREEMENT
PECO Energy Capital or the General Partner, and the Trustee, may, 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 Capital Securities: (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 Capital Securities, 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
Capital Securities; or (iv) to cure any ambiguity or correct any
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mistake. Any other amendment of the Trust Agreement must be approved
by the holders of 66-2/3% of the Capital Securities.
The Trust Agreement will terminate upon the redemption of the Capital
Securities or a final distribution in respect of the Series D Preferred
Securities and such distribution has been delivered to the holders of the
Capital Securities. In addition, PECO Energy Capital may instruct the
Trustee to dissolve the Trust and distribute the Series D Preferred
Securities on a pro rata basis to the holders of Capital Securities if the
Trust, at any time, is subject to federal income tax with respect to
interest received on its allocable share of interest on the Series D
Subordinated Debt Securities received by PECO Energy Capital, the Trust is
subject to more than a de minimis amount of other taxes, duties or
governmental charges, or a Change in 1940 Act Law (as defined in "Series D
Preferred Securities-Special Event Redemptions") has occurred, to the
effect that the Trust is or will be considered an "Investment Company"
which is required to be registered under the 1940 Act (as defined in
"Series D Preferred Securities-Special Event Redemptions"), which Change in
1940 Act Law becomes effective on or after the date of the issuance of the
Capital Securities. See "United States Taxation-Withdrawal or Distribution
of Series D Preferred Securities."
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
Capital Securities 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.
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BOOK-ENTRY-ONLY ISSUANCE -- THE DEPOSITORY TRUST COMPANY
DTC will initially act as securities depositary for all of the Capital
Securities. The Capital Securities 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 Capital Securities and will be deposited with DTC. The
Capital Securities 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. Direct Participants include
securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations. DTC is owned by a number of
its Direct Participants and by the New York Stock Exchange, Inc., the
American Stock Exchange, Inc. and the National Association of Securities
Dealers, Inc. Access to the DTC system is also available to others such as
securities brokers and dealers, banks and trust companies that clear
through or maintain a custodial relationship with a Direct Participant,
either directly or indirectly ("Indirect Participants"). The rules
applicable to DTC and its Participants are on file with the SEC.
Purchases of Capital Securities under the DTC system must be made by or
through Direct Participants, which will receive a credit for the Capital
Securities on DTC's records. The ownership interest of each actual
purchaser of each Capital Security ("Beneficial Owner") is in turn to be
recorded on the Direct and Indirect Participants' records. Beneficial
Owners will not receive written confirmation from DTC of their purchases,
but Beneficial Owners are expected to receive written confirmations
providing details of the transaction, as well as periodic statements of
their holdings, from the Direct or Indirect Participant through which the
Beneficial Owner entered into the transaction. Transfers of ownership
interests in the Capital Securities are to be accomplished by entries made
on the books of Participants acting on behalf of Beneficial Owners.
Beneficial Owners will not receive certificates representing their
ownership interests in Capital Securities, except in the event that use of
the book-entry system for the Capital Securities is discontinued.
To facilitate subsequent transfers, all Capital Securities deposited by
Participants with DTC are registered in the name of DTC's partnership
nominee, Cede & Co. The deposit of Capital Securities with DTC and their
registration in the name of Cede & Co. effect no change in beneficial
ownership. DTC has no knowledge of the actual Beneficial Owners of the
Capital Securities; DTC's records reflect only the identity of the Direct
Participants to whose accounts such Capital Securities are credited, which
may or may not be the Beneficial Owners. The Participants will remain
responsible for keeping account of their holdings on behalf of their
customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by
Direct Participants and Indirect Participants to Beneficial
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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 DTC. If less than all of the
Capital Securities are being redeemed, DTC's practice is to determine by
lot the amount of the interest of each Direct Participant to be redeemed.
Neither DTC nor Cede & Co. will consent or vote with respect to the
Capital Securities. Under its usual procedures, DTC mails an Omnibus Proxy
to the Trust as soon as possible after the record date. The Omnibus Proxy
assigns Cede & Co.'s consenting or voting rights to those Direct
Participants to whose accounts the Capital Securities are credited on the
record date (identified in a listing attached to the Omnibus Proxy).
Redemption proceeds and Distributions on the Capital Securities will be
made to Cede & Co., as nominee of DTC. DTC's practice is to credit Direct
Participants' accounts, upon DTC's receipt of funds and corresponding
detail information from the Trustee on behalf of the Trust on any
Distribution or other payment date in accordance with their respective
holdings shown on DTC's records. Payments by Participants to Beneficial
Owners will be governed by standing instructions and customary practices,
as is the case with securities held for the accounts of customers in bearer
form or registered in "street name," and will be the responsibility of such
Participant and not of DTC, PECO Energy, PECO Energy Capital or the Trust,
subject to any statutory or regulatory requirements as may be in effect
from time to time. Payment of redemption proceeds and Distributions to
Cede & Co. shall be the responsibility of the Trustee on behalf of the
Trust, disbursement of such payments to Direct Participants shall be the
responsibility of Cede & Co. and disbursement of such payments to the
Beneficial Owners shall be the responsibility of Direct and Indirect
Participants.
DTC may discontinue providing its services as securities depository
with respect to the Capital Securities at any time by giving reasonable
notice to the Trustee and PECO Energy. Under such circumstances, in the
event that a successor securities depository is not obtained, physical
certificates representing Capital Securities 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 securities depository).
In that event, physical certificates representing Capital Securities will
be printed and delivered.
In the event that the book-entry-only system is discontinued, the
Trustee shall keep the registration books for such Capital Securities at
its corporate trust office in Delaware. Such Capital Securities may be
transferred or exchanged for one or more Capital Securities upon surrender
thereof at the corporate trust office of the Trustee in Delaware by the
holders or their duly authorized attorneys or legal representatives. Upon
surrender of any Capital Securities to be transferred or exchanged, the
Trustee shall record the transfer or exchange in the registration books and
shall deliver new Capital Securities appropriately registered. The Trustee
shall not be required to register the transfer of any Capital Securities
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 Capital Securities, as their names appear in the
registration books, as the owners of those Capital Securities for all
purposes under the Trust Agreement.
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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 Trustee,
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.
DESCRIPTION OF THE SERIES D PREFERRED SECURITIES
The following is a summary of certain terms and provisions of the
Series D Preferred Securities represented by the Capital Securities.
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 D 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 D 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 $1,000,
payable semiannually in arrears on ____________ and ____________ of each
year. Distributions on the Series D Preferred Securities will be
cumulative, will accrue from the original date of issuance, and, except as
otherwise described below, will be payable semiannually in arrears
commencing on ____________, 1998. Distributions in arrears after the
semiannual payment date therefor will accumulate additional Distributions
thereon at the rate of ____% per annum. PECO Energy Capital has previously
issued Cumulative Monthly Income Preferred Securities, Series A, Series B
and Series C, which have an aggregate stated liquidation preference of
$221,250,000, $78,104,575 and $50,000,000, respectively. PECO Energy
intends to use the proceeds from the sale of its Series D Subordinated Debt
Securities to PECO Energy Capital to redeem its 8.72% Deferrable Interest
Subordinated Debentures, Series B and thereby cause a mandatory redemption
of PECO Energy Capital's 8.72% Cumulative Monthly Income Preferred
Securities, Series B.
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 D 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 Debt Securities 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 Debt Securities, including the Series D
Subordinated Debt Securities. As a consequence, semiannual Distributions
on the Series D 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 Debt Securities,
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 Debt Securities, PECO Energy may elect to
extend the interest payment period again, subject to the above
requirements. Following an Extension Period of 18 consecutive months, the
holders of Preferred Securities, including the Series D Preferred
Securities, shall have the right to appoint a Special Representative to
enforce PECO Energy Capital's rights against PECO Energy under the
Subordinated Debt Securities and the Indenture and the obligations of PECO
Energy under the Guarantees. See "-Voting Rights," "Risk Factors" and
"Description of the Series D Subordinated Debt Securities and the Indenture-
Option to Extend Interest Payment Period" and "-Interest."
Distributions on the Series D Preferred Securities must be paid by PECO
Energy Capital 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 D Subordinated Debt
Securities. See "Description of the Series D Subordinated Debt Securities
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. Distributions on the
Series D 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 __________ and __________. If any date on
which Distributions are payable on the Series D 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). The term
"business day," as used in relation to the Series D 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
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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.
MANDATORY REDEMPTION
The Series D Preferred Securities will be subject to mandatory
redemption upon the repayment by PECO Energy of the Series D Subordinated
Debt Securities at maturity, at $1,000 per Series D Preferred Security,
plus accumulated and unpaid Distributions (whether or not declared), if
any, to the date fixed for redemption (the "Redemption Price").
The Series D 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 D 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 D 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 D Subordinated Debt Securities or PECO Energy Capital will
otherwise not be taxed as a partnership, (ii) interest payable by PECO
Energy on the Series D Subordinated Debt Securities 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 D 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 D 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.
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REDEMPTION PROCEDURES
PECO Energy Capital may not redeem any Series D Preferred Securities
unless all accumulated and unpaid Distributions have been paid on all
Series D Preferred Securities for all semiannual Distribution periods
terminating on or prior to the date of redemption.
Notice of any redemption of the Series D Preferred Securities will be
given by PECO Energy Capital by mail or delivery to each record holder of
Series D 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 D Preferred Securities. Notices
of redemption shall be addressed to the record holders of the Series D
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 D Preferred Securities, then, upon the date of such payment, all
rights of owners of the Series D Preferred Securities so called for
redemption will cease. In the event that any date fixed for redemption of
Series D Preferred Securities is not a business day, then payment of the
Redemption Price payable on such date will be made on the next succeeding
day which is a business day (and without any interest or other payment in
respect of any such delay), except that if such business day falls in the
next succeeding calendar year, such payment will be made on the immediately
preceding business day (in each case with the same force and effect as if
made on such day).
LIQUIDATION DISTRIBUTION
In the event of any voluntary or involuntary dissolution and
liquidation 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
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(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 Debt Securities to fund the
Partnership Liquidation Distribution.
The amount per share payable on the Series D Preferred Securities in
the event of any voluntary or involuntary liquidation of PECO Energy
Capital is $1,000 plus accumulated and unpaid Distributions.
MERGER, CONSOLIDATION, ETC. OF PECO ENERGY CAPITAL
PECO Energy Capital may not consolidate, amalgamate, merge with or
into, or be replaced by, or convey, transfer or lease its properties and
assets substantially as an entirety to any corporation or other entity,
except with the approval of the General Partner and the holders of 66-2/3% in
aggregate stated liquidation preference of the outstanding Preferred
Securities or as otherwise described below. The General Partner may,
without the consent of the holders of the Preferred Securities, cause PECO
Energy Capital to consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to, a corporation, a limited liability company
or a limited partnership, a trust or other entity organized as such under
the laws of any state of the United States of America or the District of
Columbia; provided that, (i) such successor entity either (x) expressly
assumes all of the obligations of PECO Energy Capital under the Preferred
Securities or (y) substitutes for the Preferred Securities other securities
having substantially the same terms as the Preferred Securities (the
"Successor Securities") so long as the Successor Securities rank, as
regards to participation in the profits and assets of the successor entity,
at least as high as the Preferred Securities rank, as regards to
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 may be listed, (iv) such consolidation,
amalgamation, merger, replacement, conveyance, transfer or lease does not
cause the Preferred Securities or Successor Securities to be downgraded by
any "nationally recognized statistical rating organization," as that term
is defined by the SEC for purposes of Rule 436(g)(2) under the Securities
Act, (v) such consolidation, amalgamation, merger, replacement, conveyance,
transfer or lease does not adversely affect the powers, preferences and
other special rights of holders of Preferred Securities or Successor
Securities in any material respect, (vi) such successor entity has a
purpose substantially identical to that of PECO Energy Capital and (vii)
prior to such consolidation, amalgamation, merger, replacement, conveyance,
transfer or lease, PECO Energy has received an opinion of counsel (which
may be regular tax or other counsel to PECO Energy or an affiliate, but not
an employee thereof) experienced in such matters to the effect that (w)
holders of outstanding Preferred Securities will not recognize any gain or
loss for 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.
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VOTING RIGHTS
Except as provided below and under "-Merger, Consolidation, etc. of
PECO Energy Capital" and "Description of the Series D Guarantee-Amendments"
and as otherwise required by law and the Partnership Agreement, the holders
of the Series D Preferred Securities have no voting rights.
If (i) PECO Energy Capital fails to pay distributions in full on the
Preferred Securities for 18 consecutive months, (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 Debt
Securities 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 months 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 months, 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 distribution
periods for such Preferred Securities 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 (i) the Preferred Securities or
(ii) the Series D 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 Debt Securities.
If any proposed amendment to the Partnership Agreement provides for, or
the General Partner otherwise proposes to effect, any action which would
materially adversely affect the powers, preferences or special rights
attached to any series of Preferred Securities, whether by way of amendment
to the Partnership Agreement or otherwise, then the holders of such series
of Preferred Securities will be entitled to vote on such amendment or
action of the General Partner (but not on any other amendment or action)
and, in the case of an amendment or action which would equally adversely
affect the rights or preferences of any other Preferred Securities, such
Preferred Securities shall vote together as a class on such amendment or
action of the General Partner (but not on any other amendment or action),
and such amendment or action shall not be effective except with the
approval of the holders of not less than 66-2/3%
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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 Debt Securities 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 Debt Securities 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 Debt Securities shall be due and
payable or (iv) consent to any amendment, modification or termination of
the Indenture, where such consent shall be required, without, in each case,
obtaining the prior approval of the holders of at least 66-2/3% in aggregate
stated liquidation preference of all series of Preferred Securities
affected thereby, acting as a single class; provided, however, that where a
consent under the Indenture would require the consent of each holder
affected thereby, no such consent shall be given by the General Partner
without the prior consent of each holder of all series of Preferred
Securities affected thereby. The General Partner shall not revoke any
action previously authorized or approved by a vote of any series of
Preferred Securities. The General Partner shall notify all holders of the
Preferred Securities of any notice of default received from the Indenture
Trustee with respect to any series of Subordinated Debt Securities.
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 Debt Securities will be
treated as indebtedness
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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 D GUARANTEE
The following is a summary of certain provisions of the Series D
Guarantee which will be executed and delivered by PECO Energy concurrently
with the issuance of the Series D Preferred Securities. Reference is made
to the Series D Guarantee, which is filed as an exhibit to the Registration
Statement of which this Prospectus forms a part.
GENERAL
Under the Series D Guarantee, PECO Energy will agree to pay (i) any
accumulated and unpaid Distributions on the Series D 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 D
Preferred Securities called for redemption by PECO Energy Capital (as
described under "Series D Preferred Securities-Mandatory Redemption" and
"-Special Event Redemptions") 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 D Preferred Securities
and (b) the amount of assets of PECO Energy Capital legally available for
distribution to holders of Series D 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 D Preferred Securities or by causing PECO
Energy Capital to pay such amounts to such holders.
STATUS OF THE SERIES D GUARANTEE
The Series D 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 D Guarantee will constitute a guarantee of payment and not
of collection. The Series D Guarantee will be held by the General Partner
for the benefit of the holders of the Series D Preferred Securities. In
the event of the appointment of a Special Representative, the Special
Representative may enforce the Series D Guarantee. If no Special
Representative has been appointed to enforce the Series D Guarantee, the
General Partner will have the right to enforce the Series D Guarantee
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on behalf of the holders of the Series D Preferred Securities. The
holders of Capital Securities, together with the holders of the Series D
Preferred Securities other than the Trust, representing not less than 10%
in aggregate stated liquidation preference of the Series D Preferred
Securities will have the right to direct the time, method and place of
conducting any proceeding to enforce any remedy available in respect of the
Series D 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 D
Guarantee as above provided, any holder of Capital Securities representing
Series D Preferred Securities, and any holder of Series D Preferred
Securities other than the Trust, may institute a legal proceeding directly
against PECO Energy to enforce its rights under the Series D Guarantee
without first instituting a legal proceeding against PECO Energy Capital or
any other person or entity. The Series D 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 D Guarantee.
RELATIONSHIP AMONG SERIES D GUARANTEE, SERIES D SUBORDINATED DEBT
SECURITIES AND SERIES D PREFERRED SECURITIES
In addition to the obligations of PECO Energy under the Series D
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 Debt
Securities 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 D Guarantee and the Indenture, together with the
related covenants contained in the Partnership Agreement and PECO Energy's
obligations under the Subordinated Debt Securities, provide for PECO
Energy's full and unconditional guarantee of the Series D Preferred
Securities as set forth above.
CERTAIN COVENANTS OF PECO ENERGY
Under the Series D Guarantee, PECO Energy will covenant that, so long
as any Series D 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 D 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 D Preferred Securities (in which
case no vote will be required), the Series D Guarantee may
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be amended only with the prior approval of the holders of Capital
Securities representing not less than 66-2/3% of the aggregate stated
liquidation preference of the outstanding Series D Preferred Securities.
MERGER OF PECO ENERGY
So long as the Series D 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 D Guarantee.
TERMINATION OF THE SERIES D GUARANTEE
The Series D Guarantee will terminate and be of no further force and
effect upon full payment of the Redemption Price of all Series D Preferred
Securities or upon full payment of the amounts payable with respect to the
Series D Preferred Securities upon liquidation of PECO Energy Capital. The
Series D Guarantee will continue to be effective or will be reinstated, as
the case may be, if at any time any holder of Series D Preferred Securities
must restore payments of any sums paid under the Series D Preferred
Securities or the Series D Guarantee.
DESCRIPTION OF THE SERIES D SUBORDINATED
DEBT SECURITIES AND THE INDENTURE
The following is a summary of certain terms and provisions of the
Series D Subordinated Debt Securities 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 D Subordinated Debt Securities will be unsecured,
subordinated obligations of PECO Energy issued under the Indenture. The
Series D Subordinated Debt Securities will be in a principal amount equal
to the aggregate stated liquidation preference of the Series D 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 D Preferred Securities payable on the Distribution dates, will have
maturity and redemption provisions corresponding to the redemption
provisions of the Series D Preferred Securities and will be subject to
mandatory redemption upon the dissolution and liquidation of PECO Energy
Capital. The entire principal amount of the Series D Subordinated Debt
Securities will become due and payable, together with any accrued and
unpaid interest thereon, on ________, 2028.
PECO Energy will deliver the Series D Subordinated Debt Securities to
the General Partner to be held on behalf of the holders of the Series D
Preferred Securities. The Series D Subordinated Debt Securities 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 D 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 D Subordinated Debt Securities may
not be redeemed prior to maturity. PECO Energy Capital has the right to
redeem the Series D Preferred Securities at any time upon the occurrence of
a Tax Event, upon not less than 30 nor more than 60 days' notice (and not
less than 40 days' notice to the Trust), as described under "Description of
the Series D Preferred Securities-Special Event Redemptions." The Series D
Subordinated Debt Securities will be subject to mandatory redemption upon
the dissolution of PECO Energy Capital or upon redemption of the Series D
Preferred Securities.
If PECO Energy gives a notice of redemption in respect of Series D
Subordinated Debt Securities, then, on or prior to the redemption date,
PECO Energy shall deposit with the paying agent funds sufficient to pay the
Redemption Price and will give irrevocable instructions and authority to
pay the Redemption Price. If notice of redemption shall have been given,
if required, then the Series D Subordinated Debt Securities 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 D Subordinated
Debt Securities called for redemption and such Series D Subordinated Debt
Securities will no longer be deemed to be outstanding.
INTEREST
The Series D Subordinated Debt Securities will bear interest at an
annual rate of ____% plus Additional Interest (as defined under
"-Additional Interest"), if any, from the original date of issuance.
Interest will be payable semiannually in arrears on ____________ and
____________ of each year, commencing on ____________, 1998, to PECO Energy
Capital.
PECO Energy will make additional interest payments on any overdue
installment of interest on the Series D Subordinated Debt Securities to
PECO Energy Capital at the same rate per annum as the annual rate payable
on the Series D Subordinated Debt Securities.
Interest payments on the Subordinated Debt Securities 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 Mandatorily 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.
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OPTION TO EXTEND INTEREST PAYMENT PERIOD
Under the Indenture, PECO Energy shall have the right at any time, so
long as an Event of Default under the Indenture has not occurred and is
continuing, to extend the interest payment period for all Subordinated Debt
Securities 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 Debt Securities. At the end of the Extension
Period, PECO Energy shall pay all interest then accrued and payable on the
Series D Subordinated Debt Securities (together with interest thereon to
the extent permitted by applicable law at the rate per annum borne by the
Series D Subordinated Debt Securities). During any such Extension Period,
neither PECO Energy nor any majority owned subsidiary of PECO Energy shall
declare or pay any dividend on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its capital stock (other than
dividends by wholly owned subsidiaries). Prior to the termination of any
such Extension Period, PECO Energy may 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 any national securities
exchange or other applicable self-regulatory organization of the record
date or the date distributions on the Preferred Securities 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 Debt Securities, including the Series D Subordinated Debt
Securities, 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 Debt Securities 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
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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
Debt Securities), 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 Debt
Securities 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 Debt Securities, whether
pursuant to the terms of the Subordinated Debt Securities 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 Debt Securities) 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 Debt Securities
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 Debt
Securities) or the Special Representative to take any action to accelerate
the maturity of the Subordinated Debt Securities 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 Debt
Securities) is entitled to receive any payment from PECO Energy of
principal of or interest on the Subordinated Debt Securities.
Upon the payment in full of all Senior Indebtedness, PECO Energy
Capital (as holder of the Subordinated Debt Securities) (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 Debt Securities 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
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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 D 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 66-2/3% of the aggregate stated liquidation preference of
the Preferred Securities.
MODIFICATION OF THE INDENTURE
The Indenture contains provisions permitting PECO Energy and the
Indenture Trustee, without the consent of the Special Representative or
PECO Energy Capital, to modify the Indenture or any supplemental indenture:
(i) to cure any ambiguity, defect or inconsistency; (ii) to comply with the
provisions of the Indenture regarding a successor to PECO Energy; (iii) to
provide for uncertificated Subordinated Debt Securities in addition to or
in place of certificated Subordinated Debt Securities; (iv) to make any
other change that does not adversely affect the rights of any holder of the
Subordinated Debt Securities; (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 Debt Securities.
The Indenture contains provisions permitting PECO Energy and the
Indenture Trustee, with the consent of the Special Representative or PECO
Energy Capital at the direction of the holders of not less than 66-2/3% of the
aggregate stated liquidation preference of the Preferred Securities, to
modify the Indenture or any supplemental indenture or the rights of the
holders of the Subordinated Debt Securities issued under the Indenture;
provided that, no such modification, without the consent of each holder of
the Subordinated Debt Securities 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 Debt Securities, (ii) reduce the
principal amount of, or premium or rate of interest, if any, on, the
Subordinated Debt Securities, (iii) reduce the amount of principal of
Subordinated Debt Securities payable upon acceleration of the maturity
thereof, (iv) make the Subordinated Debt Securities payable in money or
securities other than as stated in the Subordinated Debt Securities, (v)
impair the right to institute suit for the enforcement of any payment on or
with respect to the Subordinated Debt Securities, (vi) adversely change the
redemption provisions of the Subordinated Debt Securities, (vii) adversely
affect the rights of the holders of the Subordinated Debt Securities with
respect to subordination or (viii) reduce the principal amount of the
holders of the Subordinated Debt Securities 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 ten days in payment of any interest on any series of the Subordinated
Debt Securities (other than the payment of interest during an Extension
Period); (ii) default in payment of principal of (or premium, if any, on)
any Subordinated Debt Securities; (iii) default for 60 days after notice in
the performance of any other covenant or agreement in the Indenture or any
series of Subordinated Debt Securities 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 Debt Securities shall become immediately due and payable), the
Indenture Trustee, PECO Energy Capital (as holder of the Subordinated Debt
Securities) or the Special Representative may declare the principal of all
the Subordinated Debt Securities to be due and payable. Under certain
circumstances, a declaration of acceleration with respect to Subordinated
Debt Securities may be rescinded and past defaults (except, unless
theretofore cured, a default in the payment of principal of or interest on
the Subordinated Debt Securities) 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 D 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 D
Subordinated Debt Securities, to declare the principal and interest on the
Series D Subordinated Debt Securities due and payable and to enforce the
obligations of PECO Energy under the Series D Subordinated Debt Securities
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 Debt Securities and the Indenture and (ii) immediately prior
to and after giving effect to such transaction, no Event of Default, and no
event which, after notice or lapse of time or both, would become an Event
of Default, shall have happened and be continuing.
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DEFEASANCE AND DISCHARGE
Under the terms of the Indenture, PECO Energy will be deemed to have
paid and discharged the entire indebtedness of the Series D Subordinated
Debt Securities 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 D Subordinated Debt
Securities then outstanding on the dates such payments are due in
accordance with the terms of the Series D Subordinated Debt Securities.
INFORMATION CONCERNING THE INDENTURE TRUSTEE
Subject to the provisions of the Indenture relating to its duties, the
Indenture Trustee will be under no obligation to exercise any of its rights
or powers under the Indenture, unless the Indenture Trustee receives
security and indemnity reasonably satisfactory to it. Subject to such
provision for indemnification, the holders of a majority in principal
amount of the Subordinated Debt Securities 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, LLP, 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 Capital Securities. Unless otherwise stated, this
summary deals only with Capital Securities 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
Capital Securities 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 (the "Code"), Treasury regulations
thereunder and administrative and judicial interpretations thereof, as of
the date hereof, all of which are subject to change. Prospective
purchasers should particularly note that any such change could have
retroactive application to Capital Securities acquired through this
offering.
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This summary assumes that Capital Securities are held as capital
assets, within the meaning of section 1221 of the Code, and does not
address all of the tax consequences that may be relevant to a particular
holder of Capital Securities ("Securityholder") in light of the
Securityholder's personal circumstances, or to certain types of
Securityholders (such as certain financial institutions, dealers in
securities or commodities, insurance companies, regulated investment
companies, personal holding companies, corporations subject to the
alternative minimum tax, tax-exempt organizations or persons who hold
Capital Securities as positions in a "straddle" or as part of a "hedging,"
"conversion" or "constructive sale" transaction for United States federal
income tax purposes). Also not addressed are the consequences under state,
local and foreign tax laws or the tax consequences to subsequent
Securityholders.
ALL PROSPECTIVE INVESTORS ARE ADVISED TO CONSULT THEIR TAX ADVISERS
REGARDING THE FEDERAL INCOME TAX CONSEQUENCES OF THE OWNERSHIP AND
DISPOSITION OF CAPITAL SECURITIES 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 Capital Securities, Ballard Spahr
Andrews & Ingersoll, LLP 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 Securityholder will be considered the owner of a
pro rata portion of the Series D Preferred Securities held by the Trust.
As a further consequence, each Securityholder will be required to include
in gross income as fully taxable interest income his pro rata share of the
income accrued on the Series D Subordinated Debt Securities held by PECO
Energy Capital and allocated by the Trust. Such income should not exceed
Distributions received by the Securityholders on the Capital Securities
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 D Subordinated Debt Securities 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
there is no Extension Period, cash Distributions received by an initial
Securityholder for any semiannual interest period should equal the sum of
the daily accruals of income for such interest period.
Under the applicable Treasury Regulations, a "remote" contingency that
stated interest will not be timely paid on the Series D Subordinated Debt
Securities will be ignored in determining whether the
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Series D Subordinated Debt Securities are issued with original issue
discount. PECO Energy believes that the likelihood of it exercising its
option to defer payments of interest on the Series D Subordinated Debt
Securities is remote since, among other things, exercising that option
would prevent PECO Energy from declaring dividends on any of its capital
stock. Accordingly, PECO Energy intends to take the position, based on the
advise of tax counsel, that the Series D Subordinated Debt Securities will
not be considered to be issued with original issue discount.
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 D Subordinated Debt
Securities 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 D Subordinated Debt
Securities 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 ____________ and ____________ of each year.
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 Capital Securities prior to the record
date for the payment of Distributions following such Extension Period will
include interest in gross income but will not receive any cash related
thereto from the Trust. The tax basis of a Series D 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 OR DISTRIBUTION OF SERIES D PREFERRED SECURITIES
The receipt of Series D Preferred Securities by a Securityholder in
exchange for Capital Securities (and vice versa) at the option of the
Securityholder or upon termination of the Trust will not be a taxable
event. The Securityholder's tax basis and holding period for the Series D
Preferred Securities immediately after such exchange or distribution will
equal the Securityholder's tax basis and holding period for the Capital
Securities (or Series D Preferred Securities, as applicable) surrendered in
such exchange or distribution. Income earned from the Series D Preferred
Securities (rather than the Capital Securities) will be reported annually
to the Securityholder and to the Internal Revenue Service on Schedule K-1
and not on Form 1099.
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DISPOSITION OF THE CAPITAL SECURITIES
Gain or loss will be recognized on a sale, including a redemption for
cash, of Capital Securities in an amount equal to the difference between
the amount realized and the Securityholder's tax basis in his pro rata
share of Series D Preferred Securities represented by such Capital
Securities. Gain or loss recognized by a Securityholder on the sale or
exchange of Capital Securities held for (a) more than one year but not more
than eighteen months generally will be taxable as mid-term capital gain or
loss and (b) more that eighteen months generally will be taxable as
long-term capital gain or loss.
STATE OF PENNSYLVANIA PERSONAL PROPERTY TAXES
Personal property taxes are no longer being imposed in the State of
Pennsylvania on intangible personal property such as the Capital
Securities.
BACKUP WITHHOLDING
Under the backup withholding provisions of the Code and applicable
Treasury regulations, a Securityholder may be subject to backup withholding
at the rate of 31% with respect to interest paid on, original issue
discount accrued with respect to, or the proceeds of a sale, exchange or
redemption of the Series D Preferred Securities or the Capital Securities,
unless such Securityholder (a) is a corporation or comes within certain
other exempt categories and when required demonstrates this fact or (b)
provides a taxpayer identification number, certifies as to no loss of
exemption from backup withholding and otherwise complies with applicable
requirements of the backup withholding rules. The amount of any backup
withholding from a payment to a Securityholder will be allowed as a credit
against the Securityholder's federal income tax liability and may entitle
such Securityholder to a refund, provided that the required information is
furnished to the Internal Revenue Service ("IRS").
SPECIAL TAX RULES APPLICABLE TO FOREIGN SECURITYHOLDERS
For purposes of the following discussion, a "Foreign Securityholder" is
any securityholder who is not (i) a citizen or resident of the United
States, (ii) a corporation, partnership or other entity created or
organized in or under the laws of the United States, any state or any
political subdivision thereof, (iii) an estate the income of which is
subject to United States federal income taxation regardless of source, or
(iv) a trust (A) over the administration of which a court within the United
States is able to exercise primary supervision and (B) all substantial
decisions of which one or more United States persons have the authority to
control.
Income received by a Foreign Securityholder in the form of interest and
original issue discount on the Series D Preferred Securities will be
subject to a United States federal withholding tax at a 30% rate upon the
actual payment of interest or original issue discount except as described
below and except where an applicable tax treaty provides for the reduction
or elimination of such withholding tax. A Foreign Securityholder generally
will be taxable in the same manner as a United States corporation or
resident with respect to interest or original issue discount income if such
income is effectively connected with the conduct of a trade or business in
the United States. Such effectively connected income received by a Foreign
Securityholder that is a corporation may in certain circumstances be
subject to an additional "branch profits tax" at a 30% rate, or if
applicable, a lower treaty rate.
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Payments of interest and original issue discount on the Series D
Preferred Securities received by a Foreign Securityholder on or prior to
December 31, 1998, will not be subject to United States federal withholding
tax provided that (a) the Foreign Securityholder does not actually or
constructively own 10% or more of the total combined voting power of all
classes of stock of PECO Energy entitled to vote, (b) the Securityholder is
not a controlled foreign corporation that is related to PECO Energy through
stock ownership, and (c) either (1) the beneficial owner of the Series D
Preferred Securities, under penalties of perjury, provides PECO Energy or
its agent with its name and address and certifies that it is not a United
States person or (2) 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") certifies to
PECO Energy or its agent, under penalties of perjury, that such a statement
has been received from the beneficial owner by its or another Financial
Institution and furnishes to PECO Energy or its agent a copy thereof.
Backup withholding and information reporting also generally will not apply
to payments of interest and original discount on or prior to December 31,
1998, if the certification described above is received, provided the payor
does not have actual knowledge that the Securityholder is a United States
person.
Payments of interest and original issue discount received by a Foreign
Securityholder after December 31, 1998, will not be subject to United
States federal withholding tax (or to backup withholding and information
reporting) provided that requirements (a) and (b) of the preceding
paragraph are satisfied and, in general, (1) PECO Energy or its paying
agent can reliably associate the payment with documentation upon which it
can rely to treat the payment as made to a foreign beneficial owner under
Treasury regulations issued under section 1441 of the Code; (2) PECO Energy
or its paying agent can reliably associate the payment with a withholding
certificate from a person claiming to be a withholding foreign partnership
and the foreign partnership can reliably associate the payment with
documentation upon which it can rely to treat the payment as made to a
foreign beneficial owner in accordance with such Treasury regulations; (3)
PECO Energy or its paying agent can reliably associate the payment with a
withholding certificate from a person representing to be a "qualified
intermediary" that has assumed primary withholding responsibility under
such Treasury regulations and the qualified intermediary can reliably
associate the payment with documentation upon which it can rely to treat
the payment as made to a foreign beneficial owner in accordance with its
agreement with the IRS; (4) PECO Energy or its paying agent can reliably
associate the payment with a withholding certificate described in the
Treasury Regulations from a person claiming to be a U.S. branch of a
foreign bank or insurance company subject to regulatory jurisdiction by the
Federal Reserve Board or by the National Association of Insurance
Commissioners or the insurance department of a state, a territory or the
District of Columbia under which the U.S. branch agrees to be treated as a
U.S. person with respect to that payment; or (5) PECO Energy or its paying
agent receives a statement, under penalties of perjury from an authorized
representative of a Financial Institution stating that the Financial
Institution has received from the beneficial owner a withholding
certificate described in such Treasury regulations or that it has received
from another Financial Institution a similar statement that it, or another
Financial Institution acting on behalf of the beneficial owner, has
received such a withholding certificate from the beneficial owner. In
general, it will not be necessary for a Foreign Securityholder to obtain or
furnish a United States taxpayer identification number to PECO Energy or
its paying agent in order to claim any of the foregoing exemptions from
United States withholding tax on payments of interest and original issue
discount.
A Foreign Securityholder generally will not be subject to United States
federal income or withholding tax on gain realized on the sale or exchange
of the Series D Preferred Securities or the
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Capital Securities, unless (i) the Foreign Securityholder is an
individual who is present in the United States for 183 days or more during
the taxable year and as to whom such gain is from United States sources or
(ii) the gain is effectively connected with a United States trade or
business of the holder.
The payment of the proceeds of the sale of the Series D Preferred
Securities or the Capital Securities to or through the United States office
of a broker will be subject to information reporting and possible backup
withholding at a rate of 31% unless the owner certifies its non-United
States status under penalties of perjury or otherwise establishes an
exemption in accordance with applicable Treasury regulations. The payment
of the proceeds of the sale of the Series D Preferred Stock or the Capital
Securities to or through the foreign office of a broker generally will not
be subject to this backup withholding tax. However, in the case of the
payment of proceeds from the disposition of the Series D Preferred
Securities or the Capital Securities through a foreign office of a broker
that is a United States person or a "United States related person," the
applicable Treasury regulations require information reporting on the
payment unless the broker has documentary evidence in its files that the
owner is a non-United States person and the broker has no actual knowledge
to the contrary. For this purpose, a "United States related person" is (i)
a "controlled foreign corporation" for United States federal income tax
purposes, or (ii) a foreign person 50% or more of whose gross income from
all sources for a specified period is derived from activities that are
effectively connected with the conduct of a United States trade or
business. Any amounts withheld under the backup withholding rules from a
payment to a Foreign Securityholder will be allowed as a refund or a credit
against such Foreign Securityholder's United States federal income tax,
provided that the required information is furnished to the IRS.
OTHER TAX CONSIDERATIONS
In the opinion of Ballard Spahr Andrews & Ingersoll, LLP, under current
law, interest on the Series D Subordinated Debt Securities is deductible by
PECO Energy. In the past, the Clinton Administration had 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
15 years and is not reflected as indebtedness on such issuer's consolidated
balance sheet. Because the term of the Series D Subordinated Debt
Securities exceeds 15 years, if such proposal were to become effective
retroactively, PECO Energy would be precluded from deducting interest on
the Series D Subordinated Debt Securities. There can be no assurance,
however, that a legislative proposal which would affect the ability of PECO
Energy to deduct interest on the Series D Subordinated Debt Securities
might not be adopted which, in turn, might give rise to a Tax Event and,
accordingly, the General Partner's optional right to redeem the Series D
Preferred Securities, as described under "Description of the Series D
Preferred Securities-Special Event Redemptions."
ERISA CONSIDERATIONS
FIDUCIARIES UNDER ERISA
A fiduciary of a pension, profit sharing or other employee pension
benefit plan that is intended to be tax-qualified under section 401(a) of
the Code (a "Qualified Plan") is subject to certain requirements under the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
including the discharge of duties solely in the interest of, and for the
exclusive purpose of providing benefits to, the
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Qualified Plan's participants and beneficiaries. A fiduciary is
required to perform the fiduciary's duties with the skill, prudence and
diligence of a prudent person acting in a like capacity, to diversify
investments so as to minimize the risk of large losses and to act in
accordance with the Qualified Plan's governing documents.
Fiduciaries with respect to a Qualified Plan include any persons who
exercise or possess any authority or control with respect to the management
or disposition of the funds or other property of the Qualified Plan. For
example, any person who is responsible for choosing a Qualified Plan's
investments, or who is a member of a committee that is responsible for
choosing a Qualified Plan's investments, is a fiduciary of that Qualified
Plan. Also, an investment professional whose advice will serve as one of
the primary bases for a Qualified Plan's investment decisions may be a
fiduciary of the Qualified Plan, as may any other person with special
knowledge or influence with respect to a Qualified Plan's investment or
administrative activities.
While the owner of an IRA is generally treated as a fiduciary of the
IRA under the Code, IRAs generally are not subject to ERISA's fiduciary
duty rules. Also, where a participant in a Qualified Plan exercises
control over the participant's individual account in the Qualified Plan in
a self-directed investment arrangement that meets the requirements of
Section 404(c) of ERISA, in general no person who would otherwise be a
fiduciary of the Qualified Plan may be held responsible for the
consequences of the participant's investment decisions. A fiduciary may
still, however, be held responsible for its decision to offer a particular
investment option under a Qualified Plan. Moreover, certain Qualified
Plans of sole proprietors or partnerships in which at all times (before and
after the investment) the only participants are the sole proprietor and his
spouse or the partners and their spouses, certain Qualified Plans of
corporations in which at all times (before and after the investment) the
only participant(s) is or are an individual and/or his spouse who own(s)
100% of the corporation's stock, are generally not subject to ERISA's
fiduciary duty rules, although they are subject to the Code's prohibited
transaction rules, explained below. Finally, governmental plans (as
defined in Section 3(32) of ERISA), certain church plans (as defined in
Section 3(33) of ERISA) and foreign plans (as described in Section 4(b)(4)
of ERISA) are not subject to the requirements of ERISA or Section 4975 of
the Code.
A person subject to ERISA's fiduciary rules with respect to a Qualified
Plan should consider those rules in the context of the particular
circumstances of the Qualified Plan before authorizing an investment of a
portion of the Qualified Plan's assets in Capital Securities.
PROHIBITED TRANSACTIONS UNDER ERISA AND THE CODE
Code Section 4975 (which applies to all Qualified Plans, except as
noted above, and IRAs) and Section 406 of ERISA (which does not apply to
IRAs or to certain Qualified Plans that, under the rules summarized above,
are not subject to ERISA's fiduciary rules) prohibit Qualified Plans and
IRAs from engaging in certain transactions involving "plan assets" with
parties that are "disqualified persons" under the Code or parties in interest
under ERISA ("Disqualified Persons") unless an exemption is available for a
particular transaction. Disqualified Persons include fiduciaries of the
Qualified Plan or IRA, officers, directors, shareholders and other owners
of the company sponsoring the Qualified Plan and natural persons and legal
entities sharing certain family or ownership relationships with other
Disqualified Persons.
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"Prohibited transactions" include: (1) any direct or indirect transfer
or use of a Qualified Plan's or IRA's assets to or for the benefit of a
Disqualified Person; (ii) any act by a fiduciary that involves the use of a
Qualified Plan's or IRA's assets in the fiduciary's individual interest or
for the fiduciary's own account; and (iii) any receipt by a fiduciary of
consideration for his or her own personal account from any party dealing
with a Qualified Plan or IRA in connection with a transaction involving the
assets of the Qualified Plan or the IRA. Under ERISA, a Disqualified
Person that engages in a prohibited transaction will be required to
disgorge any profits made in connection with the transaction and will be
required to compensate any Qualified Plan that was a party to the
prohibited transaction for any losses sustained by the Qualified Plan. In
addition, ERISA authorizes additional penalties and further relief. Code
Section 4975 imposes excise taxes on a Disqualified Person that engages in
a prohibited transaction with a Qualified Plan or IRA.
Fiduciaries of, and other Disqualified Persons with respect to,
Qualified Plans and IRAs should be alert to the potential for prohibited
transactions that may occur in the context of a particular Qualified Plan's
or IRA's decision to purchase Capital Securities.
PLAN ASSETS
If the Trust assets were determined under ERISA or the Code to be "plan
assets" of Qualified Plans or IRAs holding Capital Securities, fiduciaries
of such Qualified Plans and IRAs might under certain circumstances be
subject to liability for actions taken by the Trust. Moreover, fiduciaries
with responsibilities to Qualified Plans (other than IRAs) might be deemed
to have improperly delegated their fiduciary responsibilities to the Trust
in violation of ERISA.
Although under certain circumstances ERISA and the Code, as interpreted
by the Department of Labor in currently effective regulations, apply a
"look-through" rule under which the assets of an entity in which a Qualified
Plan or IRA has made an equity investment may generally constitute "plan
assets", the applicable regulations except investments in certain publicly
registered securities from the application of the "look-through" principle.
In order to qualify for the exception described above, the securities
in question must be: (i) freely transferable; (ii) owned by at least 100
investors independent of the issuer and of one another; and (iii) either
(a) part of a class of securities registered under Section 12(b) or 12(g)
of the Securities Exchange Act, or (b) sold as part of a public offering
pursuant to an effective registration statement under the Securities Act
and registered under the Securities Exchange Act within 120 days (or such
later time as may be allowed by the Commission) after the end of the
issuer's fiscal year during which the offering occurred.
The Trust currently anticipates that the Capital Securities will be
"freely transferable" within the meaning of the Department of Labor
regulations, and will be owned by at least 100 investors independent of the
issuer and of one another will subscribe for the purchase of the Capital
Securities. Finally, no Capital Securities will be sold except pursuant to
an effective registration statement under the Securities Act, and the Trust
intends to make the required filings under the Securities Exchange Act.
Therefore, the Trust should qualify for the exception, so that the Trust
assets should not be "plan assets" of any Qualified Plan or IRA investor, and
the Trust's underlying assets should not be treated as "plan assets"
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of Qualified Plan or IRA investors for purposes of determining whether
any prohibited transaction has occurred.
OTHER ERISA CONSIDERATIONS
In addition to the considerations discussed above in connection with
the "plan assets" issue, a fiduciary's decision to cause a Qualified Plan or
IRA to acquire Capital Securities should involve, among other factors,
considerations that include whether: (i) the investment is in accordance
with the documents and instruments governing the Qualified Plan or IRA;
(ii) the purchase is prudent; (iii) the investment will provide sufficient
cash distributions in light of the Qualified Plan's likely required benefit
payments and other needs for liquidity; (iv) the investment is made solely
in the interests of the plan participants; and (v) the fair market value of
the Capital Securities will be sufficiently ascertainable, with sufficient
frequency, to enable the Qualified Plan to value its assets on an annual
basis in accordance with the Qualified Plan's rules and policies.
The foregoing discussion is general in nature and is not intended to be
all inclusive. Accordingly, prospective purchasers of Capital Securities
are urged to consult their own legal counsel or advisors with respect to
the considerations associated with the acquisition and ownership of Capital
Securities under ERISA and the Code.
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 Salomon Brothers Inc and Merrill Lynch, Pierce, Fenner and Smith
Incorporated are acting as Representatives (the "Representatives"), has
severally agreed to purchase from the Trust, the respective number of
Capital Securities set forth opposite its name below:
Number of
Underwriter Capital Securities
----------- ------------------
Salomon Brothers Inc....................
Merrill Lynch, Pierce, Fenner and Smith
Incorporated.........................
_____________
Total ..................................
=============
Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and pay for all of the Capital
Securities offered hereby, if any are taken.
The Underwriters propose to offer the Capital Securities 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 Capital Security. The
Underwriters may allow, and such dealers may reallow, a concession not in
excess of $____ per Capital Security to certain brokers and
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dealers. After the Capital Securities are released for sale to the
public, the offering price and other selling terms may from time to time be
varied by the Representatives.
Under the Underwriting Agreement, PECO Energy has agreed to pay to the
Underwriters an underwriting commission of $10 per Capital Security.
Prior to this offering, there has been no public market for the Capital
Securities. An application has been made to list the Capital Securities on
the New York Stock Exchange. If the application is approved, trading of
the Capital Securities on the New York Stock Exchange is expected to
commence within a 30-day period after the initial delivery thereof. The
Representatives have advised PECO Energy that they intend to make a market
in the Capital Securities 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 Capital Securities.
In connection with this offering and in compliance with applicable law,
the Underwriters may effect transactions which stabilize, maintain or
otherwise affect the market price of the Capital Securities at levels above
those which might otherwise prevail in the open market. Such transactions
may include placing bids for the Capital Securities or effecting purchases
of the Capital Securities for the purpose of pegging, fixing or maintaining
the price of the Capital Securities or for the purpose of reducing a
syndicate short position created in connection with the offering. In
addition, the contractual arrangements among the Underwriters include a
provision whereby, if the Representatives purchase Capital Securities in
the open market for the account of the underwriting syndicate and the
Capital Securities purchased can be traced to a particular Underwriter or
member of the selling group, the underwriting syndicate may require the
Underwriter or selling group member in question to purchase the Capital
Securities in question at the cost price to the syndicate or may recover
from (or decline to pay to) the Underwriter or selling group member in
question the selling concession applicable to the Capital Securities in
question. The Underwriters are not required to engage in any of these
activities and any such activities, if commenced, may be discontinued at
any time.
PECO Energy and 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
Capital Securities 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 Capital Securities, Preferred Securities or any
preferred stock or any other securities of PECO Energy which are
substantially similar to the Capital Securities or the Series D 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.
PECO Energy and PECO Energy Capital have agreed to indemnify the
several Underwriters against certain liabilities, including liabilities
under the Securities Act.
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LEGAL MATTERS
Certain matters of Delaware law relating to the validity of the Series
D Preferred Securities and the Capital Securities 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 D Guarantee and the Series D
Subordinated Debt Securities will be passed upon on behalf of PECO Energy
by Ballard Spahr Andrews & Ingersoll, LLP, 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, LLP and Drinker Biddle &
Reath LLP will rely on Richards, Layton & Finger, P.A. as to certain
matters of Delaware law.
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, 1997. 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 DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER
MADE HEREBY EXCEPT AS CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS, AND IF GIVEN OR MADE, NO SUCH INFORMATION OR REPRESENTATIONS
SHOULD BE RELIED UPON AS HAVING BEEN AUTHORIZED BY PECO ENERGY, PECO ENERGY
CAPITAL OR THE TRUST. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL
OR A SOLICITATION OF AN OFFER TO BUY THE CAPITAL SECURITIES BY ANYONE IN
ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR
IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO
DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION.
------------
TABLE OF CONTENTS
Page
AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . .
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE . . . . . . . . . . .
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
RISK FACTORS. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PECO ENERGY . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PECO ENERGY CAPITAL . . . . . . . . . . . . . . . . . . . . . . . . .
THE TRUST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
COVERAGE RATIOS . . . . . . . . . . . . . . . . . . . . . . . . . . .
ACCOUNTING TREATMENT. . . . . . . . . . . . . . . . . . . . . . . . .
USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . .
DESCRIPTION OF THE CAPITAL SECURITIES . . . . . . . . . . . . . . . .
DESCRIPTION OF THE SERIES D PREFERRED SECURITIES. . . . . . . . . . .
DESCRIPTION OF THE SERIES D GUARANTEE . . . . . . . . . . . . . . . .
DESCRIPTION OF THE SERIES D SUBORDINATED
DEBT SECURITIES AND THE INDENTURE . . . . . . . . . . . . . . . . .
UNITED STATES TAXATION. . . . . . . . . . . . . . . . . . . . . . . .
ERISA CONSIDERATIONS. . . . . . . . . . . . . . . . . . . . . . . . .
UNDERWRITING. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$78,105,000
PECO ENERGY CAPITAL TRUST III
____% CAPITAL TRUST PASS-THROUGH
SECURITIES(SM) (TRUPS(R))
(LIQUIDATION PREFERENCE $1,000 PER CAPITAL SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED, TO THE
EXTENT PECO ENERGY CAPITAL, L.P. HAS FUNDS
AS SET FORTH HEREIN BY
PECO ENERGY COMPANY
[LOGO]
SALOMON SMITH BARNEY
MERRILL LYNCH & CO.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.*
Filing Fees - Securities and Exchange Commission . $ 23,041
Printing . . . . . . . . . . . . . . . . . . . . . 75,000
Legal fees and Blue Sky fees . . . . . . . . . . . 100,000
Accounting fees. . . . . . . . . . . . . . . . . . 25,000
Trustee fees and expenses. . . . . . . . . . . . . 10,000
Rating agencies fees and expenses. . . . . . . . . 40,000
Miscellaneous. . . . . . . . . . . . . . . . . . . 46,959
--------
Total . . . . . . . . . . . . . . . . . . . . $320,000
========
*Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
PECO Energy's Bylaws provide that PECO Energy is obligated to indemnify
directors and officers and other persons designated by the Board of
Directors against any liability including any damage, judgment, amount paid
in settlement, fine, penalty, cost or expense (including, without
limitation, attorneys' fees and disbursements) incurred in connection with
any proceeding. The Bylaws provide that no indemnification shall be made
where the act or failure to act giving rise to the claim for
indemnification is determined by arbitration or otherwise to have
constituted willful misconduct or recklessness or attributable to receipt
from PECO Energy of a personal benefit to which the recipient is not
legally entitled.
Section 518 of the Pennsylvania Business Corporation Law of 1988
provides that indemnification pursuant to a bylaw may be granted for any
action taken or any failure to take any action, absent a court
determination of willful misconduct or recklessness, and may be made
whether or not the corporation would have the power to indemnify the person
under any other provision of law.
Pursuant to the Pennsylvania Business Corporation Law of 1988, 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
II-1
<PAGE>
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 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 Capital Securities, except
for any liability arising out of gross negligence, bad faith or willful
misconduct on the part of any such person or persons.
ITEM 16. EXHIBITS
Exhibit
Numbers Exhibit
- ------- -------
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 26, 1998 (incorporated by reference to Exhibit 3-2 of PECO
Energy's 1997 Annual Report on Form 10-K, File No. 1-1401).
3-3 Certificate of Limited Partnership of PECO Energy Capital,
L.P. (incorporated by reference to Registration Statement Nos.
33-53785 and 33-53785-01).
4-1 Amended and Restated Limited Partnership Agreement of PECO
Energy Capital (incorporated by reference to Exhibit 10-7 of PECO
Energy's 1994 Annual Report on Form 10-K, File No. 1-1401).
4-2 Amendment No. 1 to Amended and Restated Limited Partnership
Agreement of PECO Energy Capital (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 Capital (incorporated by reference to
Exhibit 10-9 of PECO Energy's 1995 Annual Report on Form 10-K,
File No. 1-1401).
4-4 Amendment No. 3 to Amended and Restated Limited Partnership
Agreement of PECO Energy Capital.
II-2
<PAGE>
4-5 Form of Action of General Partner creating Series D
Preferred Securities.
4-6 Form of Series D Preferred Security Certificate
(included in Exhibit 4-1).
4-7 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).
4-8 Form of Series D Subordinated Debt Security
(included in Exhibit 4-11).
4-9 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).
4-10 Second Supplemental Indenture to Subordinated Debenture
Indenture, dated as of June 1, 1997
(incorporated by reference to Exhibit 4-6 of
PECO Energy's 1997 Annual Report on Form 10-K,
File No. 1-1401).
4-11 Form of Third Supplemental Indenture to
Subordinated Debenture Indenture.
4-12 Certificate of Trust for the Trust.
4-13 Trust Agreement for the Trust.
4-14 Form of Amended and Restated Trust Agreement for the Trust.
4-15 Form of Payment and Guarantee Agreement.
4-16 Form of Certificate Representing the Capital
Securities (included in Exhibit 4-14).
5-1 Opinion of Ballard Spahr Andrews & Ingersoll, LLP
relating to the legality of the Series D
Subordinated Debt Securities and Series D Guarantee,
including consent.
5-2 Opinion of Richards, Layton & Finger, P.A. relating to
the legality of the Capital Securities and
the Series D Preferred Securities, including consent.
8 Opinion of Ballard Spahr Andrews & Ingersoll, LLP as to tax matters.
12-1 Computations of PECO Energy's Ratio of Earnings
to Fixed Charges and Ratio of Earnings to
Combined Fixed Charges and Preferred Stock Dividend
Requirements for the years ended
December 31, 1993-1997 (incorporated by reference to
Exhibits 12-1 and 12-2, respectively,
of PECO Energy's 1997 Annual Report on Form 10-K, File No. 1-1401).
13 PECO Energy's Annual Report on Form 10-K for the
fiscal year ended December 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 1997 Annual Report on Form 10-K, File No. 1-1401).
23-1 Consent of Coopers & Lybrand, L.L.P.
II-3
<PAGE>
23-2 Consent of Ballard Spahr Andrews & Ingersoll, LLP
(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 Third Supplemental Indenture.
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 to 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.
(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 registrants 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.
(6) The undersigned registrants hereby undertake: (i) To file, during
any period in which any offers or sales are being made, a post-effective
amendment to the registration statement:
II-4
<PAGE>
(a) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(b) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective registration statement; and
(c) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(ii) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offering therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(iii) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
II-5
<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 March 16, 1998.
PECO Energy Company
By: /s/ C.A. McNeill, Jr.
_______________________________
C.A. McNeill, Jr.
Chairman of the Board, 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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ C.A. McNeill, Jr. Chairman of the Board, March 16, 1998
----------------------- President and Chief Executive
C.A. McNeill, Jr. Officer
(Principal Executive Officer)
/s/ M.J. Egan Senior Vice President - March 16, 1998
----------------------- Finance and Chief Financial
M.J. Egan Officer (Principal Financial
and Accounting Officer)
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 James A. Hagen
Daniel L. Cooper Kinnaird R. McKee
M. Walter D'Alessio Joseph J. McLaughlin
G. Fred DiBona, Jr. John M. Palms
R. Keith Elliott Joseph F. Paquette, Jr.
Richard G. Gilmore Ronald Rubin
Richard H. Glanton Robert Subin
By: /s/ C.A. McNeill, Jr. March 16, 1998
--------------------------
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 March 16, 1998.
PECO Energy Capital, L.P.
By: PECO Energy Capital Corp.,
its general partner
By: /s/ J.B. Mitchell
---------------------------
J.B. Mitchell
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ J.B. Mitchell President and Director March 16, 1998
---------------- (Principal Executive Officer
J.B. Mitchell and Principal Financial and
Accounting Officer)
/s/ M.J. Egan Director March 16, 1998
-----------------
M.J. Egan
/s/ G.A. Massih III Director March 16, 1998
-----------------
G.A. Massih III
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant, PECO Energy Capital Trust III, 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 March 16, 1998.
PECO Energy Capital Trust III
By: PECO Energy Capital, L.P.,
as its grantor
By: PECO Energy Capital Corp.,
as general partner
By: /s/ J.B. Mitchell
-------------------------
J.B. Mitchell
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ J.B. Mitchell (Principal Executive March 16, 1998
---------------- Officer and Principal
J.B. Mitchell Financial and
Accounting Officer)
/s/ M.J. Egan Director March 16, 1998
----------------
M.J. Egan
/s/ G.A. Massih III Director March 16, 1998
----------------
G.A. Massih III
$78,105,000
PECO ENERGY CAPITAL TRUST III
PECO ENERGY CAPITAL, L.P.
PECO ENERGY COMPANY
CAPITAL TRUST PASS-THROUGH SECURITIES
representing an equal number of
__% Cumulative Preferred Securities, Series D
of
PECO Energy Capital, L.P.
UNDERWRITING AGREEMENT
______, 1998
SALOMON BROTHERS INC
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
As Representatives of the Several Underwriters
c/o SALOMON BROTHERS INC
Seven World Trade Center
New York, NY 10048
Dear Sirs:
PECO Energy Capital Trust III, 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 78,105 Capital Trust Pass-through Securities (the
"Capital Securities"), representing an equal number of the
Company's __% Cumulative Preferred Securities, Series D
(liquidation preference $1,000.00 per share) (the "Series D
Preferred Securities") guaranteed by the Guarantor on a limited
basis as to the payment of accumulated and unpaid semiannual
distributions for the benefit of the holders of the Series D
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 Capital Securities and the
<PAGE>
Series D Preferred Securities are herein referred to collectively
as the "Securities." Concurrently with each issuance of the Series
D Preferred Securities to the Trust, the Company will lend the
proceeds thereof plus the Guarantor's Capital Contribution to the
Company to the Guarantor and to evidence each such loan the
Guarantor will issue and deliver to the Company the Guarantor's
% Subordinated Deferrable Interest Debentures, Series D due 2028
(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 Capital Securities
and purchase the Series D 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 D 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 Capital Securities have been duly authorized by
the Trust and will conform to the description thereof in the
Prospectus; and when the Capital Securities are executed and
delivered to the Underwriters and are paid for by the Underwriters
in accordance with the terms of this Agreement, the Capital
Securities will be validly issued, fully paid and non-assessable
beneficial interests in the Trust, and not subject to any
preemptive rights;
(l) The Series D Preferred Securities have been duly
authorized by the Company and will conform to the description
thereof in the Prospectus; and when the Series D 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 D Preferred Securities will be duly issued, fully paid and
non-assessable, and free of preemptive rights;
(m) The issue and sale of the Capital Securities by the
Trust, the issue of the Series D 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,
- 5 -
<PAGE>
as applicable) or results of operations of the Trust, the Company
or the Guarantor and its Subsidiaries taken as a whole, nor will
such action result in any violation of the provisions of the
Articles of Incorporation or Bylaws of the Guarantor or the 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 Capital
Securities, (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 Third 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 $1,000.00, the number of
Capital Securities 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 Capital
Securities.
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<PAGE>
(b) The Guarantor agrees to execute and deliver to the
Company the Guarantee concurrently with the issue and sale of the
Capital Securities.
(c) As compensation to the Underwriters for their
commitments hereunder, and in light of the fact that the proceeds
of the sale of the Capital Securities will be applied to the
purchase of the Series D Preferred Securities and the proceeds of
the sale of the Series D 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 Salomon
Brothers Inc for the accounts of the several Underwriters, an
amount equal to $10 per Trust Receipt.
3. Upon the authorization by you of the release of the
Capital Securities, the several Underwriters propose to offer the
Capital Securities for sale upon the terms and conditions set forth
in the Prospectus.
4. (a) Certificates, on original issuance, will be issued
in the form of 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 Capital Securities.
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
Salomon Brothers Inc. The time and date of such delivery and
payment shall be, with respect to the Capital Securities, 9:30
a.m., Philadelphia time, on _________, 1998, 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 Capital Securities 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 Salomon Brothers Inc in next day funds.
5. Each of the Company and the Guarantor jointly and
severally agrees with each of the Underwriters:
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(a) To complete the Prospectus in a form approved by you
and to file the Prospectus pursuant to Rule 424(b) under the Act
not later than the Commission's close of business on the second
business day following the execution and delivery of this
Agreement; to furnish you, without charge, three signed copies of
the Registration Statement (or copies thereof), including exhibits,
and, during the period mentioned in paragraph (d) below, as many
copies of the Prospectus and any supplements and amendments thereto
as you may reasonably request.
(b) Other than pursuant to filings under the Exchange
Act incorporated in the Registration Statement and the Prospectus
by reference, before amending or supplementing the Registration
Statement or the Prospectus, to furnish to you a copy of each such
proposed amendment or supplement and not to file any such proposed
amendment or supplement to which you reasonably object in writing.
(c) As soon as the Company and the Guarantor are advised
thereof, to promptly advise you orally, and (if requested by you)
to confirm such advice in writing, (i) when any amendment to the
Registration Statement has become effective or any amendment or
supplement to the Prospectus has been filed, (ii) when any stop
order has been issued under the Act with respect to the
Registration Statement or any proceedings therefor have been
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
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<PAGE>
reasonable quantity of a supplemented prospectus or of supplements
to the Prospectus complying with Section 10(a)(3) of the Act.
(e) To cooperate with you and counsel for the
Underwriters to qualify the Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions as you shall
reasonably request, provided that 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 Salomon Brothers 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 Capital
Securities or Series D Preferred Securities) of the Trust, the
Company or the Guarantor which are substantially similar to the
Capital Securities, the Series D Preferred Securities or the
Guarantee, any securities convertible into or exchangeable for
Capital Securities, the Series D 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 Salomon
Brothers 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
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<PAGE>
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
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 Capital Securities on the New York Stock Exchange,
subject to the Underwriters making the required distribution of the
Capital Securities.
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 Capital Securities; (vi) the cost and charges
of any transfer agent or registrar; (vii) the cost of qualifying
the Capital Securities and the Series D 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 Capital Securities by them, and any advertising expenses
in connection with offers they may make.
7. (a) The several obligations of the Underwriters
hereunder, as to Capital Securities to be delivered at the Time of
Delivery, are subject to the following conditions:
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(i) At the Time of Delivery, there shall be in full
force and effect a Notice of Registration of a Securities
Certificate of the Guarantor in respect to the issuance of its
Subordinated Debentures and the Guarantee in connection with the
issuance of the Capital Securities and the transactions relating
thereto substantially in accordance with the terms and conditions
herein set forth and containing no provision unacceptable to you,
it being 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 Capital Securities, you shall be
furnished with each of the following opinions or letters:
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(A) a favorable opinion, dated at the Time of
Delivery, of Ballard Spahr Andrews & Ingersoll, LLP
(Special Counsel for the Company and the Guarantor)
in form and substance reasonably satisfactory to
you;
(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 Capital Securities
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
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<PAGE>
downgrading and no notice shall have been given of "Credit Watch
with Negative Implications" in the rating accorded the Capital
Securities by Moody's Investors Services, Inc. or Standard & Poor's
Corporation, (D) a general moratorium on commercial banking
activities in New York or Pennsylvania shall not have been declared
by either Federal or New York State or Pennsylvania authorities,
and (E) there shall not have occurred any outbreak or escalation of
hostilities or any calamity or crisis of comparable magnitude that,
in your judgment, is material and adverse and, in the case of any
of the events specified in clauses (A) through (E), singly or
together with any other such event makes it, in your reasonable
judgment, impracticable or inadvisable to market the Capital
Securities 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 Capital Securities 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 Capital Securities and the transactions relating
thereto substantially in accordance with the terms and conditions
herein set forth and containing no provision unacceptable to the
Guarantor, it being understood that the Notice in effect as of the
date of this Agreement does not contain any such unacceptable
provision, and that no subsequent Notice shall be deemed to contain
any such unacceptable provision, unless the Guarantor, within 24
hours after receiving a copy thereof, shall have given notice to
you to the effect that such Notice contains an unacceptable
provision.
(iii) At the Time of Delivery, the Trust shall
receive payment for the Capital Securities 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
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<PAGE>
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
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 30 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 or 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 or the Guarantor by the same
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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
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 Salomon Brothers 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
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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
with such written consent, of if there be a final judgment 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
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(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
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 Capital Securities
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 Capital
Securities 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 Capital Securities which
it has agreed to purchase hereunder at the Time of Delivery, in
accordance with the terms hereof, and the aggregate number of
Capital Securities which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase is not more
than one-eleventh of the aggregate number of Capital Securities to
be purchased on such date, the other Underwriters shall be
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obligated severally in the proportions that the number of Capital
Securities which they have respectively agreed to purchase at the
Time of Delivery bears to the aggregate number of Capital
Securities 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 Capital
Securities which such defaulting Underwriter or Underwriters agreed
but failed or refused to purchase at the Time of Delivery; provided
that in no event shall the number of Capital Securities 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 Capital Securities without the written
consent of such Underwriter. If any Underwriter or Underwriters
shall fail or refuse to purchase any Capital Securities and the
aggregate number of Capital Securities which such defaulting
Underwriter or Underwriters agreed but failed or refused to
purchase exceeds one-eleventh of the aggregate number of Capital
Securities 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 Capital Securities are not
made within 48 hours after such default, this Agreement will
terminate without liability on the part of any non-defaulting
Underwriter or the Company and Guarantor for the purchase or sale
of any Capital Securities under this Agreement. Any action taken
under this Section 9 shall not relieve any defaulting Underwriter
from liability in respect of any default of such Underwriter under
this Agreement.
10. The respective indemnities, agreements, representations,
warranties and other statements of the Company, the Guarantor and
the several Underwriters, as set forth in this Agreement or made by
or on behalf of them, respectively, pursuant to this Agreement,
shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by
or on behalf of any Underwriter or any controlling person of any
Underwriter, or the Company, the Guarantor or any officer or
director or controlling person of the Company or the Guarantor, and
shall survive delivery of and payment for the Capital Securities.
11. If this Agreement shall be terminated pursuant to
Section 9 hereof, the Company and the Guarantor shall not then be
under any liability to any Underwriter except as provided in
Section 6 and Section 8 hereof; but if, for any other reason, any
Securities are not delivered by or on behalf of the 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
- 18 -
<PAGE>
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 or sent by mail, telex or facsimile transmission to the
Underwriters in care of Salomon Brothers Inc, Seven World Trade
Center, New York, New York 10048, 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 Capital Securities from
any Underwriter shall be deemed a successor or assign by reason
merely of such purchase.
14. Time shall be of the essence of this Agreement. As used
herein, the term "business day" shall mean any day when the
Commission's office in Washington, D.C. is open for business.
15. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
16. This Agreement may be executed by any one or more of the
parties hereto in any number of counterparts, each of which shall
be deemed to be an original, but all such respective counterparts
shall together constitute one and the same instrument.
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, _______, 1998
Salomon Brothers Inc
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
By: Salomon Brothers Inc
By: ____________________________
- 20 -
<PAGE>
SCHEDULE I
Number of
Capital Securities
Underwriters To Be Purchased
------------ ------------------
Salomon Brothers Inc ______
Merrill Lynch, Pierce, Fenner & Smith
Incorporated ______
TOTAL 78,105
======
AMENDMENT NO. 3 TO THE
AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT
OF PECO ENERGY CAPITAL, L.P.
----------------------------
This Amendment No. 3 to the Amended and Restated
Limited Partnership Agreement of PECO Energy Capital, L.P., a
Delaware limited partnership (the "Partnership"), dated as of
_________________, 1998 (this "Amendment"), is made by and among
PECO Energy Capital Corp., a Delaware corporation (the "General
Partner"), as general partner of the Partnership, and the Persons
who are limited partners of the Partnership.
WHEREAS, the General Partner and PECO Energy Company, a
Pennsylvania corporation, have heretofore formed a limited
partnership pursuant to the Delaware Act by filing a Certificate
of Limited Partnership of the Partnership with the Secretary of
State of the State of Delaware on May 23, 1994, and by entering
into a Limited Partnership Agreement of the Partnership dated as
of May 23, 1994 (the "Original Agreement");
WHEREAS, the Original Agreement was amended and
restated in its entirety by the Amended and Restated Limited
Partnership Agreement of the Partnership, dated as of July 25,
1994, and was further amended by Amendment No. 1, dated as of
October 20, 1995 and by Amendment No. 2, dated as of March 1,
1996 (as amended, the "Partnership Agreement");
WHEREAS, the parties hereto desire to amend the
Partnership Agreement as described herein; and
WHEREAS, this Amendment does not adversely affect the
powers, preferences or special rights of any series of Preferred
Partner Interests.
NOW, THEREFORE, the parties hereto, intending to be
legally bound hereby, agree to amend the Partnership Agreement as
follows:
ARTICLE I - AMENDMENTS
----------------------
1.1 The first sentence of Section 13.02(a)(i) of the
Partnership Agreement is hereby amended and restated as follows:
The Preferred Partners shall be entitled to receive,
when, as and if declared by the General Partner out of
funds held by the Partnership to the extent that the
Partnership has cash on hand sufficient to permit such
payments and funds legally available therefor,
cumulative cash distributions at a rate per annum
established by the General Partner, calculated on the
basis of a 360-day year consisting of twelve (12)
<PAGE>
months of thirty (30) days each, and for any shorter
period, distributions will be computed on the basis of
the actual number of days elapsed in such period, and
payable in United States dollars, in arrears, with a
payment frequency determined by the General Partner at
the time of issuance.
1.2 The first sentence of Section 13.02(b)(ii) of the
Partnership Agreement is hereby amended by deleting the word
"monthly" contained therein.
1.3 The second sentence of the first paragraph of
Section 13.02(d) of the Partnership Agreement is hereby amended
and restated as follows:
If (i) the Partnership fails to pay distributions in
full on any series of Preferred Partner Interests for
eighteen (18) consecutive months; (ii) a default under
the Indenture occurs and is continuing; or (iii) PECO
is in default on any of its payment or other
obligations under the Guarantee, then the holders of
the Preferred Partner Interests, acting as a single
class, will be entitled, by a vote of the majority of
the aggregate stated liquidation preference of
outstanding Preferred Partner Interests, to appoint and
authorize a special representative (the "Special
Representative") to enforce the Partnership's creditor
rights under the Subordinated Debentures and the
Indenture against PECO and enforce the obligations
undertaken by PECO under the Guarantee, including,
after failure to pay distributions for sixty (60)
consecutive months, to declare and pay distributions on
such series of Preferred Partner Interests, the General
Partner agreeing to execute and deliver such documents
as may be necessary, appropriate or convenient for the
Special Representative to enforce such rights and
obligations.
1.4 The third paragraph of Section 13.02(d) of the
Partnership Agreement is hereby amended by (i) deleting the words
"monthly distribution periods" contained in the third (3rd) line
therein and substituting therefor the word "months", and (ii)
deleting the word "monthly" contained in the seventh (7th) line
therein.
ARTICLE II - MISCELLANEOUS
--------------------------
2.1 Capitalized Terms. Capitalized terms used but not
otherwise defined herein shall have the meanings assigned to them
in the Partnership Agreement.
2
<PAGE>
2.2 Full Force and Effect. Except to the extent
modified hereby, the Partnership Agreement shall remain in full
force and effect.
2.3 Successors and Assigns. This Amendment shall be
binding upon, and shall enure to the benefit of, the parties
hereto and their respective successors and assigns.
2.4 Counterparts. This Amendment may be executed in
counterparts, all of which together shall constitute one
agreement binding on all parties hereto, notwithstanding that all
such parties are not signatories to the original or same
counterpart.
2.5 Governing Law. This Amendment shall be
interpreted in accordance with the laws of the State of Delaware
(without regard to conflict of law principles) with all rights
and remedies being governed by such laws.
GENERAL PARTNER:
PECO ENERGY CAPITAL CORP.
By: ______________________________
Name:
Title:
PREFERRED PARTNERS:
All Preferred Partners now and
hereafter admitted as Limited
Partners of the Partnership
pursuant to the Powers of Attorney
now or hereafter executed in favor
of, and delivered to, the General
Partner.
By: PECO ENERGY CAPITAL CORP.
By: ______________________________
Name:
Title:
3
Action by the General Partner of PECO Energy Capital, L.P.
Creating the __% Cumulative
Preferred Securities, Series D
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. Seventy eight thousand one hundred
five (78,105) interests with an aggregate liquidation preference
of $78,105,000 of the Preferred Partner Interests of the
Partnership, liquidation preference $1,000 per Preferred
Security, are hereby designated as "__% Cumulative Preferred
Securities, Series D" (hereinafter the "Series D Preferred
Securities").
(b) Distributions.
(i) Holders of the Series D 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
$1,000 per Series D Preferred Security semiannually on __________
and ____________ of each year. Distributions on the Series D
Preferred Securities shall accrue from the date of original
issuance on ___________, 1998 and shall be payable commencing on
__________, 1998.
(ii) Distributions on the Series D 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 D Preferred Securities will be
deferred if and for so long as PECO Energy Company ("PECO
Energy") defers payments to the Partnership on the Series D
Debentures (as defined below). Accrued and unpaid distributions
on the Series D Preferred Securities will accrue additional
<PAGE>
distributions ("Additional Distributions") in respect thereof, to
the extent permitted by law, at the rate of __% per annum of the
stated liquidation preference of $1,000 per Series D Preferred
Securities. Such Additional Distributions shall be payable at
the time the related deferred distribution is paid, but in any
event by the end of such deferral period. Distributions declared
on the Series D Preferred Securities will be payable to the
holders of Series D Preferred Securities as they appear on the
books and records of the Partnership on the relevant record
dates, which will be __________ and ____________ of each year.
(c) Redemption.
(i) Upon redemption or payment at maturity of the
__% Subordinated Deferrable Interest Debentures due 2028,
Series D (the "Series D Subordinated Debt Securities") issued by
PECO Energy pursuant to a Third Supplemental Indenture dated as
of _________, 1998 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 and a Second
Supplemental Indenture dated as of June 1, 1997 (as supplemented,
the "Indenture"), the proceeds from such redemption or payment of
the Series D Subordinated Debt Securities shall be applied by the
Partnership to redeem the Series D Preferred Securities at the
redemption price of $1,000 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").
(ii) If a Tax Event shall occur and be continuing,
the Series D 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 D 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 D 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
the case of holders of Series D Preferred Securities, the
2
<PAGE>
aggregate of the stated liquidation preference of $1,000 per
Series D 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 D
Preferred Securities shall have no voting rights except as
provided in the Partnership Agreement.
(f) Subordination. The holders of Series D Preferred
Securities are deemed, by acceptance of such Securities, to have
(i) agreed that the Series D Subordinated Debt Securities 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 D Preferred Securities is subordinate and
junior in right of payment to all general liabilities of PECO
Energy.
(g) Issuance. The Series D 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 III, 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 D Subordinated Debt Securities with an aggregate principal
amount equal to the aggregate liquidation preference of the
Series D Preferred Securities. The Partnership shall initially
be the transfer agent, registrar and paying agent for the Series
D Preferred Securities.
IN WITNESS WHEREOF, the General Partner has executed
this Action effective as of _______________, 1998.
PECO Energy Capital Corp.
By:______________________________
Name: J. Barry Mitchell
Title: President
3
PECO ENERGY COMPANY
AND
First Union National Bank, as Trustee
THIRD SUPPLEMENTAL
INDENTURE
Dated as of ___________, 1998
to
INDENTURE
Dated as of July 1, 1994
Providing for the Issuance of
__% Subordinated Deferrable Interest Debentures, Series D
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE . . . . . . . . 2
SECTION 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 2 THE SERIES D SUBORDINATED DEBT SECURITIES. . . . . . . . . 3
SECTION 2.01. Form of the Series D Subordinated Debt
Securities; Denominations . . . . . . . . . . . . . . 3
ARTICLE 3 REDEMPTION . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 3.01. Redemption; Notice to Trustee . . . . . . . . . . . . 4
SECTION 3.02. Compliance with Terms of Indenture. . . . . . . . . . 4
ARTICLE 4 EXTENSION PERIOD. . . . . . . . . . . . . . . . . . . . . 5
SECTION 4.01. Limitation on Right of Company to Extend
Interest Payment Period . . . . . . . . . . . . . . . 5
ARTICLE 5 CONCERNING THE TRUSTEE . . . . . . . . . . . . . . . . . . 5
SECTION 5.01. Not Responsible for Recitals. . . . . . . . . . . . . 6
SECTION 5.02. Qualification Under Trust Indenture Act of
1939. . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 6 MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 6.01. Trust Indenture Act Controls. . . . . . . . . . . . . 6
SECTION 6.02. Severability Clause . . . . . . . . . . . . . . . . . 6
SECTION 6.03. Governing Law . . . . . . . . . . . . . . . . . . . . 6
SECTION 6.04. No Recourse Against Others. . . . . . . . . . . . . . 7
SECTION 6.05. Use of Term "Trustee" . . . . . . . . . . . . . . . . 7
SECTION 6.06. Confirmation of Original Indenture. . . . . . . . . . 7
SECTION 6.07. Successors. . . . . . . . . . . . . . . . . . . . . . 7
SECTION 6.08. Multiple Original Copies of this Indenture. . . . . . 7
SECTION 6.09. Table of Contents; Headings, Etc. . . . . . . . . . . 7
SECTION 6.10. Benefits of the Indenture . . . . . . . . . . . . . . 8
SECTION 6.11. Date of Indenture . . . . . . . . . . . . . . . . . . 8
SECTION 11.02. Notices . . . . . . . . . . . . . . . . . . . . . . . 8
(i)
<PAGE>
THIRD SUPPLEMENTAL INDENTURE, dated as of __________,
1998, by and between PECO Energy Company, a Pennsylvania
corporation (the "Company"), and First Union National Bank, a
national association, as successor Trustee, to an Indenture,
dated as of July 1, 1994 (the "Original Indenture"), by and
between the Company and Meridian Trust Company, the original
Trustee, which was supplemented by a First Supplemental Indenture
(the "First Supplemental Indenture") dated as of December 1, 1995
and a Second Supplemental Indenture (the "Second Supplemental
Indenture") dated as of June 1, 1997 (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 issuance 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 has duly executed and delivered to
the Trustee the Second Supplemental Indenture authorizing and
providing for the issuance of the third series of Debentures
which were designated the 8% Deferrable Interest Subordinated
Debentures, Series C.
WHEREAS, the Company desires to authorize and to effect
the issuance of a fourth series of Debentures in an aggregate
principal amount of $80,520,619 and to designate such series __%
Subordinated Deferrable Interest Debentures, Series D (the
"Series D Subordinated Debt Securities") under this Third
Supplemental Indenture.
WHEREAS, all things necessary to make the Series D
Subordinated Debt Securities when duly issued and executed by the
Company and authenticated and delivered hereunder, the valid
obligations of the Company, and to make this Third Supplemental
<PAGE>
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 D Subordinated Debt Securities:
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. DEFINITIONS.
"Additional Interest", with respect to the Series D
Subordinated Debt Securities, 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 D Subordinated
Debt Securities.
"Issue Date" means ___________, 1998.
"Series D Subordinated Debt Securities" means any of
the Company's __% Subordinated Deferrable Interest Debentures,
Series D issued under this Third Supplemental Indenture.
"Series D Subordinated Debt Securityholder" or "Series
D Holder" means a Person in whose name a Series D Subordinated
Debt Security is registered on the Registrar's books.
"Series D Preferred Securities" means the __%
Cumulative Preferred Securities, Series D, 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.
2
<PAGE>
ARTICLE 2
THE SERIES D SUBORDINATED DEBT SECURITIES
SECTION 2.01. FORM OF THE SERIES D SUBORDINATED DEBT SECURITIES;
DENOMINATIONS.
The Series D Subordinated Debt Securities 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 D Subordinated Debt Securities, a form of
which is annexed hereto as Exhibit A, shall constitute, and are
hereby expressly made, a part of this Third Supplemental
Indenture. The Company and the Trustee, by their execution and
delivery of this Third 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 D Subordinated Debt Securities for original
issuance in the aggregate principal amount of $80,520,619 to
evidence the Company's obligation with respect to the loan from
PECO Energy 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 D
Subordinated Debt Securities to be authenticated and the date on
which the original issuance of Series D Subordinated Debt
Securities 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 D Subordinated
Debt Securities outstanding at any time may not exceed
$80,520,619 except as provided in Section 2.09 of the Original
Indenture.
The Series D Subordinated Debt Securities shall be
issuable only in registered form without coupons and only in
denominations of $1,000 and any integral multiple thereof.
SECTION 2.09. REPLACEMENT DEBENTURES.
If (a) any mutilated Debenture is surrendered to the
Company or the Trustee, or (b) the Company and the Trustee
receive evidence to their satisfaction of the destruction, loss
or theft of any Debenture, and there is delivered to the Company
and the Trustee such Debenture or indemnity as may be required by
them to save each of them harmless, then, in the absence of
notice to the Company or the Trustee that such Debenture has been
acquired by a protected purchaser, the Company shall execute in
exchange for any such mutilated Debenture or in lieu of any such
destroyed, lost or stolen Debenture, a new Debenture of like
tenor and principal amount, bearing a number not
contemporaneously outstanding, and the Trustee shall authenticate
and make such new Debenture available for delivery.
3
<PAGE>
In case any such mutilated, destroyed, lost or stolen
Debenture has become or is about to become due and payable, or is
about to be redeemed by the Company pursuant to Article 3 hereof,
the Company in its discretion may, instead of issuing a new
Debenture, pay or purchase such Debenture, as the case may be.
Upon the issuance of any new Debentures under this
Section 2.09, the Company may require the payment of a sum
sufficient to cover any tax or other governmental charge that may
be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee) in connection therewith.
Every new Debenture issued pursuant to this Section
2.09 in lieu of any mutilated, destroyed, lost or stolen
Debenture shall constitute an original additional contractual
obligation of the Company whether or not the mutilated,
destroyed, lost or stolen Debenture shall be at any time
enforceable by anyone, and shall be entitled to all benefits of
this Indenture equally and ratable with any and all other
Debentures duly issued hereunder.
The provisions of this Section 2.09 are exclusive and
shall preclude (to the extent lawful) all other rights and
remedies with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Debentures.
ARTICLE 3
REDEMPTION
SECTION 3.01. REDEMPTION; NOTICE TO TRUSTEE.
(a) The Series D Subordinated Debt Securities 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 D Subordinated Debt
Securities 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 D Subordinated Debt
Securities 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
4
<PAGE>
of notice, all as hereinbefore set forth in Section 3.01 of this
Article.
ARTICLE 4
EXTENSION PERIOD
SECTION 4.01. LIMITATION ON RIGHT OF COMPANY TO EXTEND INTEREST
PAYMENT PERIOD.
(b) Notwithstanding paragraph (a) of this Section 4.01
or any other provision herein to the contrary, the Company shall have
the right in its sole and absolute discretion at any time and from
time to time while the Debentures are outstanding, so long as an Event
of Default has not occurred and is continuing, to extend the interest
payment period for up to 60 consecutive months, provided that such
extended interest period shall not extend beyond the stated maturity
date or redemption date of any series of Debentures, and provided
further that at the end of each Extension Period, the Company shall
pay all interest then accrued and unpaid (provided that with respect
to any series of Debentures payable other than on a monthly basis, the
Company shall, at the end of each Extension Period, pay all interest
then accrued and payable) (together with interest thereon compounded
daily to the extent permitted by applicable law at the rate per annum
borne by the Debentures). Prior to the termination of an Extension
Period, the Company may shorten or may further extend the interest
payment period, provided that such Extension Period together with all
such further extensions may not exceed 60 months. The Company shall
give the Trustee notice of its selection of such extended or shortened
interest payment period at least one Business Day prior to the earlier
of (i) the date selected by the Company to make the interest payment
or (ii) the date PECO Energy Capital is required to give notice of the
record or payment date of such related distribution to any national
securities exchange on which the Preferred Securities are then listed
or other applicable self-regulatory organization, but in any event not
less than two Business Days prior to such record date fixed by the
Company for the payment of such interest. The Company shall give or
cause the Trustee to give such notice of the Company's selection of
such extended interest payment period to the Holders.
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, the Second
Supplemental Indenture and this Third Supplemental Indenture, and
upon the following terms and conditions:
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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 Third 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 Third 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 Third 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 Third Supplemental
Indenture, except as, and to the extent, they are expressly
excluded from this Third Supplemental Indenture, as permitted by
the TIA.
SECTION 6.02. SEVERABILITY CLAUSE.
If any provision in this Third Supplemental Indenture
or in the Series D Subordinated Debt Securities 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 Third Supplemental Indenture and the Series D
Subordinated Debt Securities 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.
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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 D Subordinated Debt Securities or
this Third Supplemental Indenture or for any claim based on, in
respect of or by reason of such obligations or their creation.
By accepting a Series D Subordinated Debt Security, each Series D
Subordinated Debt Securityholder shall waive and release all such
liability. The waiver and release shall be part of the
consideration for the issuance of the Series D Subordinated Debt
Securities.
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 Third
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,
the Second Supplemental Indenture and this Third Supplemental
Indenture, the Original Indenture, is in all respects ratified
and confirmed, and this Third 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 Third Supplemental Indenture and
to the Series D Subordinated Debt Securities issued hereunder.
SECTION 6.07. SUCCESSORS.
All agreements of the Company in this Third
Supplemental Indenture and the Series D Subordinated Debt
Securities shall bind its successors and assigns. All agreements
of the Trustee in this Third 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 Third
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 Third 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 Third Supplemental
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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 Third Supplemental Indenture
or in the Series D Subordinated Debt Securities, express or
implied, shall give to any Person, other than the parties hereto
and their successors hereunder, the Series D Holders and the
Special Representative, any benefit or any legal or equitable
right, remedy or claim under this Third Supplemental Indenture.
SECTION 6.11. DATE OF INDENTURE.
This Third Supplemental Indenture is dated as of
_______, 1998, but was actually executed and delivered on
_______, 1998.
SECTION 11.02. NOTICES.
Any notice or communication shall be in writing and
delivered in person or mailed by first-class mail, postage
prepaid, addressed as follows:
if to the Company:
PECO Energy Company
2301 Market Street
P.O. Box 8699
Philadelphia, Pennsylvania 19101
Attention: Todd D. Cutler, Esq.
Facsimile No.: (215) 841-5743
if to the Trustee:
First Union National Bank
Corporate Trust Administration
123 S. Broad Street (PA-1249)
Philadelphia, Pennsylvania 19109-1199
The Company or the Trustee, by giving notice to the
other, may designate additional or different addresses for
subsequent notices or communications. The Company shall notify
the holder, if any, of Senior Indebtedness of any such additional
or different addresses of which the Company receives notice from
the Trustee.
Any notice or communication given to the
Debentureholder other than PECO Energy Capital shall be mailed to
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the Debentureholder at the Debentureholder's address as it
appears on the Register of the Registrar and shall be
sufficiently given if mailed within the time prescribed.
Failure to mail a notice or communication to a
Debentureholder or any defect in it shall not affect its
sufficiency with respect to other Debentureholders. If a notice
or communication is mailed in the manner provided above, it is
duly given, whether or not received by the addressee.
If the Company mails a notice or communication to the
Debentureholders, it shall mail a copy to the Trustee and each
Registrar, Paying Agent or co-Registrar.
SIGNATURES
IN WITNESS WHEREOF, the undersigned, being duly
authorized, have executed this Third 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
9
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EXHIBIT A
__% SUBORDINATED DEFERRABLE INTEREST DEBENTURES,
SERIES D DUE 2028
No. 1
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 Eighty Million Five Hundred Twenty
Thousand Six Hundred Nineteen Dollars ($80,520,619) on
___________, 2028, and to pay interest on said principal sum from
___________, 1998 (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,
semiannually in arrears on ____________ and _____________ of each
year commencing ____________, 1998 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.
All capitalized terms used but not otherwise defined
herein have the meanings set forth in the Indenture (as defined
herein).
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 D Subordinated Debt Securities 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,
A-1
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be paid to the person in whose name this Series D Subordinated
Debt Security is registered at the close of business on the
regular record date for such interest installment, which shall be
__________ and ___________ of each year. 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 Series D Subordinated Debt Security 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 ten 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 Series D
Subordinated Debt Security 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 Series D Subordinated Debt Security is PECO
Energy Capital, the payment of the principal of (and premium) and
interest (including Additional Interest, if any) on this Series D
Subordinated Debt Security will be made at such place and to such
account as may be designated by PECO Energy Capital.
The indebtedness evidenced by this Series D
Subordinated Debt Security 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 Series
D Subordinated Debt Security is issued subject to the provisions
of the Indenture with respect thereto. Each Holder of this
Series D Subordinated Debt Security, 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 Series D Subordinated Debt Security is one of a
duly authorized series of Debentures of the Company (herein
sometimes referred to as the "Series D Subordinated Debt
Securities"), 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, between the
Company and Meridian Trust Company, as Trustee, as supplemented
A-2
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by a First Supplemental Indenture, dated as of December 1, 1995,
a Second Supplemental Indenture, dated as of June 1, 1997 and a
Third Supplemental Indenture dated as of _________________, 1998
(as supplemented, the "Indenture") executed and delivered between
the Company and First Union National Bank, as successor Trustee
to which reference is made to the Indenture for a description of
the rights, limitations of rights, obligations, duties and
immunities thereunder of the Trustee, the Company and the holders
of the Series D Subordinated Debt Securities. 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 provided in the Indenture.
The Series D Subordinated Debt Securities 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 D Preferred Securities, but if in
part, in an aggregate principal amount equal
to the aggregate stated liquidation
preference of the Series D Preferred
Securities redeemed.
In the event of redemption of this Series D
Subordinated Debt Security in part only, a new Series D
Subordinated Debt Security or Securities for the unredeemed
portion hereof will be issued in the name of the Holder hereof
upon the cancellation hereof.
In case an Event of Default 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 Series D Subordinated
Debt Security 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 D Subordinated Debt Securities may be amended with the
written consent of the Holders of a majority in aggregate
principal amount of the Series D Subordinated Debt Securities 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
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Series D Subordinated Debt Securities 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 Series D Subordinated Debt Security 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 Series D Subordinated Debt Security
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
D Subordinated Debt Securities, from time to time to extend the interest
payment period of such Series D Subordinated Debt Securities 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 payable
(together with interest thereon at the rate specified for the Series D
Subordinated Debt Securities to the extent that payment of such interest is
enforceable under applicable law); provided that, during such Extended
Interest Payment Period the Company shall not declare or pay any dividend
on, redeem or purchase any of its capital stock. Prior to the termination
of any such Extended Interest Payment Period, the Company may further
extend such Extended Interest Payment Period, provided that such Period
together with all such further extensions thereof shall not exceed 60
consecutive months. At the termination of any such Extended Interest
Payment Period and upon the payment of all accrued and unpaid interest and
any additional amounts then due, the Company may select a new Extended
Interest Payment period.
As provided in the Indenture and subject to certain
limitations therein set forth, this Series D Subordinated Debt
Security is transferable by the registered holder hereof on the
Debenture Register of the Company, upon surrender of this Series
D Subordinated Debt Security 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 Series D Subordinated Debt Securities of
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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 Series D Subordinated Debt Security, 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 Series D Subordinated Debt Security
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 Series D Subordinated Debt
Security, 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. Series D
Subordinated Debt Securities issued are issuable only in
registered form without coupons in denominations of $1,000 and
any integral multiple thereof. As provided in the Indenture and
subject to certain limitations therein set forth, Series D
Subordinated Debt Securities are exchangeable for a like
aggregate principal amount of Series D Subordinated Debt
Securities of a different authorized denomination, as requested
by the Holder surrendering the same.
This Series D Subordinated Debt Security shall not be
valid until an authorized officer of the Trustee manually signs
the Trustee's Certificate of Authentication below.
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IN WITNESS WHEREOF, the Company has caused this Series
D Subordinated Debt Security 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: _______________________
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
CERTIFICATE OF TRUST
OF PECO ENERGY CAPITAL TRUST III
THIS Certificate of Trust of PECO Energy Capital Trust
III (the "Trust"), dated as of March 13, 1998, 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 III.
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, One Rodney Square, 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, not in its
individual capacity but solely as
trustee
By: /s/ Edward L. Truitt, Jr.
________________________________
Name: Edward L. Truitt, Jr.
Title: Assistant Vice President
TRUST AGREEMENT
This TRUST AGREEMENT of PECO Energy Capital Trust III
(the "Trust"), dated as of March 13, 1998, between PECO Energy
Capital, L.P., a Delaware limited partnership (the "Depositor"),
First Union Trust Company, National Association, a national
association (the "Bank"), not in its individual capacity but
solely in its capacity as trustee of the Trust (the "Trustee").
The Depositor and the Trustee hereby agree as follows:
1. The trust created hereby shall be known as "PECO Energy
Capital Trust III," 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, empowered, 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 capital securities 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 with respect to the Trust or the trust estate, except
as otherwise expressly set forth herein, 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,
if the Depositor deems it necessary, appropriate or convenient to
do, 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 capital securities of
<PAGE>
the Trust and certain other securities and (b) a Registration
Statement on Form 8-A (the "1934 Act Registration Statement")
(including all pre-effective and post-effective amendments
thereto) relating to the registration of the capital securities
of the Trust under the Securities Exchange Act of 1934, as
amended; (ii) to file with the New York Stock Exchange,
Philadelphia Stock Exchange or any other 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 capital securities 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 capital securities 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 capital securities 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, empowered, 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.
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6. The number of trustees of the Trust initially
shall be one (1) and thereafter the number of trustees of the
Trust shall be such number as shall be fixed from time to time by
a written instrument signed by the Depositor which may increase
or decrease the number of trustees; provided, however, that to
the extent required by the Business Trust Act, one trustee shall
either be a natural person who is a resident of the State of
Delaware or, if not a natural person, an entity which has its
principal place of business in the State of Delaware and
otherwise meets the requirements of applicable Delaware law; and
provided, further, that the addition of any co-trustee shall be
approved by the Trustee, which approval shall not be unreasonably
withheld. Subject to the foregoing, the Depositor is entitled to
appoint or remove without cause the Trustee or any co-trustee at
any time. The Trustee may resign upon thirty (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
(in its individual capacity), 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 capital securities of the Trust
or the Bank 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
fully 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 personally 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
3
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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.
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
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AMENDED AND RESTATED
TRUST AGREEMENT
OF
PECO ENERGY CAPITAL TRUST III
PECO ENERGY CAPITAL, L.P.,
as Grantor
and
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION,
as Trustee
Dated as of _____________, 1998
==========================================================================
<PAGE>
TABLE OF CONTENTS
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Page
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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 Capital Securities. . . . . . . . 5
ARTICLE III
FORM OF CAPITAL SECURITIES, EXECUTION AND
DELIVERY, TRANSFER AND SURRENDER OF CAPITAL SECURITIES
SECTION 3.01. Form and Transferability of Capital Securities . . . . . . 6
SECTION 3.02. Issuance of Capital Securities . . . . . . . . . . . . . . 7
SECTION 3.03. Registration, Transfer and Exchange of Capital
Securities . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 3.04. Lost or Stolen Capital Securities, Etc.. . . . . . . . . . 8
SECTION 3.05. Cancellation and Destruction of Surrendered
Capital Securities . . . . . . . . . . . . . . . . . . . . 8
SECTION 3.06. Surrender of Capital Securities and Withdrawal of
Preferred Securities . . . . . . . . . . . . . . . . . . . 9
SECTION 3.07. Redeposit of Preferred Securities. . . . . . . . . . . . . 10
SECTION 3.08. Filing Proofs, Certificates and Other Information. . . . . 10
ARTICLE IV
DISTRIBUTIONS AND OTHER RIGHTS OF HOLDERS OF CAPITAL SECURITIES
SECTION 4.01. Distributions of Semiannual Distributions on
Preferred Securities . . . . . . . . . . . . . . . . . . . 11
SECTION 4.02. Redemptions of Preferred Securities. . . . . . . . . . . . 11
SECTION 4.03. Distributions in Liquidation of Grantor. . . . . . . . . . 12
SECTION 4.04. Fixing of Record Date for Holders of Capital
Securities . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 4.05. Payment of Distributions . . . . . . . . . . . . . . . . . 13
SECTION 4.06. Special Representative and Voting Rights . . . . . . . . . 13
SECTION 4.07. Changes Affecting Preferred Securities and
Reclassifications, Recapitalizations, Etc. . . . . . . . . 14
ARTICLE V
THE GUARANTEE
SECTION 5.01. The Guarantee. . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE VI
THE TRUSTEE
SECTION 6.01. Eligibility. . . . . . . . . . . . . . . . . . . . . . . . 15
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Page
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SECTION 6.02. Obligations of the Trustee . . . . . . . . . . . . . . . . 15
SECTION 6.03. Resignation and Removal of the Trustee;
Appointment of Successor Trustee . . . . . . . . . . . . . 17
SECTION 6.04. Corporate Notices and Reports. . . . . . . . . . . . . . . 18
SECTION 6.05. Status of Trust. . . . . . . . . . . . . . . . . . . . . . 18
SECTION 6.06. Appointment of Grantor to File on Behalf of
Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 6.07. Indemnification by the General Partner . . . . . . . . . . 19
SECTION 6.08. Fees, Charges and Expenses . . . . . . . . . . . . . . . . 19
SECTION 6.09. Appointment of Co-Trustee or Separate Trustee. . . . . . . 20
ARTICLE VII
AMENDMENT AND TERMINATION
SECTION 7.01. Supplemental Trust Agreement . . . . . . . . . . . . . . . 21
SECTION 7.02. Termination. . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE VIII
MERGER, CONSOLIDATION, ETC. OF GRANTOR
SECTION 8.01. Limitation on Permitted Merger Consolidation, Etc.
of Grantor . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Counterparts . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 9.02. Exclusive Benefits of Parties. . . . . . . . . . . . . . . 23
SECTION 9.03. Invalidity of Provisions . . . . . . . . . . . . . . . . . 23
SECTION 9.04. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 9.05. Trustee's Agents . . . . . . . . . . . . . . . . . . . . . 24
SECTION 9.06. Holders of Capital Securities Are Parties. . . . . . . . . 24
SECTION 9.07. Governing Law. . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 9.08. Headings . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 9.09. Capital Securities Non-Assessable and
Fully Paid . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 9.10. No Preemptive Rights . . . . . . . . . . . . . . . . . . . 25
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AMENDED AND RESTATED
TRUST AGREEMENT
AMENDED AND RESTATED TRUST AGREEMENT, dated as of
_______________, 1998 (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
______________, 1998 (the "Original Trust Agreement"), and a
Certificate of Trust filed with the Secretary of State of the
State of Delaware on _____________, 1998; 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 Capital Securities
each representing a __% Cumulative Preferred Security, Series D,
representing a limited partner interest of the Grantor (the
"Preferred Securities"); and
WHEREAS, interests in the Trust are to be evidenced by
Capital Security certificates executed 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 Capital Securities:
<PAGE>
"Affiliate" of any specified Person means any other
Person controlling or controlled by or under common control with
such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means
the power to direct the management and policies of such Person,
directly or indirectly whether through the ownership of voting
securities, by contract or otherwise, and the terms "controlling"
and "controlled" have meanings correlative to the foregoing.
"Business Day" means any day other than a day on which
banking institutions in the City of New York or the State of
Delaware are closed for business.
"Business Trust Act" shall have the meaning set forth
in the recitals to this Trust Agreement.
"Capital Security" shall mean a Capital Trust Pass-
through Security issued hereunder representing an interest in the
Trust equal to and representing a Preferred Security and
evidenced by a certificate executed by the Trustee pursuant to
Article III.
"Commission" shall have the meaning set forth in
Section 6.05 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 Depository 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 _____________, 1998, as amended from time to time
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<PAGE>
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 Capital Securities is registered on the
Register maintained by the Registrar for such purposes.
"Partnership Agreement" means the Amended and Restated
Limited Partnership Agreement of the Grantor dated as of July 25,
1994, as amended from time to time, together with any Action (as
defined in the Partnership Agreement) established by the General
Partner.
"Paying Agent" means the Person from time to time
acting as Paying Agent as provided in Section 4.05 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
Preferred Securities, Series D, 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.
"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 Capital Security 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.
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<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 national association, 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 III." The Trust exists for the sole
purpose of issuing Capital Securities 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 78,105 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 Capital Securities
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 Capital
Securities 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.
4
<PAGE>
(b) The Trustee hereby acknowledges receipt of
the Preferred Securities, registered in the name of the Trust,
and its acceptance on behalf of the Trust of the Preferred
Securities, and declares that the Trust shall hold the Preferred
Securities (including any Successor Securities) for the benefit
of the Holders.
SECTION 2.02. Trust Account. The Trustee shall open
an account entitled "PECO Energy Capital Trust III - 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
Trust.
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 Capital
Securities. With respect to the Trust, Holders of Capital
Securities 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.
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<PAGE>
ARTICLE III
FORM OF CAPITAL SECURITIES, EXECUTION AND
DELIVERY, TRANSFER AND SURRENDER OF CAPITAL SECURITIES
SECTION 3.01. Form and Transferability of Capital
Securities.
(a) Except as otherwise required by DTC, Capital
Securities shall be evidenced by certificates engraved or printed
or lithographed with steel-engraved borders and underlying tint
in substantially the form set forth in Exhibit A annexed to this
Trust Agreement, with the appropriate insertions, modifications
and omissions, as hereinafter provided.
(b) Certificates evidencing Capital Securities 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 Capital Security by manual
signature of a duly authorized signatory of the Registrar. No
certificate evidencing one or more Capital Securities 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 Capital Security certificate executed as
provided above and delivered as hereinafter provided.
(c) Certificates evidencing Capital Securities shall
be in denominations of any whole number of Preferred Securities.
All Capital Security certificates shall be dated the date of
their execution or countersignature.
(d) Certificates evidencing Capital Securities 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 Capital Securities may be listed or to
conform with any usage with respect thereto.
(e) Title to any Capital Security 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
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<PAGE>
any notice provided for in this Trust Agreement and for all other
purposes.
SECTION 3.02. Issuance of Capital Securities. 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 one or more
certificates evidencing the Capital Securities in the name of
DTC's nominee, who shall thereupon be the initial Holder of
Capital Securities.
SECTION 3.03. Registration, Transfer and Exchange of
Capital Securities. The Trustee shall cause a Register (the
"Register") to be kept at the office of the Registrar in which,
subject to such reasonable regulations as the Trustee and the
Registrar may prescribe, the Trustee shall provide for the
registration of Capital Security certificates and of transfers
and exchanges of Capital Security 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 Capital Security 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 Capital Security 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, Capital Security
certificates may be exchanged for other Capital Security
certificates representing the same number of Preferred
Securities. Upon surrender of a Capital Security certificate at
the office of the Registrar or such other office as the Trustee
may designate for the purpose of effecting an exchange of Capital
Security certificates, subject to the terms and conditions of
this Trust Agreement, the Trustee shall execute and deliver a new
Capital Security certificate representing the same number of
Preferred Securities as the Capital Security certificate
surrendered.
As a condition precedent to the registration of the
transfer or exchange of any Capital Security 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
7
<PAGE>
the Registrar may establish not inconsistent with the provisions
of this Trust Agreement.
No service charge shall be made to a Holder of Capital
Securities for any registration of transfer or exchange of
Capital Security 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 Capital Security certificates.
Neither the Trustee nor the Registrar shall be required
(a) to register the transfer of or exchange any Capital Security
certificate for a period beginning at the opening of business ten
days preceding any selection of Capital Securities to be redeemed
and ending at the close of business on the day of the mailing a
notice of redemption of Capital Securities or (b) to register the
transfer of or exchange of Capital Securities called or being
called for redemption in whole or in part, except as provided in
Section 4.02.
SECTION 3.04. Lost or Stolen Capital Securities, Etc.
In case any Capital Security certificate shall be mutilated or
destroyed or lost or stolen and in the absence of notice to the
Trustee that such Capital Security has been acquired by a
protected purchaser (as such term is used in Section 8-405(a)(1)
of the Delaware Uniform Commercial Code), the Trustee shall
execute and deliver a Capital Security certificate of like form
and tenor in exchange and substitution for such mutilated Capital
Security certificate or in lieu of and in substitution for such
destroyed, lost or stolen Capital Security 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 Capital Security 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 Capital Security certificate issued
pursuant to this Section 3.04 shall constitute complete and
indefeasible evidence of beneficial ownership in the Trust, as if
originally issued, whether or not the lost, stolen or destroyed
Capital Security certificate shall be found at any time.
SECTION 3.05. Cancellation and Destruction of
Surrendered Capital Securities. All Capital Security
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
Capital Security certificate, the Trustee may destroy such
cancelled Capital Security certificates.
8
<PAGE>
SECTION 3.06. Surrender of Capital Securities and
Withdrawal of Preferred Securities. Any Person who is the
beneficial owner (an "Owner") of the Capital Securities
represented by the global certificate held by DTC as reflected in
the records of the Clearing Agency or successor clearing agency
(the "Clearing Agency") or, if a participant in the Clearing
Agency is not the Owner, then as reflected in the records of a
Person maintaining an account with such Clearing Agency (directly
or indirectly), in accordance with the rules of such Clearing
Agency, may withdraw all, but not less than all, of the Preferred
Securities represented by such Capital Securities 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, all in form satisfactory to the Trustee, in its sole
discretion. Within a reasonable period after such request has
been properly made, (i) the Trustee shall instruct DTC to reduce the
number of Capital Securities represented by the global
certificate held by DTC by an amount equal to the number of
Capital Securities to be so withdrawn by the Owner, (ii) the Grantor
shall issue to the Owner a certificate, in form substantially
similar to that certificate attached hereto as Exhibit A to the
Partnership Agreement, representing the number of Preferred
Securities so withdrawn and (iii) the Trustee, on behalf of the Trust,
shall reduce the number of Preferred Securities represented by
the global certificate held by the Trustee by a like amount;
provided, that the Grantor shall not issue any fractional number
of Preferred Securities. If an Owner of Capital Securities
withdraws Preferred Securities in accordance with this Section
3.06, such Owner of Capital Securities shall cease to be an
Owner. The Preferred Securities will only be issued by the
Grantor in certificated form.
An Owner who wishes to withdraw 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 Owner's receipt of a
certificate evidencing such Preferred Securities registered in
such Owner's name.
The Trustee shall deliver the Preferred Securities
represented by the Capital Securities surrendered to the Owner in
accordance with this Section 3.06 at the Corporate Office, except
that, at the request, risk and expense of the Owner and for the
account of the Owner thereof, such delivery may be made at such
other place as may be designated by such Owner.
Notwithstanding anything in this Section 3.06 to the
contrary, if the Preferred Securities represented by Capital
Securities have been called for redemption in accordance with the
Partnership Agreement, no Owner of such Capital Securities may
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withdraw any or all of the Preferred Securities represented by
such Capital Securities.
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 Capital Securities represented by the global
certificate held by DTC by an amount equal to the Preferred
Securities to be deposited. The Capital Securities 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
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 Capital Security or Capital Securities,
the transfer, redemption or exchange of any Capital Security or
Capital Securities or the making of any distribution until such
proof or other information is filed, such certificates are
executed or such representations and warranties are made.
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ARTICLE IV
DISTRIBUTIONS AND OTHER RIGHTS OF HOLDERS OF CAPITAL SECURITIES
SECTION 4.01. Distributions of Semiannual
Distributions on Preferred Securities. Whenever the Trustee
shall receive any cash distribution representing a semiannual
distribution on the Preferred Securities (whether or not
distributed by the Grantor on the regular semiannual 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 Capital Securities on the record date fixed pursuant to
Section 4.04, such amounts in proportion to the respective
numbers of Preferred Securities represented by the Capital
Securities 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 Capital Securities 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 Capital
Securities. Such notice shall be mailed to the Holders of the
Capital Securities 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 Capital
Securities and the Preferred Securities are to be redeemed; that
all outstanding Capital Securities are to be redeemed or, in the
case of a redemption of fewer than all outstanding Capital
Securities in connection with a partial redemption of Preferred
Securities, the number of such Capital Securities to be so
redeemed; the place or places where Capital Securities to be
redeemed are to be surrendered for redemption; and specifying the
CUSIP number assigned to the Capital Securities. In case fewer
than all the outstanding Capital Securities are to be redeemed,
the Capital Securities 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 Capital
Securities from any national exchange on which the Capital
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Securities 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 Trust the
aggregate amount payable upon redemption of the Preferred
Securities to be redeemed, the Trustee, on behalf of the Trust,
shall redeem (using the funds so deposited with it) Capital
Securities 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 Capital Securities called for redemption shall be
deemed no longer to be outstanding and all rights of the Holders
of Capital Securities (except the right to receive the redemption
price in cash upon surrender of Capital Securities) shall cease
and terminate. Upon surrender in accordance with said notice of
the Capital Securities endorsed or assigned for transfer, if the
Trustee shall so require, the Holders of such Capital Securities
shall receive for each such Capital Security 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 Capital Securities of any
Holder are called for redemption, the Registrar will deliver to
the Holder of such Capital Securities upon surrender of the
certificate evidencing such Capital Securities a new certificate
evidencing the number of Capital Securities not called for
redemption.
SECTION 4.03. Distributions in Liquidation of Grantor.
Upon and to the extent of receipt by the Trust of any
distribution from the Grantor upon the liquidation of the Grantor
or any payment under the Guarantee in respect thereof pursuant to
Article V of this Trust Agreement, after satisfaction of
creditors of the Trust as required by applicable law, the Trustee
shall distribute to the Holders of Capital Securities 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 Capital Securities held by such Holders.
SECTION 4.04. Fixing of Record Date for Holders of
Capital Securities. 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
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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, of which the General Partner shall promptly
inform the Trustee) for the determination of the Holders of
Capital Securities 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
semiannual distributions on, the redemption price of, and
distributions in liquidation on, the Capital Securities. 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
Capital Securities. The aforesaid appointment and designation
shall remain in effect until changed by the Grantor. Payments of
semiannual distributions on the Capital Securities 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 Capital Securities and
distributions in liquidation shall be made upon surrender of such
Capital Securities at the office of the Paying Agent. The
Grantor shall pay semiannual distributions on, the redemption
price of, and distributions in liquidation on, the Preferred
Securities directly to the Paying Agent for distribution to the
Holders 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 Capital
Securities of such right, request direction of each Holder of a
Capital Security as to the appointment of a Special
Representative and vote the Preferred Securities represented by
such Capital Security 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 Capital
Securities and, if so directed by the Holders of Capital
Securities 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.
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(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
Capital Securities 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 Capital Securities 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 Capital Securities,
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 Capital Security on such record date, the Trustee shall vote
or cause to be voted the number of Preferred Securities
represented by the Capital Securities evidenced by such Capital
Security 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 Capital Security, the Trustee
will abstain from voting to the extent of the Preferred
Securities represented by such Capital Security.
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 Capital Securities
then outstanding shall thenceforth represent the proportionate
interests of Holders thereof in the new deposited property so
received in exchange for or upon conversion or in respect of such
Preferred Securities.
ARTICLE V
THE GUARANTEE
SECTION 5.01. The Guarantee. In connection with the
issuance of the Preferred Securities, PECO Energy has delivered
to the General Partner the Guarantee for the benefit of the
holders of the Preferred Securities. If the General Partner or
the Grantor receives any payment under the Guarantee, the General
Partner or the Grantor, as the case may be, will immediately
transfer such payment to the Trustee. All rights to enforce the
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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 Capital Securities 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
Capital Securities 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 Capital Security to
Holders of Capital Securities 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 Capital Securities that in its
opinion 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.
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The Grantor may instruct the Trustee to dissolve the
Trust and distribute the Trust Estate on a pro rata basis to the
Holders if the Trust, at any time, is subject to federal income
tax with respect to interest received on its allocable share of
interest on the Deferrable Interest Subordinated Debentures,
Series D issued by PECO Energy Company received by the Grantor,
or the Trust is subject to more than a de minimis amount of other
taxes, duties or other governmental charges or if an Investment Company
Act Event shall occur and be continuing. "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 the Trust is or will be considered an "Investment
Company" which is required to be registered under the Investment Company
Act of 1940, as amended, which Change in 1940 Act Law becomes effective
on or after the date of the issuance of the Capital Securities.
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 ten 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 to any Holder or any
other party having an interest hereunder 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
Capital Security 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 from any and all liability 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
Capital Securities 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 liability
for or responsibility with respect to the issuance of Capital
Securities or as to the validity of the registration statement
pursuant to which the Capital Securities are registered under the
Securities Act, the Preferred Securities, the Guarantee or the
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Capital Securities (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.
The Trustee assumes no responsibility for the
correctness of the description that appears in the Capital
Securities, 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 Capital
Securities, the Trustee makes no warranties or representations as
to the validity, genuineness or sufficiency of any Preferred
Securities or the Guarantee or of the Capital Securities, as to
the validity or sufficiency of this Trust Agreement, as to the
value of the Capital Securities or as to any right, title or
interest of the Holders of Capital Securities, 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 Section 6.02 of the 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,
provided that an Event of Default has not occurred and is then
continuing under the Indenture dated as of July 1, 1994 between
PECO Energy and First Union National Bank, as successor trustee,
as supplemented from time to time, or the Guarantee, 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
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Trustee may petition a court of competent jurisdiction to appoint
a successor trustee, and the expenses of such proceeding shall be
borne by the General Partner. 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 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 Capital Securities. Any
successor Trustee shall promptly mail notice of its appointment
to the Holders of Capital Securities.
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, which record
date shall become the record date with respect to the Capital
Securities pursuant to Section 4.04 hereof, 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 Capital Securities, 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 Capital
Securities 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 Capital
Securities 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
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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 Capital Securities.
SECTION 6.06. Appointment of Grantor to File on Behalf
of Trust. The Grantor and the Trustee hereby authorize and
direct the Grantor, if the Grantor deems it necessary,
appropriate or convenient to do, as the sponsor of the Trust (and
any of the following are hereby confirmed if such action has been
taken) (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 amended, of the Capital Securities 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 Capital Securities
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
Capital Securities 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
Capital Securities 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 Capital Securities, except for any liability
arising out of gross 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
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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 Capital Securities 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 property of the
Trust must at the time be located, the Trustee shall have the
power and may execute and deliver all instruments to appoint one
or more Persons to act as co-trustee or co-trustees, or separate
trustee or separate trustees, of all or any part of the Trust,
and to vest in such Person or Persons, in such capacity and for
the benefit of the Holders, such title to the Trust, or any part
thereof, and, subject to the other provisions of this Section
6.09, such powers, duties, obligations, rights and trusts as the
Trustee may consider necessary or desirable. No co-trustee or
separate trustee hereunder shall be required to meet the terms of
eligibility as successor trustee under Section 6.03 and no notice
to the Holders of the appointment of any co-trustee or separate
trustee shall be required.
(b) Every separate trustee and co-trustee shall, to
the extent permitted by law, be appointed and act subject to the
following provisions and conditions:
(i) all rights, powers, duties and obligations
conferred or imposed upon and exercised or performed by the
Trustee and such separate trustee or co-trustee jointly (it
being understood that such separate trustee or co-trustee is
not authorized to act separately without the Trustee joining
in such act), except to the extent that under any laws of
any jurisdiction in which any particular act or acts are to
be performed, the Trustee shall be incompetent or
unqualified to perform such act or acts, in which event,
such rights, powers, duties and obligations (including the
holding of title to the Trust or any portion thereof in any
such jurisdiction) shall be exercised and performed singly
by such separate trustee or co-trustee, but solely at the
direction of the Trustee;
(ii) no Trustee hereunder shall be personally
liable by reason of any act or omission of any other trustee
hereunder; and
(iii) the Trustee may at any time accept the
resignation of or remove any separate trustee or co-trustee.
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(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
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, and the Trustee may, 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
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(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 Capital Securities.
SECTION 7.02. Termination. The Trust Agreement shall
terminate on the date that all outstanding Capital Securities
have been redeemed or there has been a final distribution in
respect of the Preferred Securities in connection with any
liquidation, dissolution or winding up of the Grantor and such
distribution has been made to the Holders of the Capital
Securities. 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
Capital Securities 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 Capital Securities to be delisted by any national
securities exchange or other organization on which the Capital
Securities are then listed, (ii) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not
cause the Capital Securities to be downgraded by any "nationally
recognized statistical rating organization," as that term is
defined by the Commission for purposes of Rule 436(g)(2) under
the Securities Act 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 Capital Securities will not
recognize any gain or loss for Federal income tax purposes as a
result of the merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease.
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ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Counterparts. This Trust Agreement may
be executed by the Grantor, the Trustee and the General Partner
in separate counterparts, each of which counterparts, when so
executed and delivered shall be deemed an original, but all such
counterparts taken together shall constitute one and the same
instrument. Delivery of an executed counterpart of a signature
page to this Trust Agreement by telecopier shall be effective as
delivery of a manually executed counterpart of this Trust
Agreement. Copies of this Trust Agreement shall be filed with
the Trustee and any Trustee's agents appointed pursuant to
Section 9.05 and shall be open to inspection during business
hours at the Corporate Office and the respective offices of such
Trustee's agents, if any, by any Holder of a Capital Security.
SECTION 9.02. Exclusive Benefits of Parties. This
Trust Agreement is for the exclusive benefit of the parties
hereto and the Holders of the Capital Securities 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 Capital Securities 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 Capital Securities 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 Capital Security
hereunder or under the Capital Securities 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
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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 or on behalf of the other parties hereof or from any
Holder of a Capital Security, 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 Capital Securities Are
Parties. Notwithstanding that Holders of Capital Securities have
not executed and delivered this Trust Agreement or any
counterpart thereof, the Holders of Capital Securities from time
to time shall be bound by all of the terms and conditions hereof
and of the Capital Securities by acceptance of delivery of
Capital Securities.
SECTION 9.07. Governing Law. This Trust Agreement and
the Capital Securities 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 Capital
Security 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
Capital Securities.
SECTION 9.09. Capital Securities Non-Assessable and
Fully Paid. The Holders of the Capital Securities shall not be
personally liable for obligations of the Trust, the interests in
the Trust represented by the Capital Securities shall be
non-assessable for any losses or expenses of the Trust or for any
reason whatsoever, and the Capital Securities upon delivery
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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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<PAGE>
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, as
trustee
By: ______________________________
Name:
Title:
The General Partner joins in this Trust Agreement solely for
the purposes of obligating itself under Sections 4.04, 4.06,
6.01, 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
CAPITAL TRUST PASS-THROUGH SECURITIES
OF PECO ENERGY CAPITAL TRUST III,
a Delaware Business Trust,
each Representing a ____% Cumulative
Preferred Security, Series D of
PECO Energy Capital, L.P. (a Delaware limited partnership)
No. _________ ___________ Capital Securities
First Union Trust Company, National Association, not in
its individual capacity, but solely as Trustee (the "Trustee") on
behalf of the above-named Trust, hereby certifies that
______________ is the registered owner of ____________ Capital
Trust Pass-through Securities ("Capital Securities"), each
representing a ____% Cumulative Preferred Security, Series D (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 III dated as of
________________, 1998 (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
Capital Securities, 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 Capital Securities 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 Capital Securities 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
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and any other Holder, each Holder shall be entitled to enforce in
the name of the Trust the Trust's rights under the Preferred
Securities represented by the Capital Securities held by such
Holder and any recovery on such 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 Capital Securities may withdraw
all, but not less than all, of the Preferred Securities
represented by such Capital Securities 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 Grantor shall not issue any
fractional number of Preferred Securities.
3. Distributions of Semiannual Distributions on
Preferred Securities. Whenever and to the extent the Trustee
shall receive any cash distribution representing a semiannual
distribution on the Preferred Securities (whether or not
distributed by the Grantor on the regular semiannual distribution
date therefor) or payment by PECO Energy Company ("PECO Energy")
under the Payment and Guarantee Agreement dated as of
_____________, 1998 (the "Guarantee") in respect thereof, the
Trustee acting directly or through any Paying Agent shall
distribute to Holders of Capital Securities on the record date
therefor, such amounts in proportion to the respective numbers of
Preferred Securities represented by the Capital Securities 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, with first-class postage
prepaid, notice of the redemption of Preferred Securities and the
proposed simultaneous redemption of the Capital Securities 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
Capital Securities. Such notice shall be mailed to the Holders
of the Capital Securities, 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
Capital Securities are to be redeemed, the Capital Securities 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 Trust the aggregate amount payable upon
redemption of the Preferred Securities to be redeemed, the
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Trustee, on behalf of the Trust, shall redeem (using the funds so
deposited with it) Capital Securities representing the same
number of Preferred Securities to be redeemed by the Grantor.
5. Distributions in Liquidation. Upon receipt by the
Trustee of any distribution from the Grantor upon the liquidation
of the Grantor or any payment under the Guarantee in respect
thereof, after satisfaction of creditors of the Trust required by
applicable law, the Trustee shall distribute to Holders of
Capital Securities on the record date therefor, such amounts in
proportion to the respective number of Preferred Securities which
were represented by the Capital Securities held by such Holders.
6. Fixing of Record Date for Holders of Capital
Securities. 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
Capital Securities 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 semiannual
distributions on the Capital Securities 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 Capital Securities and distributions in
liquidation shall be made against surrender of such Capital
Securities 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 Capital Securities of such right,
request direction of each Holder of a Capital Security and vote
the Preferred Securities represented by such Capital Security 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 Capital Securities and, if so directed
by the Holders of Capital Securities 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.
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(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 Capital Securities a notice, which shall be provided
by the Grantor and which shall contain (i) such information as is
contained in such notice of meeting, (ii) a statement that the
Holders of Capital Securities 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 Capital Securities, 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 Capital Security on such
record date, the Trustee shall vote or cause to be voted the
number of Preferred Securities represented by the Capital
Securities in accordance with the instructions set forth in such
request. In the absence of specific instructions from the Holder
of a Capital Security, the Trustee will abstain from voting to
the extent of the Preferred Securities represented by such
Capital Security.
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 Capital Securities
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 Capital Securities.
Subject to the terms and conditions of the Trust Agreement, the
Trustee shall register the transfer on its books from time to
time of Capital Security 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 Capital
Security representing the same aggregate number of the Capital
Securities 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 Capital Security at the Corporate
Office or such other office as the Trustee may designate for the
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<PAGE>
purpose of effecting an exchange of Capital Security
certificates, subject to the terms and conditions of the Trust
Agreement, the Trustee shall execute and deliver a new Capital
Security certificate representing the same number of Preferred
Securities as the Capital Security certificate surrendered.
As a condition precedent to the registration of a
transfer or exchange of any Capital Security 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 Capital Security
certificate for a period beginning at the opening of business ten
days next preceding any selection of Capital Securities to be
redeemed and ending at the close of business on the day of the
mailing of a notice of redemption of Capital Securities or (b) to
transfer or exchange Capital Securities called or being called
for redemption in whole or in part.
11. Title to Capital Securities. It is a condition of
the Capital Securities, and every successive Holder hereof by
accepting or holding the same consents and agrees, that title to
this Capital Security 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 Capital Security 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 Capital
Securities 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
Capital Securities, which books at all reasonable times will be
open for inspection by the Holders of Capital Securities 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
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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; (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; (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 Capital Securities.
14. Governing Law. The Trust Agreement and this
Capital Security 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. Capital Security Non-Assessable and Fully Paid.
Holders of Capital Securities shall not be personally liable for
obligations of the Trust, the interest in the Trust represented
by the Capital Securities shall be non-assessable for any losses
or expenses of the Trust or for any reason whatsoever and the
Capital Securities upon delivery thereof by the Trustee pursuant
to the Trust Agreement are and shall be deemed fully paid.
16. Liability of Holders of Capital Securities.
Holders of Capital Securities 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 Capital Security certificate shall not be entitled
to any benefits under the Trust Agreement or be valid or
obligatory for any purpose unless this Capital Security
certificate shall have been executed manually or, if a Registrar
for the Capital Securities (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
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of the Trustee, shall have been countersigned manually by such
Registrar by the signature of a duly authorized signatory.
THE TRUSTEE IS NOT RESPONSIBLE FOR THE VALIDITY OF ANY
PREFERRED SECURITIES. THE TRUSTEE ASSUMES NO RESPONSIBILITY FOR
THE CORRECTNESS OF THE FOREGOING DESCRIPTION WHICH CAN BE TAKEN
AS A STATEMENT OF THE GRANTOR SUMMARIZING CERTAIN PROVISIONS OF
THE TRUST AGREEMENT. THE TRUSTEE MAKES NO WARRANTIES OR
REPRESENTATIONS AS TO THE VALIDITY, GENUINENESS OR SUFFICIENCY OF
PREFERRED SECURITIES OR OF CAPITAL SECURITIES; AS TO THE VALIDITY
OR SUFFICIENCY OF THE TRUST AGREEMENT; AS TO THE VALUE OF CAPITAL
SECURITIES OR AS TO ANY RIGHT, TITLE OR INTEREST OF THE HOLDERS
OF CAPITAL SECURITIES IN AND TO CAPITAL SECURITIES.
Dated: _____________, 1998
First Union Trust Company, National
Association, not in its individual
capacity, but solely as Trustee on
behalf of the Trust,
By: ______________________________
Name:
Title:
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[FORM OF ASSIGNMENT]
FOR VALUE RECEIVED, the undersigned hereby sells,
assigns, and transfers unto ____________________ the within
Capital Security Certificate and all rights and interests
represented by the Capital Securities 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 Capital
Security in every particular,
without alteration or
enlargement or any change
whatever.
Signature Guarantee:
_______________________
PAYMENT AND GUARANTEE AGREEMENT
THIS PAYMENT AND GUARANTEE AGREEMENT ("Guarantee
Agreement"), dated as of ______________, 1998, 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 D 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 $78,105,000 aggregate stated liquidation preference of
limited partner interests of a series designated the __%
Cumulative Preferred Securities, Series D (the "Series D
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 D Subordinated
Debt Securities (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 D 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").
"Capital Securities" shall mean the Capital Trust Pass-
through Securities issued by the Trust each representing a Series
D Preferred Security.
<PAGE>
"Guarantee Payments" shall mean the following payments,
without duplication, to the extent not paid by PECO Energy
Capital: (i) any accumulated and unpaid semiannual distributions
on the Series D 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 D 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 D 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 D 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, the Second Supplemental Indenture, dated as of June 1,
1997, between the Guarantor and First Union National Bank, as
trustee, and the Third Supplemental Indenture, dated as of
_______________, 1998, 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 $1,000 per Series D
Preferred Security and all accumulated and unpaid distributions
to the date of payment.
"Redemption Price" shall mean the aggregate of $1,000
per Series D Preferred Security and all accumulated and unpaid
distributions to the date fixed for redemption.
"Special Representative" shall mean any representative
of the Holders appointed pursuant to Section 13.02(d) of the
Limited Partnership Agreement.
"Supplemental Indenture" shall mean the Third
Supplemental Indenture, dated as of __________, 1998, between the
Guarantor and First Union National Bank, as trustee, pursuant to
which the Guarantor has issued its __% Subordinated Deferrable
Interest Debentures, Series D (the "Series D Subordinated Debt
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<PAGE>
Securities") in an amount equal to the aggregate stated
liquidation preference of the Series D Preferred Securities and
the G.P. Capital Contribution.
"Trust" shall mean PECO Energy Capital Trust III, a
Delaware business trust.
"Trust Agreement" shall mean the Amended and Restated
Trust Agreement of PECO Energy Capital Trust III, 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 ____________, 1998.
"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 D Subordinated Debt
Securities and the Guarantor shall not be obligated hereunder to
pay during an Extension Period any semiannual distributions on
the Series D Preferred Securities which are not paid by PECO
Energy Capital during such Extension Period.
SECTION 2.02. The Guarantor hereby waives notice of
acceptance of this Guarantee Agreement and of any liability to
which it applies or may apply, presentment, demand for payment,
protest, notice of nonpayment, notice of dishonor, notice of
redemption and all other notices and demands.
SECTION 2.03. Except as otherwise set forth herein,
the obligations, covenants, agreements and duties of the
Guarantor under this Guarantee Agreement shall in no way be
affected or impaired by reason of the happening from time to time
of any of the following:
(a) the release or waiver, by operation of law or
otherwise, of the performance or observance by PECO Energy
Capital of any express or implied agreement, covenant, term or
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<PAGE>
condition relating to the Series D 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 D Preferred Securities or
the extension of time for the performance of any other obligation
under, arising out of, or in connection with, the Series D
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 D
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 D 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
Capital Securities, together with the holders of the Series D
Preferred Securities other than the Trust, representing not less
than 10% in aggregate stated liquidation preference of the Series
D 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
4
<PAGE>
provided, any holder of Capital Securities representing Series D
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 D Preferred Securities
and that the Guarantor shall be liable as principal and sole
debtor hereunder to make Guarantee Payments pursuant to the terms
of this Guarantee Agreement notwithstanding the occurrence of any
event referred to in subsections (a) through (f), inclusive, of
Section 2.03 hereof.
ARTICLE III
SECTION 3.01. So long as any Series D 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
5
<PAGE>
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 D 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 D 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 D Preferred Securities or under
this Guarantee Agreement for any reason whatsoever.
ARTICLE V
SECTION 5.01. All guarantees and agreements contained
in this Guarantee Agreement shall bind the successors, assigns,
receivers, trustees and representatives of the Guarantor and
shall inure to the benefit of the Holders. Except as provided in
Section 3.02, the Guarantor may not assign its obligations
hereunder without the prior approval of the Holders of not less
than 66-2/3% of the aggregate stated liquidation preference of all
Series D Preferred Securities then outstanding.
SECTION 5.02. This Guarantee Agreement may only be
amended by a written instrument executed by the Guarantor;
6
<PAGE>
provided that, so long as any of the Series D Preferred
Securities remain outstanding, any amendment that materially
adversely affects the Holders, any termination of this Guarantee
Agreement or any waiver of compliance with any covenant hereunder
shall be effected only with the prior approval of the holders of
Capital Securities together with the holders of Series D
Preferred Securities other than the Trust, representing not less
than 66-2/3% of the aggregate liquidation preference of all Series D
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 D Preferred Securities.
SECTION 5.05. This Guarantee Agreement shall be
governed by and construed and interpreted in accordance with the
laws of the Commonwealth of Pennsylvania without giving effect to
the conflict of law principles thereof.
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
7
March 13, 1998
PECO Energy Company
2301 Market Street
Philadelphia, PA 19101
Re: Capital Trust Pass-through Securities of PECO
Energy Capital Trust III, Representing Cumulative
Preferred Securities, Series D 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 III (the "Trust") of its Capital Trust Pass-through
Securities (the "Capital Securities"), each representing a
Cumulative Preferred Security, Series D (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 D (the "Subordinated
Debentures"), and the registration of the Capital Securities, 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 Third 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 Capital
<PAGE>
PECO Energy Company
March 13, 1998
Page 2
Securities, 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 Capital Securities:
(i) the general partner of PECO Energy Capital
will authorize the issuance of, and determine
the terms of, the Preferred Securities, which
will be purchased by the Trust with the
proceeds from the issuance of the Capital
Securities;
(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;
(v) Amendment No. 3 to the Amended and Restated
Limited Partnership Agreement of PECO Energy
Capital will be executed by PECO Energy
Capital Corp., as the sole general partner of
PECO Energy Capital, and PECO Energy Capital
Corp. on behalf of the Preferred Partners (as
defined therein); and
<PAGE>
PECO Energy Company
March 13, 1998
Page 3
(d) The Indenture is and the Supplemental Indenture
will be qualified in accordance with the provisions of the Trust
Indenture Act of 1939, as amended.
Based on the foregoing, we are of the opinion that:
1. When properly executed, authenticated, delivered
and paid for, as provided in the Indenture and the Supplemental
Indenture, the Subordinated Debentures will be legally issued,
valid and binding obligations of the Company.
2. When executed and delivered by the Company, the
Guarantee will be a valid and binding obligation of the Company.
We consent to the filing of this opinion as an Exhibit
to the Registration Statement and to the references to this firm
under the headings "Legal Matters" and "United States Taxation"
in the Prospectus included in the Registration Statement.
Very truly yours,
/s/ Ballard Spahr Andrews &
Ingersoll, LLP
[Letterhead of Richards, Layton & Finger, P.A.]
March 13, 1998
PECO Energy Capital, L.P.
1013 Centre Road, Suite 350F
Wilmington, DE 19805
PECO Energy Capital Trust III
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 III
---------------------------------
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 III, 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:
(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, 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, and the Action of the General Partner, dated
as of June 6, 1997, relating to the 8% Cumulative Monthly Income Preferred
Securities, Series C, 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 Amendment");
(f) A form of Amendment No. 3 to the Amended Agreement (the "Third
Partnership Amendment") (the Amended Agreement as amended by the First
Partnership Amendment, the Second Partnership Amendment and the Third
Partnership Amendment being hereinafter referred to as the "Partnership
Agreement"), attached as an exhibit to the Registration Statement (as
defined below);
(g) A form of Action of the General Partner, relating to the Preferred
Partner Interests (as defined below) (the "Action"), attached as an exhibit
to the Registration Statement;
(h) The Certificate of Trust of the Trust, dated as of March 13, 1998
(the "Trust Certificate"), as filed in the office of the Secretary of State
on March 13, 1998;
(i) The Trust Agreement of the Trust, dated as of March 13, 1998,
among the Partnership, First Union Trust Company, National Association, as
trustee of the Trust (the "Trustee"), and, for limited purposes, the
General Partner;
(j) 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;
(k) The Registration Statement (the "Registration Statement") on Form
S-3, including a related prospectus (the "Prospectus"), relating to the
___% Cumulative Preferred Securities, Series D, of the Partnership (each, a
"Preferred Partner Interest" and collectively, the "Preferred Partner
Interests") and to the Capital Trust Pass-through Securities of the Trust
(each, a "Capital Security" and collectively, the "Capital Securities"), as
proposed to be filed by PECO Energy Company, a Pennsylvania corporation,
the Partnership and the Trust with the Securities and Exchange Commission
on or about March 13, 1998;
(l) A Certificate of Good Standing for the Partnership, dated March 13,
1998, obtained from the Secretary of State; and
(m) A Certificate of Good Standing for the Trust, dated March 13, 1998,
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 (m) above. In
particular, we have not reviewed any document (other than the documents
listed in paragraphs (a) through (m) 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 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 Capital
Security 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 Capital Security
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. Section 17-101, et seq.) (the "Partnership
Act"), including all information with respect to all Persons to be admitted
as Partners and their contributions to the Partnership, (x) that the
Preferred Partner Interests are issued and sold to the Preferred Partners
in accordance with the Registration Statement and the LP Agreement, and
(xi) that the Capital Securities 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.
2. Assuming that the Preferred Partners, as limited partners of the
Partnership, do not participate in the control of the business of the
Partnership, upon issuance and payment as contemplated by the LP Agreement,
the Preferred Partner Interests will represent valid and, subject to the
qualifications set forth herein, will be fully paid and nonassessable
limited partner interests in the Partnership, as to which the Preferred
Partners, as limited partners of the Partnership, will have no liability in
excess of their obligations to make payments provided for in the LP
Agreement and their share of the Partnership's assets and undistributed
profits (subject to the obligation of a Preferred Partner to repay any
funds wrongfully distributed to it).
3. There are no provisions in the LP Agreement the inclusion of which,
subject to the terms and conditions therein, or, assuming that the
Preferred Partners, as limited partners of the Partnership, take no action
other than actions permitted by the LP Agreement, the exercise of which, in
accordance with the terms and conditions therein, would cause the Preferred
Partners, as limited partners of the Partnership, to be deemed to be
participating in the control of the business of the Partnership.
4. The Trust has been duly created and is validly existing in good
standing as a business trust under the Delaware Business Trust Act (12 Del.
C. Section 3801, et seq.).
5. The Capital Securities 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 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, P.A.
March 13, 1998
PECO Energy Company
2301 Market Street
Philadelphia, PA 19101
Ladies and Gentlemen:
We have acted as special counsel to you (the "Company")
in connection with the registration of Capital Trust Pass-through
Securities to be issued by PECO Energy Capital Trust III,
representing Cumulative Preferred Securities, Series D of PECO
Energy Capital, L.P. and the registration of the related Payment
and Guarantee Agreement and Deferrable Interest Subordinated
Debentures, Series D 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, LLP
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form S-3
of our report dated February 2, 1998, 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".
COOPERS & LYBRAND L.L.P.
Philadelphia, Pennsylvania
March 13, 1998
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that I, SUSAN W. CATHERWOOD of BRYN MAWR,
PA, do hereby appoint C. A. MC NEILL, JR, 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: February 23, 1998
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that I, DANIEL L. COOPER of WYOMISSING, PA,
do hereby appoint C. A. MC NEILL, JR, 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/ Daniel L. Cooper
________________________________
DATE: February 23, 1998
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that I, M. WALTER D'ALESSIO of PHILADELPHIA,
PA, do hereby appoint C. A. MC NEILL, JR., 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: February 23, 1998
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that I, G. FRED DiBONA, JR. of BRYN MAWR,
PA, do hereby appoint C. A. MC NEILL, JR., 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, Jr.
________________________________
DATE: February 23, 1998
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that I, R. KEITH ELLIOTT of MENDENHALL, PA,
do hereby appoint C. A. MC NEILL, JR., 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: February 23, 1998
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that I, RICHARD G. GILMORE of BRADENTON, FL,
do hereby appoint C. A. MC NEILL, JR., 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: February 23, 1998
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that I, RICHARD H. GLANTON of PHILADELPHIA,
PA, do hereby appoint C. A. MC NEILL, JR., 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: February 23, 1998
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that I, JAMES A. HAGEN of WILMINGTON, NC, do
hereby appoint C. A. MC NEILL, JR., 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: February 23, 1998
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that I, KINNAIRD R. McKEE of OXFORD, MD, do
hereby appoint C. A. MC NEILL, JR., 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: February 23, 1998
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that I, JOSEPH J. McLAUGHLIN of ROSEMONT,
PA, do hereby appoint C. A. MC NEILL, JR., 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: February 23, 1998
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that I, JOHN M. PALMS, PhD. of COLUMBIA, SC,
do hereby appoint C. A. MC NEILL, JR., 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, PhD.
________________________________
DATE: February 23, 1998
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that I, JOSEPH F. PAQUETTE, JR. of GLADWYNE,
PA, do hereby appoint C. A. MC NEILL, JR., 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 F. Paquette, Jr.
________________________________
DATE: February 23, 1998
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that I, RONALD RUBIN of NARBERTH, PA, do
hereby appoint C. A. MC NEILL, JR., 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: February 23, 1998
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that I, ROBERT SUBIN of BLUE BELL, PA, do
hereby appoint C. A. MC NEILL, JR., 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: February 23, 1998
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.)
301 South College Street, 1 First Union Center,
Charlotte, North Carolina
--------------------------------------------------------------
(Address of Principal Executive Offices)
28288
--------------------------------------------------------------
(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)
% JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES, SERIES D
--------------------------------------------------------------
(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
Richmond, Virginia 23219
Federal Deposit Insurance Corporation
Washington, D.C. 20429
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
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.
2
<PAGE>
5. Interlocking directorates and similar relationships with the
obligor or underwriters.
If the trustee or any of the directors or executive officers of the
trustee is a director, officer, partner, employee, appointee, or
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
3
<PAGE>
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:
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.
None.
(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.
None
14. Affiliations with the underwriters.
If any underwriter is an affiliate of the trustee, describe each
such affiliation.
4
<PAGE>
Not applicable - see answer to item 13.
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.
_X_ 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.*
_X_ 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.
_X_ 7. Copy of report of condition of the trustee at the close of
business on December 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 incorporated herein by
reference.
5
<PAGE>
NOTE
The trustee disclaims responsibility for the accuracy or
completeness of information contained in this Statement of Eligibility
and Qualification not known to the trustee and not obtainable by it
through reasonable investigation and as to which information it has
obtained from the obligor and has had to rely or will obtain from the
principal underwriters and will have to rely.
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 13th day of March,
1998.
FIRST UNION NATIONAL BANK
By:_____________________
/s/ George J. Rayzis
Vice President
6
<PAGE>
EXHIBIT 1
CHARTER NO. 22693
FIRST UNION NATIONAL BANK
ARTICLES OF ASSOCIATION
(AS RESTATED EFFECTIVE FEBRUARY 26, 1998)
For purposes of organizing an Association to carry on the
business of banking under the laws of the United States, the
undersigned do enter into the following Articles of
Association:
FIRST. The title of this Association shall be First
Union National Bank.
SECOND. The Main Office of the Association shall be in
Charlotte, County of Mecklenburg, State of North Carolina.
The general business of the Association shall be conducted at
its main office and its branches.
THIRD. The Board of Directors of this Association shall
consist of not less than five nor more than twenty-five
directors, the exact number of directors within such minimum
and maximum limits to be fixed and determined from time to
time by resolution of a majority of the full Board of
Directors or by resolution of the shareholders at any annual
or special meeting thereof. Unless otherwise provided by the
laws of the United States, any vacancy in the Board of
Directors for any reason, including an increase in the number
thereof, may be filled by action of the Board of Directors.
FOURTH. The annual meeting of the shareholders for the
election of directors and the transaction of whatever other
business may be brought before said meeting shall be held at
the main office or such other place as the Board of Directors
may designate, on the day of each year specified therefor in
the By-Laws, but if no election is held on that day, it may be
held on any subsequent day according to the provisions of law;
and all elections shall be held according to such lawful
regulations as may prescribed by the Board of Directors.
Nominations for election to the Board of Directors may be
made by the Board of Directors or by any stockholder of any
outstanding class of capital stock of the bank entitled to
vote for election of directors. Nominations, other than those
made by or on behalf of the existing management of the bank,
shall be made in writing and shall be delivered or mailed to
the President of the bank and to the Comptroller of the
Currency, Washington, D.C., not less than 14 days nor more
than 50 days prior to any meeting of stockholders called for
the election of directors, provided, however, that if less
than 21 days' notice of the meeting is given to shareholders,
such nomination shall be mailed or delivered to the President
of the Bank and to the Comptroller of the Currency not later
than the close of business on the seventh day following the
day on which the notice of meeting was mailed. Such
notification shall contain the following information to the
extent known to the notifying shareholder: (a) the name and
address of each proposed nominee; (b) the principal occupation
of each proposed nominee; (c) the total number of shares of
capital stock of the bank that will be voted for each proposed
nominee; (d) the name and residence address of the
7
<PAGE>
notifying shareholder; and (e) the number of shares of capital
stock of the bank owned by the notifying shareholder. Nominations
not made in accordance herewith may, in his discretion, be
disregarded by the Chairman of the meeting, and upon his
instructions, the vote tellers may disregard all votes cast
for each such nominee.
FIFTH.
(a) General. The amount of capital stock of
this Association shall be (i) 25,000,000 shares of common
stock of the par value of twenty dollars ($20.00) each (the
"Common Stock") and (ii) 160,540 shares of preferred stock of
the par value of one dollar ($1.00) each (the "Non-Cumulative
Preferred Stock"), having the rights, privileges and
preferences set forth below, but said capital stock may be
increased or decreased from time to time in accordance with
the provisions of the laws of the United States.
(b) Terms of the Non-Cumulative Preferred Stock.
1. General. Each share of Non-Cumulative Preferred
Stock shall be identical in all respects with the other shares
of Non-Cumulative Preferred Stock. The authorized
number of shares of Non-Cumulative Preferred Stock may
from time to time be increased or decreased (but not
below the number then outstanding) by the Board of Directors.
Shares of Non-Cumulative Preferred Stock redeemed by the
Association shall be canceled and shall revert to authorized
but unissued shares of Non-Cumulative Preferred Stock.
2. Dividends.
(a) General. The holders of Non-Cumulative Preferred
Stock shall be entitled to receive, when, as and if declared
by the Board of Directors, but only out of funds legally
available therefor, non-cumulative cash dividends at the
annual rate of $83.75 per share, and no more, payable
quarterly on the first days of December, March, June and
September, respectively, in each year with respect to the
quarterly dividend period (or portion thereof) ending on the
day preceding such respective dividend payment date, to
shareholders of record on the respective date, not exceeding
fifty days preceding such dividend payment date, fixed for
that purpose by the Board of Directors in advance of payment
of each particular dividend. Notwithstanding the foregoing,
the cash dividend to be paid on the first dividend payment
date after the initial issuance of Non-Cumulative Preferred
Stock and on any dividend payment date with respect to a
partial dividend period shall be $83.75 per share multiplied
by the fraction produced by dividing the number of days since
such initial issuance or in such partial dividend period, as
the case may be, by 360.
(b) Non-cumulative Dividends. Dividends on the
shares of Non-Cumulative Stock shall not be cumulative and no
rights shall accrue to the holders of shares of Non-Cumulative
Preferred Stock by reason of the fact that the Association may
fail to declare or pay dividends on the shares of Non-
Cumulative Preferred Stock in any amount in any quarterly
dividend period, whether or not the earnings of the
Association in any quarterly dividend period were sufficient
to pay such dividends in whole or in part, and the Association
shall have no obligation at any time to pay any such dividend.
(c) Payment of Dividends. So long as any share of
Non-Cumulative Preferred Stock remains outstanding, no
dividend whatsoever shall be paid or declared and no
distribution made on any junior stock other than a dividend
payable in junior stock, and no shares of junior stock shall
be purchased, redeemed or otherwise acquired for consideration
by the Association, directly or indirectly (other than as a
result of a reclassification of junior stock, or the exchange or
8
<PAGE>
conversion of one junior stock for or into another junior
stock, or other than through the use of the proceeds of a
substantially contemporaneous sale of other junior stock),
unless all dividends on all shares of Non-Cumulative Preferred
Stock and non-cumulative Preferred Stock ranking on a parity
as to dividends with the shares of Non-Cumulative Preferred
Stock for the most recent dividend period ended prior to the
date of such payment or declaration shall have been paid in
full and all dividends on all shares of cumulative Preferred
Stock ranking on a parity as to dividends with the shares of
Non-Cumulative Preferred Stock for the most recent dividend
period ended prior to the date of such payment or declaration
shall have been paid in full and all dividends on all shares
of Non-Cumulative Stock (not withstanding that dividends on
such stock are cumulative) for all past dividend periods shall
have been paid in full. Subject to the foregoing, and not
otherwise, such dividends (payable in cash, stock or
otherwise) as may be determined by the Board of Directors may
be declared and paid on any junior stock from time to time out
of any funds legally available therefor, and the Non-
Cumulative Stock shall not be entitled to participate in any
such dividends, whether payable in cash, stock or otherwise.
No dividends shall be paid or declared upon any shares of any
class or series of stock of the Association ranking on a
parity (whether dividends on such stock are cumulative or non-
cumulative) with the Non-Cumulative Preferred Stock in the
payment of dividends for any period unless at or prior to the
time of such payment or declaration all dividends payable on
the Non-Cumulative Preferred Stock for the most recent
dividend period ended prior to the date of such payment or
declaration shall have been paid in full. When dividends are
not paid in full, as aforesaid, upon the Non-Cumulative
Preferred Stock and any other series of Preferred Stock
ranking on a parity as to dividends (whether dividends on such
stock are cumulative or non-cumulative) with the Non-
Cumulative Preferred Stock, all dividends declared upon the
Non-Cumulative Preferred Stock and any other series of
Preferred Stock ranking on a parity as to dividends with the
Non-Cumulative Preferred Stock shall be declared pro rata so
that the amount of dividends declared per share on the Non-
Cumulative Preferred Stock and such other Preferred Stock
shall in all cases bear to each other the same ratio that
accrued dividends per share on the Non-Cumulative Preferred
Stock (but without any accumulation in respect of any unpaid
dividends for prior dividend periods on the shares of Non-
Cumulative Stock) and such other Preferred Stock bear to each
other. No interest, or sum of money in lieu of interest,
shall be payable in respect of any dividend payment or
payments on the Non-Cumulative Preferred Stock which may be in
arrears.
3. Voting. The holders of Non-Cumulative Preferred
Stock shall not have any right to vote for the election of
directors or for any other purpose.
4. Redemption.
(a) Optional Redemption. The Association, at the
option of the Board of Directors, may redeem the whole or any
part of the shares of Non-Cumulative Preferred Stock at the
time outstanding, at any time or from time to time after the
fifth anniversary of the date of original issuance of the Non-
Cumulative Preferred Stock, upon notice given as hereinafter
specified, at the redemption price per share equal to $1,000
plus an amount equal to the amount of accrued and unpaid
dividends from the immediately preceding dividend payment date
(but without any accumulation for unpaid dividends for prior
dividend periods on the shares of Non-Cumulative Preferred
Stock) to the redemption date.
(b) Procedures. Notice of every redemption of shares
of Non-Cumulative Preferred Stock shall be mailed by first
class mail, postage prepaid, addressed to the holders of
record of the shares to be redeemed
9
<PAGE>
at their respective last addresses as they shall appear on the
books of the Association. Such mailing shall be at least 10 days
and not more than 60 days prior to the date fixed for redemption.
Any notice which is mailed in the manner herein provided shall be
conclusively presumed to have been duly given, whether or not the
shareholder receives such notice, and failure duly to give such
notice by mail, or any defect in such notice, to any holder of
shares of Non-Cumulative Preferred Stock designated for
redemption shall not affect the validity of the proceedings for
the redemption of any other shares of Non-Cumulative Preferred
Stock.
In case of redemption of a part only of the shares of
Non-Cumulative Preferred Stock at the time outstanding the
redemption may be either pro rata or by lot or by such other
means as the Board of Directors of the Association in its
discretion shall determine. The Board of Directors shall have
full power and authority, subject to the provisions herein
contained, to prescribe the terms and conditions upon which
shares of the Non-Cumulative Preferred Stock shall be redeemed
from time to time.
If notice of redemption shall have been duly given, and,
if on or before the redemption date specified therein, all
funds necessary for such redemption shall have been set aside
by the Association, separate and apart from its other funds,
in trust for the pro rata benefit of the holders of the shares
called for redemption, so as to be and continue to be
available therefor, then, notwithstanding that any certificate
for shares so called for redemption shall not have been
surrendered for cancellation, all shares so called for
redemption shall no longer be deemed outstanding on and after
such redemption date, and all rights with respect to such
shares shall forthwith on such redemption date cease and
terminate, except only the right of the holders thereof to
receive the amount payable on redemption thereof, without
interest.
If such notice of redemption shall have been duly given
or if the Association shall have given to the bank or trust
company hereinafter referred to irrevocable authorization
promptly to give such notice, and, if on or before the
redemption date specified therein, the funds necessary for
such redemption shall have been deposited by the Association
with such bank or trust company in trust for the pro rata
benefit of the holders of the shares called for redemption,
then, notwithstanding that any certificate for shares so
called for redemption shall not have been surrendered for
cancellation, from and after the time of such deposit, all
shares so called for redemption shall no longer be deemed to
be outstanding and all rights with respect to such shares
shall forthwith cease and terminate, except only the right of
the holders thereof to receive from such bank or trust company
at any time after the time of such deposit the funds so
deposited, without interest. The aforesaid bank or trust
company shall be organized and in good standing under the laws
of the United States of America or any state thereof, shall
have capital, surplus and undivided profits aggregating at
least $50,000,000 according to its last published statement of
condition, and shall be identified in the notice of
redemption. Any interest accrued on such funds shall be paid
to the Association from time to time. In case fewer than all
the shares of Non-Cumulative Preferred Stock represented by a
stock certificate are redeemed, a new certificate shall be
issued representing the unredeemed shares without cost to the
holder thereof.
Any funds so set aside or deposited, as the case may be,
and unclaimed at the end of the relevant escheat period under
applicable state law from such redemption date shall, to the
extent permitted by law, be released or repaid to the
Association, after which repayment the holders of the shares
so called for redemption shall look only to the Association
for payment thereof.
10
<PAGE>
5. Liquidation.
(a) Liquidation Preference. In the event of any
voluntary liquidation, dissolution or winding up of the
affairs of the Association, the holders of Non-Cumulative
Preferred Stock shall be entitled, before any distribution or
payment is made to the holders of any junior stock, to be paid
in full an amount per share equal to an amount equal to $1,000
plus an amount equal to the amount of accrued and unpaid
dividends per share from the immediately preceding dividend
payment date (but without any accumulation for unpaid
dividends for prior dividend periods on the shares of Non-
Cumulative Preferred Stock) per share to such distribution or
payment date (the "liquidation amount").
In the event of any involuntary liquidation, dissolution
or winding up of the affairs of the Association, then, before
any distribution or payment shall be made to the holders of
any junior stock, the holders of Non-Cumulative Preferred
Stock shall be entitled to be paid in full an amount per share
equal to the liquidation amount.
If such payment shall have been made in full to all
holders of shares of Non-Cumulative Preferred Stock, the
remaining assets of the Association shall be distributed among
the holders of junior stock, according to their respective
rights and preferences and in each case according to their
respective numbers of shares.
(b) Insufficient Assets. In the event that, upon any
such voluntary or involuntary liquidation, dissolution or
winding up, the available assets of the Association are
insufficient to pay such liquidation amount on all outstanding
shares of Non-Cumulative Preferred Stock, then the holders of
Non-Cumulative Preferred Stock shall share ratably in any
distribution of assets in proportion to the full amounts to
which they would otherwise be respectively entitled.
(c) Interpretation. For the purposes of this paragraph
5, the consolidation or merger of the Association with any
other corporation or association shall not be deemed to
constitute a liquidation, dissolution or winding up of the
Association.
6. Preemptive Rights. The Non-Cumulative Preferred
Stock is not entitled to any preemptive, subscription,
conversion or exchange rights in respect of any securities of
the Association.
7. Definitions. As used herein with respect to the Non-
Cumulative Preferred Stock, the following terms shall have the
following meanings:
(a) The term "junior stock" shall mean the Common Stock
and any other class or series of shares of the Association
hereafter authorized over which the Non-Cumulative Preferred
Stock has preference or priority in the payment of dividends
or in the distribution of assets on any liquidation,
dissolution or winding up of the Association.
(b) The term "accrued dividends", with respect to any
share of any class or series, shall mean an amount computed at
the annual dividend rate for the class or series of which the
particular share is a part, from, if such share is cumulative,
the date on which dividends on such share became cumulative to
and including the date to which such dividends are to be
accrued, less the aggregate amount of all dividends
theretofore paid thereon and, if such share is non-cumulative,
the relevant date designated to and including the date to
which such dividends are accrued, less the aggregate amount of
all dividends theretofore paid with respect to such period.
11
<PAGE>
(c) The term "Preferred Stock" shall mean all outstanding
shares of all series of preferred stock of the Association as
defined in this Article Fifth of the Articles of Association,
as amended, of the Association.
8. Restriction on Transfer. No shares of Non-Cumulative
Preferred Stock, or any interest therein, may be sold,
pledged, transferred or otherwise disposed of without the
prior written consent of the Association. The foregoing
restriction shall be stated on any certificate for any shares
of Non-Cumulative Preferred Stock.
9. Additional Rights. The shares of Non-Cumulative
Preferred Stock shall not have any relative, participating,
optional or other special rights and powers other than as set
forth herein.
SIXTH. The Board of Directors shall appoint one of its
members President of this Association, who shall be Chairman
of the Board, unless the Board appoints another director to be
the Chairman. The Board of Directors shall have the power to
appoint one or more Vice Presidents; and to appoint a cashier
or such other officers and employees as may be required to
transact the business of this Association.
The Board of Directors shall have the power to define the
duties of the officers and employees of the Association; to
fix the salaries to be paid to them; to dismiss them; to
require bonds from them and to fix the penalty thereof; to
regulate the manner in which any increase of the capital of
the Association shall be made; to manage and administer the
business and affairs of the Association; to make all By-laws
that it may be lawful for them to make; and generally to do
and perform all acts that it may be legal for a Board of
Directors to do and perform.
SEVENTH. The Board of Directors shall have the power to
change the location of the main office to any other place
within the limits of Charlotte, North Carolina, without the
approval of the shareholders but subject to the approval of
the Comptroller of the Currency; and shall have the power to
establish or change the location of any branch or branches of
the Association to any other location, without the approval of
the shareholders, but subject to the approval of the
Comptroller of the Currency.
EIGHTH. The corporate existence of this Association
shall continue until terminated in accordance with the laws of
the United States.
NINTH. The Board of Directors of this Association, or
any three or more shareholders owning, in the aggregate, not
less than 10 percent of the stock of this Association, may
call a special meeting of shareholders at any time. Unless
otherwise provided by the laws of the United States, a notice
of the time, place, and purpose of every annual and special
meeting of the shareholders shall be given by first-class
mail, postage prepaid, mailed at least ten days prior to the
date of such meeting, to each shareholder of record at his
address as shown upon the books of this Association.
TENTH. Each director and executive officer of this
Association shall be indemnified by the association against
liability in any proceeding (including without limitation a
proceeding brought by or on behalf of the Association itself)
arising out of his status as such or his activities in either
of the foregoing capacities, except for any liability incurred
on account of activities which were at the time taken known or
believed by such person to be clearly in conflict with the
best interests of the Association. Liabilities incurred by a
director or executive officer of the Association in defending
a proceeding shall be paid by the Association in advance of
the final disposition of such
12
<PAGE>
proceeding upon receipt of an undertaking by the director or
executive officer to repay such amount if it shall be determined,
as provided in the last paragraph of this Article Tenth, that he
is not entitled to be indemnified by the Association against such
liabilities.
The indemnity against liability in the preceding
paragraph of this Article Tenth, including liabilities
incurred in defending a proceeding, shall be automatic and
self-operative.
Any director, officer or employee of this Association who
serves at the request of the Association as a director,
officer, employee or agent of a charitable, not-for-profit,
religious, educational or hospital corporation, partnership,
joint venture, trust or other enterprise, or a trade
association, or as a trustee or administrator under an
employee benefit plan, or who serves at the request of the
Association as a director, officer or employee of a business
corporation in connection with the administration of an estate
or trust by the Association, shall have the right to be
indemnified by the Association, subject to the provisions set
forth in the following paragraph of this Article Tenth,
against liabilities in any manner arising out of or
attributable to such status or activities in any such
capacity, except for any liability incurred on account of
activities which were at the time taken known or believed by
such person to be clearly in conflict with the best interests
of the Association, or of the corporation, partnership, joint
venture, trust, enterprise, Association or plan being served
by such person.
In the case of all persons except the directors and
executive officers of the Association, the determination of
whether a person is entitled to indemnification under the
preceding paragraph of this Article Tenth shall be made by and
in the sole discretion of the Chief Executive Officer of the
Association. In the case of the directors and executive
officers of the Association, the indemnity against liability
in the preceding paragraph of this Article Tenth shall be
automatic and self-operative.
For purposes of this Article Tenth of these Articles of
Association only, the following terms shall have the meanings
indicated:
(a) "Association" means First Union National Bank and
its direct and indirect wholly-owned subsidiaries.
(b) "Director" means an individual who is or was a
director of the Association.
(c) "Executive officer" means an officer of the
Association who by resolution of the Board of Directors of the
Association has been determined to be an executive officer of
the Association for purposes of Regulation O of the Federal
Reserve Board.
(d) "Liability" means the obligation to pay a judgement,
settlement, penalty, fine (including an excise tax assessed
with respect to an employee benefit plan), or reasonable
expenses, including counsel fees and expenses, incurred with
respect to a proceeding.
(e) "Party" includes an individual who was, is or is
threatened to be made a named defendant or respondent in a
proceeding.
(f) "Proceeding" means any threatened, pending, or
completed claim, action, suit, or proceeding, whether civil,
criminal, administrative, or investigative and whether formal
or informal.
The Association shall have no obligation to indemnify any
person for an amount paid in settlement of a proceeding unless
the Association
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consents in writing to such settlement.
The right to indemnification herein provided for shall
apply to persons who are directors, officers, or employees of
banks or other entities that are hereafter merged or otherwise
combined with the Association only after the effective date of
such merger or other combination and only as to their status
and activities after such date.
The right to indemnification herein provided for shall
inure to the benefit of the heirs and legal representatives of
any person entitled to such right.
No revocation of, change in, or adoption of any resolution
or provision in the Articles of Association or By-laws of the
Association inconsistent with, this Article Tenth shall
adversely affect the rights of any director, officer, or
employee of the Association with respect to (i) any proceeding
commenced or threatened prior to such revocation, change, or
adoption, or (ii) any proceeding arising out of any act or
omission occurring prior to such revocation, change, or
adoption, in either case, without the written consent of such
director, officer, or employee.
The rights hereunder shall be in addition to and not
exclusive of any other rights to which a director, officer, or
employee of the Association may be entitled under any statue,
agreement, insurance policy, or otherwise.
The Association shall have the power to purchase and
maintain insurance on behalf of any person who is or was a
director, officer, or employee of the Association, or is or
was serving at the request of the Association as a director,
officer, employee, or agent of another corporation,
partnership, joint venture, trust, trade association, employee
benefit plan, or other enterprise, against any liability
asserted against such director, officer, or employee in any
such capacity, or arising out of their status as such, whether
or not the Association would have the power to indemnify such
director, officer, or employee against such liability,
excluding insurance coverage for a formal order assessing
civil money penalties against an Association director or
employee.
Notwithstanding anything to the contrary provided herein,
no person shall have a right to indemnification with respect
to any liability (i) incurred in an administrative proceeding
or action instituted by an appropriate bank regulatory agency
which proceeding or action results in a final order assessing
civil money penalties or requiring affirmative action by an
individual or individuals in the form of payments to the
Association, (ii) to the extent such person is entitled to
receive payment therefor under any insurance policy or from
any corporation, partnership, joint venture, trust, trade
association, employee benefit plan, or other enterprise other
than the Association, or (iii) to the extent that a court of
competent jurisdiction determines that such indemnification is
void or prohibited under state or federal law.
ELEVENTH. These Articles of Association may be amended
at any regular or special meeting of the shareholders by the
affirmative vote of the holders of a majority of the stock of
this Association, unless the vote of the holders of a greater
amount of stock is required by law, and in that case by the
vote of the holders of such greater amount.
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EXHIBIT 4
BY-LAWS OF
FIRST UNION NATIONAL BANK
Charter No. 22693
As Restated Effective February 26, 1998
ARTICLE I
Meetings of Shareholders
------------------------
Section 1.1 Annual Meeting. The annual meeting of the
shareholders for the election of directors and for the
transaction of such other business as may properly come before
the meeting shall be held on the third Tuesday of April in
each year, commencing with the year 1998, except that the
Board of Directors may, from time to time and upon passage of
a resolution specifically setting forth its reasons, set such
other date for such meeting during the month of April as the
Board of Directors may deem necessary or appropriate;
provided, however, that if
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an annual meeting would otherwise fall on a legal holiday, then
such annual meeting shall be held on the second business day
following such legal holiday. The holders of a majority of the
outstanding shares entitled to vote which are represented at any
meeting of the shareholders may choose persons to act as Chairman
and as Secretary of the meeting.
Section 1.2. Special Meetings. Except as otherwise
specifically provided by statute, special meetings of the
shareholders may be called for any purpose at any time by the
Board of Directors or by any three or more shareholders
owning, in the aggregate, not less than ten percent of the
stock of the Association. Every such special meeting, unless
otherwise provided by law, shall be called by mailing, postage
prepaid, not less than ten days prior to the date fixed for
such meeting, to each shareholder at his address appearing on
the books of the Association, a notice stating the purpose of
the meeting.
Section 1.3 Nominations for Directors. Nominations for
election to the Board of Directors may be made by the Board of
Directors or by any stockholder of any outstanding class of
capital stock of the bank entitled to vote for the election of
directors. Nominations, other than those made by or on behalf
of the existing management of the bank, shall be made in
writing and shall be delivered or mailed to the President of
the Bank and to the Comptroller of the Currency, Washington,
D.C., not less than 14 days nor more than 50 days prior to any
meeting of stockholders called for the election of directors,
provided however, that if less than 21 days' notice of such
meeting is given to shareholders, such nomination shall be
mailed or delivered to the President of the Bank and to the
Comptroller of the Currency not later than the close of
business on the seventh day following the day on which the
notice of meeting was mailed. Such notification shall contain
the following information to the extent known to the notifying
shareholder: (a) the name and address of each proposed
nominee; (b) the principal occupation of each proposed
nominee; (c) the total number of shares of capital stock of
the bank that will be voted for each proposed nominee; (d) the
name and residence address of the notifying shareholder; and
(e) the number of the shares of capital stock of the bank
owned by the notifying shareholder. Nominations not made in
accordance herewith may, in his discretion, be disregarded by
the chairman of the meeting, and upon his instructions, the
vote tellers may disregard all votes cast for each such
nominee.
Section 1.4 Judges of Election. The Board may at any
time appoint from among the shareholders three or more persons
to serve as Judges of Election at any meeting of shareholders;
to act as judges and tellers with respect to all votes by
ballot at such meeting and to file with the Secretary of the
meeting Certificate under their hands, certifying the result
thereof.
Section 1.5 Proxies. Shareholders may vote at any
meeting of the shareholders by proxies duly authorized in
writing, but no officer or employee of this Association shall
act as proxy. Proxies shall be valid only for one meeting, to
be specified therein, and any adjournments of such meeting.
Proxies shall be dated and shall be filed with the records of
the meeting.
Section 1.6 Quorum. A majority of the outstanding
capital stock, represented in person or by proxy, shall
constitute a quorum at any
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meeting of shareholders, unless otherwise provided by law; but
less than a quorum may adjourn any meeting, from time to time,
and the meeting may be held, as adjourned, without further
notice. A majority of the votes cast shall decide every question
or matter submitted to the shareholders at any meeting, unless
otherwise provided by law or by the Articles of Association.
ARTICLE II
Directors
---------
Section 2.1 Board of Directors. The Board of Directors
(hereinafter referred to as the "Board"), shall have power to
manage and administer the business and affairs of the
Association. Except as expressly limited by law, all
corporate powers of the Association shall be vested in and may
be exercised by said Board.
Section 2.2 Number. The Board shall consist of not less
than five nor more than twenty-five persons, the exact number
within such minimum and maximum limits to be fixed and
determined from time to time by resolution of a majority of
the full Board or by resolution of the shareholders at any
meeting thereof; provided, however, that a majority of the
full Board of Directors may not increase the number of
directors to a number which: (1) exceeds by more than two the
number of directors last elected by shareholders where such
number was fifteen or less; and (2) to a number which exceeds
by more than four the number of directors last elected by
shareholders where such number was sixteen or more, but in no
event shall the number of directors exceed twenty-five.
Section 2.3 Organization Meeting. The Secretary of the
meeting upon receiving the certificate of the judges, of the
result of any election, shall notify the directors-elect of
their election and of the time at which they are required to
meet at the Main Office of the Association for the purpose of
organizing the new Board and electing and appointing officers
of the Association for the succeeding year. Such meeting shall
be held as soon thereafter as practicable. If, at the time
fixed for such meeting, there shall not be a quorum present,
the directors present may adjourn the meeting from time to
time, until a quorum is obtained.
Section 2.4 Regular Meetings. Regular meetings of the
Board of Directors shall be held at such place and time as may
be designated by resolution of the Board of Directors. Upon
adoption of such resolution, no further notice of such meeting
dates or the places or times thereof shall be required. Upon
the failure of the Board of Directors to adopt such a
resolution, regular meetings of the Board of Directors shall
be held, without notice, on the third Tuesday in February,
April, August, October and December, commencing with the year
1997, at the main office or such other place and time as may
be designated by the Board of Directors. When any regular
meeting of the Board would otherwise fall on a holiday, the
meeting shall be held on the next business day unless the
Board shall designate some other day.
Section 2.5 Special Meetings. Special meetings of the
Board of Directors may be called by the President of the
Association, or at the request of three (3) or more directors.
Each member of the Board of Directors shall be given notice
stating the time and place, by telegram, letter, or in person,
of each such special meeting.
Section 2.6 Quorum. A majority of the directors shall
constitute a quorum at any meeting, except when otherwise
provided by law; but a less number may adjourn any meeting,
from time to time, and the meeting may be held, as adjourned,
without further notice.
Section 2.7 Vacancies. When any vacancy occurs among the
directors,
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the remaining members of the Board, in accordance with the laws
of the United States, may appoint a director to fill such vacancy
at any regular meeting of the Board, or at a special meeting
called for that purpose.
Section 2.8 Advisory Boards. The Board of Directors may
appoint Advisory Boards for each of the states in which the
Association conducts operations. Each such Advisory Board
shall consist of as many persons as the Board of Directors may
determine. The duties of each Advisory Board shall be to
consult and advise with the Board of Directors and senior
officers of the Association in such state with regard to the
best interests of the Association and to perform such other
duties as the Board of Directors may lawfully delegate. The
senior officer in such state, or such officers as directed by
such senior officer, may appoint advisory boards for
geographic regions within such state and may consult with the
State Advisory Boards prior to such appointments.
ARTICLE III
Committees of the Board
-----------------------
Section 3.1 The Board of Directors, by resolution
adopted by a majority of the number of directors fixed by
these By-Laws, may designate two or more directors to
constitute an Executive Committee and other committees, each
of which, to the extent authorized by law and provided in such
resolution, shall have and may exercise all of the authority
of the Board of Directors and the management of the
Association. The designation of any committee and the
delegation thereto of authority shall not operate to relieve
the Board of Directors, or any member thereof, of any
responsibility of liability imposed upon it or any member of
the Board of Directors by law. The Board of Directors reserves
to itself alone the power to act on (1) dissolution, merger or
consolidation, or disposition of substantially all corporate
property, (2) designation of committees or filling vacancies
on the Board of Directors or on a committee of the Board
(except as hereinafter provided), (3) adoption, amendment or
repeal of By-laws, (4) amendment or repeal of any resolution
of the Board which by its terms is not so amendable or
repealable, and (5) declaration of dividends, issuance of
stock, or recommendations to stockholders of any action
requiring stockholder approval.
The Board of Directors or the Chairman of the Board of
Directors of the Association may change the membership of any
committee at any time, fill vacancies therein, discharge any
committee or member thereof either with or without cause at
any time, and change at any time the authority and
responsibility of any such committee.
A majority of the members of any committee of the Board of
Directors may fix such committee's rules of procedure. All
action by any committee shall be reported to the Board of
Directors at a meeting succeeding such action, except such
actions as the Board may not require to be reported to it in
the resolution creating any such committee. Any action by any
committee shall be subject to revision, alteration, and
approval by the Board of Directors, except to the extent
otherwise provided in the resolution creating such
committee; provided, however, that no rights or acts of third
parties shall be affected by any such revision of alteration.
ARTICLE IV
Officers and Employees
----------------------
Section 4.1 Officers. The officers of the Association may
be a Chairman of the Board, a Vice Chairman of the Board, one
or more Chairman or Vice Chairman (who shall not be required
to be directors of
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the Association), a President, one or more Vice Presidents, a
Secretary, a Cashier or Treasurer, and such other officers,
including officers holding similar or equivalent titles to the
above in regions, divisions or functional units of the
Association, as amy be appointed by the Board of Directors. The
Chairman of the Board and the President shall be members of the
Board of Directors. Any two or more offices may be held by one
person, but no officer shall sign of execute any document in more
than one capacity.
Section 4.2 Election, Term of Office, and Qualification.
Each officer shall be chosen by the Board of Directors and
Shall hold office until the annual meeting of the Board of
Directors held next after his election or until his successor
shall have been duly chosen and qualified, or until his death,
or until he shall resign, or shall have been disqualified, or
shall have been disqualified, or shall have been removed from
office.
Section 4.2(a) Officers acting as Assistant Secretary.
Notwithstanding Section 1 of these By-laws, any Senior Vice
President, Vice President, or Assistant Vice President shall
have, by virtue of his office, and by authority of the By-
laws, the authority from time to time to act as an Assistant
Secretary of the Bank, and to such extent, said officers are
appointed to the office of Assistant Secretary.
Section 4.3 Chief Executive Officer. The Board of
Directors shall designate one of its members to be the
President of this Association, and the officer so designated
shall be an ex officio member of all committees of the
Association except the Examining Committee, and its Chief
Executive Officer unless some other officer is so designated
by the Board of Directors.
Section 4.4 Duties of Officers. The duties of all
officers shall be prescribed by the Board of Directors.
Nevertheless, the Board of Directors may delegate to the Chief
Executive Officer the authority to prescribe the duties of
other officers of the corporation not inconsistent with law,
the charter, and these By-laws, and to appoint other
employees, prescribe their duties, and to dismiss them.
Notwithstanding such delegation of authority, any officer or
employee also may be dismissed at any time by the Board of
Directors.
Section 4.5 Other Employees. The Board of Directors may
appoint from time to time such tellers, vault custodians,
bookkeepers, and other clerks, agents, and employees as it may
deem advisable for the prompt and orderly transaction of the
business of the Association, define their duties, fix the
salary to be paid them, and dismiss them. Subject to the
authority of the Board of Directors, the Chief Executive
Officer or any other officer of the Association authorized by
him, may appoint and dismiss all such tellers, vault
custodians, bookkeepers and other clerks, agents, and
employees, prescribe their duties and the conditions of their
employment, and from time to time fix their compensation.
Section 4.6 Removal and Resignation. Any officer or
employee of the Association may be removed either with or
without cause by the Board of Directors. Any employee other
than an officer elected by the Board of Directors may be
dismissed in accordance with the provisions of the preceding
Section 4.5. Any officer may resign at any time by giving
written notice to the Board of Directors or to the Chief
Executive Officer of the Association. Any such resignation
shall become effective
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upon its being accepted by the Board of Directors, or the Chief
Executive Officer.
ARTICLE V
Fiduciary Powers
----------------
Section 5.1 Capital Management Group. There shall be an
area of this Association known as the Capital Management Group
which shall be responsible for the exercise of the fiduciary
powers of this Association. The Capital Management Group shall
consist of four service areas: Fiduciary Services, Retail
Services, Investments, and Marketing. The Fiduciary Services
unit shall consist of personal trust, employee benefits,
corporate trust and operations. The General Office for the
Fiduciary Services unit shall be located in Charlotte, N.C.,
with City Trust Offices located in such cities within the
State of North Carolina as designated by the Board of
Directors.
Section 5.2 Trust Officers. There shall be a General
Trust Officer of this Association whose duties shall be to
manage, supervise and direct all the activities of the Capital
Management Group. Further, there shall be one or more Senior
Trust Officers designated to assist the General Trust Officers
designated to assist the General Trust Officer in the
performance of his duties. They shall do or cause to be done
all things necessary or proper in carrying out the business of
the Capital Management Group in accordance with provisions of
applicable law and regulation.
Section 5.3 Capital Management/General Trust Committee.
There shall be a Capital management/General Trust Committee
composed of not less than four (4) members of the Board of
Directors of officers of this Association who shall be
appointed annually or from time to time by the Board of
Directors of the Association. The General Trust Officer shall
serve as an ex-officio member of the Committee. Each member
shall serve until his successor is appointed. The Board of
Directors or the Chairman of the Board may change the
membership of the Capital Management/General Trust Committee
at any time, fill vacancies therein, or discharge any member
thereof with or without cause at any time. The Committee shall
counsel and advise on all matters relating to the business or
affairs of the Capital Management Group and shall adopt
overall policies for the conduct of the business of the
Capital Management Group including but not limited to:
investment policies, new business development, and review for
approval of major assignments of functional responsibilities.
The Committee shall meet at least quarterly or as called for
by its Chairman or any three (3) members of the Committee. A
quorum shall consist of three (3) members. In carrying out its
responsibilities, the Capital Management/General Trust
Committee shall review the actions of all officers, employees
and committees utilized by this Association in connection with
the activities of the Capital Management Group and may assign
the administration and performance of any fiduciary powers or
duties to any of such officers or employees or to the
Investment Policy Committee, Personal Trust Administration
Committee, Account Review Committee, Corporate and
Institutional Accounts Committee, or any other committees it
shall designate. One of the methods to be used in the review
process will be the thorough scrutiny of the Report of
Examination by the Office of the Comptroller of the Currency
and the reports of the Audit Division of First Union
Corporation, as they relate to the activities of the Capital
Management Group. These reviews shall be in addition to
reviews of such reports by the Audit Committee of the
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Board of Directors. The Chairman of the Capital
Management/General Trust Committee shall be appointed by the
Chairman of the Board of Directors. He shall cause to be
recorded in appropriate minutes all actions taken by the
Committee. The minutes shall be signed by its Secretary and
approved by its Chairman. Further, the Committee shall summarize
all actions taken by it and shall submit a report of its
proceedings to the Board of Directors at its next regularly
scheduled meeting following a meeting of the Capital
Management/General Trust Committee. As required by Section 9.7
of Regulation 9 of the Comptroller of the Currency, the Board of
Directors retains responsibility for the proper exercise of the
fiduciary powers of this Association.
The Fiduciary Services unit of the Capital Management
Group will maintain a list of securities approved for
investment in fiduciary accounts and will from time to time
provide the Capital Management/General Trust Committee with
current information relative to such list and also with
respect to transactions in other securities not on such list.
It is the policy of this Association that members of the
Capital Management/General Trust Committee should not buy,
sell or trade in securities which are on such approved list or
in any other securities in which the Fiduciary Services unit
has taken, or intends to take, a position in fiduciary
accounts in any circumstances in which any such transaction
could be viewed as a possible conflict of interest or could
constitute a violation of applicable law or regulation.
Accordingly, if any such securities are owned by any member of
the Capital Management/General Trust Committee at the time of
appointment to such Committee, the Capital Management Group
shall be promptly so informed in writing. If any member of the
Capital Management/General Trust Committee intends to buy,
sell, or trade in any such securities while serving as a
member of the Committee, he should first notify the Capital
Management Group in order to make certain that any proposed
transaction will not constitute a violation of this policy or
of applicable law or regulation.
Section 5.4 Investment Policy Committee. There shall be
an Investment Policy Committee composed of not less than seven
(7) officers and/or employees of this Association who shall be
appointed annually or from time to time by the Board of
Directors. Each member shall serve until his successor is
appointed. Meetings shall be called by the Chairman or any two
(2) members of the Committee. A quorum shall consist of five
(5) members. The Investment Policy Committee shall exercise
such fiduciary powers and perform such duties as may be
assigned to it by the Capital Management/General trust
Committee. All actions taken by the Investment Policy
Committee shall be recorded inappropriate minutes, signed by
the Secretary thereof, approved by its Chairman and submitted
to the Capital Management/General Trust Committee at its next
ensuing regular meeting for its review and approval.
Section 5.5 Personal Trust Administration Committee.
There shall be a Personal Trust Administration Committee
composed of not less than five (5) officers, who shall be
appointed annually or from time to time by the Board of
Directors. Each member shall serve until his successor is
appointed. Meetings shall be called by the Chairman or any
three (3) members of the Committee. A quorum shall consist of
three (3) members. The Personal Trust Administration Committee
shall exercise such fiduciary powers and perform such duties
as may be assigned to it by the Capital Management/General
Trust Committee. All action taken by the Personal Trust
Administration Committee shall be recorded in appropriate
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minutes signed by the Secretary thereof, approved by its
Chairman, and submitted to the Capital Management/General
Trust Committee at its next ensuing regular meeting for its
review and approval.
Section 5.6 Account Review Committee. There shall be an
Account Review Committee composed of not less than four (4)
officers and/or employees of this Association, who shall be
appointed annually or from time to time by the Board of
Directors. Each member shall serve until his successor is
appointed. Meetings shall be called by the Chairman or any two
(2) members of the Committee. A quorum shall consist of three
(3) members. The Account Review Committee shall exercise such
fiduciary powers and perform such duties as may be assigned to
it by the Capital Management/General Trust Committee. All
actions taken by the Account Review Committee shall be
recorded in appropriate minutes, signed by the Secretary
thereof, approved by its Chairman and submitted to the Capital
Management/General Trust Committee at its next ensuing regular
meeting for its review and approval.
Section 5.7 Corporate and Institutional Accounts
Committee. There shall be a Corporate and Institutional
Accounts Committee composed of not less than five (5) officers
and/or employees of this Association, who shall be appointed
annually, or from time to time, by the Capital
Management/General Trust Committee and approved by the Board
of Directors. Meetings may be called by the Chairman or any
two (2) members of the Committee. A quorum shall consist of
three (3) members. The Corporate and Institutional Accounts
Committee shall exercise such fiduciary powers and duties as
may be assigned to it by the General Trust Committee. All
actions taken by the Corporate and Institutional Accounts
Committee shall be recorded in appropriate minutes, signed by
the Secretary thereof, approved by its Chairman and made
available to the General Trust Committee at its next ensuing
regular meeting for its review and approval.
ARTICLE VI
Stock and Stock Certificates
----------------------------
Section 6.1 Transfers. Shares of stock shall be
transferable on the books of the Association, and a transfer
book shall be kept in which all transfers of stock shall be
recorded. Every person becoming a shareholder by such transfer
shall, in proportion to its shares, succeed to all rights and
liabilities of the prior holder of such shares.
Section 6.2 Stock Certificates. Certificates of stock
shall bear the signature of the Chairman, the Vice Chairman,
the President, or a Vice President (which may be engraved,
printed, or impressed), and shall be signed manually or by
facsimile process by the Secretary, Assistant Secretary,
Cashier, Assistant Cashier, or any other officer appointed by
the Board of Directors for that purpose, to be known as an
Authorized Officer, and the seal of the Association shall be
engraved thereon. Each certificate shall recite on its face
that the stock represented thereby is transferrable only upon
the books of the Association properly endorsed.
ARTICLE VII
Corporate Seal
--------------
Section 7.1 The President, the Cashier, the Secretary,
or any Assistant Cashier, or Assistant Secretary, or other
thereunto designated
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by the Board of Directors shall have authority to affix the
corporate seal to any document requiring such seal, and to attest
the same. Such seal shall be substantially in the following
form.
ARTICLE VIII
Miscellaneous Provisions
------------------------
Section 8.1 Fiscal Year. The fiscal year of the
Association shall be the calendar year.
Section 8.2 Execution of Instruments. All agreements,
indentures, mortgages, deeds, conveyances, transfers,
certificates, declarations, receipts, discharges, releases,
satisfactions, settlements, petitions, notices, applications,
schedules, accounts, affidavits, bonds, undertakings, proxies
and other instruments or documents may be signed, executed,
acknowledged, verified, delivered or accepted in behalf of the
Association by the Chairman of the Board, the Vice Chairman of
the Board, any Chairman or Vice Chairman, the President, any
Vice President, or Assistant Vice President, the Secretary or
Assistant Secretary, the Cashier or Treasurer or any Assistant
Cashier or Assistant Treasurer, or any officer holding similar
or equivalent titles to the above in any regions, divisions,
or functional units of the Association, or, if in connection
with the exercise of fiduciary powers of the Association, by
any of said officers or by any Trust Officer or Assistant
Trust Officer (or equivalent titles); provided, however, that
where required, any such instrument shall be attested by one
of said officers other than the officer executing such
instrument. Any such instruments may also be executed,
acknowledged, verified, delivered or accepted in behalf of the
Association in such other manner and by such other officers as
the Board of Directors may from time to time direct. The
Provisions of this Section 8.2 are supplementary to any other
provision of these By-laws.
Section 8.3 Records. The Articles of Association, the
By-laws, and the proceedings of all meetings of the
shareholders, the Board of Directors, standing committees of
the Board, shall be recorded in appropriate minute books
provided for the purpose. The minutes of each meeting shall be
signed by the Secretary, Cashier, or other officer appointed
to act as Secretary of the meeting.
ARTICLE IX
By-laws
-------
Section 9.1 Inspection. A copy of the By-laws, with all
amendments thereto, shall at all times be kept in a convenient
place at the Head Office of the Association, and shall be open
for inspection to all shareholders, during banking hours.
Section 9.2 Amendments. The By-laws may be amended,
altered or repealed at any regular or special meeting of the
Board of Directors by a vote of a majority of the whole number
of Directors.
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Exhibit A
First Union National Bank
ARTICLE X
Emergency By-laws
-----------------
In the event of an emergency declared by the President of the United
States or the person performing his functions, the officers and
employees of this Association will continue to conduct the affairs of
the Association under such guidance from the directors or the Executive
Committee as amy be available except as to matters which by statute
require specific approval of the Board of Directors and subject to
conformance with any applicable governmental directives during the
emergency.
OFFICERS PRO TEMPORE AND DISASTER
Section 1. The surviving members of the Board of Directors or the
Executive Committee shall have the power, in the absence or disability
of any officer, or upon the refusal of any officer to act, to delegate
and prescribe such officer's powers and duties to any other officer, or
to any director, for the time being.
Section 2. In the event of a state of disaster of sufficient severity to
prevent the conduct and management of the affairs and business of this
Association by its directors and officers as contemplated by these By-
laws, any two or more available members of the then incumbent Executive
Committee shall constitute a quorum of the full conduct and management
of the affairs and business of the Association in accordance with the
provisions of Article II of these By-laws; and in addition, such
Committee shall be empowered to exercise all of the powers reserved to
the General Trust Committee under Section 5.3 of Article V hereof. In
the event of the unavailability, at such time, of a minimum of two
members of the then incumbent Executive Committee, any three available
directors shall constitute the Executive Committee for the full conduct
and management of the affairs and business of the Association in
accordance with the foregoing provisions of this section. This By-law
shall be subject to implementation by resolutions of the Board of
Directors passed from time to time for that purpose, and any provisions
of these By-laws (other than this section) and any resolutions which are
contrary to the provisions of this section or to the provisions of such
implementary resolutions shall be suspended until it shall be determined
by an interim Executive Committee acting under this section that it
shall be to the advantage of this Association to resume the conduct and
management of its affairs and business under all of the other provisions
of these By-laws.
OFFICER SUCCESSION
BE IT RESOLVED, that if consequent upon war or warlike damage or
disaster, the Chief Executive Officer of this Association cannot be
located by the then acting Head Officer or is unable to assume or to
continue normal executive duties, then the authority and duties of the
Chief Executive Officer shall, without further action of the Board of
Directors, be automatically assumed by one of the following persons in
the order designated:
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Chairman
President
Division Head/Area Administrator - Within this officer class, officers
shall take seniority on the basis of length of service in such office
or, in the event of equality, length of service as an officer of the
Association.
Any one of the above persons who in accordance with this resolution
assumes the authority and duties of the Chief Executive Officer shall
continue to serve until he resigns or until five-sixths of the other
officers who are attached to the then acting Head Office decide in
writing he is unable to perform said duties or until the elected Chief
Executive Officer of this Association, or a person higher on the above
list, shall become available to perform the duties of Chief Executive
Officer of the Association.
BE IT FURTHER RESOLVED, that anyone dealing with this Association may
accept a certificate by any three officers that a specified individual
is acting as Chief Executive Officer in accordance with this resolution;
and that anyone accepting such certification may continue to consider it
in force until notified in writing of a change, said notice of change to
carry the signatures of three officers of the Association.
ALTERNATE LOCATIONS
The offices of the Association at which its business shall be conducted
shall be the main office thereof in each city which is designated as a
City Office (and branches, if any), and any other legally authorized
location which may be leased or acquired by this Association to carry on
its business. During an emergency resulting in any authorized place of
business of this Association being unable to function, the business
ordinarily conducted at such location shall be relocated elsewhere in
suitable quarters, in addition to or in lieu of the locations heretofore
mentioned, as may be designated by the Board of Directors or by the
Executive Committee or by such persons as are then, in accordance with
resolutions adopted from time to time by the Board of Directors dealing
with the exercise of authority in the time of such emergency, conducting
the affairs of this Association. Any temporary relocated place of
business of this Association shall be returned to its legally authorized
location as soon as practicable and such temporary place of business
shall then be discontinued.
ACTING HEAD OFFICES
BE IT RESOLVED, that in case of and provided because of war or warlike
damage or disaster, the General Office of this Association, located in
Charlotte, North Carolina, is unable temporarily to continue its
functions, the Raleigh office, located in Raleigh, North Carolina, shall
automatically and without further action of this Board of Directors,
become the "Acting Head Office of this Association";
BE IT FURTHER RESOLVED, that if by reason of said war or warlike damage
or disaster, both the General Office of this Association and the said
Raleigh Office of this Association are unable to carry on their
functions, then and in such case, the Asheville Office of this
Association, located in Asheville, North Carolina, shall, without
further action of this Board of Directors, become the "Acting Head
Office of this Association"; and if neither the Raleigh Office nor the
Asheville Office can carry on their functions, then the Greensboro
Office of this Association, located in Greensboro, North Carolina,
shall, without further action of this Board of Directors, become the
"Acting Head Office of this Association"; and if neither the Raleigh
Office, the Asheville Office, nor the Greensboro Office can carry on
their functions, then the Lumberton Office of this Association, located
in Lumberton, North Carolina, shall, without further action of this
Board of Directors, become the "Acting Head Office of this Association".
The Head Office shall resume its functions at its legally authorized
location as soon as practicable.
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EXHIBIT 6
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, Subordinated Deferrable Interest Debentures, Series D, 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
Vice President
Philadelphia, PA
March 13, 1998
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EXHIBIT 7
REPORT OF CONDITION
Consolidating domestic and foreign subsidiaries of the First Union
National Bank, Avondale, Pennsylvania, at the close of business on
December 31, 1997, published in response to call made by Comptroller of
the Currency, under title 12, United States Code, Section 161. Charter
Number 22693 Comptroller of the Currency Northeastern District.
STATEMENT OF RESOURCES AND LIABILITIES
ASSETS
Thousand of Dollars
-------------------
Cash and balance due from depository institutions:
Noninterest-bearing balances and currency and coin......... 1,725,148
Interest-bearing balances.................................. 4,216,934
Securities................................................... /////////
Hold-to-maturity securities................................ 337,471
Available-for-sale securities.............................. 3,949,655
Federal funds sold and securities purchased under agreements //////////
to resell ................................................. 51,999
Loans and lease financing receivables:
Loan and leases, net of unearned income .........15,757,193
LESS: Allowance for loan and lease losses ....... 196,929
LESS: Allocated transfer risk reserve ........... 0
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Loans and leases, net of unearned income, allowance, and
reserve................................................. 15,560,264
Assets held in trading accounts........................... 0
Premises and fixed assets (including capitalized leases).. 418,837
Other real estate owned................................... 36,598
Investment in unconsolidated subsidiaries and associated //////////
companies............................................... 37,868
Customer's liability to this bank on acceptances
outstanding............................................. 91,787
Intangible assets......................................... 382,749
Other assets.............................................. 1,043,467
Total assets.............................................. 27,852,777
LIABILITIES
Deposits:
In domestic offices..................................... 20,810,085
Noninterest-bearing........................... 3,480,114
Interest-bearing...............................17,329,971
In foreign offices, Edge and Agreement subsidiaries,
and IBFs.............................................. 736,612
Noninterest-bearing............................ 136
Interest-bearing............................... 736,476
Federal funds purchased and securities sold under //////////
agreements to repurchase ................................ 2,581,021
Demand notes issued to the U.S. Treasury................... 64,236
Trading liabilities........................................ 0
Other borrowed money:...................................... /////////
With a remaining maturity of one year or less............ 0
With a remaining maturity of one year through
three years............................................ 7,510
With a remaining maturity of more than three years....... 5,777
Not Applicable ............................................ ////////
Bank's liability on acceptances executed and outstanding... 93,594
Subordinated notes and debentures.......................... 450,000
Other liabilities.......................................... 812,999
Total liabilities.......................................... 25,561,834
EQUITY CAPITAL
Perpetual preferred stock and related surplus.............. 160,540
Common Stock............................................... 452,156
Surplus.................................................... 1,303,224
Undivided profits and capital reserves..................... 342,689
Net unrealized holding gains (losses) on available-for-sale /////////
securities............................................... 32,334
Cumulative foreign currency translation adjustments........ 0
Total equity capital....................................... 2,290,943
Total liabilities and equity .............................. 27,852,777
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