<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON
REGISTRATION NO. -
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
----------------
POTOMAC ELECTRIC POWER COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
----------------
DISTRICT OF COLUMBIA AND VIRGINIA 53-0127880
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
----------------
1900 PENNSYLVANIA AVENUE, N.W., WASHINGTON, D.C. 20068
(202) 872-2000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
----------------
ELLEN SHERIFF ROGERS
ASSOCIATE GENERAL COUNSEL, SECRETARY AND ASSISTANT TREASURER
POTOMAC ELECTRIC POWER COMPANY
1900 PENNSYLVANIA AVENUE, N.W.
WASHINGTON, D.C. 20068
(202) 872-3526
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE OF PROCESS)
----------------
WITH COPIES TO:
D. MICHAEL LEFEVER, ESQ. STEPHEN K. WAITE, ESQ.
COVINGTON & BURLING WINTHROP, STIMSON, PUTNAM & ROBERTS
1201 PENNSYLVANIA AVENUE, N.W. ONE BATTERY PARK PLAZA
WASHINGTON, D.C. 20004 NEW YORK, NEW YORK 10004
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, please check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
----------------
CALCULATION OF REGISTRATION FEE
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- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED
MAXIMUM
AGGREGATE
TITLE OF EACH CLASS OF OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED PRICE(1) REGISTRATION FEE
- --------------------------------------------------------------------------------
<S> <C> <C>
Debt Securities.................................. $125,000,000 $37,878.79
</TABLE>
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(1) Estimated solely for the purpose of calculating the registration fee.
----------------
Pursuant to Rule 429 under the Securities Act of 1933, each of the
Prospectuses filed as part of this Registration Statement may be used as a
combined prospectus in connection with the securities registered under this
Registration Statement and unsold debt securities having an aggregate offering
price of $75,000,000 previously registered under Registration Statement No.
33-61379 for which a registration fee of $25,862 was paid.
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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<PAGE>
EXPLANATORY NOTE
This Registration Statement contains two forms of prospectus to be used in
separate offerings of Debt Securities in an aggregate principal amount of
$200,000,000, including $75,000,000 in principal amount of debt securities
registered under Registration Statement No. 33-61379. One prospectus will be
used in connection with the offering of First Mortgage Bonds (the "First
Mortgage Bond Prospectus"). The other prospectus will be used in connection
with the offering of Medium-Term Notes (the "Medium-Term Note Prospectus").
The First Mortgage Bond Prospectus and the Medium-Term Note Prospectus are
identical with the exception of their respective Cover Pages, the section
headed "Plan of Distribution," the sections describing the respective Debt
Securities, and minor conforming changes to the sections headed "Use of
Proceeds," "Experts," and "Legal Opinions." The First Mortgage Bond Prospectus
includes a section headed "Description of Bonds and Mortgage" and the Medium-
Term Note Prospectus includes a section headed "Description of the Notes."
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE +
+WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES +
+LAWS OF ANY SUCH JURISDICTION. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PRELIMINARY PROSPECTUS DATED ,
SUBJECT TO COMPLETION
POTOMAC ELECTRIC POWER COMPANY
FIRST MORTGAGE BONDS
-----------
Potomac Electric Power Company (the "Company") may offer from time to time up
to $200,000,000 aggregate principal amount of its First Mortgage Bonds (the
"New Bonds"), which may be offered in one or more series in amounts, at prices
and on terms to be determined by market conditions at the time of sale. The
aggregate principal amount, rate (or method of calculation) and time of payment
of interest, maturity, offering price, any redemption terms and other specific
terms of the series of New Bonds in respect of which this Prospectus is being
delivered, are set forth in the accompanying Prospectus Supplement (the
"Prospectus Supplement"). The amount of First Mortgage Bonds to be offered
hereby will be reduced by the amount of any Medium-Term Notes sold pursuant to
the Registration Statements of which this Prospectus is a part. See
"Description of Bonds and Mortgage."
The Company may sell the New Bonds through underwriters designated by the
Company or through dealers, directly to a limited number of institutional
purchasers, or through agents. See "Plan of Distribution." The Prospectus
Supplement sets forth the names of such underwriters, dealers or agents, if
any, any applicable commissions or discounts and the net proceeds to the
Company from such sale.
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR BY ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
-----------
THE DATE OF THIS PROSPECTUS IS , 1997
<PAGE>
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT IN CONNECTION WITH
THE OFFER MADE BY THIS PROSPECTUS AND ANY PROSPECTUS SUPPLEMENT AND, IF GIVEN
OR MADE, ANY SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY. NEITHER THIS PROSPECTUS NOR ANY
PROSPECTUS SUPPLEMENT IS AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO
BUY, BY ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH AN
OFFER OR SOLICITATION. EXCEPT AS OTHERWISE INDICATED HEREIN, THIS PROSPECTUS
AND ANY PROSPECTUS SUPPLEMENT SPEAKS AS OF THE DATE THEREOF AND DOES NOT
PURPORT TO REFLECT ANY CHANGES IN THE AFFAIRS OF THE COMPANY THEREAFTER.
----------------
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and in accordance therewith
files periodic and current reports and other information with the Securities
and Exchange Commission (the "Commission"). Information concerning directors
and officers, their remuneration and any material interest of such persons in
transactions with the Company, as of particular dates, is disclosed in such
reports and in proxy statements distributed to shareholders of the Company and
filed with the Commission. Such reports, proxy statements and other
information can be inspected and copied at the public reference facilities of
the Commission at 450 Fifth Street, N.W., Washington, D.C.; 500 West Madison
Street, Suite 1400, Chicago, Illinois; and 7 World Trade Center, 13th Floor,
New York, New York. Copies of such material can also be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. Such reports, proxy statements and
other information also may be obtained from the Commission's Electronic Data
Gathering and Retrieval ("EDGAR") database located at the website maintained
by the Commission at http://www.sec.gov. In addition, reports, proxy
statements and other information concerning the Company can be inspected at
the offices of the New York Stock Exchange, Inc., where certain securities of
the Company are listed.
The Company has filed with the Commission registration statements on Form S-
3 relating to the First Mortgage Bonds (herein, together with all amendments
and exhibits, referred to as the "Registration Statements") under the
Securities Act of 1933, as amended (the "1933 Act"). This Prospectus does not
contain all of the information set forth in the Registration Statements,
certain parts of which are omitted in accordance with the rules and
regulations of the Commission. For further information, reference is hereby
made to the Registration Statements.
----------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company with the Commission
under the 1934 Act are incorporated by reference in this Prospectus:
(a) The Company's Annual Report on Form 10-K for the year ended December
31, 1996.
(b) The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1997 and June 30, 1997.
(c) The Company's Current Reports on Form 8-K dated April 7, 1997, April
17, 1997, May 5, 1997, July 14, 1997 and August 6, 1997.
All documents subsequently filed by the Company with the Commission pursuant
to Sections 13(a), 13(c), 14 or 15(d) of the 1934 Act after the date of this
Prospectus and prior to the termination of this offering shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of the filing of such documents. Any statement contained in an
incorporated document 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 incorporated document subsequently filed or in an accompanying
Prospectus Supplement modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
2
<PAGE>
THE COMPANY HEREBY UNDERTAKES TO FURNISH, WITHOUT CHARGE, TO EACH PERSON,
INCLUDING ANY BENEFICIAL OWNER, TO WHOM A COPY OF THIS PROSPECTUS HAS BEEN
DELIVERED, ON THE WRITTEN OR ORAL REQUEST OF ANY SUCH PERSON, A COPY OF ANY OR
ALL OF THE DOCUMENTS REFERRED TO ABOVE WHICH HAVE BEEN OR MAY BE INCORPORATED
BY REFERENCE IN THIS PROSPECTUS, OTHER THAN EXHIBITS TO SUCH DOCUMENTS.
REQUESTS FOR SUCH DOCUMENTS SHOULD BE DIRECTED TO ELLEN SHERIFF ROGERS,
ASSOCIATE GENERAL COUNSEL, SECRETARY AND ASSISTANT TREASURER, POTOMAC ELECTRIC
POWER COMPANY, 1900 PENNSYLVANIA AVENUE, N.W., WASHINGTON, D.C. 20068 (202-
872-3526).
3
<PAGE>
THE COMPANY
Potomac Electric Power Company, a District of Columbia and Virginia
corporation (the "Company"), is engaged in the generation, transmission,
distribution and sale of electric energy in the Washington, D.C. metropolitan
area, including the District of Columbia and major portions of Montgomery and
Prince George's Counties in Maryland. It also supplies, at wholesale, electric
energy to the Southern Maryland Electric Cooperative, Inc., which distributes
electricity in Calvert, Charles, Prince George's and St. Mary's Counties in
southern Maryland. The Company's wholly owned nonutility subsidiary, Potomac
Capital Investment Corporation ("PCI"), was organized in late 1983 to provide
a vehicle to conduct the Company's ongoing nonutility businesses. PCI's
principal investments have been in aircraft and power generation equipment,
equipment leasing and marketable securities, primarily preferred stock with
mandatory redemption features. PCI is also involved with activities which
provide telecommunication and energy services. In addition, PCI has
investments in real estate properties in the Washington, D.C. metropolitan
area. The mailing address of the Company's executive offices is 1900
Pennsylvania Avenue, N.W., Washington, D.C. 20068, and its telephone number is
202-872-2000.
USE OF PROCEEDS
The Company may offer from time to time pursuant to this Prospectus up to an
aggregate principal amount of $200,000,000 of its First Mortgage Bonds.
The proceeds from the sale of the First Mortgage Bonds will be used to
refund short-term debt incurred primarily to finance, on a temporary basis,
the Company's utility construction program and operations, and to refund the
Company's senior securities, including the retirement of long-term debt and
the satisfaction of contractual sinking fund requirements.
4
<PAGE>
SELECTED FINANCIAL INFORMATION
The following is a selection of certain consolidated financial information
of the Company which was derived from, and is qualified in its entirety by,
the audited consolidated financial statements contained in the Company's
Annual Report on Form 10-K for the year ended December 31, 1996, and the
unaudited consolidated financial information contained in its Quarterly Report
on Form 10-Q for the quarter ended June 30, 1997, which are available as
described herein under "Incorporation of Certain Documents by Reference." The
interim financial data are unaudited; however, in the opinion of the
management of the Company, such data reflect all adjustments, consisting of
normal recurring accruals, necessary for a fair statement of the results of
operations for the interim periods presented.
<TABLE>
<CAPTION>
12 MONTHS ENDED
-----------------------------------------------
JUNE 30, DEC. 31, DEC. 31, DEC. 31,
1997 1996 1995 1994
----------- ----------- ----------- -----------
(THOUSANDS OF DOLLARS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Income Statement Data:
Total Revenue................. $ 1,911,969 $ 2,010,311 $ 1,876,102 $ 1,823,074
Operating Revenue............. 1,800,921 1,834,857 1,822,432 1,790,600
Net Income.................... 223,080 236,960 94,391 227,162
Earnings for Common Stock..... 206,490 220,356 77,540 210,725
Earnings Per Share of Common
Stock........................ 1.74 1.86 .65 1.79
Balance Sheet Data at end of
period:
Property and Plant, net....... $ 4,443,141 $ 4,423,249 $ 4,400,311 $ 4,334,399
</TABLE>
<TABLE>
<CAPTION>
AS OF JUNE 30,
1997
----------------------
AMOUNT RATIO
----------- -----
(THOUSANDS)
<S> <C> <C> <C>
Capital Structure (excluding nonutility subsidiary debt
and current maturities):
Long-Term Debt........................................ $1,727,065 44.9%
Preferred Stock....................................... 266,293 6.9
Common Equity......................................... 1,857,120 48.2
---------- -----
Total Capitalization................................ $3,850,478 100.0%
==========
Parent Company Long-Term Debt and Preferred Stock
Redemption Due in One Year and Short-Term Debt......... $ 412,585
==========
</TABLE>
RATIOS OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
12 MONTHS ENDED
-----------------------------------------------------
JUNE 30, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31,
1997 1996 1995 1994 1993 1992
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Parent company only....... 2.90 3.08 3.05 3.23 3.20 2.73
Fully consolidated........ 2.26 2.24 1.52 2.37 2.31 2.19
</TABLE>
For purposes of computing the ratio of earnings to fixed charges for rate-
regulated public utilities, earnings represent net income before cumulative
effect of accounting changes plus income taxes and fixed charges. Fixed
charges represent interest charges on debt (exclusive of credits arising from
the allowance for funds used during construction) and the portion of rentals
deemed representative of the interest factor.
5
<PAGE>
DESCRIPTION OF BONDS AND MORTGAGE
GENERAL. The New Bonds are to be issued under the Mortgage and Deed of Trust
dated July 1, 1936, between the Company and The Bank of New York, New York,
N.Y., as Trustee and as successor in such capacity to The Riggs National Bank
of Washington, D.C. (the "Trustee"), as amended and supplemented and as to be
supplemented by a separate supplemental indenture (the "Supplemental
Indenture") each time New Bonds are offered under this Prospectus and the
accompanying Prospectus Supplement. Said mortgage, as so amended and
supplemented and to be supplemented, is herein sometimes called the
"Mortgage." Copies of the documents currently constituting the Mortgage are
exhibits to the Registration Statements, as is the form of the Supplemental
Indenture.
Reference is made to the Prospectus Supplement which accompanies this
Prospectus for the following terms and other information with respect to the
New Bonds being offered thereby: (1) the designation and aggregate principal
amount of such New Bonds; (2) the date on which such New Bonds will mature;
(3) the rate per annum at which such New Bonds will bear interest, or the
method of determining such rate; (4) the dates on which such interest will be
payable; (5) any redemption terms; and (6) other specific terms applicable to
the New Bonds.
The New Bonds will be available only in fully registered form without
coupons in denominations of $1,000 or any multiple thereof, except as may be
set forth in the accompanying Prospectus Supplement. Both principal and
interest on the New Bonds will be payable at the agency of the Company, The
Bank of New York, New York, N.Y. The Company will not impose charges for any
exchanges of New Bonds.
The Supplemental Indenture will contain no provisions for an improvement and
sinking fund or any maintenance and replacement requirement or dividend
restriction; neither does the Mortgage nor any indenture supplemental thereto
relating to any outstanding Series of Bonds contain any such provisions.
The Mortgage does not contain any covenants or other provisions that
specifically are intended to afford holders of the New Bonds special
protection in the event of a highly leveraged transaction.
The following statements are outlines of certain provisions contained in the
Mortgage and do not purport to be complete. They are qualified by express
reference to the cited Sections and Articles of the Mortgage. Certain terms
used are as defined in the Mortgage.
SECURITY. The New Bonds will be secured, together with all other Bonds now
or hereafter issued under the Mortgage, by a valid and direct first lien
(subject to certain leases, Permitted Liens and other minor matters) on
substantially all the properties and franchises of the Company (the principal
properties being its generating stations and its electric transmission and
distribution systems), other than cash, accounts receivable and other liquid
assets, securities (including securities evidencing investments in
subsidiaries of the Company), leases by the Company as lessor, equipment and
materials not installed as part of the fixed property, and electric energy and
other materials, merchandise or supplies produced or purchased by the Company
for sale, distribution or use. The Company's 9.72% undivided interest in a
mine-mouth, steam-electric generating station, known as the Conemaugh
Generating Station, which is located in Indiana County, Pennsylvania, and its
associated transmission lines is that of a tenant in common with eight other
utility owners. Substantially all of the Company's transmission and
distribution lines of less than 230,000 volts, portions of its 230,000 and
500,000 volt transmission lines, substantially all of the Conemaugh
transmission lines, and 11 substations are located on land owned by others or
on public streets and highways.
The Mortgage contains provisions subjecting after-acquired property (subject
to pre-existing and Permitted Liens) to the lien thereof. The lien on such
property is, however, subject to rights of persons having superior equities
attaching prior to the recording or filing of an appropriate supplemental
indenture.
ISSUANCE OF ADDITIONAL BONDS. Additional Bonds ranking equally with the New
Bonds may be issued in an aggregate amount of up to (i) 60% of the Net
Bondable Value of Property Additions not subject to an
6
<PAGE>
Unfunded Prior Lien, (ii) the amount of cash deposited with the Trustee (which
may thereafter be withdrawn on the same basis that Additional Bonds are
issuable under (i) and (iii)), and (iii) the amounts of Bonds retired or to be
retired (except out of trust moneys or by any sinking or analogous fund if the
fund prevents such use) (Secs. 4, 6 and 7, Art. III; Sec. 4, Art. VIII).
Additional Bonds may not be issued unless Net Earnings of the Company
Available for Interest and Property Retirement Appropriations (i.e., earnings
before depreciation, amortization, income taxes and interest charges) during
12 of the immediately preceding 15 months shall have been at least twice the
annual interest charges on all Bonds and Prior Lien Bonds then outstanding and
then being issued, unless they are being issued on the basis of Bonds paid at
or redeemed or purchased within two years of maturity or on the basis of
Property Additions subject to an Unfunded Prior Lien (which simultaneously
becomes a Funded Prior Lien) and the Bonds are issued within two years of the
maturity of the Prior Lien Bonds secured by such Prior Liens (Secs. 3, 4 and
7, Art. III). Giving effect to the issuance of the New Bonds at an assumed
rate of interest of 8%, such Net Earnings for the twelve months ended June 30,
1997 would be approximately 5.8 times the aggregate annual interest charges
referred to above. Such coverage would permit issuance of approximately $2.6
billion of mortgage bonds (in addition to the New Bonds) at an assumed average
interest rate of 8% per annum, against property additions or cash deposits,
although only approximately $530 million of such additional bonds could
currently be issued in compliance with unbonded net property addition
limitations contained in the Mortgage.
So long as any New Bonds are outstanding, Property Additions constructed or
acquired on or before December 31, 1946 may not be made the basis for the
issue of Bonds, or the withdrawal of cash, or the reduction of cash required
to be paid to the Trustee (Sec. 2, Part IV, Supplemental Indenture).
Prior Lien Bonds secured by an Unfunded Prior Lien may be issued under the
circumstances and subject to the limitations contained in the Mortgage (Sec.
16, Art. IV).
After giving effect to the issuance of the New Bonds (which are to be issued
against Property Additions), approximately $880 million of the Property
Additions as of June 30, 1997 will remain available for the purposes permitted
in the Mortgage, including the issuance of Bonds.
RELEASE OF PROPERTY. The Mortgage permits property to be released from the
lien of the Mortgage upon compliance with the provisions thereof. Such
provisions generally require that cash be deposited with the Trustee in an
amount equal to the fair value of the property to be released. The Mortgage
permits the Company to reduce such amounts of cash otherwise required to be
deposited by substituting a like amount of Bonds retired. The Mortgage also
contains certain requirements relating to the withdrawal of cash deposited to
obtain a release of property (Art. VII and Art. VIII).
MODIFICATION OF MORTGAGE. With the consent of the holders of 80% in amount
of Bonds and of 80% in amount of Bonds of each series affected if less than
all are affected, the Mortgage may be changed except to affect the terms of
payment of the principal or interest on any Bonds or to reduce the percentage
of Bondholders required to effect any change (Sec. 6, Art. XV).
The Supplemental Indenture, however, provides that the foregoing percentages
shall be reduced to 60% upon the consent or agreement to such change by the
holders of all outstanding Bonds. Purchasers of the New Bonds will be deemed
to have agreed to such reduction pursuant to the terms of the Supplemental
Indenture.
EVENTS OF DEFAULT. The holders of 25% in amount of Bonds, upon any Event of
Default, may require the Trustee to accelerate maturity of the Bonds (although
a majority in amount of Bonds may waive such default and rescind such
acceleration if such default is cured) and to enforce the lien of the Mortgage
upon being indemnified to its satisfaction (Sec. 1 and 4, Art. IX).
The holders of a majority in amount of Bonds may direct proceedings for the
sale of the trust estate, or for the appointment of a receiver or any other
proceedings under the Mortgage, but have no right to involve the Trustee in
any personal liability without indemnifying it to its satisfaction (Sec. 11,
Art. IX).
7
<PAGE>
Events of Default include failure to pay principal, failure for 30 days to
pay interest or to satisfy any improvement, maintenance or sinking fund
obligation, failure for 60 days (after notice by the Trustee or the holders of
15% in amount of Bonds) to perform any other covenant, and certain events of
bankruptcy, insolvency or reorganization (Sec. 1, Art. IX).
While the Mortgage by its terms does not require that periodic evidence be
furnished to the Trustee as to the absence of default or as to compliance with
the terms of the Mortgage, the Trust Indenture Act of 1939, as amended,
requires that annual certificates as to the absence of such defaults be
furnished to the Trustee.
RELATIONSHIPS WITH TRUSTEE. The Bank of New York is the trustee under
indentures for the Company's medium-term notes, 5% Convertible Debentures due
2002 and 7% Convertible Debentures due 2018, and in connection with a sale and
leaseback of the Company's Control Center. The Company has with the Trustee
and its affiliates, as it has with various other banks, a demand deposit
account and conventional and revolving credit arrangements. The Bank of New
York is the Issuing and Paying Agent for medium-term notes issued by PCI.
PLAN OF DISTRIBUTION
The Company may sell the New Bonds: (i) through underwriters or dealers;
(ii) directly to one or more purchasers; (iii) through agents; or (iv) through
a combination of any such methods of sale. The Prospectus Supplement with
respect to any New Bonds being offered thereby sets forth the terms of the
offering of such New Bonds, including the name or names of any underwriters,
the purchase price of such New Bonds and the proceeds to the Company from such
sale, any underwriting discounts and other items constituting underwriters'
compensation, any initial public offering price and any discounts or
concessions allowed or reallowed or paid to dealers and any securities
exchanges on which such New Bonds may be listed.
If underwriters are used in the sale, the New Bonds will be acquired by the
underwriters for their own account and may be resold from time to time in one
or more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of sale. The New
Bonds may be offered to the public, either through underwriting syndicates
represented by the underwriter or underwriters to be designated by the Company
or directly by one or more of such firms. Unless otherwise set forth in the
Prospectus Supplement, the obligations of the underwriters to purchase the New
Bonds offered thereby will be subject to certain conditions precedent, and the
underwriters will be obligated to purchase all such New Bonds if any are
purchased. Any initial public offering price and any discounts or concessions
allowed or reallowed or paid to dealers may be changed from time to time.
New Bonds may be sold directly by the Company or through agents designated
by the Company from time to time. The Prospectus Supplement sets forth the
name of any agent involved in the offer or sale of the New Bonds in respect of
which the Prospectus Supplement is delivered as well as any commission payable
by the Company to such agent. Unless otherwise indicated in the Prospectus
Supplement, any such agent is acting on a best efforts basis for the period of
its appointment.
If so indicated in the Prospectus Supplement, the Company will authorize
agents, underwriters or dealers to solicit offers by certain specified
institutions to purchase the New Bonds from the Company at the public offering
price set forth in the Prospectus Supplement pursuant to delayed delivery
contracts providing for payment and delivery on a specified date in the
future. Such contracts will be subject to those conditions set forth in the
Prospectus Supplement, and the Prospectus Supplement will set forth the
commission payable for solicitation of such contracts.
Agents and underwriters may be entitled under agreements entered into with
the Company to indemnification by the Company against certain civil
liabilities, including liabilities under the 1933 Act. Agents and underwriters
may be customers of, engaged in transactions with, or perform services for the
Company in the ordinary course of business.
8
<PAGE>
EXPERTS
The consolidated financial statements incorporated in this Prospectus by
reference to the Company's Annual Report on Form 10-K for the year ended
December 31, 1996 have been so incorporated in reliance on the report of Price
Waterhouse LLP, independent accountants, given on the authority of said firm
as experts in auditing and accounting.
With respect to the unaudited consolidated financial information of the
Company for the three- and twelve-month periods ended March 31, 1997 and 1996,
and the three-, six- and twelve-month periods ended June 30, 1997 and 1996
incorporated by reference in this Prospectus, Price Waterhouse LLP reported
that they have applied limited procedures in accordance with professional
standards for a review of such information. However, their separate reports
dated May 14, 1997 and August 13, 1997, incorporated by reference herein,
state that they did not audit and they do not express opinions on that
unaudited consolidated financial information. Price Waterhouse LLP has not
carried out any significant or additional audit tests beyond those which would
have been necessary if such reports had not been included. Accordingly, the
degree of reliance on their reports on such information should be restricted
in light of the limited nature of the review procedures applied. Price
Waterhouse LLP is not subject to the liability provisions of Section 11 of the
1933 Act for their reports on the unaudited consolidated financial information
because each such report is not a "report" or a "part" of the registration
statement prepared or certified by Price Waterhouse LLP within the meaning of
Sections 7 and 11 of the 1933 Act.
The statements as to matters of law and legal conclusions contained under
"Description of Bonds and Mortgage--Security" have been prepared under the
supervision of, and reviewed by, William T. Torgerson, Esq., Senior Vice
President and General Counsel for the Company, and are made on his authority.
LEGAL OPINIONS
Certain legal matters in connection with the securities to be offered hereby
will be passed upon for the Company by Covington & Burling, 1201 Pennsylvania
Avenue, N.W., Washington, D.C., and William T. Torgerson, Esq., 1900
Pennsylvania Avenue, N.W., Washington, D.C. Mr. Torgerson is regularly
employed by the Company as Senior Vice President and General Counsel. Unless
otherwise indicated in the accompanying Prospectus Supplement, the legality of
such securities will be passed upon for the underwriter, dealer or agents by
Winthrop, Stimson, Putnam & Roberts, One Battery Park Plaza, New York, N.Y.,
who will, however, not pass on the incorporation of the Company.
9
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE +
+WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES +
+LAWS OF ANY SUCH JURISDICTION. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PRELIMINARY PROSPECTUS DATED .
SUBJECT TO COMPLETION
POTOMAC ELECTRIC POWER COMPANY
MEDIUM-TERM NOTES
-----------
Potomac Electric Power Company (the "Company") may offer from time to time up
to $200,000,000 aggregate principal amount of its Medium-Term Notes (the
"Notes") having maturities ranging from nine months to thirty years from the
date of issuance. Each Note will bear interest at a rate or pursuant to an
interest rate formula determined by the Company at or prior to the sale
thereof. The aggregate principal amount, the interest rate or formula for
determining such rate, interest payment dates for floating rate Notes, purchase
price, date of maturity, redemption terms, if any, and certain other variable
terms with respect to the Notes will be set forth in the accompanying
Prospectus Supplement (the "Prospectus Supplement") or Pricing Supplement
thereto (the "Pricing Supplement") to be filed with respect to the issuance and
sale of Notes. The terms upon which each issuance and sale of Notes are
offered, together with the names of the agents and the agents' commissions or
discounts, if applicable, will also be set forth in the Prospectus Supplement
or Pricing Supplement. See "Plan of Distribution" regarding possible
indemnification arrangements for agents. The amount of Medium-Term Notes to be
offered hereby will be reduced by the amount of any First Mortgage Bonds sold
pursuant to the Registration Statements of which this Prospectus is a part. See
"Description of the Notes."
The Notes may be offered on a continuous basis by the Company through agents.
The Notes may also be sold by the Company to any agent at negotiated discounts
for its own account or for resale to one or more investors and other purchasers
at varying prices relating to prevailing market prices at the time of resale as
determined by such agent. The Notes will not be listed on any securities
exchange. The Company or the agents may reject, in whole or in part, any offer
to purchase the Notes. See "Plan of Distribution."
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR BY ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
-----------
The date of this Prospectus is , 1997
<PAGE>
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS
PROSPECTUS AND, IF GIVEN OR MADE, ANY SUCH INFORMATION OR REPRESENTATION MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS
IS NOT AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, BY ANY PERSON
IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR
SOLICITATION. EXCEPT AS OTHERWISE INDICATED HEREIN, THIS PROSPECTUS SPEAKS AS
OF ITS DATE AND DOES NOT PURPORT TO REFLECT ANY CHANGES IN THE AFFAIRS OF THE
COMPANY THEREAFTER.
----------------
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and in accordance therewith
files periodic and current reports and other information with the Securities
and Exchange Commission (the "Commission"). Information concerning directors
and officers, their remuneration and any material interest of such persons in
transactions with the Company, as of particular dates, is disclosed in such
reports and in proxy statements distributed to shareholders of the Company and
filed with the Commission. Such reports, proxy statements and other
information can be inspected and copied at the public reference facilities of
the Commission at 450 Fifth Street, N.W., Washington, D.C., 500 West Madison
Street, Suite 1400, Chicago, Illinois; and 7 World Trade Center, 13th Floor,
New York, New York. Copies of such material can also be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. Such reports, proxy statements and
other information also may be obtained from the Commission's Electronic Data
Gathering and Retrieval ("EDGAR") database located at the website maintained
by the Commission at http://www.sec.gov. In addition, reports, proxy
statements and other information concerning the Company can be inspected at
the offices of the New York Stock Exchange, Inc., where certain securities of
the Company are listed.
The Company has filed with the Commission registration statements on Form S-
3 relating to the Notes (herein, together with all amendments and exhibits,
referred to as the "Registration Statements") under the Securities Act of
1933, as amended (the "1933 Act"). This Prospectus does not contain all of the
information set forth in the Registration Statements, certain parts of which
are omitted in accordance with the rules and regulations of the Commission.
For further information, reference is hereby made to the Registration
Statements.
----------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company with the Commission
under the 1934 Act are incorporated by reference in this Prospectus:
(a) The Company's Annual Report on Form 10-K for the year ended December
31, 1996.
(b) The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1997 and June 30, 1997.
(c) The Company's Current Reports on Form 8-K dated April 7, 1997, April
17, 1997, May 5, 1997, July 14, 1997 and August 6, 1997.
All documents subsequently filed by the Company with the Commission pursuant
to Sections 13(a), 13(c), 14 or 15(d) of the 1934 Act after the date of this
Prospectus and prior to the termination of this offering shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of the filing of such documents. Any statement contained in an
incorporated document 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 incorporated document subsequently filed or in an accompanying
Prospectus Supplement modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
2
<PAGE>
THE COMPANY HEREBY UNDERTAKES TO FURNISH, WITHOUT CHARGE, TO EACH PERSON,
INCLUDING ANY BENEFICIAL OWNER, TO WHOM A COPY OF THIS PROSPECTUS HAS BEEN
DELIVERED, ON THE WRITTEN OR ORAL REQUEST OF ANY SUCH PERSON, A COPY OF ANY OR
ALL OF THE DOCUMENTS REFERRED TO ABOVE WHICH HAVE BEEN OR MAY BE INCORPORATED
BY REFERENCE IN THIS PROSPECTUS, OTHER THAN EXHIBITS TO SUCH DOCUMENTS.
REQUESTS FOR SUCH DOCUMENTS SHOULD BE DIRECTED TO ELLEN SHERIFF ROGERS,
ASSOCIATE GENERAL COUNSEL, SECRETARY AND ASSISTANT TREASURER, POTOMAC ELECTRIC
POWER COMPANY, 1900 PENNSYLVANIA AVENUE, N.W., WASHINGTON, D.C. 20068 (202-
872-3526).
THE COMPANY
Potomac Electric Power Company, a District of Columbia and Virginia
corporation (the "Company"), is engaged in the generation, transmission,
distribution and sale of electric energy in the Washington, D.C. metropolitan
area, including the District of Columbia and major portions of Montgomery and
Prince George's Counties in Maryland. It also supplies, at wholesale, electric
energy to the Southern Maryland Electric Cooperative, Inc., which distributes
electricity in Calvert, Charles, Prince George's and St. Mary's Counties in
southern Maryland. The Company's wholly owned nonutility subsidiary, Potomac
Capital Investment Corporation ("PCI"), was organized in late 1983 to provide
a vehicle to conduct the Company's ongoing nonutility businesses. PCI's
principal investments have been in aircraft and power generation equipment,
equipment leasing and marketable securities, primarily preferred stock with
mandatory redemption features. PCI is also involved with activities which
provide telecommunication and energy services. In addition, PCI has
investments in real estate properties in the Washington, D.C. metropolitan
area. The mailing address of the Company's executive offices is 1900
Pennsylvania Avenue, N.W., Washington, D.C. 20068, and its telephone number is
202-872-2000.
USE OF PROCEEDS
The Company may offer from time to time pursuant to this Prospectus up to an
aggregate principal amount of $200,000,000 of its Medium-Term Notes.
The proceeds from the sale of the Notes will be used to refund short-term
debt incurred primarily to finance, on a temporary basis, the Company's
utility construction program and operations, and to refund the Company's
senior securities, including the retirement of long-term debt and the
satisfaction of contractual sinking fund requirements.
3
<PAGE>
SELECTED FINANCIAL INFORMATION
The following is a selection of certain consolidated financial information
of the Company which was derived from, and is qualified in its entirety by,
the audited consolidated financial statements contained in the Company's
Annual Report on Form 10-K for the year ended December 31, 1996, and the
unaudited consolidated financial information contained in its Quarterly Report
on Form 10-Q for the quarter ended June 30, 1997, which are available as
described herein under "Incorporation of Certain Documents by Reference." The
interim financial data are unaudited; however, in the opinion of the
management of the Company, such data reflect all adjustments, consisting of
normal recurring accruals, necessary for a fair statement of the results of
operations for the interim periods presented.
<TABLE>
<CAPTION>
12 MONTHS ENDED
-----------------------------------------------
JUNE 30, DEC. 31, DEC. 31, DEC. 31,
1997 1996 1995 1994
----------- ----------- ----------- -----------
(THOUSANDS OF DOLLARS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Income Statement Data:
Total Revenue................. $ 1,911,969 $ 2,010,311 $ 1,876,102 $ 1,823,074
Operating Revenue............. 1,800,921 1,834,857 1,822,432 1,790,600
Net Income.................... 223,080 236,960 94,391 227,162
Earnings for Common Stock..... 206,490 220,356 77,540 210,725
Earnings Per Share of Common
Stock........................ 1.74 1.86 .65 1.79
Balance Sheet Data at end of
period:
Property and Plant, net....... $ 4,443,141 $ 4,423,249 $ 4,400,311 $ 4,334,399
</TABLE>
<TABLE>
<CAPTION>
AS OF JUNE 30, 1997
----------------------
AMOUNT RATIO
----------- -----
(THOUSANDS)
<S> <C> <C> <C>
Capital Structure (excluding nonutility subsidiary debt
and current maturities):
Long-Term Debt........................................ $1,727,065 44.9%
Preferred Stock....................................... 266,293 6.9
Common Equity......................................... 1,857,120 48.2
---------- -----
Total Capitalization................................ $3,850,478 100.0%
==========
Parent Company Long-Term Debt and Preferred Stock
Redemption Due in One Year and Short-Term Debt......... $ 412,585
==========
</TABLE>
RATIOS OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
12 MONTHS ENDED
-----------------------------------------------------
JUNE 30, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31,
1997 1996 1995 1994 1993 1992
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Parent company only....... 2.90 3.08 3.05 3.23 3.20 2.73
Fully consolidated........ 2.26 2.24 1.52 2.37 2.31 2.19
</TABLE>
For purposes of computing the ratio of earnings to fixed charges for rate-
regulated public utilities, earnings represent net income before cumulative
effect of accounting change plus income taxes and fixed charges. Fixed charges
represent interest charges on debt (exclusive of credits arising from the
allowance for funds used during construction) and the portion of rentals
deemed representative of the interest factor.
4
<PAGE>
DESCRIPTION OF THE NOTES
The Notes will be issued under an Indenture between the Company and The Bank
of New York, as Trustee (the "Trustee"), dated as of July 28, 1989 (such
Indenture as originally executed and delivered and as thereafter supplemented
and amended, together with any constituent instruments establishing the terms
of particular Notes, being herein called the "Indenture"). The following
summaries of certain provisions of the Indenture do not purport to be complete
and are subject to, and are qualified in their entirety by reference to, all
of the provisions of the Indenture, a copy of which has been incorporated by
reference as an exhibit to the Registration Statements of which this
Prospectus is a part. The terms and conditions set forth below will apply to
each Note unless otherwise specified in the applicable Prospectus Supplement
or Pricing Supplement. Certain terms used are defined in the Indenture.
As of the date of this Prospectus, $275,000,000 aggregate principal amount
of Indenture Securities (defined herein) are issued and outstanding (not
including the Notes offered hereby). The Notes, issued and to be issued, will
be unsecured and will rank pari passu with all other unsecured and
unsubordinated indebtedness of the Company from time to time outstanding. As
of the date of this Prospectus, an aggregate of $1,341,800,000 of secured debt
is outstanding. The terms of the Notes will not restrict the further
incurrence of secured debt by the Company. The Notes will not be subject to
any sinking fund.
Unless otherwise specified in a Prospectus Supplement, the Notes will mature
on any day from 9 months to 30 years from the date of original issue (the
"Original Issue Date"), as selected by the purchaser and agreed to by the
Company. Each Note will bear interest at either (a) a fixed rate (a "Fixed
Rate Note") or (b) rates determined by reference to a Base Rate (as hereafter
defined), which may be adjusted by a Spread or Spread Multiplier (as hereafter
defined) (a "Floating Rate Note").
The Notes will be offered on a continuous basis. Reference is made to the
Prospectus Supplement or the applicable Pricing Supplement with respect to the
Notes described therein for the following terms: (1) the purchase price of
such Notes (the "Issue Price"), or a statement that the Notes are being
offered by an agent as principal at varying market prices; (2) the Original
Issue Date; (3) the stated maturity date of such Notes (the "Maturity Date");
(4) if Fixed Rate Notes, the rate per annum at which such Notes will bear
interest (the "Interest Rate"); (5) if Floating Rate Notes, the interest rate
formula and other variable terms; (6) the date or dates from which any such
interest shall accrue; (7) the terms for redemption, if any; and (8) any other
terms of such Notes.
The Notes will be subject to redemption by the Company on and after the
initial redemption date, if any, fixed at the time of sale and set forth in
the applicable Pricing Supplement (the "Initial Redemption Date"). If no
Initial Redemption Date is indicated with respect to a Note, such Note will
not be redeemable prior to maturity. On and after the Initial Redemption Date
with respect to any Note, such Note will be redeemable in whole or in part in
increments of $1,000 at the option of the Company at a redemption price (the
"Redemption Price") determined in accordance with the following paragraph,
together with interest thereon payable to the date of redemption, on notice
given no more than 60 nor less than 30 days prior to the date of redemption.
The Redemption Price for each Note subject to redemption shall initially be
equal to a certain percentage (the "Initial Redemption Percentage") of the
principal amount of such Note to be redeemed and shall decline at each
anniversary of the Initial Redemption Date with respect to such Note by a
percentage (the "Annual Redemption Percentage Reduction") of the principal
amount to be redeemed until the Redemption Price is 100% of such principal
amount. The Initial Redemption Percentage and any Annual Redemption Percentage
Reduction with respect to each Note subject to redemption prior to maturity
will be fixed at the time of sale and set forth in the applicable Pricing
Supplement.
The Notes will be repayable by the Company at the option of the Holders
thereof prior to the stated Maturity Date only if one or more optional
repayment dates ("Optional Repayment Date") are specified in the applicable
Prospectus Supplement or Pricing Supplement. If so specified, the Notes will
be subject to repayment at the
5
<PAGE>
option of the Holders thereof on any Optional Repayment Date in whole or from
time to time in part in increments of $1,000 or such other minimum
denomination specified in the applicable Prospectus Supplement or Pricing
Supplement (provided that any remaining principal amount thereof shall be at
least $1,000 or such other minimum denomination), at a repayment price equal
to 100% of the unpaid principal amount to be repaid, together with unpaid
interest accrued thereon to the date of repayment. For any Note to be repaid,
such Note must be received, together with the form thereon entitled "Option to
Elect Repayment" duly completed, by the Trustee at its office maintained for
such purpose in the Borough of Manhattan, The City of New York, currently the
corporate trust office of the Trustee located at 101 Barclay Street, not more
than 60 nor less than 30 calendar days prior to the date of repayment.
Exercise of such repayment option by the Holder will be irrevocable.
Only the Depositary may exercise the repayment option in respect of global
securities representing Book-Entry Notes (as hereinafter defined).
Accordingly, owners of beneficial interests in global securities ("Beneficial
Owners") that desire to have all or any portion of the Book-Entry Notes
represented by such global securities repaid must instruct the participant
through which they own their interest to direct the Depositary to exercise the
repayment option on their behalf by delivering the related global security and
duly completed election form to the Trustee as aforesaid. In order to ensure
that such global security and election form are received by the Trustee on a
particular day, the applicable Beneficial Owner must so instruct the
participant through which it owns its interest before such participant's
deadline for accepting instructions for that day. Different firms may have
different deadlines for accepting instructions from their customers.
Accordingly, Beneficial Owners should consult the participants through which
they own their interest to determine the respective deadlines for such
participants. All instructions given to participants from Beneficial Owners of
global securities relating to the option to elect repayment shall be
irrevocable. In addition, at the time such instructions are given, each such
Beneficial Owner shall cause the participant through which it owns its
interest to transfer such Beneficial Owner's interest in the global security
or securities representing the related Book-Entry Notes, on the Depositary's
records, to the Trustee.
If applicable, the Company will comply with the requirements of Section
14(e) of the 1934 Act, and the rules promulgated thereunder, and any other
securities laws or regulations in connection with any such repayment.
The Company may at any time purchase Notes at any price or prices in the
open market or otherwise. Notes so purchased by the Company may, at the
discretion of the Company, be held, resold or surrendered to the Trustee for
cancellation.
The Notes will be issued only in fully registered certificated or book-entry
form without coupons and, except as may otherwise be provided in the
applicable Prospectus Supplement or Pricing Supplement, in the denomination of
$1,000 or any multiple thereof. Notes issued in certificated form may be
transferred or exchanged at the offices described in the immediately following
paragraphs. In the event the Notes are issued in book-entry form through the
facilities of the Depositary (as defined below), transfers or exchanges may be
similarly effected through a participating member of the Depositary.
For Notes issued in certificated form, principal and interest will be
payable, the transfer of the Notes will be registrable, and Notes will be
exchangeable for Notes bearing identical terms and provisions at the office or
agency of the Company in The City of New York designated for such purpose;
provided, however, that payment of interest, other than interest at maturity
(or on any date of redemption if a Note is redeemed prior to maturity), may be
made at the option of the Company by check mailed to the address of the person
in whose name the applicable Note is registered at the close of business on
the Regular Record Date (as hereafter defined) as shown on the security
register maintained by the Trustee. Interest will be payable on each date
specified in the Note on which an installment of interest is due and payable
(an "Interest Payment Date") and at maturity (or any date of redemption).
Notwithstanding the foregoing, if the original issue date of a Note is between
the Regular Record Date and the initial Interest Payment Date, the initial
interest payment will be made on the Interest Payment Date following the next
succeeding Regular Record Date to the registered holder on such next
succeeding Regular Record Date.
6
<PAGE>
No service charge will be made to holders of Notes for any transfer or
exchange of Notes, but the Company may require payment of a sum sufficient to
cover any tax or governmental charge incident to the transfer or exchange.
Transfers and exchanges of Notes may be made at the Corporate Trust Office of
the Trustee.
Interest payments shall be the amount of interest accrued from and including
the next preceding Interest Payment Date in respect of which interest has been
paid (or from and including the date of issue, if no interest has been paid
with respect to such Note), to, but excluding, the Interest Payment Date,
maturity date or date of redemption (an "Interest Accrual Period"). The
principal and interest payable at maturity (or any date of redemption) on each
Note will be paid upon maturity (or any date of redemption) in immediately
available funds against presentation of the Note at the Corporate Trust Office
of The Bank of New York located at 101 Barclay Street, New York, New York.
Interest payable at maturity (or on any date of redemption) will be payable to
the person to whom the principal of the Note shall be paid. Notwithstanding
the above, a holder of $10,000,000 or more in aggregate principal amount of
Notes issued in certificated form having the same Interest Payment Date shall
be entitled to receive payments of interest by wire transfer of immediately
available funds if appropriate wire transfer instructions have been received
by The Bank of New York on or before the Regular Record Date immediately
preceding the applicable Interest Payment Date.
The Indenture does not contain any covenants or other provisions that
specifically are intended to afford holders of the Notes special protection in
the event of a highly leveraged transaction.
BOOK-ENTRY NOTES. The Notes may be issued in whole or in part in the form of
one or more fully-registered Notes (each, a "Book-Entry Note") which will be
deposited with, or on behalf of, The Depository Trust Company, New York (the
"Depositary") and registered in the name of the Depositary's nominee. Except
as set forth below, the Book-Entry Note may not be transferred except as a
whole by the Depositary to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary or by the
Depositary or any nominee to a successor of the Depositary or a nominee of
such successor.
Upon the issuance of Notes by the Company represented by a Book-Entry Note,
the Depositary will credit, on its book-entry registration and transfer
system, the respective principal amounts of the Notes represented by such
Book-Entry Note to the accounts of participants. The accounts to be credited
shall be designated by the agents for such Notes, or by the Company if such
Notes are offered and sold directly by the Company. Ownership of beneficial
interests in a Book-Entry Note will be limited to participants or persons that
may hold interests through participants. Ownership of beneficial interests in
a Book-Entry Note will be shown on, and the transfer of that ownership will be
effected only through, records maintained by the Depositary, or by
participants or persons that may hold interests through participants. The laws
of some states require that certain purchasers of securities take physical
delivery of such securities in certificated form. Such limits and such laws
may impair the ability to transfer beneficial interests in a Book-Entry Note.
So long as the Depositary for a Book-Entry Note, or its nominee, is the
registered owner of a Book-Entry Note, the Depositary or its nominee, as the
case may be, will be considered the sole owner or holder of the Notes
represented by such Book-Entry Note for all purposes under the Indenture.
Except as provided below, owners of beneficial interests in a Book-Entry Note
will not be entitled to have Notes represented by such Book-Entry Note
registered in their names, will not receive or be entitled to receive physical
delivery of Notes in certificated form and will not be considered the owners
or holders thereof under the Indenture.
Principal, premium, if any, and interest payments on Notes issued in book-
entry form and represented by one or more Book-Entry Notes will be made by the
Company to the Depositary or its nominee, as the case may be, as the
registered owner of the related Book-Entry Note or Notes. Neither the Company
nor the Trustee will have any responsibility or liability for any aspect of
the records relating to or payments made on account of
7
<PAGE>
beneficial ownership interests of a Book-Entry Note, or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests. The Company expects that the Depositary, upon receipt of any
payment of principal, premium, if any, or interest in respect of a Book-Entry
Note, will credit immediately the accounts of the related participants with
payment in amounts proportionate to their respective holdings in principal
amount of beneficial interest in such Book-Entry Note as shown on the records
of the Depositary. The Company also expects that payments by participants to
owners of beneficial interests in a Book-Entry Note will be governed by
standing customer instructions and customary practices, as is now 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
participants.
The Depositary has advised the Company that it is a limited purpose trust
company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the
Uniform Commercial Code and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Securities Exchange Act of 1934, as amended.
The Depositary was created to hold securities of its participants and to
facilitate the clearance and settlement of securities transactions among its
participants in such securities through electronic book-entry changes in
accounts of the participants, thereby eliminating the need for physical
movement of securities certificates. The Depositary's participants include
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations, some of whom (and/or their representatives)
own the Depositary. Access to the Depositary's book-entry system is also
available to others, such as banks, brokers, dealers and trust companies that
clear through or maintain a custodial relationship with a participant, either
directly or indirectly. Persons who are not participants may beneficially own
securities held by the Depositary only through participants.
If the Depositary is at any time unwilling or unable to continue as
depositary and a successor depositary is not appointed by the Company within
90 days, the Company will issue Notes in certificated from in exchange for
each Book-Entry Note. In addition, the Company may at any time determine not
to have Notes represented by one or more Book-Entry Notes, and, in such event,
will issue Notes in certificated form in exchange for the Book-Entry Note or
Notes representing such Notes. Further, if the Company so specifies with
respect to a Book-Entry Note, an owner of a beneficial interest in such Book-
Entry Note may, on terms acceptable to the Company and the Depositary, receive
Notes in certified form. In any such instance, an owner of a beneficial
interest in a Book-Entry Note will be entitled to physical delivery in
certificated form of Notes equal in principal amount to such beneficial
interest and to have such Notes registered in its name. Notes so issued in
certificated form will be issued in the denomination of $1,000 or any multiple
thereof and will be issued in registered form only.
FIXED RATE NOTES
Each Fixed Rate Note will bear interest from the date of issue at the rate
per annum stated on the face thereof until the principal amount thereof is
paid or made available for payment. Interest on Fixed Rate Notes will be
payable semiannually on each February 1 and August 1 Interest Payment Date and
at maturity (or any date of redemption). The "Regular Record Date" for Fixed
Rate Notes will be the fifteenth day of the month next preceding the February
1 or August 1 Interest Payment Date. Interest on the Fixed Rate Notes will be
computed on the basis of a 360-day year of twelve 30-day months. If any
Interest Payment Date or the maturity date (or any date of redemption) on a
Fixed Rate Note falls on a day that is not a Business Day (as hereafter
defined), the payment shall be made on the next Business Day as if it were
made on the date such payment was due and no interest shall accrue on the
amount so payable for the period from and after such Interest Payment Date or
the Maturity Date (or any date of redemption), as the case may be.
FLOATING RATE NOTES
Unless otherwise specified in the applicable Prospectus Supplement or
Pricing Supplement, Floating Rate Notes will be issued as described below.
Interest on Floating Rate Notes will be determined by reference to a "Base
Rate," which shall be the "Commercial Paper Rate" ("Commercial Paper Rate
Notes"), "LIBOR"
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("LIBOR Notes"), the Treasury Rate" ("Treasury Rate Notes"), the "CD Rate"
("CD Rate Notes") or other interest rate formula, based upon the Index
Maturity and adjusted by a Spread or Spread Multiplier, if any, as specified
in the applicable Pricing Supplement. The "Index Maturity" is the period to
maturity of the instrument or obligation from which the Base Rate is
calculated. The "Spread" is the number of basis points above or below the Base
Rate applicable to such Floating Rate Note, and the "Spread Multiplier" is the
percentage of the Base Rate applicable to the interest rate for such Floating
Rate Note. The Spread, Spread Multiplier, Index Maturity and other variable
terms of the Floating Rate Notes are subject to change by the Company from
time to time, but no such change will affect any Floating Rate Note
theretofore issued or as to which an offer has been accepted by the Company.
The rate of interest on each Floating Rate Note will be reset daily, weekly,
monthly, quarterly, semiannually or annually, as specified in the applicable
Prospectus Supplement or Pricing Supplement. The "Interest Rate Reset Date"
will be, in the case of Floating Rate Notes which reset daily, each day; in
the case of Floating Rate Notes which reset weekly, the Wednesday of each week
(with the exception of weekly reset Treasury Rate Notes which reset the
Tuesday of each week, except as specified below); in the case of Floating Rate
Notes which reset monthly, the third Wednesday of each month; in the case of
Floating Rate Notes which reset quarterly, the third Wednesday of March, June,
September and December, in the case of Floating Rate Notes which reset semi-
annually, the third Wednesday of the two months specified in the applicable
Pricing Supplement; and in the case of Floating Rate Notes which reset
annually, the third Wednesday of the month specified in the applicable Pricing
Supplement. If any Interest Rate Reset Date for any Floating Rate Note would
otherwise be a day that is not a Business Day, such Interest Rate Reset Date
shall be postponed to the next succeeding day that is a Business Day, except
that in the case of a LIBOR Note, if such next succeeding Business Day is in
the next succeeding calendar month, such Interest Rate Reset Date shall be the
next preceding Business Day. Unless otherwise specified in the applicable
Prospectus Supplement or Pricing Supplement, "Business Day" means any day,
other than a Saturday or Sunday, on which banks in The City of New York (and,
with respect to LIBOR Notes, the City of London) are not required or
authorized by law to close.
The interest rate applicable to each Interest Accrual Period commencing on
an Interest Rate Reset Date will be the rate determined on the "Interest Rate
Determination Date." The Interest Rate Determination Date with respect to the
Commercial Paper Rate and CD Rate will be the second Business Day preceding
the Interest Rate Reset Date. The Interest Rate Determination Date with
respect to LIBOR will be the second London Banking Date (defined in "LIBOR
Notes" below) preceding an Interest Rate Reset Date. With respect to the
Treasury Rate the Interest Rate Determination Date will be the day of the week
in which the Interest Rate Reset Date falls on which Treasury bills normally
would be auctioned; provided, however, that if as a result of a legal holiday
an auction is held on the Friday of the week preceding the Interest Rate Reset
Date, the related Interest Rate Determination Date shall be such preceding
Friday; and provided, further, that if an auction shall fall on any Interest
Rate Reset Date then the Interest Rate Reset Date shall instead be the first
Business Day following such auction.
A Floating Rate Note may also have either or both of the following: (i) a
maximum limit ("Maximum Interest Rate"), or ceiling, on the rate of interest
which may accrue during any Interest Accrual Period; and (ii) a minimum limit
("Minimum Interest Rate"), or floor, on the rate of interest which may accrue
during any Interest Accrual Period. In addition to any Maximum Interest Rate
which may be applicable to any Floating Rate Note pursuant to the above
provisions, the interest rate on the Floating Rate Notes will in no event be
higher than the maximum rate permitted by New York law, as the same may be
modified by United States law of general application. Under present New York
law, the maximum rate of interest is 25% per annum on a simple interest basis.
The limit does not apply to Floating Rate Notes in which $2,500,000 or more
has been invested.
The applicable Prospectus Supplement or Pricing Supplement will specify each
variable term with respect to each Floating Rate Note, including the
following: Initial Interest Rate, Interest Rate Reset Dates, Interest Payment
Dates, Index Maturity, Maturity, Maximum Interest Rate and Minimum Interest
Rate, if any, the Spread or Spread Multiplier, if any, and terms of
redemption, if any.
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Each Floating Rate Note will bear interest from the date of issue at the
rates determined as described below until the principal thereof is paid or
otherwise made available for payment. Except as provided below, interest will
be payable, in the case of Floating Rate Notes which reset daily, weekly or
monthly, on the third Wednesday of each month or on the third Wednesday of
March, June, September and December of each year, as specified in the
applicable Pricing Supplement; in the case of Floating Rate Notes which reset
quarterly, on the third Wednesday of March, June, September and December of
each year; in the case of Floating Rate Notes which reset semi-annually, on
the third Wednesday of the two months of each year specified in the applicable
Pricing Supplement; in the case of Floating Rate Notes which reset annually,
on the third Wednesday of the month specified in the applicable Pricing
Supplement; and, in each case, at maturity (or any date of redemption).
If any Interest Payment Date (other than an Interest Payment Date occurring
on the Maturity Date or a Redemption Date) for any Floating Rate Note would
fall on a day that is not a Business Day with respect to such Note, such
Interest Payment Date will be the following day that is a Business Day with
respect to such Note, except that, in the case of a LIBOR Note, if such
Business Day is in the next succeeding calendar month, such Interest Payment
Date shall be the immediately preceding day that is a Business Day with
respect to such LIBOR Note. If the Maturity Date (or any date of redemption)
of any Floating Rate Note would fall on a day that is not a Business Day, the
payment of interest and principal (and premium, if any) shall be made on the
next succeeding Business Day, and no interest on such payment shall accrue for
the period from and after the Maturity Date (or any date of redemption).
The "Regular Record Date" with respect to Floating Rate Notes will be the
date 15 calendar days (whether or not a Business Day) prior to the applicable
Interest Payment Date.
With respect to a Floating Rate Note, accrued interest is calculated by
multiplying the face amount of such Floating Rate Note by an accrued interest
factor. Such accrued interest factor is computed by adding the interest factor
calculated for each day from the date of issue, or from the last date to which
interest has been paid, to the date for which accrued interest is being
calculated. The interest factor for each such day is computed by dividing the
interest rate applicable to such day by 360 in the case of CD Rate Notes,
Commercial Paper Rate Notes and LIBOR Notes, or by the actual number of days
in the year in the case of Treasury Rate Notes.
All percentages resulting from any calculation on Floating Rate Notes will
be rounded, if necessary, to the nearest one hundred-thousandth of a
percentage point, with five one-millionths of a percentage point rounded
upward, (e.g., 9.876545% (or .09876545) being rounded to 9.87655% (or
.0987655)), and all dollar amounts used in or resulting from such calculation
on Floating Rate Notes will be rounded to the nearest cent (with one-half cent
being rounded upward).
Unless otherwise provided for in the applicable Prospectus Supplement or
Pricing Supplement. The Bank of New York will be the "Calculation Agent." Upon
the request of the holder of any Floating Rate Note, the Trustee will provide
the interest rate then in effect and, if determined, the interest rate that
will become effective as a result of a determination made for the next
Interest Rate Reset Date with respect to such Floating Rate Note. The Company,
or the Calculation Agent, will notify the Trustee of each determination of the
interest rate applicable to any such Floating Rate Note promptly after such
determination is made. The "Calculation Date," where applicable, pertaining to
any Interest Rate Determination Date will be the tenth calendar day after such
Interest Rate Determination Date, or, if any such day is not a Business Day,
the next succeeding Business Day.
The interest rate in effect with respect to a Floating Rate Note from the
date of issue to the first Interest Rate Reset Date (the "Initial Interest
Rate") will be specified in the applicable Pricing Supplement. Unless
otherwise indicated in the applicable Prospectus Supplement or Pricing
Supplement, the interest rate determined with respect to any Interest Rate
Determination Date will become effective on and as of the next succeeding
Interest Rate Reset Date; provided, however, the interest rate in effect for
the period from the date of issue to the first Interest Rate Reset Date will
be the Initial Interest Rate. The interest rate for each subsequent Interest
Rate Reset Date will be determined by the Calculation Agent as follows:
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CD RATE NOTES
CD Rate Notes will bear interest at the interest rates (calculated with
reference to the CD Rate and the Spread or Spread Multiplier, if any)
specified in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Prospectus Supplement or
Pricing Supplement, "CD Rate" means, with respect to any Interest Rate
Determination Date relating to a Floating Rate Note for which the interest
rate is determined with reference to the CD Rate (a "CD Rate Interest
Determination Date"), the rate on such date for negotiable United States
certificates of deposit having the Index Maturity specified in the applicable
Pricing Supplement as published by the Board of Governors of the Federal
Reserve System in "Statistical Release H.15(519), Selected Interest Rates," or
any successor publication ("H.15(519)"), under the heading "CDs (Secondary
Market)," or, if not published by 3:00 P.M., New York City time, on the
Calculation Date, the rate on such CD Rate Interest Determination Date for
negotiable United States certificates of deposit of the Index Maturity
specified in the applicable Pricing Supplement as published by the Federal
Reserve Bank of New York in its daily statistical release "Composite 3:30 P.M.
Quotations for U.S. Government Securities" or any successor publication
("Composite Quotations") under the heading "Certificates of Deposit." If such
rate is not yet published in either H.15(519) or Composite Quotations by 3:00
P.M., New York City time, on the related Calculation Date, then the CD Rate on
such CD Rate Interest Determination Date will be calculated by the Calculation
Agent and will be the arithmetic mean of the secondary market offered rates as
of 10:00A.M., New York City time, on such CD Rate Interest Determination Date,
of three leading nonbank dealers in negotiable United States dollar
certificates of deposit in The City of New York (which may include the Agents
or their affiliates) selected by the Calculation Agent for negotiable United
States certificates of deposit of major United States money center banks for
negotiable certificates of deposit with a remaining maturity closest to the
Index Maturity specified in the applicable Prospectus Supplement or Pricing
Supplement in an amount that is representative for a single transaction in
that time; provided, however, that if the dealers selected by the Calculation
Agent are not quoting as mentioned in this sentence, the CD Rate determined as
of such CD Rate Interest Determination Date will be the CD Rate in effect on
such CD Rate Interest Determination Date.
COMMERCIAL PAPER RATE NOTES
Commercial Paper Rate Notes will bear interest at the interest rates
(calculated with reference to the Commercial Paper Rate and the Spread or
Spread Multiplier, if any) specified in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Prospectus Supplement or
Pricing Supplement, "Commercial Paper Rate" means, with respect to any
Interest Rate Determination Date relating to a Floating Rate Note for which
the interest rate is determined with reference to the Commercial Paper Rate (a
"Commercial Paper Rate Interest Determination Date"), the Money Market Yield
(as hereinafter defined) on such date of the rate for commercial paper having
the Index Maturity specified in the applicable Pricing Supplement as published
in H.15(519) under the heading "Commercial Paper" or, if such heading is no
longer available and applicable, such other heading representing commercial
paper issued by non-financial entities whose bond rating is "Aa", or the
equivalent, from a nationally recognized statistical rating organization. In
the event that such rate is not published by 3:00 P.M., New York City time, on
the related Calculation Date, then the Commercial Paper Rate on such
Commercial Paper Rate Interest Determination Date will be the Money Market
Yield of the rate for commercial paper having the Index Maturity specified in
the applicable Prospectus Supplement or Pricing Supplement as published in
Composite Quotations under the heading "Commercial Paper" (with an Index
Maturity of one month or three months being deemed to be equivalent to an
Index Maturity of 30 days or 90 days, respectively). If such rate is not yet
published in either H.15(519) or Composite Quotations by 3:00 P.M., New York
City time, on the related Calculation Date, then the Commercial Paper Rate on
such Commercial Paper Rate Interest Determination Date will be calculated by
the Calculation Agent and will be the Money Market Yield of the arithmetic
mean of the offered rates at approximately 11:00 A.M., New York City time, on
such Commercial Paper Rate Interest Determination Date of three leading
dealers of commercial paper in The City of New York (which may include the
Agents or their affiliates) selected by the Calculation Agent for
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commercial paper having the Index Maturity specified in the applicable
Prospectus Supplement or Pricing Supplement placed for a non-financial entity
whose bond rating is "Aa," or the equivalent, from a nationally recognized
statistical rating organization; provided, however, that if the dealers
selected by the Calculation Agent are not quoting as mentioned in this
sentence, the Commercial Paper Rate determined as of such Commercial Paper
Rate Interest Determination Date will be the Commercial Paper Rate in effect
on such Commercial Paper Rate Interest Determination Date.
"Money Market Yield" means a yield (expressed as a percentage) calculated in
accordance with the following formula:
D X 360
Money Market Yield - X 100
360 - (D X M)
where "D" refers to the applicable per annum rate for commercial paper quoted
on a bank discount basis and expressed as a decimal, and "M" refers to the
actual number of days in the applicable interest period for which interest is
being calculated.
LIBOR NOTES
LIBOR Notes will bear interest at the interest rates (calculated with
reference to LIBOR and the spread or Spread Multiplier, if any) specified in
the applicable Pricing Supplement.
LIBOR Unless otherwise specified in the applicable Prospectus Supplement or
Pricing Supplement, "LIBOR" means the rate determined in accordance with the
following provisions:
(i) With respect to any Interest Determination Date relating to a
Floating Rate Note for which the interest rate is determined with reference
to LIBOR (a "LIBOR Interest Determination Date"), LIBOR will be either: (a)
if "LIBOR Reuters" is specified in the applicable Prospectus Supplement or
Pricing Supplement, the arithmetic mean of the offered rates (unless the
Designated LIBOR Page by its terms provides only for a single rate, in
which case such single rate shall be used) for deposits in the Designated
LIBOR Currency having the Index Maturity specified in such Prospectus
Supplement or Pricing Supplement, commencing on the applicable Interest
Reset Date, that appear (or, if only a single rate is required as
aforesaid, appears) on the Designated LIBOR Page as of 11:00 A.M., London
time, on such LIBOR Interest Determination Date, or (b) if "LIBOR Telerate"
is specified in the applicable Prospectus Supplement or Pricing Supplement
or if neither "LIBOR Reuters" nor "LIBOR Telerate" is specified in the
applicable Prospectus Supplement or Pricing Supplement as the method for
calculating LIBOR, the rate for deposits in the Designated LIBOR Currency
having the Index Maturity specified in such Prospectus Supplement or
Pricing Supplement, commencing on such Interest Reset Date, that appears on
the Designated LIBOR Page as of 11:00 A.M., London time, on such LIBOR
Interest Determination Date. If fewer than two such offered rates so
appear, or if no such rate so appears, as applicable, LIBOR on such LIBOR
Interest Determination Date will be determined in accordance with the
provisions described in clause (ii) below.
(ii) With respect to a LIBOR Interest Determination Date on which fewer
than two offered rates appear, or no rate appears, as the case may be, on
the Designated LIBOR Page as specified in clause (i) above, the Calculation
Agent will request the principal London offices of each of four major
reference banks (which may include affiliates of the Agents) in the London
interbank market, as selected by the Calculation Agent, to provide the
Calculation Agent with its offered quotation for deposits in the Designated
LIBOR Currency for the period of the Index Maturity specified in the
applicable Prospectus Supplement or Pricing Supplement, commencing on the
applicable Interest Reset Date, to prime banks in the London interbank
market at approximately 11:00 A.M., London time, on such LIBOR Interest
Determination Date and in a principal amount that is representative for a
single transaction in the Designated LIBOR Currency in such market at such
time. If at least two such quotations are so provided, then LIBOR on such
LIBOR Interest Determination Date will be the arithmetic mean of such
quotations. If fewer than two such quotations are so provided, then LIBOR
on such LIBOR Interest Determination Date will be the arithmetic mean of
the
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rates quoted at approximately 11:00 A.M., in the applicable Principal
Financial Center, on such LIBOR Interest Determination Date by three major
banks (which may include affiliates of the Agents) in such Principal
Financial Center selected by the Calculation Agent for loans in the
Designated LIBOR Currency to leading European banks, having the Index
Maturity specified in the applicable Prospectus Supplement or Pricing
Supplement and in a principal amount that is representative for a single
transaction in the Designated LIBOR Currency in such market at such time;
provided, however, that if the banks so selected by the Calculation Agent
are not quoting as mentioned in this sentence, LIBOR determined as of such
LIBOR Interest Determination Date will be LIBOR in effect on such LIBOR
Interest Determination Date.
"Designated LIBOR Currency" means the currency or composite currency
specified in the applicable Prospectus Supplement or Pricing Supplement as to
which LIBOR shall be calculated or, if no such currency or composite currency
is specified in the applicable Prospectus Supplement or Pricing Supplement,
United States dollars.
"Designated LIBOR Page" means (a) if "LIBOR Reuters" is specified in the
applicable Prospectus Supplement or Pricing Supplement, the display on the
Reuter Monitor Money Rates Service (or any successor service) on the page
specified in such Prospectus Supplement or Pricing Supplement (or any other
page as may replace such page on such service) for the purpose of displaying
the London interbank rates of major banks for the Designated LIBOR Currency,
or (b) if "LIBOR Telerate" is specified in the applicable Prospectus
Supplement or Pricing Supplement or neither "LIBOR Reuters" nor "LIBOR
Telerate" is specified in the applicable Prospectus Supplement or Pricing
Supplement as the method for calculating LIBOR, the display on the Dow Jones
Telerate Service (or any successor service) on the page specified in such
Prospectus Supplement or Pricing Supplement (or any other page as may replace
such page on such service) for the purpose of displaying the London interbank
rates of major banks for the Designated LIBOR Currency.
TREASURY RATE NOTES
Treasury Rate Notes will bear interest at the interest rates (calculated
with reference to the Treasury Rate and the Spread or Spread Multiplier, if
any) specified in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Prospectus Supplement or
Pricing Supplement, "Treasury Rate" means, with respect to any Interest Rate
Determination Date relating to a Floating Rate Note for which the interest
rate is determined by reference to the Treasury Rate (a "Treasury Rate
Interest Determination Date"), the rate from the auction held on such Treasury
Rate Interest Determination Date (the "Auction") of direct obligations of the
United States ("Treasury bills") having the Index Maturity specified in the
applicable Prospectus Supplement or Pricing Supplement, as such rate is
published in H.15(519) under the heading "Treasury Bills-auction average
(investment)" or, if not published by 3:00 P.M., New York City time, on the
related Calculation Date, the auction average rate of such Treasury Bills
(expressed as a bond equivalent on the basis of a year of 365 or 366 days, as
applicable, and applied on a daily basis) as otherwise announced by the United
States Department of the Treasury. In the event that the results of the
Auction of Treasury bills having the Index Maturity specified in the
applicable Prospectus Supplement or Pricing Supplement are not reported as
provided by 3:00 P.M., New York City time, on the related Calculation Date, or
if no such Auction is held, then the Treasury Rate will be calculated by the
Calculation Agent and will be a yield to maturity (expressed as a bond
equivalent on the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) of the arithmetic mean of the secondary market bid
rates, as of approximately 3:30 P.M., New York City time, on such Treasury
Rate Interest Determination Date, of three leading primary United States
government securities dealers (which may include the Agents or their
affiliates) selected by the Calculation Agent for the issue of Treasury Bills
with a remaining maturity closest to the Index Maturity specified in the
applicable Prospectus Supplement or Pricing Supplement; provided, however,
that if the dealers selected by the Calculation Agent are not quoting as
mentioned in this sentence, the Treasury Rate determined as of such Treasury
Rate Interest Determination Date will be the Treasury Rate in effect on such
Treasury Rate Interest Determination Date.
EVENTS OF DEFAULT, WAIVER AND NOTICE. An Event of Default with respect to
the Notes of a particular series (the "Series Notes") is defined in the
Indenture as (a) default in the payment of any installment of interest
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on any of the Series Notes and the continuance of such default for a period of
30 days; (b) default in payment of the principal of (and premium, if any, on)
any of the Series Notes when due at maturity; (c) default in the deposit of
any sinking fund payment due under the Series Notes and the continuance of
such default for a period of 3 business days; (d) default by the Company in
the performance or breach of any other covenant or warranty contained in the
Indenture and the continuance of such default or breach for a period of 60
days after appropriate notice; (e) certain events of bankruptcy, insolvency
and reorganization of the Company; and (f) any other Event of Default
established with respect to the Series Notes. (Section 501).
The Indenture provides that the Trustee shall, within 90 days after the
occurrence of a default with respect to the Series Notes, give all the
registered holders of Series Notes then outstanding and any other holder of
Series Notes entitled under the Indenture to receive reports notice of all
incurred defaults known to it (the term default to mean any event which is or
(after notice or lapse of time) would become an Event of Default); provide
that, except in the case of a default in the payment of principal of or
interest on any Series Note, the Trustee shall be protected in withholding
such notice if it determines in good faith that the withholding of such notice
is in the interest of all the holders of the Series Notes. (Section 602).
The Indenture provides that if an Event of Default with respect to the
Series Notes shall have occurred and to continuing, either the Trustee or the
holders of at least 33% in principal amount (calculated as provided in the
Indenture) of the Series Notes may declare the principal of all of the Series
Notes and the interest accrued thereon or any lesser amount specified in the
Series Notes to be due and payable immediately. (Section 502).
Upon certain conditions, such declarations of acceleration with respect to
Series Notes may be annulled and past defaults (except for defaults in the
payment of principal, and premium (if any) or interest on such Series Notes
not theretofore cured or in respect of a covenant or provision of the
Indenture which cannot be amended or modified without the consent of the
holder of each Series Note) may be waived with respect to the Series Notes by
the holders of not less than a majority in principal amount (calculated as
provided in the Indenture) of the Series Notes. (Section 513).
The Indenture requires that the Company file with the Trustee annually a
written statement as to the presence or absence of any defaults in the
fulfillment of its obligations under the terms thereof and as to performance
and fulfillment of obligations therein. (Section 1005). Prior to the time the
Company must provide such written statement, the holders of not less than a
majority in principal amount of the Series Notes may waive the Company's
obligation to file a written statement as to the presence or absence of any
such defaults. (Section 1006).
The Indenture provides that the holders of not less than a majority in
principal amount (calculated as provided in the Indenture) of the Series Notes
shall have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred on the Trustee by the Indenture with respect to defaults or
Events of Default with respect to the Series Notes so long as any such
direction does not conflict with any provision of the Indenture or is not
unduly prejudicial to the rights of other holders of the Series Notes.
(Section 512).
In order to require the Trustee to take action with respect to the Series
Notes, holders of at least 33% in principal amount (calculated as provided in
the Indenture) of the Series Notes shall have made a written request upon the
Trustee (Section 507). The Indenture provides that the Trustee shall be under
no obligation, subject to the duty of the Trustee during default to act with
the required standard of care, to exercise any of the rights or powers vested
in it by the Indenture at the direction of the holders of the Series Notes
unless such holders shall have offered to the Trustee reasonable security or
indemnity against expenses and liabilities. (Section 603).
MODIFICATION OF THE INDENTURE. The Indenture contains provisions permitting
the Company and the Trustee, with the consent of the holders of not less than
66 2/3% in principal amount (calculated as provided in the Indenture) of each
series of securities, including the Notes, issued and outstanding pursuant to
the Indenture
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(the "Indenture Securities") and affected by such amendment to modify the
Indenture or any supplemental indenture or the rights of the holders of the
Indenture Securities affected by such modification; provided that no such
modification shall, without the consent of each holder of the Indenture
Securities affected thereby, change the maturity of principal of or interest
on any Indenture Security, or reduce the principal amount thereof, or reduce
the rate or extend the time of payment of interest thereon, or reduce any
amount payable upon redemption of any Indenture Security, or reduce the
overdue rate thereof or change the currency of payment of principal or
interest on any Indenture Security or reduce the percentage in principal
amount of Indenture Securities the consent of the holders of which is required
for modification or amendment of the Indenture or for waiver of certain
defaults or reduce the voting or quorum requirements under the Indenture.
(Section 902).
The Indenture also permits the Company and the Trustee to amend the
Indenture in certain circumstances without consent of the holders of any
Indenture Securities to evidence the merger of the Company or the replacement
of the Trustee and for certain other purposes. (Section 901).
RELATIONSHIPS WITH TRUSTEE. The Bank of New York is the trustee under
indentures for the Company's First Mortgage Bonds, 5% Convertible Debentures
due 2002 and 7% Convertible Debentures due 2018, and in connection with a sale
and leaseback of the Company's Control Center. The Company has with the
Trustee and its affiliates, as it has with various other banks, a demand
deposit account and conventional and revolving credit arrangements. The Bank
of New York is the Issuing and Paying Agent for medium-term notes issued by
PCI.
PLAN OF DISTRIBUTION
The Notes may be offered on a continuous basis by the Company through
agents, each of which will agree to use its best efforts to solicit offers to
purchase the Notes. The Company may also sell the Notes to any of the agents
at negotiated discounts for such agent's own account or for resale to one or
more investors or other purchasers at varying prices related to prevailing
market prices at the time of resale, as determined by such agent.
The agents with respect to the offer and sale of any issue of the Notes will
be named in the Prospectus Supplement relating thereto. The Prospectus
Supplement will also describe the discounts and commissions to be allowed or
paid to agents and all other items constituting agents' compensation.
Agents may be entitled under agreements entered into with the Company to
indemnification by the Company against certain civil liabilities, including
liabilities under the 1933 Act. Agents may be customers of, engage in
transactions with or perform services for the Company in the ordinary course
of business.
The Notes will not be listed on any securities exchange. There currently is
no established trading market for the Notes and no assurance can be given as
to the existence or liquidity of a secondary market for the Notes in the
future.
EXPERTS
The consolidated financial statements incorporated in this Prospectus by
reference to the Company's Annual Report on Form 10-K for the year ended
December 31, 1996 have been so incorporated in reliance on the report of Price
Waterhouse LLP, independent accountants, given on the authority of said firm
as experts in auditing and accounting.
With respect to the unaudited consolidated financial information of the
Company for the three- and twelve-month periods ended March 31, 1997 and 1996,
and the three-, six- and twelve-month periods ended June 30, 1997 and 1996
incorporated by reference in this Prospectus, Price Waterhouse LLP reported
that they have applied limited procedures in accordance with professional
standards for a review of such information. However, their separate reports
dated May 14, 1997 and August 13, 1997, incorporated by reference herein,
state that they did not audit and they do not express opinions on that
unaudited consolidated financial information. Price
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Waterhouse LLP has not carried out any significant or additional audit tests
beyond those which would have been necessary if such reports had not been
included. Accordingly, the degree of reliance on their reports on such
information should be restricted in light of the limited nature of the review
procedures applied. Price Waterhouse LLP is not subject to the liability
provisions of Section 11 of the 1933 Act for their reports on the unaudited
consolidated financial information because each such report is not a "report"
or a "part" of the registration statement prepared or certified by Price
Waterhouse LLP within the meaning of Sections 7 and 11 of the 1933 Act.
----------------
LEGAL OPINIONS
Certain legal matters in connection with the Notes to be offered hereby will
be passed upon for the Company by Covington & Burling, 1201 Pennsylvania
Avenue, N.W., Washington, D.C., and William T. Torgerson, Esq., 1900
Pennsylvania Avenue, N.W., Washington, D.C. Mr. Torgerson is regularly
employed by the Company as Senior Vice President and General Counsel. The
validity of the Notes is being passed upon on behalf of the Agents by Brown &
Wood LLP, New York, New York.
16
<PAGE>
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Estimated expenses relating to the New Bonds (assuming an issuance of
$125,000,000) are as follows:
<TABLE>
<S> <C>
Registration fee................................................. $ 37,879
Recordation taxes................................................ 573,000
Rating Agency fees............................................... 37,500
Printing......................................................... 62,500
Trustee's fees and expenses...................................... 45,000
Fee of independent accountants................................... 22,500
Fees of counsel.................................................. 40,000
Expenses incidental to qualification under Blue Sky Laws......... 7,500
Miscellaneous.................................................... 24,121
--------
Total.......................................................... $850,000
========
</TABLE>
Estimated expenses relating to the Notes (assuming an issuance of
$125,000,000) are as follows:
<TABLE>
<S> <C>
Registration fee................................................. $ 37,879
Rating Agency fees............................................... 37,500
Trustee's fees and expenses...................................... 10,000
Printing......................................................... 30,000
Fee of independent accountants................................... 22,500
Fees of counsel.................................................. 35,000
Expenses incidental to qualification under Blue Sky Laws......... 7,500
Miscellaneous.................................................... 19,621
--------
Total.......................................................... $200,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The By-Laws of the Company provide that the Company shall indemnify each
director or officer and each former director and officer of the Company
against expenses actually and reasonably incurred in connection with the
defense of any action, suit or proceeding by reason of his or her being or
having been such director or officer, including liabilities incurred under the
Securities Act of 1933, as amended, except in relation to matters as to which
such director or officer shall be finally adjudged in such action, suit or
proceeding to have knowingly violated the criminal law or to be liable for
willful misconduct in the performance of his or her duty to the Company; and
that such indemnification shall be in addition to, and not exclusive of, any
other rights to which those indemnified may be entitled under any by-law,
agreement, vote of stockholders, or otherwise.
In the Underwriting Agreement and the Distribution Agreement, the
underwriters and agents will agree to indemnify the Company, its directors,
officers and controlling persons against certain civil liabilities that may
arise under the Securities Act of 1933 in connection with this offering.
The Company also has policies of insurance which insure officers and
directors against certain liabilities and expenses incurred by them in such
capacities.
II-1
<PAGE>
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT REFERENCE*
----------- ---------------------- ----------
<C> <S> <C>
1.1 --Form of Underwriting Agreement
for the New Bonds.............. Filed herewith.
1.2 --Form of Distribution Agreement
for the Medium-Term Notes...... Exh. 1-B to Registration
Statement No. 33-48325, 6/2/92.
4.1 --Form of the New Bonds......... Included in Exhibit No. 4.4.
4.2 --Form of the Medium-Term Notes. Included in Exhibit No. 4.5.
4.3.1 --Mortgage and Deed of Trust,
dated July 1, 1936, of the
Company to The Riggs National
Bank of Washington, D.C., as
Trustee, securing First
Mortgage Bonds of the Company, Exh. B-4 to First Amendment,
and Supplemental Indenture 6/19/36, to Registration
dated 7/1/36................... Statement No. 2-2232.
--Supplemental Indentures, to
the aforesaid Mortgage and Deed
of Trust, dated--
4.3.2 December 1, 1939 and December
10, 1939....................... Exhs. A & B to Form 8-K, 1/3/40.
4.3.3 August 1, 1940.................. Exh. A to Form 8-K, 9/25/40.
4.3.4 July 15, 1942 and August 10, Exh. B-1 to Amendment No. 2,
1942......................... 8/24/42, and B-3 to Post-
Effective Amendment, 8/31/42, to
Registration Statement No.
2-5032.
4.3.5 August 1, 1942.................. Exh. B-4 to Form 8-A, 10/8/42.
4.3.6 October 15, 1942................ Exh. A to Form 8-K, 12/7/42.
4.3.7 October 15, 1947................ Exh. A to Form 8-K, 12/8/47.
4.3.8 January 1, 1948................. Exh. 7-B to Post-Effective
Amendment No. 2, 1/28/48, to
Registration Statement No.
2-7349.
4.3.9 December 31, 1948............... Exh. A-2 to Form 10-K, 4/13/49.
4.3.10 May 1, 1949..................... Exh. 7-B to Post-Effective
Amendment No. 1, 5/10/49, to
Registration Statement No.
2-7948.
4.3.11 December 31, 1949............... Exh. (a)-1 to Form 8-K, 2/8/50.
4.3.12 May 1, 1950..................... Exh. 7-B to Amendment No. 2,
5/8/50, to Registration
Statement No. 2-8430.
4.3.13 February 15, 1951............... Exh. (a) to Form 8-K, 3/9/51.
4.3.14 March 1, 1952................... Exh. 4-C to Post-Effective
Amendment No. 1, 3/12/52, to
Registration Statement No.
2-9435.
4.3.15 February 16, 1953............... Exh. (a)-1 to Form 8-K, 3/5/53.
4.3.16 May 15, 1953.................... Exh. 4-C to Post-Effective
Amendment No. 1, 5/26/53, to
Registration Statement No.
2-10246.
4.3.17 March 15, 1954 and March 15, Exh. 4-B to Registration
1955........................... Statement No. 2-11627, 5/2/55.
4.3.18 May 16, 1955.................... Exh. A to Form 8-K, 7/6/55.
4.3.19 March 15, 1956.................. Exh. C to Form 10-K, 4/4/56.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT REFERENCE*
----------- ---------------------- ----------
<C> <S> <C>
4.3.20 June 1, 1956................... Exh. A to Form 8-K, 7/2/56.
4.3.21 April 1, 1957.................. Exh. 4-B to Registration
Statement No. 2-13884, 2/5/58.
4.3.22 May 1, 1958.................... Exh. 2-B to Registration
Statement No. 2-14518, 11/10/58.
4.3.23 December 1, 1958............... Exh. A to Form 8-K, 1/2/59.
4.3.24 May 1, 1959.................... Exh. 4-B to Amendment No. 1,
5/13/59, to Registration
Statement No. 2-15027.
4.3.25 November 16, 1959.............. Exh. A to Form 8-K, 1/4/60.
4.3.26 May 2, 1960.................... Exh. 2-B to Registration
Statement No. 2-17286, 11/9/60.
4.3.27 December 1, 1960 and April 3,
1961.......................... Exh. A-1 to Form 10-K, 4/24/61.
4.3.28 May 1, 1962.................... Exh. 2-B to Registration
Statement No. 2-21037, 1/25/63.
4.3.29 February 15, 1963.............. Exh. A to Form 8-K, 3/4/63.
4.3.30 May 1, 1963.................... Exh. 4-B to Registration
Statement No. 2-21961, 12/19/63.
4.3.31 April 23, 1964................. Exh. 2-B to Registration
Statement No. 2-22344, 4/24/64.
4.3.32 May 15, 1964................... Exh. A to Form 8-K, 6/2/64.
4.3.33 May 3, 1965.................... Exh. 2-B to Registration
Statement No. 2-24655, 8/16/66.
4.3.34 April 1, 1966.................. Exh. A to Form 10-K, 4/21/66.
4.3.35 June 1, 1966................... Exh. 1 to Form 10-K, 4/11/67.
4.3.36 April 28, 1967................. Exh. 2-B to Post-Effective
Amendment No. 1 to Registration
Statement No. 2-26356, 5/3/67.
4.3.37 May 1, 1967.................... Exh. A to Form 8-K, 6/1/67.
4.3.38 July 3, 1967................... Exh. 2-B to Registration
Statement No. 2-28080, 1/25/68.
4.3.39 February 15, 1968.............. Exh. II-I to Form 8-K, 3/7/68.
4.3.40 May 1, 1968.................... Exh. 2-B to Registration
Statement No. 2-31896, 2/28/69.
4.3.41 March 15, 1969................. Exh. A-2 to Form 8-K, 4/8/69.
4.3.42 June 16, 1969.................. Exh. 2-B to Registration
Statement No. 2-36094, 1/27/70.
4.3.43 February 15, 1970.............. Exh. A-2 to Form 8-K, 3/9/70.
4.3.44 May 15, 1970................... Exh. 2-B to Registration
Statement No. 2-38038, 7/27/70.
4.3.45 August 15, 1970................ Exh. 2-D to Registration
Statement No. 2-38038, 7/27/70.
4.3.46 September 1, 1971.............. Exh. 2-C to Registration
Statement No. 2-45591, 9/1/72.
4.3.47 September 15, 1972............. Exh. 2-E to Registration
Statement No. 2-45591, 9/1/72.
4.3.48 April 1, 1973.................. Exh. A to Form 8-K, 5/9/73.
4.3.49 January 2, 1974................ Exh. 2-D to Registration
Statement No. 2-49803, 12/5/73.
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT REFERENCE*
----------- ---------------------- ----------
<C> <S> <C>
4.3.50 August 15, 1974................. Exhs. 2-G and 2-H to Amendment
No. 1 to Registration Statement
No. 2-51698, 8/14/74.
4.3.51 June 15, 1977................... Exh. 4-A to Form 10-K, 3/19/81.
4.3.52 July 1, 1979.................... Exh. 4-B to Form 10-K, 3/19/81.
4.3.53 June 16, 1981................... Exh. 4-A to Form 10-K, 3/19/82.
4.3.54 June 17, 1981................... Exh. 2 to Amendment No. 1,
6/18/81, to Form 8-A.
4.3.55 December 1, 1981................ Exh. 4-C to Form 10-K, 3/19/82.
4.3.56 August 1, 1982.................. Exh. 4-C to Amendment No. 1 to
Registration Statement
No. 2-78731, 8/17/82.
4.3.57 October 1, 1982................. Exh. 4 to Form 8-K, 11/8/82.
4.3.58 April 15, 1983.................. Exh. 4 to Form 10-K, 3/23/84.
4.3.59 November 1, 1985................ Exh. 2-B to Form 8-A, 11/1/85.
4.3.60 March 1, 1986................... Exh. 4 to Form 10-K, 3/28/86.
4.3.61 November 1, 1986................ Exh. 2-B to Form 8-A, 11/5/86.
4.3.62 March 1, 1987................... Exh. 2-B to Form 8-A, 3/27/87.
4.3.63 September 16, 1987.............. Exh. 4-B to Registration
Statement No. 33-18229,
10/30/87.
4.3.64 May 1, 1989..................... Exh. 4-C to Registration
Statement No. 33-29382, 6/16/89.
4.3.65 August 1, 1989.................. Exh. 4 to Form 10-K, 3/28/90.
4.3.66 April 5, 1990................... Exh. 4-C to Registration
Statement No. 33-36875, 9/24/90.
4.3.67 May 21, 1991.................... Exh. 4 to Form 10-K, 3/27/92.
4.3.68 May 7, 1992..................... Exh. 4-C to Registration
Statement No. 33-48325, 6/2/92.
4.3.69 September 1, 1992............... Exh. 4 to Form 10-K, 3/26/93.
4.3.70 November 1, 1992................ Exh. 4 to Form 10-K, 3/26/93.
4.3.71 March 1, 1993................... Exh. 4 to Form 10-K, 3/26/93.
4.3.72 March 2, 1993................... Exh. 4 to Form 10-K, 3/26/93.
4.3.73 July 1, 1993.................... Exh. 4.4 to Registration
Statement No. 33-49973, 8/11/93.
4.3.74 August 20, 1993................. Exh. 4.4 to Registration
Statement No. 33-50377, 9/23/93.
4.3.75 September 29, 1993.............. Exh. 4 to Form 10-K, 3/25/94.
4.3.76 September 30, 1993.............. Exh. 4 to Form 10-K, 3/25/94.
4.3.77 October 1, 1993................. Exh. 4 to Form 10-K, 3/25/94.
4.3.78 February 10, 1994............... Exh. 4 to Form 10-K, 3/25/94.
4.3.79 February 11, 1994............... Exh. 4 to Form 10-K, 3/25/94.
4.3.80 March 10, 1995.................. Exh. 4.3 to Registration
Statement No. 33-61379, 7/28/95.
4.3.81 September 6, 1995............... Exh. 4 to Form 10-K, 4/1/96.
4.3.82 September 7, 1995............... Exh. 4 to Form 10-K, 4/1/96.
4.4 --Form of Supplemental Indenture
between the Registrant and The
Bank of New York, Successor
Trustee, with respect to the
New Bonds...................... Filed herewith.
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT REFERENCE*
----------- ---------------------- ----------
<C> <S> <C>
4.5 --Form of Indenture between the
Registrant and The Bank of New
York, Trustee, with respect to Exh. 4 to Form 8-K, 6/21/90.
the Medium-Term Notes..........
5 --Opinion of William T.
Torgerson...................... Filed herewith.
12 --Computation of Ratios......... Exh. 12 to Form 10-Q, 8/13/97.
15 --Letter re Unaudited Financial
Information.................... Filed herewith.
23.1 --Consent of Price Waterhouse
LLP............................ Filed herewith.
23.2 --Consent of William T.
Torgerson...................... Contained in Exhibit 5.
23.3 --Consent of Covington &
Burling........................ Filed herewith.
24 --Power of Attorney............. Filed herewith.
25.1 --Form T-1 Statement of
Eligibility and Qualification
under the Trust Indenture Act
of 1939 of The Bank of New
York, with respect to the New
Bonds.......................... Filed herewith.
25.2 --Form T-1 Statement of
Eligibility and Qualification
under the Trust Indenture Act
of 1939 of The Bank of New
York, with respect to the Exh. 26-B to Registration
Medium-Term Notes.............. Statement No. 33-48325, 6/2/92.
</TABLE>
- --------
* The exhibits referred to in this column by specific designations and date
have heretofore been filed with the Securities and Exchange Commission under
such designations and are hereby incorporated herein by reference. The Forms
8-A, 8-K and 10-K referred to above were filed by the Company under the
Commission's File No. 1-1072 and the Registration Statements referred to are
registration statements of the Company.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. 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 and 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 20
percent change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the registration statement is on Form S-3 or Form S-8, and the information
required to be included in a post-effective amendment by these paragraphs
is contained in periodic reports filed by the registrant pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at the time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
II-5
<PAGE>
(4) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's 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.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the registrant pursuant to the By-Laws of the registrant or
Virginia or District of Columbia Law, or otherwise, the registrant has 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 registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding) is
asserted against the registrant by such director, officer or controlling
person in connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
II-6
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF WASHINGTON, DISTRICT OF COLUMBIA, ON THE 13TH DAY
OF AUGUST, 1997.
Potomac Electric Power Company
(Registrant)
Edward F. Mitchell*
By __________________________________
(EDWARD F. MITCHELL, CHAIRMAN OF
THE BOARD 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.
(i) Principal Executive Officers:
Edward F. Mitchell* Chairman of the
- ------------------------------------- Board and Chief
(EDWARD F. MITCHELL) Executive Officer
John M. Derrick, Jr.* President and
- ------------------------------------- Director
(JOHN M. DERRICK, JR.)
(ii) Principal Financial Officer and
(iii) Principal Accounting Officer:
D.R. Wraase* Senior Vice August 13, 1997
- ------------------------------------- President and Chief
(DENNIS R. WRAASE) Financial Officer
(iv) Directors:
Roger R. Blunt, Sr.* Director
- -------------------------------------
(ROGER R. BLUNT, SR.)
A. James Clark* Director
- -------------------------------------
(A. JAMES CLARK)
II-7
<PAGE>
H.L. Davis* Director
- -------------------------------------
(H. LOWELL DAVIS)
Richard E. Marriott* Director
- -------------------------------------
(RICHARD E. MARRIOTT)
David O. Maxwell* Director
- -------------------------------------
(DAVID O. MAXWELL)
Floretta D. McKenzie* Director
- -------------------------------------
(FLORETTA D. MCKENZIE)
Ann D. McLaughlin* Director
- ------------------------------------- August 13,
(ANN D. MCLAUGHLIN) 1997
Peter F. O'Malley* Director
- -------------------------------------
(PETER F. O'MALLEY)
Louis A. Simpson* Director
- -------------------------------------
(LOUIS A. SIMPSON)
A. Thomas Young* Director
- -------------------------------------
(A. THOMAS YOUNG)
Ellen Sheriff Rogers
*By: ________________________________
(ELLEN SHERIFF ROGERS, ATTORNEY-
IN-FACT)
II-8
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
POTOMAC ELECTRIC POWER COMPANY
1900 PENNSYLVANIA AVENUE, N.W., WASHINGTON, D.C.
TO
THE BANK OF NEW YORK
101 BARCLAY STREET, NEW YORK, NY
AS TRUSTEE
------------------
Supplemental Indenture
DATED AS OF ,1997
------------------
SUPPLEMENTAL TO MORTGAGE AND DEED OF TRUST
DATED JULY 1, 1936
------------------
FIRST MORTGAGE BONDS, % SERIES DUE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
POTOMAC ELECTRIC POWER COMPANY
SUPPLEMENTAL INDENTURE DATED AS OF
TABLE OF CONTENTS*
------------------
<TABLE>
<CAPTION>
PAGE
<S> <C>
Parties................................................................... 1
Recitals.................................................................. 1
Granting Clauses.......................................................... 5
Certain Exceptions........................................................ 11
Grant in Trust............................................................ 12
PART I
Description of Bonds
Section 1. General description of Bonds of Series..................... 13
Section 2. Form of face of Bond of Series............................. 14
Form of Trustee's certificate................................. 17
Text appearing on reverse side of Bond of Series........... 17
Section 3. Denominations of Bonds of Series........................... 21
Section 4. Execution and form of temporary Bonds......................... 21
PART II
Issue of Bonds
Section 1. Limitation as to principal amount............................. 21
Section 2. Issue of Bonds................................................ 22
PART III
Redemption at Option of Company
Section 1. Bonds of Series redeemable ................................ 22
Section 2. Notice of Redemption, etc. ................................... 23
PART IV
Repayment at Option of Holders
Section 1. Bonds of Series redeemable at request of holders ............. 23
Section 2. Cancellation of redeemed bonds................................ 23
</TABLE>
- ---------
* The Table of Contents is not part of the Supplemental Indenture and should
not be considered as such. It is included herein only for purposes of
convenient reference.
<PAGE>
PART V
<TABLE>
<CAPTION>
PAGE
Additional Particular Covenants of the Company
<C> <S> <C>
Section 1. Company not to withdraw moneys pursuant to Section 2 of 23
Article VIII in excess of an amount equal to principal
amount of issued refundable bonds.........................
Section 2. No property additions made on or prior to December 31, 1946 24
to be used for any purpose under the Indenture............
PART VI
Amendment of Indenture to Permit Qualification Under Trust Indenture Act
of 1939............................................................... 24
PART VII
Amendment of Original Indenture......................................... 24
PART VIII
The Trustee
Acceptance of trusts by the Trustee..................................... 25
Trustee not responsible for validity of the Supplemental Indenture...... 25
PART IX
Miscellaneous Provisions
Execution of Supplemental Indenture in counterparts..................... 25
Appointment of attorneys-in-fact by parties............................. 25
Testimonium............................................................. 26
Execution............................................................... 27
Company's Acknowledgments............................................... 28
Trustee's Acknowledgments............................................... 31
</TABLE>
ii
<PAGE>
SUPPLEMENTAL INDENTURE, dated as of the day of , nineteen hundred and
ninety-seven (1997), made by and between Potomac Electric Power Company, a
corporation organized and existing under the laws of the District of Columbia
and a domestic corporation of the Commonwealth of Virginia (hereinafter some-
times called the "Company"), party of the first part, and The Bank of New
York, a New York banking corporation organized and existing under the laws of
the State of New York (hereinafter sometimes called the "Trustee"), as Trustee
under the Mortgage and Deed of Trust dated July 1, 1936, hereinafter men-
tioned, party of the second part;
Whereas, The Company has heretofore executed and delivered its Mortgage and
Deed of Trust, dated July 1, 1936 (hereinafter sometimes referred to as the
"Original Indenture"), to The Riggs National Bank of Washington, D.C., as
trustee, to secure an issue of First Mortgage Bonds of the Company, issuable
in series; and
Whereas, the Trustee has succeeded The Riggs National Bank of Washington,
D.C. as trustee under the Original Indenture pursuant to Article XIII, Section
3 thereof.
Whereas, pursuant to the terms and provisions of the Original Indenture, in-
dentures supplemental thereto dated as of July 1, 1936, December 1, 1939, Au-
gust 1, 1940, August 1, 1942, January 1, 1948, May 1, 1949, May 1, 1950, March
1, 1952, May 15, 1953, May 16, 1955, June 1, 1956, December 1, 1958, November
16, 1959, December 1, 1960, February 15, 1963, May 15, 1964, April 1, 1966,
May 1, 1967, February 15, 1968, March 15, 1969, February 15, 1970, August 15,
1970, September 15, 1972, April 1, 1973, January 2, 1974, August 15, 1974, Au-
gust 15, 1974, June 15, 1977, July 1, 1979, June 16, 1981, June 17, 1981, De-
cember 1, 1981, August 1, 1982, October 1, 1982, April 15, 1983, November 1,
1985, March 1, 1986, November 1, 1986, March 1, 1987, September 16, 1987, May
1, 1989, August 1, 1989, April 5, 1990, May 21, 1991, May 7, 1992, September
1, 1992, November 1, 1992, March 1, 1993, March 2, 1993, July 1, 1993, August
20, 1993, September 29, 1993, September 30, 1993, October 1, 1993, February
10, 1994, February 11, 1994, March 10, 1995, September 6, 1995 and September
7, 1995 have been heretofore entered into between the Company and the Trustee
to provide, respectively, for the creation of the first through the sixty-
first series of Bonds thereunder and, in the case of the supplemental inden-
tures dated January 1, 1948, March 1, 1952, May 15, 1953, May 16, 1955, June
1, 1956, September 15, 1972, July 1, 1979, June 17, 1981, November 1, 1985,
September 16, 1987, May 1, 1989, May 21, 1991, May 7, 1992, July 1, 1993 and
one of the supplemental indentures dated August 15, 1974, to convey additional
property; and
<PAGE>
Whereas, $20,000,000 principal amount of Bonds of the 3 1/4% Series due 1966
(the first series), $5,000,000 principal amount of Bonds of the 3 1/4% Series
due 1974 (the second series), $10,000,000 principal amount of Bonds of the 3
1/4% Series due 1975 (the third series), $5,000,000 principal amount of Bonds
of the 3 1/4% Series due 1977 (the fourth series), $15,000,000 principal
amount of Bonds of the 3% Series due 1983 (the fifth series), $10,000,000
principal amount of Bonds of the 2 7/8% Series due 1984 (the sixth series),
$30,000,000 principal amount of Bonds of the 2 3/4% Series due 1985 (the sev-
enth series), $15,000,000 principal amount of Bonds of the 3 1/4% Series due
1987 (the eighth series), $10,000,000 principal amount of Bonds of the 3 7/8%
Series due 1988 (the ninth series), $10,000,000 principal amount of Bonds of
the 3 3/8% Series due 1990 (the tenth series), $10,000,000 principal amount of
Bonds of the 3 5/8% Series due 1991 (the eleventh series), $25,000,000 princi-
pal amount of Bonds of the 4 5/8% Series due 1993 (the twelfth series),
$15,000,000 principal amount of Bonds of the 5 1/4% Series due 1994 (the thir-
teenth series), $40,000,000 principal amount of Bonds of the 5% Series due
1995 (the fourteenth series), $45,000,000 principal amount of Bonds of the 7
3/4% Series due 2004 (the twentieth series), $35,000,000 principal amount of
Bonds of the 8.85% Series due 2005 (the twenty-first series), $70,000,000
principal amount of Bonds of the 9 1/2% Series due August 15, 2005 (the twen-
ty-second series), $50,000,000 principal amount of Bonds of the 7 3/4% Series
due 2007 (the twenty-third series), $25,000,000 principal amount of Bonds of
the 5 5/8% Series due 1997 (the twenty-fourth series), $100,000,000 principal
amount of Bonds of the 8 3/8% Series due 2009 (the twenty-fifth series),
$50,000,000 principal amount of Bonds of the 10 1/4% Series due 1981 (the
twenty-sixth series), $50,000,000 principal amount of Bonds of the 10 3/4% Se-
ries due 2004 (the twenty-seventh series), $38,300,000 principal amount of
Bonds of the 6 1/8% Series due 2007 (the twenty-eighth series), $15,000,000
principal amount of Bonds of the 6 1/2% Series due 2004 (the twenty-ninth se-
ries), $20,000,000 principal amount of Bonds of the 6 1/2% Series due 2007
(the thirtieth series), $7,500,000 principal amount of Bonds of the 6 5/8% Se-
ries due 2009 (the thirty-first series), $30,000,000 principal amount of Bonds
of the Floating Rate Series due 2010 (the thirty-second series), $50,000,000
principal amount of Bonds of the 14 1/2% Series due 1991 (the thirty-third se-
ries), $60,000,000 principal amount of Bonds of the 14 1/4% Series due 1992
(the thirty-fifth series),
2
<PAGE>
$50,000,000 principal amount of Bonds of the 11 7/8% Series due 1989 (the
thirty-sixth series), $37,000,000 principal amount of Bonds of the 8 3/4% Se-
ries due 2010 (the thirty-seventh series), $75,000,000 principal amount of
Bonds of the 11 1/4% Series due 2015 (the thirty-eighth series), $75,000,000
principal amount of Bonds of the 9 1/4% Series due 2016 (the thirty-ninth se-
ries), $75,000,000 principal amount of Bonds of the 8 3/4% Series due 2016
(the fortieth series), $75,000,000 principal amount of Bonds of the 8 1/4% Se-
ries due 2017 (the forty-first series), $75,000,000 principal amount of Bonds
of the 9% Series due 1990 (the forty-second series), $75,000,000 principal
amount of Bonds of the 9 3/4% Series due 2019 (the forty-third series) and
$75,000,000 principal amount of Bonds of the 8 5/8% Series due 2019 (the for-
ty-fourth series), have been heretofore redeemed and retired and there are now
issued and outstanding under the Original Indenture and under the supplemental
indentures referred to above: $50,000,000 principal amount of Bonds of the 4
3/8% Series due 1998 (the fifteenth series); $45,000,000 principal amount of
Bonds of the 4 1/2% Series due 1999 (the sixteenth series); $15,000,000 prin-
cipal amount of Bonds of the 5 1/8% Series due 2001 (the seventeenth series);
$35,000,000 principal amount of Bonds of the 5 7/8% Series due 2002 (the eigh-
teenth series); $40,000,000 principal amount of Bonds of the 6 5/8% Series due
2003 (the nineteenth series); $50,000,000 principal amount of Bonds of the Ad-
justable Rate Series due 2001 (the thirty-fourth series); $100,000,000 princi-
pal amount of Bonds of the 9% Series due 2000 (the forty-fifth series);
$100,000,000 principal amount of Bonds of the 9% Series due 2021 (the forty-
sixth series); $75,000,000 principal amount of Bonds of the 8 1/2% Series due
2027 (the forty-seventh series); $30,000,000 principal amount of Bonds of the
6% Series due 2022 (the forty-eighth series); $37,000,000 principal amount of
Bonds of the 6 3/8% Series due 2023 (the forty-ninth series); $78,000,000
principal amount of Bonds of the 6 1/2% Series due 2008 (the fiftieth series);
$40,000,000 principal amount of Bonds of the 7 1/2% Series due 2028 (the fif-
ty-first series); $100,000,000 principal amount of Bonds of the 7 1/4% Series
due 2023 (the fifty-second series); $100,000,000 principal amount of Bonds of
the 6 7/8% Series due 2023 (the fifty-third series); $50,000,000 principal
amount of Bonds of the 5 5/8% Series due 2003 (the fifty-fourth series);
$50,000,000 principal amount of Bonds of the 5 7/8% Series due 2008 (the fif-
ty-fifth series); $75,000,000 principal amount of Bonds of the 6 7/8% Series
due 2024 (the fifty-sixth series); $42,500,000 principal amount of Bonds of
the 5 3/8% Series due 2024 (the fifty-seventh
3
<PAGE>
series); $38,300,000 principal amount of Bonds of the 5 3/8% Series due 2024
(the fifty-eighth series); $16,000,000 principal amount of Bonds of the 5 3/4%
Series due 2010 (the fifty-ninth series); $100,000,000 principal amount of
Bonds of the 6 1/2% series due 2005 (the sixtieth series); and $75,000,000
principal amount of Bonds of the 7 3/8% Series due 2025 (the sixty-first se-
ries); and
Whereas, for the purpose of conforming the Original Indenture to the stan-
dards prescribed by the Trust Indenture Act of 1939 or otherwise modifying
certain of the provisions of the Original Indenture, indentures supplemental
thereto dated December 10, 1939, August 10, 1942, October 15, 1942, April 1,
1966, June 16, 1981, June 17, 1981, December 1, 1981, August 1, 1982, October
1, 1982, April 15, 1983, November 1, 1985, March 1, 1986, November 1, 1986,
March 1, 1987, September 16, 1987, May 1, 1989, August 1, 1989, April 5, 1990,
May 21, 1991, May 7, 1992, September 1, 1992, November 1, 1992, March 1, 1993,
March 2, 1993, July 1, 1993, August 20, 1993, September 29, 1993, September
30, 1993, October 1, 1993, February 10, 1994, February 11, 1994, March 10,
1995, September 6, 1995 and September 7, 1995 have been heretofore entered
into between the Company and the Trustee, and for the purpose of conveying ad-
ditional property, indentures supplemental thereto dated July 15, 1942, Octo-
ber 15, 1947, December 31, 1948, December 31, 1949, February 15, 1951, Febru-
ary 16, 1953, March 15, 1954, March 15, 1955, March 15, 1956, April 1, 1957,
May 1, 1958, May 1, 1959, May 2, 1960, April 3, 1961, May 1, 1962, May 1,
1963, April 23, 1964, May 3, 1965, June 1, 1966, April 28, 1967, July 3, 1967,
May 1, 1968, June 16, 1969, May 15, 1970, September 1, 1971, June 17, 1981,
November 1, 1985, September 16, 1987, May 1, 1989, May 21, 1991, May 7, 1992
and July 1, 1993 have been heretofore entered into between the Company and the
Trustee, and for the purpose of better securing and protecting the Bonds then
or thereafter issued and confirming the lien of the Original Indenture, an in-
denture dated October 15, 1942 supplemental thereto has been heretofore en-
tered into between the Company and the Trustee; the Original Indenture as
heretofore amended and supplemented being hereinafter referred to as the
"Original Indenture as amended"; and
Whereas, the Company is entitled to have authenticated and delivered addi-
tional Bonds on the basis of the net bondable value of property
4
<PAGE>
additions, upon compliance with the provisions of Section 4 of Article III of
the Original Indenture as amended; and
Whereas, the Company has determined to issue a sixty-second series of Bonds
under the Original Indenture as amended in the principal amount of
$ , to be known as First Mortgage Bonds, % Series due (herein-
after called "Bonds of Series"); and
Whereas, the Original Indenture as amended provides that certain terms and
provisions, as determined by the Board of Directors of the Company, of the
Bonds of any particular series may be expressed in and provided by the execu-
tion of an appropriate supplemental indenture; and
Whereas, the Original Indenture as amended provides that the Company and the
Trustee may enter into indentures supplemental thereto to add to the covenants
and agreements of the Company contained therein other covenants and agreements
thereafter to be observed; and to surrender any right or power reserved to or
conferred upon the Company in the Original Indenture as amended; and
Whereas, the Company, in the exercise of the powers and authority conferred
upon and reserved to it under the provisions of the Original Indenture as
amended and pursuant to appropriate resolutions of its Board of Directors, has
duly resolved and determined to make, execute and deliver to the Trustee a
Supplemental Indenture in the form hereof for the purposes herein provided;
and
Whereas, all conditions and requirements necessary to make this Supplemental
Indenture a valid, binding and legal instrument have been done, performed and
fulfilled, and the execution and delivery hereof have been in all respects
duly authorized;
Now, Therefore, This Indenture Witnesseth:
That Potomac Electric Power Company, in consideration of the premises and of
One Dollar to it duly paid by the Trustee at or before the ensealing and de-
livery of these presents, and for other valuable considerations, the receipt
whereof is hereby acknowledged, and in order further to secure the payment of
the principal of, and premium (if any) and interest on all Bonds at any time
issued and outstanding under the Indenture
5
<PAGE>
according to their tenor, purport and effect, and for the purpose of ratifying
and confirming the lien of the Indenture and the performance and observance by
the Company of all of the covenants and conditions contained in the Indenture,
has executed and delivered this Supplemental Indenture, and has granted, bar-
gained, sold, warranted, aliened, remised, released, conveyed, assigned,
transferred, mortgaged, pledged, set over, ratified and confirmed and by these
presents does grant, bargain, sell, warrant, alien, remise, release, convey,
assign, transfer, mortgage, pledge, set over, ratify and confirm unto The Bank
of New York, as Trustee under the Indenture and to its successors in the trust
created thereby and to its and their assigns forever, all and singular the
following described properties (in addition to all other properties heretofore
subject to the lien of the Original Indenture as amended and not heretofore
released from the lien thereof), that is to say:
FIRST.
All and singular the lands, real estate, chattels real, easements, servitudes
and leasehold and other interests in real estate which the Company now owns
or, subject to the provisions of Article XII of the Original Indenture as
amended, may hereafter acquire, including, among other things, the following
(but reference to, or enumeration of, any particular kinds, classes or items
of property shall not be deemed to exclude from the operation and effect of
this Indenture any kind, class or item not so referred to or enumerated, ex-
cept as hereinafter expressly provided):
I. DISTRICT OF COLUMBIA
The following parcel of land in the District of Columbia:
Alabama Avenue Substation
Land acquired from the District of Columbia, Department of Housing and Commu-
nity Development by deed dated December 4, 1996 and recorded December 9, 1996
as Instrument No. 9600080488.
6
<PAGE>
II. CHARLES COUNTY, MARYLAND
Morgantown Fly Ash Site
Land acquired from Brinsfield Farms, Inc. by deed dated June 27, 1995 and re-
corded June 28, 1995 in Liber 2102, Folio 263.
III. MONTGOMERY COUNTY, MARYLAND
Derwood Substation No. 209
Land acquired from Potomac Capital Investment Corporation by quitclaim deed
dated March 22, 1995 and recorded April 7, 1995 in Liber 13338, Folio 479.
Brighton/High Ridge Transmission Line Right-of-Way
The following parcels of land, being part of an 88-foot wide right-of-way ex-
tending from Brighton Substation No. 66 in Montgomery County, Maryland to Bal-
timore Gas and Electric Company's High Ridge Substation in Howard County,
Maryland.:
<TABLE>
<CAPTION>
PROPERTY NAME OF COMPANY'S DEED BY WHICH ACQUIRED
NO. GRANTOR BY THE COMPANY
- -------- ----------------- ----------------------
<S> <C> <C>
1906 State of Maryland, to Deed of Easement Date--March 3, 1995
the use of the Record Date--March 22, 1995
Department of Liber 13309, Folio 345
Natural Resources
1913 Harold T. Meryman and Deed of Easement Date--May 2, 1994
Mary Lane Meryman Record Date--May 10, 1994
Liber 12602, Folio 415
</TABLE>
7
<PAGE>
IV. HOWARD COUNTY, MARYLAND
Brighton/High Ridge Transmission Line Right-of-Way
The following parcels of land, being part of a 150-foot wide right-of-way ex-
tending from Brighton Substation No. 66 in Montgomery County, Maryland to Bal-
timore Gas and Electric Company's High Ridge Substation in Howard County,
Maryland:
<TABLE>
<CAPTION>
PROPERTY NAME OF COMPANY'S DEED BY WHICH ACQUIRED
NO. GRANTOR BY THE COMPANY
- -------- ----------------- ----------------------
<S> <C> <C>
1920.1 Guy J. Carson and Deed of Exchange Date--August 3, 1993
Kathryn D. Carson Record Date--October 29, 1993
Liber 3034, Folio 106
1932 Marie T. Spencer Deed of Easement Date--March 30, 1994
Record Date--March 30, 1994
Liber 3206, Folio 0027
1943 Samuel F. Lyons and Deed of Easement Date--March 26, 1993
Elsie K. Lyons Record Date--March 31, 1993
(Lot 1) Liber 2815, Folio 468
1943 Samuel F. Lyons and Deed of Easement Date--March 26, 1993
Elsie K. Lyons Record Date--March 31, 1993
(Lot 2) Liber 2815, Folio 473
1943 Samuel F. Lyons and Deed of Easement Date--March 26, 1993
Elsie K. Lyons Record Date--March 31, 1993
(Lot 3) Liber 2815, Folio 478
1943 Samuel F. Lyons and Deed of Easement Date--March 26, 1993
Elsie K. Lyons Record Date--March 31, 1993
(Lot 4) Liber 2815, Folio 483
1943 Samuel F. Lyons and Deed of Easement Date--March 26, 1993
Elsie K. Lyons Record Date--March 31, 1993
(Lot 5) Liber 2815, Folio 488
</TABLE>
8
<PAGE>
V. INDIANA COUNTY, PENNSYLVANIA
The Company's undivided 9.72% interest as tenant in common in the following
property located in Indiana County, Pennsylvania.
<TABLE>
<CAPTION>
NAME OF COMPANY'S DEED BY WHICH ACQUIRED
GRANTOR BY THE COMPANY
--------------------------- ----------------------------
<S> <C>
American Trustee & Transfer Deed Date--February 11, 1994
Corporation, Trustee Record Date--July 27, 1994
Deed Book 1048, Page 425
</TABLE>
SECOND.
Also all power houses, plants, buildings and other structures, dams, dam
sites and substations, together with all and singular the electric and mechan-
ical appliances appurtenant thereto of every nature whatsoever, now owned by
the Company or, subject to the provisions of Article XII of the Original In-
denture as amended, which it may hereafter acquire, including all and singular
the machinery, engines, boilers, furnaces, generators, dynamos, turbines and
motors, and all and every character of mechanical appliance for generating or
producing electricity for light, heat, cold, power or other purposes.
THIRD.
Also all transmission and distribution systems used for the transmission and
distribution of electricity for light, heat, cold or power or any other pur-
pose whatsoever, whether underground or overhead, surface or otherwise, now
owned by the Company or, subject to the provisions of Article XII of the Orig-
inal Indenture as amended, which it may hereafter acquire, including all
poles, towers, posts, wires, cables, conduits, manholes, pipes, tubes, drains,
furnaces, switchboards, transformers, conductors, insulators, supports, me-
ters, lamps, fuses, junction boxes and other electric fixtures and apparatus.
Also all inventions, patent rights and licenses used or useful in connection
with the generation, production, transmission or distribution of electricity
for light, heat, cold, power or other purposes, now owned by the
9
<PAGE>
Company or, subject to the provisions of Article XII of the Original Indenture
as amended, which it may hereafter acquire.
FOURTH.
Also all franchises and all permits, ordinances, easements, privileges, immu-
nities and licenses, all rights to construct, maintain and operate overhead,
surface and underground systems for the distribution and transmission of elec-
tricity for the supply to itself or others of light, heat, cold or power, all
rights-of-way, all waters, water rights and flowage rights and all grants and
consents, now owned or, subject to the provi-sions of Article XII of the Orig-
inal Indenture as amended, which it may hereafter acquire.
FIFTH.
Also all improvements, extensions or additions purchased, constructed or oth-
erwise acquired by the Company to or about all other property, real, personal
and mixed (except as herein and in the Original Indenture as amended expressly
provided), of every nature and kind wheresoever situated, as such property is
described in the Original Indenture as amended and indentures supplemental
thereto.
Also, subject to the provisions of Article XII of the Original Indenture as
amended, all other property, real, personal and mixed (except as herein ex-
pressly excepted) of every nature and kind and wheresoever situated now or
hereafter possessed by or belonging to the Company, or to which it is now, or
may at any time hereafter be, in any manner entitled in law or in equity.
SIXTH.
Also any and all property of any kind or description which may from time to
time after the date of this Supplemental Indenture by delivery or by writing
of any kind be conveyed, mortgaged, pledged, assigned or transferred to the
Trustee by the Company or by any person, copartnership or corporation, with
the consent of the Company or otherwise as
10
<PAGE>
expressly permitted by the terms of the Original Indenture as amended, and ac-
cepted by the Trustee, to be held as part of the mortgaged property; and the
Trustee is hereby authorized to accept and receive any such property and any
such conveyance, mortgage, pledge, assignment and transfer, as and for addi-
tional security hereunder, and to hold and apply any and all such property
subject to and in accordance with the terms and provisions upon which such
conveyance, mortgage, pledge, assignment or transfer shall be made.
SEVENTH.
Together with all and singular the tenements, hereditaments and appurtenances
belonging or in anywise appertaining to the aforesaid prop-
erty or any part thereof; with the reversion and reversions, remainder and re-
mainders, tolls, rents, revenues, issues, income, product and profits thereof,
and all the estate, right, title, interest and claim whatsoever, at law as
well as in equity, which the Company now has or hereafter acquires in and to
the aforesaid property and franchises and every part and parcel thereof.
Expressly Excepting and Excluding, However, from this Supplemental Indenture
and from the lien and operation hereof:
(a) All bills, notes and accounts receivable, cash on hand or in bank, con-
tracts, operating agreements, existing leases in which the Company is lessor
and leases hereafter made of portions of the mortgaged property in which the
Company is lessor;
(b) All shares of stock and other certificates or evidences of interest
therein, and all bonds, notes and other evidences of indebtedness or certif-
icates of interest therein and other securities now owned or hereafter ac-
quired or possessed by the Company (except securities or obligations re-
quired to be pledged by the terms of the Original Indenture as amended);
(c) All equipment and materials not installed as a part of the fixed prop-
erty of the Company and merchandise and supplies acquired by the Company for
the purpose of resale or leasing to its customers in the ordinary course and
conduct of its business; and
(d) All electric energy and other materials or products generated, manufac-
tured, produced or purchased by the Company for sale, distribution or use in
the ordinary course and conduct of its business.
11
<PAGE>
And Further Expressly Excepting and Excluding from this Supplemental Inden-
ture and from the lien and operation hereof, all property, permits and fran-
chises of any other corporation of whatever character, shares of stock or se-
curities whereof, or obligations secured by lien upon the properties and fran-
chises whereof, which may be now owned or hereafter acquired or possessed by
the Company, notwithstanding the fact that the Company may own or hereafter
acquire all or substantially all of the shares of stock or other securities
issued by, or secured by lien upon property of, any such corporation, or that
any such corporation may be incorporated or organized at the instance of or
for the account of the Company, or that all or any part of the shares of stock
or other securities of such corporation may be subjected to the lien hereof by
the Company.
To Have and To Hold all said properties, real, personal and mixed, mortgaged,
pledged and conveyed by the Company as aforesaid, or intended so to be, unto
the Trustee, its successors in the Trust created by the Indenture and its and
their assigns forever;
Subject, However, to the exceptions and reservations and matters hereinabove
recited, to existing leases, to existing mortgages or other liens upon ease-
ments or rights-of-way for transmission or distribution line purposes, as de-
fined in Article I of the Original Indenture as amended, and any extensions
thereof, and subject to existing easements for streets, alleys, highways,
rights-of-way and railroad purposes over, upon, and across any of the Property
hereinbefore described, and subject also to all terms conditions, agreements,
covenants, exceptions and reservations expressed or provided in the deeds or
other instruments respectively under and by virtue of which the Company now
owns or may hereafter acquire any property subject to the lien hereof, and to
undetermined liens and charges, if any, incidental to construction or other
existing permitted liens as defined in Article I of the Original Indenture as
amended;
In Trust Nevertheless, upon the terms and trusts in the Original Indenture
and the indentures supplemental thereto, including this Supplemental Inden-
ture, set forth, for the further, equal and proportionate benefit, security,
and protection of all present and future holders of the Bonds and coupons is-
sued and to be issued thereunder, or any of them,
12
<PAGE>
without preference of any of said Bonds and coupons of any particular series
over the Bonds and coupons of any other series, by reason of priority in the
time of issue, sale or negotiation thereof, or by reason of the purpose of is-
sue or otherwise howsoever, except as otherwise provided in Section 2 of Arti-
cle IV of the Original Indenture as amended;
And Potomac Electric Company hereby covenants, declares and agrees with the
Trustee and its successors in the trust under the Original Indenture as amend-
ed, for the benefit of those who hold the Bonds and coupons, or any of them,
issued or to be issued hereunder or under the Original, Indenture as amended,
as follows:
PART I.
Description of Bonds.
Section 1. The Bonds of Series shall, subject to the provisions of Section
1 of Article II of the Original Indenture as amended, be designated as "First
Mortgage Bonds, Series due " of the Company. The Bonds of Series shall
be executed, authenticated and delivered in accordance with the provisions of,
and shall in all respects be subject to, all of the terms, conditions and cov-
enants of the Original Indenture as amended, except in so far as the terms and
provisions of the Original Indenture as amended are amended or modified by
this Supplemental Indenture.
The Bonds of Series shall mature , and shall bear interest at the
rate of per annum, payable semiannually, commencing , on the day
of and the day of in each year (each such and being herein-
after called an "interest payment date"). The Bonds of Series shall be pay-
able as to principal and interest in lawful money of the United States of
America, and shall be payable (as well the interest as the principal thereof)
at the Agency of the Company in the Borough of Manhattan, The City of New
York.
The interest so payable on any interest payment date shall be paid to the
persons in whose names the Bonds of Series are registered at the close of
business on the last business day (hereinafter called the "rec-
13
<PAGE>
ord date") which is more than ten days prior to such interest payment date, a
"business day" being any day that is not a day on which banks in the City of
New York, are authorized by law to close; except that if the Company shall de-
fault in the payment of any interest due on such interest payment date, such
defaulted interest shall be paid to the persons in whose names the Bonds of
Series are registered on the date of payment of such defaulted interest, or in
accordance with the regulations of any securities exchange on which the Bonds
of Series are listed.
Except as provided hereinafter, every Bond of Series shall be dated as of
the date of its authentication and delivery, or if that is an interest payment
date, the next day, and shall bear interest from the interest payment date
next preceding its date or the date of delivery of the initial Bonds of Se-
ries, whichever is later. Notwithstanding Section 6 of Article II of the Orig-
inal Indenture, any Bond of Series authenticated and delivered by the
Trustee after the close of business on the record date with respect to any in-
terest payment date and prior to such interest payment date shall be dated as
of the date next following such interest payment date and shall bear interest
from such interest payment date; except that if the Company shall default in
the payment of any interest due on such interest payment date, such Bond shall
bear interest from the next preceding interest payment date or the date of de-
livery of the initial Bonds of Series, whichever is later.
Section 2. The Bonds of Series, and the Trustee's certificate to be en-
dorsed on the Bonds of Series, shall be substantially in the following
forms, respectively:
[form of face of bond of series]
POTOMAC ELECTRIC POWER COMPANY
(A District of Columbia and Virginia corporation)
First Mortgage Bond, % Series Due
No. $
Potomac Electric Power Company, a corporation organized and existing under
the laws of the District of Columbia and a domestic cor-
14
<PAGE>
poration of the Commonwealth of Virginia (hereinafter called the "Company",
which term shall include any successor corporation as defined in the Amended
Indenture hereinafter referred to), for value received, hereby promises to pay
to ................... or registered assigns, the sum of ..................
dollars, on the day of , in lawful money of the United States of Ameri-
ca, and to pay interest thereon in like money from the later of the date of
delivery of the initial Bonds of Series or the interest payment date or
next preceding the date of this Bond, or if the Company shall default in
the payment of interest due on such interest payment date, then from the next
preceding interest payment date or the date of delivery of the initial Bonds
of Series, whichever is later, at the rate of per annum, payable
semiannually, commencing , on the day of and in each year un-
til maturity, or, if the Company shall default in the payment of the principal
hereof, until the Company's obligation with respect to the payment of such
principal shall be discharged as provided in the Amended Indenture. The inter-
est so payable on any or will, subject to certain exceptions pro-
vided in the indenture dated as of , 1997 supplemental to the Amended In-
denture, be paid to the person in whose name this Bond is registered at the
close of business on the last business day which is more than ten days prior
to such or . Both principal of, and interest on, this Bond are pay-
able at the agency of the Company in the Borough of Manhattan, The City of New
York.
Reference is made to the further provisions of this Bond set forth on the re-
verse hereof, and such further provisions shall for all purposes have the same
effect as though fully set forth at this place.
This Bond shall not be entitled to any benefit under the Amended Indenture or
any indenture supplemental thereto, or become valid or
obligatory for any purpose, until The Bank of New York, the Trustee under the
Amended Indenture, or a successor trustee thereto under the Amended Indenture,
shall have signed the form of certificate endorsed hereon.
15
<PAGE>
In Witness Whereof, Potomac Electric Power Company has caused this Bond to be
signed in its name by the signature (or a facsimile thereof) of its President
or a Vice President, and its corporate seal (or a facsimile thereof) to be
hereto affixed and attested by the facsimile signature of its Secretary or an
Assistant Secretary.
Dated,
Potomac Electric Power Company
By......................................
Vice President
Attest:
...................................
Secretary
16
<PAGE>
[form of trustee's certificate]
This Bond is one of the Bonds, of the series designated therein, described in
the within-mentioned Amended Indenture and the Supplemental Indenture dated as
of , 1997.
The Bank of New York
Trustee.
By..........................................
Authorized Officer
[TEXT APPEARING ON REVERSE SIDE OF BOND OF SERIES]
This Bond is one of a duly authorized issue of Bonds of the Company (herein-
after called the "Bonds") in unlimited aggregate principal amount, of the se-
ries hereinafter specified, all issued and to be issued under and equally se-
cured (except in so far as any purchase or sinking fund or analogous provi-
sions for any particular series of Bonds, established by any indenture supple-
mental to the Amended Indenture hereinafter mentioned, may afford additional
security for such Bonds) by a mortgage and deed of trust, dated July 1, 1936,
executed by the Company to The Bank of New York as successor to The Riggs Na-
tional Bank of Washington, D.C. (herein called the "Trustee"), as trustee, as
amended by indentures supplemental thereto dated December 10, 1939, August 10,
1942, October 15, 1942, April 1, 1966, June 16, 1981, June 17, 1981, December
1, 1981, August 1, 1982, October 1, 1982, April 15, 1983, November 1, 1985,
March 1, 1986, November 1, 1986, March 1, 1987, September 16, 1987, May 1,
1989, August 1, 1989, April 5, 1990, May 21, 1991, May 7, 1992, September 1,
1992, November 1, 1992, March 1, 1993, March 2, 1993, July 1, 1993, August 20,
1993, September 29, 1993, September 30, 1993, October 1, 1993, February 10,
1994, February 11, 1994, March 10, 1995, September 6, 1995 and September 7,
1995 (said mortgage and deed of trust, as so amended, being herein called the
"Amended Indenture") and all indentures supplemental thereto, to which Amended
Indenture and supplemental indentures reference is hereby made for a descrip-
tion of the properties mortgaged and pledged, the nature and extent of the se-
curity, the
17
<PAGE>
rights of the owners of the Bonds and of the Trustee in respect thereto, and
the terms and conditions upon which the Bonds are, and are to be, secured. To
the extent permitted by, and as provided in, the Amended Indenture, modifica-
tions or alterations of the Amended Indenture, or of any indenture supplemen-
tal thereto, and of the rights and obligations of the Company and of the hold-
ers of the Bonds may be made with the consent of the Company by an affirmative
vote of not less than 80% in amount of the Bonds entitled to vote then out-
standing, at a meeting of Bondholders called and held as provided in the
Amended Indenture, and by an affirmative vote of not less than 80% in amount
of the Bonds of any series entitled to vote then outstanding and affected by
such modification or alteration, in case one or more but less than all of the
series of Bonds then outstanding under the Amended Indenture are so affected;
provided, however, that no such modification or alteration shall be made which
will affect the terms of payment of the principal of, or interest on, this
Bond, which are unconditional, or which reduces the percentage of Bonds the
affirmative vote of which is required for the making of such modifications or
alterations. The Company is proposing an amendment to the Amended Indenture
which would replace "80%" with "60%" in the preceding sentence, which amend-
ment will become effective upon the consent or agreement thereto of the hold-
ers of all the outstanding Bonds. The holder of this Bond will be deemed to
have approved such amendment. The Bonds may be issued in series, for various
principal sums, may mature at different times, may bear interest at different
rates and may otherwise vary as in the Amended Indenture provided.
This Bond is one of a series designated as the "First Mortgage Bonds, Series
due (herein called the "Bonds of Series") of the Company, issued under and
secured by the Amended Indenture and all indentures supplemental thereto and
described in the indenture (herein called the "New Supplemental Indenture"),
dated as of , 1997, between the Company and the Trustee, supplemental to
the Amended Indenture.
The Bonds of Series are subject to redemption, at any time or from time to
time after and prior to maturity, at the option of the Company, ei-
ther as a whole or in part by lot, upon payment of the redemption prices ap-
plicable to the respective period set forth
18
<PAGE>
below, together, in each case, with accrued interest to the redemption date,
all subject to the conditions and as more fully set forth in the Amended In-
denture and the New Supplemental Indenture:
<TABLE>
<CAPTION>
REDEMPTION PRICE
IF REDEEMED EXPRESSED AS
DURING THE PERCENTAGE OF
12 MONTH PERIOD THE PRINCIPAL
ENDING AMOUNT OF BONDS
--------------- ----------------
<S> <C>
2008............. %
2009.............
2010.............
2011.............
2012.............
2013.............
</TABLE>
<TABLE>
<CAPTION>
REDEMPTION PRICE
IF REDEEMED EXPRESSED AS
DURING THE PERCENTAGE OF
12 MONTH PERIOD THE PRINCIPAL
ENDING AMOUNT OF BONDS
--------------- ----------------
<S> <C>
2014.................... %
2015....................
2016....................
2017....................
2018 and thereafter..... 100.00
</TABLE>
Notice of any redemption shall be sent by the Company through the mails,
postage prepaid, at least thirty days and not more than sixty days prior to
the redemption date, to the registered owners of any of the Bonds to be re-
deemed, at their addresses as the same shall appear on the transfer register
of the Company, all subject to the conditions and as more fully set forth in
the Amended Indenture and New Supplemental Indenture. Any notice so mailed
shall be conclusively presumed to have been duly given, whether or not the
owner receives it.
The Bonds of Series will be repayable on , at the option of the holders
thereof, at 100% of their principal amount, together with accrued and unpaid
interest to . In order for a Bond of Series to be repaid, the Company
must receive at the corporate trust office of the Trustee during the period
from and including to and including the close of business on (or if
is not a Business Day, the next succeeding Business Day): (i) the Bond of
Series (the "Redeemable Bond") with the form entitled "Option to Elect
Repayment" on, or otherwise accompanying, the Redeemable Bond duly completed
or (ii) a telegram, telex, facsimile transmission or letter from a member of a
national securities exchange or the National Association of Securities Deal-
ers, Inc. or a commercial bank or trust company in the United States of Amer-
ica setting forth the name of the holder of the Redeemable Bond, the principal
amount of the Redeemable Bond, the principal amount of the Redeemable Bond to
be repaid, a statement that the option to elect repayment is being exercised
thereby and a guarantee that the Redeemable Bond to be repaid (with the form
entitled "Option to Elect Repayment"
19
<PAGE>
on, or otherwise accompanying, the Redeemable Bond duly completed) will be re-
ceived at the Trustee's corporate trust office not later than five Business
Days after the date of such telegram, telex, facsimile transmission or letter,
and such Redeemable Bond and form duly completed are received at the Trustee's
office by such fifth Business Day. Effective exercise of the repayment option
by the holder of any Redeemable Bond shall be irrevocable. No transfer or ex-
change of any Redeemable Bond (or, in the event that any Redeemable Bond is to
be repaid in part, such portion of the Redeemable Bond to be repaid) will be
permitted after exercise of the repayment option. The repayment option may be
exercised by the holder of a Redeemable Bond for less than the entire princi-
pal amount of the Redeemable Bond, provided the principal amount which is to
be repaid is set forth on the form entitled "Option to Elect Repayment" on the
Redeemable Bond and is equal to $1,000 or any integral multiple thereof. All
questions as to the validity, eligibility (including time of receipt) and ac-
ceptance of any Redeemable Bond for repayment will be determined by the Compa-
ny, whose determination will be final, binding and non-appealable. Upon timely
delivery of a Redeemable Bond to the Trustee with the "Option to Elect Repay-
ment" form completed in accordance with the foregoing, the outstanding princi-
pal amount of such Redeemable Bond (or portion thereof indicated on the "Op-
tion to Elect Repayment") shall become due and payable on , at the price
equal to 100% of the principal amount to be repaid, plus accrued and unpaid
interest to .
In case an event of default, as defined in the Amended Indenture, shall oc-
cur, the principal of all the Bonds at any such time outstanding under the
Amended Indenture may be declared or may become due and payable, upon the con-
ditions and in the manner and with the effect provided in the Amended Inden-
ture. The Amended Indenture provides that such declaration may in certain
events be waived by the holders of a majority in principal amount of the Bonds
entitled to vote then outstanding.
This Bond is transferable by the registered owner hereof, in person or by
duly authorized attorney, on the books of the Company to be kept for that pur-
pose at the agency of the Company in the Borough of Manhattan, The City of New
York, upon surrender and cancellation of this Bond and on presentation of a
duly executed written instrument of transfer, and thereupon a new Bond or
Bonds of the same series, of the same aggregate
20
<PAGE>
principal amount and in authorized denominations will be issued to the trans-
feree or transferees in exchange therefor; and this Bond, with or without oth-
ers of the same series, may in like manner be exchanged for one or more new
Bonds of the same series of other authorized denominations but of the same ag-
gregate principal amount; all subject to the terms and conditions set forth in
the Amended Indenture.
No recourse shall be had for the payment of the principal of, or the interest
on, this Bond, or for any claim based hereon or otherwise in respect hereof or
of the Amended Indenture or any indenture supplemental thereto, against any
incorporator, or against any stockholder, director or officer, past, present
or future, of the Company or of any predecessor or successor corporation, ei-
ther directly or through the Company or any such predecessor or successor cor-
poration, whether for amounts unpaid on stock subscriptions or by virtue of
any constitution, statute or rule of law, or by the enforcement of any assess-
ment or penalty or otherwise, all such liability, whether at common law, in
equity, by any constitution, statute or otherwise, of incorporators, stock-
holders, directors or officers being released by every owner hereof by the ac-
ceptance of this Bond and as part of the consideration for the issue hereof,
and being likewise released by the terms of the Amended Indenture.
Section 3. The Bonds of Series shall be registered Bonds without coupons
in denominations of any multiple of $1,000, numbered consecutively upwards
from R1.
Section 4. Until Bonds of Series in definitive form are ready for deliv-
ery, the Company may execute, and upon its request in writing the Trustee
shall authenticate and deliver, in lieu thereof, Bonds for such series in tem-
porary form, as provided in Section 9 of Article II of the Original Indenture
as amended.
PART II.
Issue of Bonds.
Section 1. Except for Bonds of Series issued pursuant to Section 13 of Ar-
ticle II of the Original Indenture as amended, the principal amount of Bonds
of Series which may be authenticated and delivered hereunder is limited to
$ aggregate principal amount.
21
<PAGE>
Section 2. Bonds of Series in the aggregate principal amount permitted in
Section 1 of this Part II, may at any time subsequent to the execution hereof
be executed by the Company and delivered to the Trustee and shall be authenti-
cated by the Trustee and delivered (either before or after the recording here-
of) to or upon the order of the Company evidenced by a writing or writings,
signed by its President or one of its Vice Presidents and its Treasurer or one
of its Assistant Treasurers, at such time or times as may be requested by the
Company subsequent to the receipt by the Trustee of
(1) the certified resolution and the officers' certificate required by Sec-
tion 3(a) and Section 3(b) of Article III of the Original Indenture as
amended;
(2) the opinion of counsel required by Section 3(c) of Article III of the
Original Indenture as amended;
(3) cash, if any, in the amount required to be deposited by Section 3(d) of
Article III of the Original Indenture as amended, which shall be held and
applied by the Trustee as provided in said Section 3(d);
(4) the certificates, instruments, opinions of counsel, prior lien bonds
and cash, if any, required by Section 4 of Article III of the Original In-
denture as amended, except that, as required by Part V of this Supplemental
Indenture, property additions purchased, constructed or otherwise acquired
on or before December 31, 1946 shall not be made the basis for the authenti-
cation and delivery of Bonds of Series; and
(5) the certificates and opinions required by Article XVIII of the Original
Indenture as amended.
PART III.
Redemption at Option of Company.
Section 1. The Bonds of Series are not redeemable up to and including
. The Bonds of Series shall, in accordance with the provisions of Arti-
cle V of the Original Indenture as amended, be redeemable, at any time or from
time to time after and prior to maturity, at the option of the Com-
pany, either as a whole or in part by lot, upon payment of the redemption
prices applicable
22
<PAGE>
to the respective periods set forth in the form of Bond of Series contained
in Section 2 of Part I hereof, together, in each case, with accrued interest
to the redemption date.
Section 2. In accordance with the provisions of Article V of the Original In-
denture as amended, notice of any redemption shall be sent by the Company
through the mails, postage prepaid, at least thirty days and not more than
sixty days prior to the date of redemption, to the registered owners of any of
the Bonds to be redeemed at their addresses as the same shall appear on the
transfer register of the Company. Any notice so mailed shall be conclusively
presumed to have been duly given, whether or not the owner receives it.
All Bonds delivered to or redeemed by the Trustee pursuant to the provisions
of this Part III shall forthwith be cancelled.
PART IV.
Repayment at Option of Holders
Section 1. The Bonds of Series shall be repayable on , at the option
of the respective holders thereof, at 100% of their principal amount, together
with accrued and unpaid interest to , in accordance with the procedures
set forth in the form of Bond of Series contained in Section 2 of Part I
hereof.
Section 2. All bonds of Series redeemed pursuant to the provisions of this
Part IV shall forthwith be cancelled.
PART V.
Additional Particular Covenants of the Company.
The Company hereby covenants, warrants and agrees that so long as any Bonds
of Series are outstanding:
Section 1. The Company will not withdraw, pursuant to the provisions of Sec-
tion 2 of Article VIII of the Original Indenture as amended, any moneys held
by the Trustee as part of the trust estate in excess of
23
<PAGE>
an amount equal to the aggregate principal amount of such of the refundable
Bonds as were theretofore issued by the Company; and that upon any such with-
drawal by the Company refundable Bonds equal in aggregate principal amount to
the amount so withdrawn shall be deemed to have been made the basis of such
withdrawal.
Section 2. Property additions purchased, constructed or otherwise acquired on
or before December 31, 1946 shall not be made the basis for the authentication
and delivery of Bonds, or the withdrawal of cash, or the reduction of the
amount of cash required to be paid to the Trustee under any provision of the
Indenture.
PART VI.
Amendment of Indenture to Permit Qualification
Under Trust Indenture Act of 1939.
The Company and the Trustee, from time to time and at any time, without any
vote or consent of the holders of the Bonds of Series, may enter into such
indentures supplemental to the Original Indenture as may or shall by them be
deemed necessary or desirable to add to or modify or amend any of the provi-
sions of the Original Indenture so as to permit the qualification of the Orig-
inal Indenture under the Trust Indenture Act of 1939.
Except to the extent specifically provided herein, no provision of this Sup-
plemental Indenture is intended to modify, and the parties hereto do hereby
adopt and confirm, the provisions of Section 318(c) of the Trust Indenture Act
of 1939 which amend and supersede provisions of the Original Indenture, as
supplemented, in effect prior to November 15, 1990.
PART VII.
Amendment of Original Indenture.
Notwithstanding any other provisions of the Original Indenture as amended,
the holders of the Bonds of Series, by their holding of such Bonds, are
deemed to have approved the following amendment to the
24
<PAGE>
Original Indenture as amended and to have authorized the Trustee to take any
action necessary to evidence or effectuate such approval:
Sections 5 and 6 of Article XV of the Original Indenture as amended are
hereby amended by changing the words and figures "eighty percent. (80%)" to
the words and figures "sixty percent. (60%)" wherever in such Sections such
words and figures occur.
PART VIII.
The Trustee.
The Trustee hereby accepts the trusts hereby declared and provided and agrees
to perform the same upon the terms and conditions in the Original Indenture as
amended set forth and upon the following terms and conditions:
The Trustee shall not be responsible in any manner whatsoever for or in re-
spect of the validity or sufficiency of this Supplemental Indenture or the due
execution hereof by the Company or for or in respect of the recitals contained
herein, all of which recitals are made by the Company solely. In general, each
and every term and condition contained in Article XIII of the Original Inden-
ture as amended shall apply to this Supplemental Indenture with the same force
and effect as if the same were herein set forth in full, with such omissions,
variations and modifications thereof as may be appropriate to make the same
conform to this Supplemental Indenture.
PART IX.
Miscellaneous Provisions.
This Supplemental Indenture may be simultaneously executed in any number of
counterparts, each of which when so executed shall be deemed to be an origi-
nal; but such counterparts shall together constitute but one and the same in-
strument.
Potomac Electric Power Company hereby constitutes and appoints Dennis R.
Wraase, one of its Senior Vice Presidents, to be its true and
25
<PAGE>
lawful attorney-in-fact, for it and in its name to appear before any officer
authorized by law to take and certify acknowledgments of deeds to be recorded
in the District of Columbia, in the State of Maryland, in the Commonwealth of
Virginia, and in the Commonwealth of Pennsylvania and to acknowledge and de-
liver these presents as the act and deed of said Potomac Electric Power Compa-
ny.
The Bank of New York, hereby constitutes and appoints , one of its ,
to be its true and lawful attorney-in-fact, for it and in its name to appear
before any officer authorized by law to take and certify acknowledgments of
deeds to be recorded in the District of Columbia, in the State of Maryland, in
the Commonwealth of Virginia, and in the Commonwealth of Pennsylvania and to
acknowledge and deliver these presents as the act and deed of said The Bank of
New York.
26
<PAGE>
In Witness Whereof, said Potomac Electric Power Company has caused this Sup-
plemental Indenture to be executed on its behalf by its President or one of
its Vice Presidents and its corporate seal to be hereto affixed and said seal
and this Supplemental Indenture to be attested by its Secretary or one of its
Assistant Secretaries; and said The Bank of New York, in evidence of its ac-
ceptance of the trust hereby created, has caused this Supplemental Indenture
to be executed on its behalf by its President or one of its Vice Presidents,
and its corporate seal to be hereto affixed and said seal and this Supplemen-
tal Indenture to be attested by one of its Assistant Vice Presidents, all as
of the day of , One thousand nine hundred and ninety-seven.
Potomac Electric Power Company
(Corporate Seal)
By.........................................
DENNIS R. WRAASE,
Senior Vice President
Attested:
...................................
ELLEN SHERIFF ROGERS,
Secretary
Signed, sealed and delivered by
Potomac Electric Power Company in
the presence of:
...................................
...................................
As Witnesses
The Bank of New York
(Corporate Seal)
By..........................................
Vice President
Attested:
...................................
MARY BETH LEWICKI
Assistant Vice President
Signed, sealed and delivered by The
Bank of New York in the presence
of:
...................................
...................................
As Witnesses
27
<PAGE>
City of Washington,
District of Columbia, ss.:
I, Lisa A. Poole, a Notary Public in and for the District of Columbia, United
States of America, whose commission as such will expire , do hereby
certify that Dennis R. Wraase and Ellen Sheriff Rogers, whose names as Senior
Vice President and Secretary, respectively, of Potomac Electric Power Company,
a corporation, are signed to the foregoing and hereto attached deed, bearing
date as of the day of , personally appeared this day before me in my
District aforesaid and acknowledged themselves to be, respectively, a Senior
Vice President and the Secretary of Potomac Electric Power Company, and that
they as such, being authorized so to do, executed the said deed by signing the
name of Potomac Electric Power Company by Dennis R. Wraase, as Senior Vice
President, and attested by Ellen Sheriff Rogers, as Secretary, and acknowl-
edged the same before me in my District aforesaid and acknowledged the forego-
ing instrument to be the act and deed of Potomac Electric Power Company.
Given under my hand and official seal this day of , 1997.
(Notarial Seal)
............................................
Notary Public
District of Columbia
28
<PAGE>
City of Washington,
District of Columbia, ss.:
I, Lisa A. Poole, a Notary Public in and for the District of Columbia, United
States of America, do hereby certify that Dennis R. Wraase, a Senior Vice
President of Potomac Electric Power Company, a corporation, one of the parties
to the foregoing instrument bearing date as of the day of , and hereto
annexed, this day personally appeared before me in the City of Washington, the
said Dennis R. Wraase being personally well known to me as the person who exe-
cuted the said instrument as a Senior Vice President of and on behalf of said
Potomac Electric Power Company and known to me to be the attorney-in-fact duly
appointed therein to acknowledge and deliver said instrument on behalf of said
corporation, and, as such attorney-in-fact, he acknowledged said instrument to
be the act and deed of said Potomac Electric Power Company, and delivered the
same as such. I further certify that the said Dennis R. Wraase, being by me
duly sworn, did depose and say that he knows the seal of said corporation;
that the seal affixed to said instrument is such corporate seal and was so af-
fixed by order of the Board of Directors of said corporation; and that he
signed his name thereto by like order. My commission expires .
Given under my hand and official seal this day of , 1997.
(Notarial Seal)
............................................
Notary Public
District of Columbia
29
<PAGE>
City of New York,
State of New York,____________ ss.:___________________________________________
I, , a Notary Public in and for the City of New York, State of New York,
do hereby certify that and Mary Beth Lewicki, whose names as Vice Presi-
dent and Assistant Vice President, respectively, of The Bank of New York, a
corporation, are signed to the foregoing and hereto attached deed, bearing
date as of the day of , 1997, personally appeared before me this day in
the State aforesaid and acknowledged themselves to be, respectively, a Vice
President and an Assistant Vice President of The Bank of New York, and that
they as such, being authorized so to do, executed the said deed by signing the
name of The Bank of New York, by as Vice President, and attested by Mary
Beth Lewicki, as Assistant Vice President, and acknowledged the same before me
in the State aforesaid and acknowledged the foregoing instrument to be the act
and deed of The Bank of New York, as therein set forth.
Given under my hand and notarial seal this day of , 1997.
(Notarial Seal)
...............................................
Notary Public
New York, New York
My Commission Expires .
30
<PAGE>
City of New York,_____________ ________________________________________________
State of New York,____________ ss.:___________________________________________
, of full age, being sworn according to law, on his oath deposes and
says that he is a of The Bank of New York, the Trustee named in the
foregoing Supplemental Indenture, dated as of the day of , 1997, that
he is the agent of said Trustee for the purpose of perfecting such Supplemen-
tal Indenture and that the consideration in the Original Indenture referred to
therein and in all indentures supplemental to said Original Indenture, includ-
ing the foregoing Supplemental Indenture, is true and bona fide as therein set
forth.
............................................
Subscribed and sworn to before me
this day of , 1997.
...................................
Notary Public
My Commission Expires .
(Notarial Seal)
31
<PAGE>
City of New York,
State of New York______________ ss.:,
I, , a Notary Public in and for the City of New York, State of New York,
do hereby certify that a Vice President of The Bank of New York, a cor-
poration, one of the parties to the foregoing instrument bearing date as of
the day of , 1997, and hereto annexed, this day personally appeared be-
fore me in the City of New York, the said , being personally well known
to me as the person who executed the said instrument as a Vice President of
and on behalf of said The Bank of New York, and known to me to be the attor-
ney-in-fact duly appointed therein to acknowledge and deliver said instrument
on behalf of said corporation, and, as such attorney-in-fact, he acknowledged
said instrument to be the act and deed of said The Bank of New York, and de-
livered the same as such. I further certify that the said , being by me
duly sworn, did depose and say that he knows the seal of said corporation;
that the seal affixed to said instrument is such corporate seal and was so af-
fixed by order of the Board of Directors of said corporation; and that he
signed his name thereto by like order.
Given under my hand and official seal this day of , 1997.
(Notarial Seal)
...............................................
Notary Public
New York, New York
My Commission Expires .
32
<PAGE>
CERTIFICATE OF RESIDENCE
The Bank of New York, Mortgagee and Trustee within named, hereby certifies
that its precise residence is 101 Barclay Street, New York, NY 10286.
The Bank of New York
By..........................................
MARY BETH LEWICKI,
Assistant Vice President
33
<PAGE>
EXHIBIT 23.1
CONSENT
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectuses
constituting parts of this Registration Statement on Form S-3 of our report
dated January 17, 1997, which appears on page 32 of the 1996 Annual Report to
shareholders of Potomac Electric Power Company, which is incorporated by
reference in Potomac Electric Power Company's Annual Report on Form 10-K for
the year ended December 31, 1996. We also consent to the incorporation by
reference of our report on the Consolidated Financial Statement Schedule,
which appears on page 66 of such Annual Report on Form 10-K. We also consent
to the reference to us under the headings "Experts" in such Prospectuses.
Price Waterhouse LLP
Washington, D.C.
August 13, 1997
POTOMAC ELECTRIC POWER COMPANY
First Mortgage Bonds
UNDERWRITING AGREEMENT
To the Representatives named in
Schedule I hereto of the Underwriters
named in Schedule II hereto
Ladies and Gentlemen:
The undersigned Potomac Electric Power Company (the "Company") hereby
confirms its agreement with the several underwriters named in Schedule II
hereto (the "Underwriters") as set forth below to sell its First Mortgage
Bonds of the designation, with the terms and in the amount, specified in
Schedule I hereto (the "Bonds"). If the firm or firms listed in Schedule I
hereto (the "Representatives") are the same as the firm or firms listed in
Schedule II hereto, then the terms "Underwriters" and "Representatives," as
used herein, shall each be deemed to refer to such firm or firms.
SECTION I. Description of Bonds. The Company has authorized by
appropriate corporate action and proposes to issue and sell the Bonds, to be
issued under and secured by its Mortgage and Deed of Trust dated July 1, 1936
to The Bank of New York, as successor trustee (the "Trustee"), and the
indentures supplemental thereto including the Supplemental Indenture relating
to the Bonds (herein collectively called the "Indenture"). Certain of the
terms and provisions relating to the Bonds and the Indenture are summarized in
the Registration Statement and Prospectus hereinafter referred to.
SECTION 2. Representations and Warranties of the Company. The Company
represents and warrants to each of the Underwriters that:
(a) The Company has filed with the Securities and Exchange
Commission (the "Commission") two registration statements on Form S-3
(No. 33-61379 and No. 33- ), including prospectuses, for the
registration of the Bonds under the Securities Act of 1933, as amended
(the "1933 Act"), and the qualification of the Indenture under the Trust
Indenture Act of 1939 (the "1939 Act"), which registration statements
have been declared effective by the Commission and which Indenture has
been qualified under the 1939 Act. Such registration statements, as
amended to the date of this Agreement, including the documents
incorporated by reference but excluding the Form T-1 Statement of
Eligibility and Qualification of the Trustee, and the prospectus
contained in the registration statement on Form S-3 (No. 33- ) as
supplemented either by a prospectus supplement, dated the date hereof,
relating to the terms and offering of the Bonds to be filed pursuant to
Rule 424 ("Rule 424") of the rules and regulations of the Commission
under the 1933 Act (the "1933 Act Regulations") and/or by a term sheet
or abbreviated term sheet, if any, sent or given in reliance upon Rule
434 of the 1933 Act Regulations and to be filed pursuant to Rule 424
<PAGE>
(including, in each case, the documents incorporated by reference
therein pursuant to Item 12 of Form S-3 under the 1933 Act) are
hereinafter called the "Registration Statement" and the "Prospectus,"
respectively; any reference herein to the terms "amend," or "amendment"
with respect to the Registration Statement or the Prospectus shall be
deemed to include any document incorporated by reference therein after
the date hereof and prior to the termination of the offering of the
Bonds by the Underwriters; provided, however, that any prospectus
supplement, term sheet or abbreviated term sheet filed with the
Commission pursuant to Rule 424 under the 1933 Act with respect to an
offering of first mortgage bonds other than the Bonds shall not be
deemed to be a supplement to, or a part of, the Prospectus. If any
revised prospectus shall be provided to the Underwriters by the Company
for use in connection with the offering of the Bonds (whether or not
such revised prospectus is required to be filed by the Company pursuant
to Rule 424(b) of the 1933 Act Regulations), the term "Prospectus" shall
refer to such revised prospectus from and after the time it is first
provided to the Underwriters for such use.
(b) At the time the Registration Statement became effective, the
Registration Statement, the prospectus included therein and the
Indenture fully complied, and at the Closing Date, as hereinafter
defined, the Registration Statement and the Prospectus, as they may be
amended or supplemented, and the Indenture will fully comply, in all
material respects with the applicable provisions of the 1933 Act, the
1933 Act Regulations, and the 1939 Act; on said dates the Registration
Statement did not, and the Registration Statement, as it may be amended
or supplemented, will 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 not misleading; when the
Registration Statement became effective, the prospectus included therein
did not, and at the Closing Date and on the date it is filed with, or
transmitted for filing to, the Commission pursuant to Rule 424 the
Prospectus, as it may be amended or supplemented, will not, contain an
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that
the foregoing representations and warranties in this subparagraph (b)
shall not apply to statements or omissions made in reliance upon and in
conformity with information furnished herein or in writing to the
Company by the Representatives or by or on behalf of any Underwriter
through the Representatives expressly for use in the Registration
Statement or the Prospectus.
(c) The documents incorporated by reference in the Registration
Statement and the Prospectus pursuant to Item 12 of Form S-3 under the
1933 Act, when they were filed with the Commission, complied in all
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material respects with the applicable requirements of the 1933 Act and
the Securities Exchange Act of 1934, as amended (the "1934 Act"), and
the rules and regulations of the Commission thereunder, and any
documents so filed and incorporated by reference subsequent to the date
hereof will, when they are filed with the Commission, comply in all
material respects with the requirements of the 1934 Act and the rules
and regulations of the Commission thereunder; and none of such documents
included or includes or will include any untrue statement of a material
fact or omitted or omits or will omit to state any 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.
(d) The financial statements incorporated by reference in the
Registration Statement and the Prospectus present fairly the financial
condition and operations of the Company and its consolidated
subsidiaries at the respective dates or for the respective periods to
which they apply; such financial statements have been prepared in each
case in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, except as set
forth therein; and the supporting schedules incorporated by reference in
the Registration Statement and the Prospectus present fairly the
information required to be stated therein and Price Waterhouse LLP
("Price Waterhouse"), who have examined certain of the financial
statements, are independent accountants as required by the 1933 Act, and
the rules and regulations of the Commission.
(e) Except as reflected in, or contemplated by, the Registration
Statement and the Prospectus, since the respective dates as of which
information is given in the Registration Statement and the Prospectus,
and prior to the Closing Date, (i) there has not been any material,
adverse change in the business, property or financial condition of the
Company and its subsidiaries considered as one enterprise and (ii) there
have been no transactions entered into by the Company or any of its
subsidiaries, other than those in the ordinary course of business, which
are material with respect to the Company and its subsidiaries considered
as one enterprise. The Company has no material contingent obligation
which is not disclosed in or contemplated by the Registration Statement
and the Prospectus.
(f) The sale by the Company to the Underwriters, severally, of
the Bonds for the consideration herein specified and upon the terms and
conditions herein contained will not result in a breach of any of the
terms or provisions of or constitute a default under the Company's
Charter or By-Laws, each as amended, or any indenture or other agreement
or instrument which the Company has assumed or to which it is now a
party or any applicable law, administrative regulation or administrative
court decree.
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(g) There are no contracts or documents of the Company or any of
its subsidiaries which are required to be filed as exhibits to the
Registration Statement by the 1933 Act or by the 1933 Act Regulations
which have not been so filed.
SECTION 3. Sale of the Bonds. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company agrees to sell to each of the Underwriters and each
Underwriter agrees, severally and not jointly, to purchase from the Company,
at the purchase price set forth in Schedule I hereto, the respective principal
amounts of Bonds set forth opposite the name of such Underwriter in Schedule
II hereto.
SECTION 4. Time and Place of Closing. Payment for the Bonds shall be
made at the place, date and time specified in Schedule I hereto (or such other
place, date and time as the Representatives and the Company may agree upon),
against delivery of the Bonds, at the office of Bankers Trust Company, 4
Albany Street, New York, N.Y., to the Representatives for the respective
accounts of the several Underwriters. The hour and date of such delivery and
payment are herein called the "Closing Date." Payment for the Bonds shall be
in immediately available funds. Certificates for the Bonds shall be delivered
to the Representatives for the respective accounts of the several Underwriters
in such names and denominations as the Representatives shall specify not later
than the beginning of business on the third full business day before the
Closing Date. For the purpose of expediting the checking of the certificates
by the Representatives, the Company agrees to make the certificates for the
Bonds available to the Representatives not later than 1:00 p.m., New York
Time, on the last full business day prior to the Closing Date at said office
of Bankers Trust Company.
SECTION 5. Covenants of the Company. The Company agrees that:
(a) As soon as possible after the execution and delivery of this
Agreement, the Company will file the Prospectus with the Commission
pursuant to Rule 424 setting forth, among other things, the necessary
information with respect to the terms of offering of the Bonds.
(b) The Company will give the Representatives notice of its
intention to file any amendment to the Registration Statement or any
amendment or supplement to the Prospectus, will furnish the
Representatives and counsel for the Underwriters copies of any such
amendment or supplement a reasonable time in advance of filing, and will
not file any such amendment or supplement to which the Representatives
or counsel for the Underwriters shall reasonably object prior to such
filing.
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(c) The Company will promptly deliver to the Representatives one
fully executed copy of the registration statement as originally filed
with the Commission and of each amendment or supplement thereto,
heretofore or hereafter made, including any post-effective amendment (in
each case including all exhibits filed therewith not previously
furnished to the Representatives) and signed copies of each consent and
certificate included therein or filed as an exhibit thereto. The
Company will also send to the Representatives as soon as practicable
after the date of this Agreement and thereafter from time to time not
later than nine months after the date of this Agreement, as many copies
of the Prospectus (excluding documents incorporated by reference under
Item 12 of Form S-3) as the Representatives may reasonably request for
the purposes contemplated by the 1933 Act, the 1934 Act and the rules
and regulations of the Commission thereunder.
(d) The Company will pay or cause to be paid all expenses in
connection with (i) the preparation and filing by it of the Registration
Statement and Prospectus and the preparation and delivery of this
Agreement, (ii) the preparation, rating, issue and delivery of the Bonds
to be sold by it as provided herein, (iii) the printing and delivery to
the Underwriters in reasonable quantities of copies of the Registration
Statement, each preliminary prospectus and the Prospectus, (iv) all
filing fees and fees and disbursements not to exceed $5,000 of Winthrop,
Stimson, Putnam & Roberts incurred in connection with the qualification
of the Bonds under securities laws and the determination of the legality
of the Bonds in accordance with the provisions of Section 5(i), and (v)
the printing and delivery to the Underwriters of copies of the Blue Sky
Survey; and will pay all taxes, if any (but not including any transfer
taxes), on the issue of said Bonds; provided, however, that the
Underwriters shall pay all of their own costs and expenses, including
the fees and expenses of their counsel (subject however to the
provisions of this subparagraph requiring the payment by the Company of
certain fees and expenses, not to exceed $5,000), any transfer taxes on
the Bonds which they may sell.
(e) If, during the period when delivery of the Prospectus is
required under the 1933 Act, any event relating to or affecting the
Company, or of which the Company shall be advised in writing by the
Representatives, shall occur which, in the Company's opinion, should be
set forth in an amendment to the Prospectus, including an appropriate
filing pursuant to Section 13(a) or (c) or Section 14 of the 1934 Act,
in order to make the Prospectus not misleading in the light of the
circumstances when it is delivered to a purchaser, or if it is necessary
to amend the Prospectus to comply with the 1933 Act, the Company will
forthwith at its expense prepare and file with the Commission (in form
and substance satisfactory to counsel for the Underwriters) and furnish
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to the Representatives a reasonable number of copies of such amendment
or amendments to the Prospectus, including any filing pursuant to
Section 13(a) or (c) or Section 14 of the 1934 Act, which will amend the
Prospectus so that as amended it will comply with the 1933 Act and will
not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the
light of the circumstances when the Prospectus is delivered to a
purchaser, not misleading. In case any of the several Underwriters is
required to deliver a Prospectus after the expiration of nine months
after the date of this Agreement, the Company, upon such Underwriter's
request, will furnish to such Underwriter, at the expense of such
Underwriter, a reasonable quantity of an amended prospectus, or
amendments to the Prospectus, complying with Section 10(a) of the 1933
Act.
(f) The Company will advise the Representatives promptly
(confirming such advice in writing) (i) of the filing of the Prospectus
pursuant to Rule 424 and of any amendment to the Prospectus or
Registration Statement, (ii) of the receipt of any comments from the
Commission, (iii) of any official request made by the Commission for
amendments to the Registration Statement or Prospectus or for additional
information with respect thereto or (iv) of official notice of
institution of proceedings for, or the entry of, a stop order suspending
the effectiveness of the Registration Statement. The Company will make
every reasonable effort to prevent the issuance of any stop order and,
if such a stop order should be entered by the Commission, will make
every reasonable effort to obtain the lifting or removal thereof as soon
as possible.
(g) For a period of five years, the Company will (i) furnish to
the Representatives as soon as practicable after the close of each
fiscal year a consolidated balance sheet of the Company as of the close
of such fiscal year, in reasonable detail, together with consolidated
statements of earnings and of cash flows, in reasonable detail, of the
Company, for such fiscal year, such consolidated balance sheet,
statements of earnings and of cash flows, to be accompanied by an
opinion thereon rendered by independent accountants, who may be the
regular auditors for the Company; (ii) upon request, will furnish to the
Representatives as soon as practicable after the close of each of the
first three quarters of each fiscal year an interim earnings statement
of the Company for the twelve months ended with the close of such
quarter, which need not be audited, similar to that furnished pursuant
to clause (i) of this subparagraph; and (iii) will furnish to the
Representatives copies of all such financial statements as it shall file
with the Commission or any governmental agency substituted therefor, and
from time to time, copies of any reports or other communications which
it shall send to stockholders generally.
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(h) The Company will make generally available to its security
holders, as soon as reasonably practicable, but in any event not later
than 16 months after the end of the fiscal quarter in which the filing
of the Prospectus pursuant to Rule 424 occurs, an earning statement (in
form complying with the provisions of Section 11(a) of the 1933 Act and
the 1933 Act Regulations, which need not be certified by independent
public accountants) covering a period of twelve months beginning not
later than the first day of the Company's fiscal quarter next following
the filing of the Prospectus pursuant to Rule 424.
(i) The Company will use its best efforts to qualify the Bonds
for offer and sale under the applicable securities and legal investment
laws of such jurisdictions as the Representatives may designate, and
will file and make such statements or reports as are or may be
reasonably required by the laws of such jurisdictions; provided,
however, that the Company shall not be required to qualify as a foreign
corporation or dealer in securities, or to file any general consents to
service of process under the laws of any jurisdiction. The fees and
disbursements of Winthrop, Stimson, Putnam & Roberts, who are acting as
counsel for the Underwriters for the purposes of this Agreement, shall
be paid by the Underwriters (subject however to provisions of
subparagraph (d) hereof requiring payment by the Company of counsel fees
and disbursements not to exceed $5,000), provided, however, that if this
Agreement is terminated in accordance with the provisions of Section 6,
7 or 9, the Company shall reimburse the Underwriters for the amount of
such fees and disbursements. The Company shall not be required to pay
any amount for any expenses of the Underwriters except as provided in
this Section 5. The Company shall not in any event be liable to the
Underwriters for damages on account of the loss of anticipated profits.
(j) The Company, during the period when the Prospectus is
required to be delivered under the 1933 Act, will file promptly all
documents required to be filed with the Commission pursuant to Section
13(a) or (c) or Section 14 of the 1934 Act subsequent to the time of
execution of this Agreement.
(k) Between the date hereof and the Closing Date, the Company
will not, without prior written consent of the Representatives, offer or
sell, or enter into any agreement to sell, any additional First Mortgage
Bonds of the Company.
(l) The Company will use the net proceeds received from the sale
of the Bonds in the manner specified in the Prospectus under "Use of
Proceeds".
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SECTION 6. Conditions of Underwriters' Obligations. The several
obligations of the Underwriters to purchase and pay for the Bonds shall be
subject to the accuracy of the representations and warranties on the part of
the Company, to the substantial accuracy of the statements of Company officers
made pursuant to the provisions hereof, to the performance by the Company of
its obligations to be performed hereunder prior to the Closing Date, and to
the following further conditions:
(a) That, at the Closing Date, the Representatives shall receive
the signed opinions of the following counsel, substantially in the
respective forms attached hereto: Winthrop, Stimson, Putnam & Roberts,
counsel for the Underwriters, and Covington & Burling and William T.
Torgerson, Esq., counsel for the Company.
(b) That no amendment to the Registration Statement or
Prospectus, filed subsequent to the execution of this Agreement, shall
be unsatisfactory in substance to the Representatives or unsatisfactory
in form to counsel for the Underwriters.
(c) That, at or prior to 6:00 p.m., New York Time, on the date
hereof or at such later time and date as the Representatives may have
from time to time consented to in writing or by telephone, confirmed in
writing, all orders of the Public Service Commission of the District of
Columbia necessary to permit the issue and sale of the Bonds shall be in
effect; that at or prior to the Closing Date the certificate of such
Public Service Commission permitting the issue of the Bonds shall have
been recorded on the books of the Company; that prior to the Closing
Date no stop order with respect to the effectiveness of the Registration
Statement shall have been issued under the 1933 Act by the Commission
and that at the Closing Date no proceedings therefor shall be pending or
threatened; and that at the Closing Date the Prospectus shall 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, other than any statement contained in, or any
matter omitted from, the Registration Statement or the Prospectus in
reliance upon, and in conformity with, information furnished to the
Company in writing by the Representatives or by or on behalf of any of
the several Underwriters through the Representatives expressly for use
in the Registration Statement or the Prospectus.
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<PAGE>
(d) That, subsequent to the respective dates as of which
information is given in the Registration Statement and Prospectus and
prior to the Closing Date, no material and adverse change in the
condition of the Company and its subsidiaries, taken as a whole,
financial or otherwise, shall have taken place (other than as referred
to in or contemplated by the Registration Statement and Prospectus) and
that the Company shall, at the Closing Date, deliver to the
Representatives, a signed certificate of its President or a Vice
President and its Treasurer or an Assistant Treasurer to the effect that
(i) there has been no material adverse change, (ii) the representations
and warranties in Section 2 are true and correct with the same force and
effect as though expressly made at and as of the Closing Date, (iii) the
Company has complied with all agreements and satisfied all conditions on
its part to be performed or satisfied at or prior to Closing Date, and
(iv) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
initiated or threatened by the Commission.
(e) That at the Closing Date the Representatives shall have
received a letter from Price Waterhouse in form and substance
satisfactory to the Representatives, dated the Closing Date, confirming
that they are independent accountants within the meaning of the 1933
Act, the 1934 Act and published rules and regulations thereunder and to
the effect that (1) in their opinion the audited consolidated financial
statements included in the Company's Annual Report to the Commission on
Form 10-K, incorporated by reference in the Registration Statement (the
"Form 10-K"), comply as to form in all material respects with the
applicable accounting requirements of the 1933 Act, the 1934 Act and the
published rules and regulations of the Commission issued thereunder with
respect to Form 10-K and registration statements on Form S-3, and (2) on
the basis of a reading of the unaudited consolidated financial data
included in the Company's Quarterly Reports to the Commission on Form
10-Q, if any (the "Forms 10-Q"), incorporated by reference in the
Registration Statement, and on the basis of the following procedures
(but not on the basis of an audit in accordance with generally accepted
auditing standards) to be performed by Price Waterhouse: (A) a reading
of the minutes of the Board of Directors of the Company and the
Executive Committee thereof as set forth in the minute books to a
specified date not more than three business days prior to the date of
such letter, (B) a reading of the latest available unaudited interim
consolidated financial data (if any), and (C) inquiries of certain
officials of the Company who have responsibility for financial and
accounting matters, nothing has come to their attention which in their
judgment would indicate that (a) the unaudited consolidated financial
data included in the Forms 10-Q (if any) do not comply as to form in all
material respects with the applicable accounting requirements of the
1934 Act and the published rules and regulations of the Commission
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thereunder, or that any material modifications should be made to such
unaudited consolidated financial data for such unaudited consolidated
financial data to be in conformity with generally accepted accounting
principles; (b) the unaudited amounts of operating revenue, net income,
earnings applicable for common stock and earnings per share of common
stock and unaudited amounts for property and plant -- net, long-term
debt, preferred and preference stock and common equity outstanding, as
included in the Registration Statement, were not determined on a basis
substantially consistent with that of the corresponding amounts in the
audited consolidated statements of earnings and consolidated balance
sheets incorporated by reference in the Registration Statement; (c) the
ratios of earnings to fixed charges, actual and (if any) pro forma, as
set forth in the Registration Statement were not arithmetically correct;
(d) at the date of the latest available unaudited interim financial data
there was any change in the common stock outstanding or long-term debt
of the Company or any decrease in the common equity of the Company
(before giving effect to dividends declared on common stock) as compared
with amounts shown in the most recent consolidated balance sheet
incorporated by reference in the Registration Statement; or for the
period from the date of such consolidated balance sheet to the date of
the latest available unaudited interim consolidated financial data there
were any decreases, as compared with the corresponding period in the
preceding year, in operating revenue or in net income or earnings per
share; or (e) at a specified date not more than three business days
prior to the date of such letter there was any change in the common
stock outstanding or long-term debt of the Company, in each case as
compared with amounts shown in the most recent consolidated balance
sheet incorporated by reference in the Registration Statement; except in
all instances for (i) changes or decreases which the Registration
Statement discloses have occurred or may occur or (ii) changes or
decreases not in excess of $500,000 of (iii) changes occasioned by the
issuance of common stock pursuant to the Company's Shareholder Dividend
Reinvestment Plan, Savings Plan for Exempt Employees, Savings Plan for
Bargaining Unit Employees and Savings Plan for Non-Bargaining Unit, Non-
Exempt Employees, or Long-Term Incentive Plan or upon the conversion of
the Company's Serial Preferred Stock, $2.44 Convertible Series of 1966,
or the 7% Convertible Debentures and the 5% Convertible Debentures. The
letter of Price Waterhouse also shall be to the effect that they have
carried out certain specified procedures, not constituting an audit,
with respect to certain amounts, percentages and financial information
which are derived from the general accounting records of the Company,
which appear in the Registration Statement and Prospectus and which are
specified by the Representatives, and have compared such amounts,
percentages and financial information with the accounting records of the
Company and have found them to be in agreement.
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(f) That the Company shall have performed such of its obligations
under this Agreement as are to be performed by the terms hereof at or
before the Closing Date.
(g) At the Closing Date counsel for the Underwriters shall have
been furnished with such certificates, documents and opinions as they
may reasonably require for the purpose of enabling them to pass upon
the issuance and sale of the Bonds as herein contemplated and related
proceedings, or in order to evidence the accuracy of any of the
representations and warranties, or the fulfillment of any of the
conditions herein contained; and all proceedings taken by the Company in
connection with the issuance and sale of the Bonds as herein
contemplated shall be satisfactory in form and substance to the
Representatives and counsel for the Underwriters.
If any condition specified in this Section shall not have been fulfilled
when and as required to be fulfilled, this Agreement may be terminated by the
Representatives by notice to the Company at any time at or prior to the
Closing Date and such termination shall be without liability of any party to
any other party except as provided in Section 5 and Section 8.
SECTION 7. Conditions of Company's Obligations. The obligations of the
Company with respect to the issue, sale and delivery of the Bonds shall be
subject to the following conditions:
(a) That, at or before 6:00 p.m., New York Time, on the date
hereof, or such later time and day as the Company may have from time to
time consented to in writing or by telegram, confirmed in writing, all
orders of the Public Service Commission of the District of Columbia
necessary to permit the issue, sale and delivery of the Bonds shall be
in effect; and that, prior to the Closing Date, no stop order with
respect to the effectiveness of the Registration Statement shall have
been issued under the 1933 Act by the Commission and that at the Closing
Date no proceedings therefor shall be pending or threatened.
(b) That no order of the Public Service Commission of the
District of Columbia relating to the issue or sale of the Bonds or to
the application of the proceeds thereof, which may be entered after the
execution of this Agreement and prior to the Closing Date, shall contain
any conditions which are not acceptable to the Company.
In case any of the conditions specified above in this Section shall not
have been fulfilled, this Agreement may be terminated by the Company, upon
notice thereof to the Representatives, at any time prior to Closing Date, and
such termination shall be without liability of any party to any other party
except as provided in Section 5 and Section 8.
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SECTION 8. Indemnification. (a) The Company agrees to indemnify and
hold harmless the several Underwriters and each person who controls any of the
several Underwriters within the meaning of Section 15 of the 1933 Act against
any and all losses, claims, damages or liabilities, as incurred, joint or
several, to which they or any of them may become subject under the 1933 Act or
under any other statute or common law, and to reimburse each such Underwriter
and each such controlling person for any legal or other expenses (including,
to the extent hereinafter provided, reasonable counsel fees) incurred by them
in connection with investigating any such losses, claims, damages or
liabilities or in connection with defending or settling (if settled with the
written consent of the Company) any actions, insofar as such losses, claims,
damages, liabilities, expenses or actions arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in
the registration statement as originally filed or as subsequently amended or
in the Registration Statement or any amendment thereto, or the omission or
alleged omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading, or arising out of any
untrue statement or alleged untrue statement of a material fact contained in
the preliminary prospectus or the prospectus as originally filed or as
subsequently amended or the Prospectus, as amended or supplemented if there
shall have been any amendment or supplement thereto, or the omission or
alleged omission therefrom of 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 the indemnity agreement contained in
this Section shall not apply to any such losses, claims, damages, liabilities,
expenses or actions arising out of, or based upon any such untrue statement or
alleged untrue statement, or any such omission or alleged omission, if such
statement or omission was made in reliance upon and in conformity with
information furnished herein or in writing to the Company by the
Representatives or by or on behalf of any of the several Underwriters through
the Representatives expressly for use in the registration statement as
originally filed or as subsequently amended or in the preliminary prospectus
as originally filed or as subsequently amended or in the Registration
Statement or the Prospectus or any amendment or supplement to either thereof;
and provided, further, that the indemnity agreement contained in this Section
shall not inure to the benefit of any Underwriter (or of any person
controlling such Underwriter) on account of any such losses, claims, damages,
liabilities, expenses or actions arising from the sale of Bonds to any person
if such Underwriter failed to send or give a copy of the Prospectus (as it may
have been amended) (excluding documents incorporated by reference) to such
person with or prior to the written confirmation of the sale involved. The
indemnity agreement of the Company contained in this Section and the
representations and warranties of the Company contained in Section 2 hereof
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any Underwriter, or any such controlling
person, and shall survive the delivery of the Bonds. The Underwriters agree
to notify the Company promptly of the commencement of any litigation or
proceedings against them or any of them or against any such controlling person
in connection with the sale of Bonds.
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(b) Each Underwriter agrees to indemnify and hold harmless the Company,
its officers and directors, and each person who controls any thereof within
the meaning of Section 15 of the 1933 Act against any and all losses, claims,
damages or liabilities, as incurred, joint or several, to which they or any of
them may become subject under the 1933 Act or under any other statute or
common law, and to reimburse each of them for any legal or other expenses
(including, to the extent hereinafter provided, reasonable counsel fees)
incurred by them in connection with investigating any such losses, claims,
damages or liabilities, or in connection with defending or settling (if
settled with the Underwriters' written consent) any actions, insofar as such
losses, claims, damages, liabilities, expenses or actions arise out of or are
based upon any untrue statement or alleged untrue statement of a material fact
contained in the registration statement as originally filed or as subsequently
amended or in the Registration Statement or any amendment thereto, or the
omission or alleged omission therefrom of a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
arising out of any untrue statement or alleged untrue statement of a material
fact contained in the preliminary prospectus or the prospectus as originally
filed or as subsequently amended or the Prospectus, as amended or supplemented
if there shall have been any amendment or supplement thereto, or the omission
or alleged omission therefrom of a material fact necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading, if such statement or omission was made in reliance upon
and in conformity with information furnished herein or in writing to the
Company by the Representatives or by or on behalf of the several Underwriters
through the Representatives expressly for use in the registration statement as
originally filed or as subsequently amended or in the preliminary prospectus
as originally filed or as subsequently amended or in the Registration
Statement or the Prospectus or any amendment or supplement to either thereof.
The indemnity agreement contained in this Section shall remain operative and
in full force and effect regardless of any investigation made by or on behalf
of the Company, or any such controlling person, and shall survive the receipt
of the proceeds of the sale of the Bonds. The Company agrees promptly to
notify the Representatives of the commencement of any litigation or
proceedings against the Company or any of its officers or directors in
connection with the sale of Bonds. The foregoing indemnity agreement is in
addition to any further liability which any Underwriter may otherwise have to
the Company or any of its directors, officers or controlling persons.
(c) The Company and each of the several Underwriters agree that, upon
the receipt of notice of the commencement of any action against it, its
officers and directors, or any person controlling it as aforesaid in respect
of which indemnity may be sought on account of any indemnity agreement
contained herein, it will promptly give written notice of the commencement
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thereof to the party or parties against whom indemnity shall be sought
hereunder. The omission so to notify such indemnifying party or parties of
any such action shall relieve such indemnifying party or parties from any
liability which it or they may have to the indemnified party on account of any
indemnity agreement contained in (a) or (b) above, but shall not relieve such
indemnifying party or parties from any liability which it or they may have to
the indemnified party otherwise than on account of such indemnity agreement.
In case such notice of any such action shall be so given, such indemnifying
party shall be entitled to participate at its own expense in the defense or,
if it so elects, to assume (in conjunction with any other indemnifying
parties) the defense of such action, in which event such defense shall be
conducted by counsel chosen by such indemnifying party or parties and
reasonably satisfactory to the indemnified party or parties who shall be
defendant or defendants in such action, and such defendant or defendants shall
bear the fees and expenses of any additional counsel retained by them; but if
the indemnifying party shall elect not to assume the defense of such action,
such indemnifying party will reimburse such indemnified party or parties for
the reasonable fees and expenses of any counsel retained by them. In the
event that the parties to any such action (including impleaded parties)
include both the indemnified party or parties and the indemnifying party and
any of the indemnified parties shall have been advised by counsel chosen by it
and reasonably satisfactory to the Company that there may be one or more legal
defenses available to it which are different from or additional to those
available to the indemnifying party, the indemnifying party shall not have the
right to assume the defense of such action on behalf of the indemnified party
or parties and will reimburse the indemnified party or parties as aforesaid
for the reasonable fees and expenses of any counsel retained by such
indemnified party or parties, it being understood that the indemnifying party
shall not, in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses
of more than one separate firm of attorneys for all such indemnified parties,
which firm shall, in connection with indemnification provided for in (a)
above, be designated in writing by the Representatives, and, in connection
with indemnification provided for in (b) above, be designated in writing by
the Company.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in this Section 8
is for any reason held to be unenforceable by the indemnified parties although
applicable in accordance with its terms, then each indemnifying party, in lieu
of indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, liabilities,
claims, damages and expenses of the nature contemplated in said indemnity
agreement in such proportion as is equitable and as shall reflect both the
relative benefits received by the Company on the one hand and the Underwriter
or Underwriters, as the case may be, on the other hand from the offering of
the Bonds, and the relative fault, if any, of the Company on the one hand and
of the Underwriter or Underwriters, as the case may be, on the other hand in
- 14 -
<PAGE>
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 benefits received by the Company 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 Bonds shall be deemed to be
in the same proportion as the total net proceeds from the offering of such
Bonds (before deducting expenses) received by the Company bear to the total
commissions and underwriting discounts received by the Underwriter or
Underwriters, as the case may be. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company on the one hand
or the Underwriter or the Underwriters on the other hand and the parties'
relative intent, knowledge, access to information and opportunity to correct
or prevent such statement or omission. The Company and the Underwriters agree
that it would not be just and equitable if contribution pursuant to this
Subsection (d) were determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable
considerations referred to above. The amount paid or payable by an
indemnified party as a result of the losses, liabilities, claims, damages and
expenses referred to above shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933
Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. For purposes of this Section, each person,
if any, who controls an Underwriter within the meaning of Section 15 of the
1933 Act shall have the same rights to contribution as such Underwriter, and
each director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act shall have the same rights to
contribution as the Company.
SECTION 9. Termination. This Agreement may be terminated any time
prior to the Closing Date by the Representatives by giving notice thereof to
the Company, if at or prior to such time (i) there shall have occurred any
general suspension of trading in securities on the New York Stock Exchange or
there shall have been established by the New York Stock Exchange or by the
Commission or by any federal or state agency or by the decision of any court
any limitation on prices for such trading, or (ii) if a banking moratorium has
been declared by any Federal, New York, District of Columbia or Virginia
authority, or (iii) there shall have occurred any new outbreak or escalation
of hostilities or other national or international calamity or crisis, the
effect of which on the financial markets of the United States shall be such as
to make it impracticable for the Underwriters to enforce contracts for the
sale of the Bonds, or (iv) the Company shall have sustained a substantial loss
by fire, flood, accident or other calamity which renders it impracticable to
- 15 -
<PAGE>
consummate the sale of the Bonds and the delivery of the Bonds by the several
Underwriters at the initial public offering price. Any termination hereof
pursuant to this Section 9 shall be without liability of any party to any
other party except as otherwise provided in Section 5 and Section 8.
SECTION 10. Default. If one or more of the Underwriters shall fail on
the Closing Date to purchase the Bonds which it or they are obligated to
purchase hereunder (the "Defaulted Bonds"), then the remaining Underwriters
(the "Non-Defaulting Underwriters") shall have the right, within 24 hours
after such date, to make arrangements for one or more of the Non-Defaulting
Underwriters, or any other underwriters, to purchase all, but not less than
all, of the Defaulted Bonds in such amounts as may be agreed upon and upon the
terms herein set forth. If, however, during such 24 hours such arrangements
shall not have been completed for the purchase of all of the Defaulted Bonds,
then:
(a) If the principal amount of the Defaulted Bonds does not
exceed 10% of the principal amount of the Bonds, the Non-Defaulting
Underwriters shall be obligated to purchase the total number of such
Defaulted Bonds in the proportions that their respective underwriting
obligations hereunder bear to the underwriting obligations of all Non-
Defaulting Underwriters.
(b) If the principal amount of the Defaulted Bonds exceeds 10% of
the principal amount of the Bonds, this Agreement shall terminate
without any liability on the part of the Company or any Non-Defaulting
Underwriter.
Nothing in this Section 10 and no action taken pursuant to this Section
10 shall relieve any defaulting party from liability in respect of its
default.
In the event of a default by one or more Underwriters as set forth in
this Section 10 which does not result in a termination of this Agreement,
either the Non-Defaulting Underwriters or the Company shall have the right to
postpone the Closing Date for a period of not exceeding 7 days in order that
any required changes in the Registration Statement or the Prospectus or in any
other documents or arrangements may be effected.
SECTION 11. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement, or contained in certificates of officers of the Company submitted
pursuant hereto, shall remain operative and in full force and effect,
regardless of any investigation made by or on behalf of any Underwriter or
controlling person, or by or on behalf of the Company, and shall survive
delivery of the Bonds to the Underwriters.
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<PAGE>
SECTION 12. Miscellaneous. This Agreement shall inure to the benefit
of the several Underwriters and the Company and with respect to the provisions
of Section 8, the officers and directors and each controlling person referred
to in Section 8, and their respective successors. Nothing in this Agreement
is intended or shall be construed to give to any other person, firm or
corporation, other than the Underwriters and the Company and their respective
successors and the controlling persons and officers and directors referred to
in Section 8 and their heirs and legal representatives, any legal or equitable
right, remedy or claim under or in respect of this Agreement or any provision
herein contained. The term "successors" as used in this Agreement shall not
include any purchaser, as such purchaser, of any Bonds from the Underwriters.
In all dealings hereunder, the Representatives shall act on behalf 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 the Representatives (or by any one of the Representatives
authorized by the agreement among the Underwriters relating to the Bonds to
act on behalf of all the Underwriters).
SECTION 13. Notices. All communications hereunder shall be in writing
and shall be deemed to have been duly given if mailed or transmitted by any
standard form of telecommunication. Notices to the Underwriters shall be
directed to the Representatives at the address set forth in Schedule I hereto,
and notices to the Company shall be directed to it at 1900 Pennsylvania
Avenue, N. W., Washington, D. C. 20068, Attention of Ellen Sheriff Rogers,
Associate General Counsel, Secretary and Assistant Treasurer.
SECTION 14. Governing Law. This Agreement shall be governed by the
laws of the State of New York.
- 17 -
<PAGE>
SECTION 15. Counterparts. This Agreement may be simultaneously
executed in counterparts, each of which when so executed shall be deemed to be
an original. Such counterparts shall together constitute one and the same
instrument.
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to the Company the enclosed duplicate
hereof, whereupon it will become a binding agreement between the Company and
the several Underwriters in accordance with its terms.
Very truly yours,
POTOMAC ELECTRIC POWER COMPANY
By
The foregoing Underwriting Agreement is hereby confirmed and accepted as
of the date first above written.
By____________________________
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<PAGE>
SCHEDULE I
Underwriting Agreement dated
Registration Statements No. 33-61379 and No. 33-
Representative and Address:
Bonds:
Designation: First Mortgage Bonds, % Series
due
Principal Amount: $
Supplemental Indenture dated as of
Date of Maturity:
Interest Rate: % per annum, payable
_________ and __________ of
each year, commencing
_________
Purchase Price: % of the principal
amount thereof, plus accrued
interest, if any, from
________________ to the date
of payment and delivery
Public Offering Price: % of the principal amount thereof, plus
accrued interest, if any, from the ____________
to the date of payment and delivery
Closing Date and Location:
- 19 -
<PAGE>
SCHEDULE II
Principal
Amount
Name of Underwriter of Bonds
$
Total $
- 20 -
<PAGE>
[LETTERHEAD OF WINTHROP, STIMSON, PUTNAM & ROBERTS]
Ladies and Gentlemen:
We have acted as counsel for you in connection with your several
purchases from Potomac Electric Power Company (the "Company") of $
aggregate principal amount of its First Mortgage Bonds, %
Series due (the "Bonds") pursuant to the Underwriting Agreement,
dated , 19 , between you and the Company (the
"Underwriting Agreement"). The Bonds have been issued under the
Mortgage and Deed of Trust, dated July 1, 1936, between the Company
and The Bank of New York, as successor trustee (the "Trustee"), as
heretofore supplemented and amended, including a Supplemental
Indenture dated as of , 19 (said Mortgage and Deed of Trust as
so supplemented and amended being hereinafter referred to collectively
as the "Indenture").
We are members of the New York Bar and do not hold ourselves out
as experts on the laws of the District of Columbia, the State of
Maryland or the Commonwealths of Pennsylvania or Virginia. We
understand that you are relying and, in rendering this opinion, we
have, with your consent, relied upon the opinion of even date herewith
addressed to you by William T. Torgerson, Esq., Senior Vice President
and General Counsel of the Company, with respect to legal matters
regarding the corporate authority of the Company and other matters
covered in such opinion relating to the laws of the District of
Columbia, the State of Maryland and the Commonwealths of Pennsylvania
and Virginia. We do not pass upon the organization of the Company or
the lien of the Indenture. As to such matters, it is our
understanding that you are relying on the above-mentioned opinion. We
have reviewed such opinion and believe it is satisfactory and that you
and we are justified in relying thereon.
We have examined the documents described in the list of closing
papers as having been delivered to you at the closing and such other
documents and have satisfied ourselves as to such other matters as we
have deemed necessary in order to enable us to express this opinion.
We have not examined the Bonds, except for a specimen thereof, and we
have relied upon a certificate of the Trustee as to the authentication
and delivery thereof. As to various questions of fact material to
this opinion, we have relied upon representations of the Company and
statements in the Registration Statements and the Prospectus
hereinafter mentioned. In such examination, we have assumed the
genuineness of all signatures, the authenticity of all documents
submitted to us and the genuineness and conformity to original
documents of documents submitted to us as certified or photostatic
<PAGE>
copies. As used herein, the term "Registration Statements" means the
Company's registration statement on Form S-3 (No. 33-61379) (the
"First Registration Statement") and the Company's registration
statement on Form S-3 (No. 33- ) (the "Second Registration
Statement") and the term "Prospectus" has the same meaning as the same
word in the Underwriting Agreement.
Based on the foregoing, we are of the opinion that:
1. The Bonds have been duly and validly authorized by all
necessary corporate action of the Company, have been duly and validly
issued in accordance with the provisions of the Indenture, and
constitute legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms, except
as may be limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization or other laws affecting the enforcement of mortgagees'
and other creditors' rights and by general principles of equity, and
the Bonds are entitled to the benefits and security afforded by the
Indenture.
2. The Underwriting Agreement has been duly authorized,
executed and delivered by the Company.
3. The Indenture has been qualified under the Trust
Indenture Act of 1939, as amended (the "1939 Act"), has been duly and
validly authorized, executed and delivered by the Company and is a
legal, valid and binding instrument, enforceable against the Company
in accordance with its terms, except as limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization or other laws
affecting the enforcement of mortgagees' and other creditors' rights
and by general principles of equity.
4. The Registration Statements are effective under the
Securities Act of 1933, as amended (the "1933 Act"), and to the best
of our knowledge, no stop order suspending the effectiveness of either
of the Registration Statements has been issued and no proceedings for
that purpose are pending or threatened under Section 8(d) of the 1933
Act; each of the Registration Statements, at the time it became
effective, and the Prospectus, at the time it was filed with the
Securities and Exchange Commission (the "Commission") pursuant to Rule
424(b) under the 1933 Act (except as to the financial statements and
other financial or statistical data constituting a part thereof or
incorporated by reference therein, or as to the parts of the
Registration Statements that constitute the statements of eligibility
of the Trustee, upon which we express no opinion), complied as to form
in all material respects with the applicable requirements of the 1933
Act and the 1939 Act and the applicable instructions, rules and
regulations of the Commission thereunder. The documents or portions
thereof filed with the Commission pursuant to the Securities Exchange
Act of 1934, as amended (the "1934 Act"), and incorporated by
reference in the Registration Statement and the Prospectus pursuant
to Item 12 of Form S-3 (except as to the financial statements and
other financial or statistical data constituting a part thereof or
<PAGE>
incorporated by reference therein, upon which we express no opinion),
at the time they were filed with the Commission, complied as to form
in all material respects with the applicable requirements of the 1934
Act and the applicable instructions, rules and regulations of the
Commission thereunder.
5. The summary of the terms of the Indenture and the Bonds
contained in the Registration Statements and the Prospectus fairly
describes the provisions thereof required to be described by the
registration statement form, except that we express no opinion as to
the statements contained under "Description of Bonds and Mortgage -
Security."
6. The approval of the Public Service Commission of the
District of Columbia that is required for the valid authorization,
issuance and sale of the Bonds by the Company in accordance with the
Underwriting Agreement has been obtained; to the best of our
knowledge, such approval is in full force and effect; no approval by
the State Corporation Commission of the Commonwealth of Virginia is
necessary for the valid authorization, issuance and sale of the Bonds
by the Company in accordance with the Underwriting Agreement; and we
do not know of any other approvals of any governmental body required
in that connection (other than in connection or in compliance with the
provisions of the securities or blue-sky laws of any jurisdiction,
upon which we express no opinion).
All legal proceedings and legal opinions rendered in connection
with the issuance and sale of the Bonds, including the opinion of
William T. Torgerson, Esq. of even date herewith, are satisfactory in
form to us.
In passing upon the forms of the Registration Statements and the
form of the Prospectus, we necessarily assume the correctness and
completeness of the statements made and information included therein
by the Company and take no responsibility therefor, except insofar as
such statements relate to us and as set forth in paragraph 5 above.
In connection with the Company's preparation of the Registration
Statements and the Prospectus, we have had conferences with certain of
its officers and representatives, with counsel for the Company, with
Price Waterhouse LLP, the Company's independent public accountants,
and with your representatives. We did not participate in the
preparation of the documents incorporated by reference in the
Registration Statements and the Prospectus. Our examination of the
Registration Statements and the Prospectus, and our discussions in the
above-mentioned conferences, did not disclose to us any information
that gives us reason to believe that either the First Registration
Statement, at the time the Company filed its Annual Report on Form 10-
K for the year ended December 31, 1996, or the Second Registration
Statement, at the time the Second Registration Statement became
effective, contained an untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or that the Prospectus, at
the time it was filed with the Commission pursuant to Rule 424(b)
<PAGE>
under the 1933 Act or at the date hereof, contained or contains any
untrue statement of a material fact or omitted or omits to state a
material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading. We do not express any opinion or belief as to the
financial statements or other financial or statistical data
constituting a part of, or incorporated by reference in, the
Registration Statements or the Prospectus, or as to the parts of the
Registration Statements that constitute the statement of eligibility
of the Trustee.
This opinion is given to you solely for your use in connection
with the Underwriting Agreement and the transactions contemplated
thereunder and may not be relied upon in any manner by any other
person or for any other purpose, without our prior written consent.
Very truly yours,
<PAGE>
[LETTERHEAD OF COVINGTON & BURLING]
Ladies and Gentlemen:
We have acted as special counsel to Potomac Electric Power
Company (the "Company") in connection with the issuance and sale by
the Company of $_______ principal amount of First Mortgage Bonds,
% Series due ____ (the "Bonds"), which are being issued under the
Mortgage and Deed of Trust dated July 1, 1936 between the Company and
The Bank of New York, as successor trustee (the "Trustee"), as
heretofore supplemented and amended, and as now further supplemented
by a Supplemental Indenture dated as of , 19 (the
"Supplemental Indenture"; said Mortgage and Deed of Trust as so
further supplemented and amended being hereinafter referred to as the
"Indenture"), and which are being purchased by the Underwriters named
in the Underwriting Agreement dated ____________, 19__ between the
Underwriters and the Company with respect to the Bonds (the
"Underwriting Agreement"). As used herein, the term "Registration
Statements" means the registration statements of the Company on Form
S-3, with file numbers 33-61379 and 33- . All other terms used
herein which are not defined herein but which are defined, either
directly or by cross-reference, in the Underwriting Agreement are used
herein with the respective meanings assigned to such terms therein.
As counsel for the Company, we have examined originals (or copies
certified or otherwise identified to our satisfaction) of such
instruments, certificates and documents and have reviewed such
questions of law as we have deemed necessary or appropriate for the
purpose of the opinion rendered below. In such examination, we have
assumed the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, the conformity to the original
documents of all documents submitted to us as copies and the
conformity of the Bonds to the specimen thereof attached as Exhibit A
to the certificate of the Trustee of even date herewith regarding the
due authentication and delivery of the Bonds. As to any facts
material to our opinion we have, when relevant facts were not
independently established, relied upon the aforesaid certificates.
Based on the foregoing, and subject to the following limitations
and qualifications, we are of the opinion that:
<PAGE>
1. The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
District of Columbia and under the laws of the Commonwealth of
Virginia, and has the corporate power and authority to execute the
Underwriting Agreement and the Indenture and to issue and sell the
Bonds.
2. The Underwriting Agreement has been duly authorized,
executed and delivered by the Company.
3. The Supplemental Indenture has been duly and validly
authorized by all necessary corporate action of the Company, has been
duly and validly executed and delivered by the Company, and, as
amended by the Supplemental Indenture, the Indenture constitutes a
valid and legally binding instrument of the Company enforceable
against the Company in accordance with its terms, except as limited by
bankruptcy, insolvency, reorganization or other laws affecting the
enforcement of creditors' rights or by general principles of equity;
the Indenture has been qualified under the Trust Indenture Act of
1939, as amended (the "1939 Act").
4. The Bonds have been duly and validly authorized by all
necessary corporate action of the Company, have been duly and validly
issued in accordance with the provisions of the Indenture, and
constitute the valid and legally binding obligations of the Company
enforceable against the Company in accordance with their terms, except
as limited by bankruptcy, insolvency, reorganization or other laws
affecting enforcement of creditors' rights or by general principles of
equity, and are entitled to the benefit and security afforded by the
Indenture.
5. The Registration Statements are effective under the
Securities Act of 1933, as amended (the "1933 Act"), and to the best
of our knowledge no stop order suspending the effectiveness of either
of the Registration Statements has been issued and no proceedings for
that purpose are pending or threatened under Section 8(d) of the 1933
Act. Each of the Registration Statements, at the time it became
effective, and the Prospectus, at the time it was filed with the
Securities and Exchange Commission (the "Commission") pursuant to Rule
424(b) under the 1933 Act (except for the financial statements and
other financial and statistical data constituting a part thereof, as
to which we express no opinion), complied as to form in all material
respects with the applicable requirements of the 1933 Act and the 1939
Act, and the applicable rules and regulations of the Commission
thereunder, except that we express no opinion on the Forms T-1 filed
as exhibits to the Registration Statements. The documents or portions
thereof filed with the Commission pursuant to the Securities Exchange
Act of 1934, as amended (the "1934 Act"), and incorporated by
reference in the Registration Statements and the Prospectus, at the
- 2 -
<PAGE>
times they were filed with the Commission, complied as to form in all
material respects with the 1934 Act, and the rules and regulations of
the Commission thereunder.
6. The approval of the Public Service Commission of the
District of Columbia which is required for the valid authorization,
issuance and sale of the Bonds by the Company in accordance with the
Underwriting Agreement has been obtained; to the best of our
knowledge, such approval is in full force and effect; no approval by
the State Corporation Commission of the Commonwealth of Virginia is
necessary for the valid authorization, issuance and sale of the Bonds
by the Company in accordance with the Underwriting Agreement; and we
do not know of any other approvals, consents or orders of any
governmental body that are legally required as a condition to the
valid authorization and issuance of the Bonds (other than in
connection or in compliance with the provisions of the securities or
"blue sky" laws of any jurisdiction, as to which we express no
opinion).
7. The summary of the terms of the Indenture and the Bonds
contained in the Registration Statements and the Prospectus fairly
describes the provisions thereof required to be described by the
registration statement form.
8. The Indenture constitutes a valid first lien or charge,
to the extent that it purports to be such, upon the interest held by
the Company in its property covered by the Indenture, subject only to
such exceptions, defects, qualifications and other matters as may be
permitted by the Indenture and to such other matters as do not
materially affect the security for the Bonds; and the Supplemental
Indenture has been recorded or filed for recording in the only
counties in which any real property subject to the lien of the
Indenture is located, and all requisite steps have been taken to
perfect the security interest of the Indenture in personal property of
the Company.
With respect to the opinion set forth in paragraph 8, we have
relied on the opinion to you of William T. Torgerson, Esq., General
Counsel of the Company, dated the date hereof.
In passing upon the forms of the Registration Statements and the
form of the Prospectus, we necessarily assume the correctness and
completeness of the statements made and information included therein
by the Company and take no responsibility therefor, except insofar as
such statements relate to us and as set forth in paragraph 7 above.
In connection with the Company's preparation of the Registration
Statements and the Prospectus, we had discussions with certain of its
officers and representatives. Our examination of the Registration
- 3 -
<PAGE>
Statements and the Prospectus and our discussions did not disclose to
us any information which gives us reason to believe that, at the time
the respective Registration Statements became effective, they
contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus, at the time
it was filed with the Commission pursuant to Rule 424(b) or at the
date hereof, contained or contains any untrue statement of a material
fact or omitted or omits 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.
We do not express any opinion or belief as to the financial statements
and other financial and statistical data constituting a part of the
Registration Statements or the Prospectus.
Very truly yours,
Covington & Burling
- 4 -
<PAGE>
[LETTERHEAD OF POTOMAC ELECTRIC POWER COMPANY]
Ladies and Gentlemen:
This opinion is being delivered to you in connection with the
issuance and sale by Potomac Electric Power Company (the "Company") of
$ aggregate principal amount of its First Mortgage Bonds,
% Series due (the "Bonds"), which are being issued under the
Mortgage and Deed of Trust dated July 1, 1936 between the Company and
The Bank of New York, as successor trustee (the "Trustee"), as
heretofore supplemented and amended, and as now further supplemented
by a Supplemental Indenture dated as of , 19 (said
Supplemental Indenture being hereinafter referred to as the
"Supplemental Indenture" and said Mortgage and Deed of Trust as so
further supplemented and amended being hereinafter referred to as the
"Indenture") and which are being purchased by you pursuant to the
Underwriting Agreement dated , 19 between you and the Company
with respect to the Bonds (the "Underwriting Agreement"). As used
herein, the term "Registration Statements" means the registration
statements of the Company on Form S-3 filed with the Securities and
Exchange Commission, with file numbers 33-61379 and 33- . Terms
used in this opinion letter which are not defined herein but which are
defined, either directly or by cross-reference, in the Underwriting
Agreement are used herein with the respective meanings assigned to
such terms therein.
As counsel for the Company, I have examined such corporate
records, certificates and other documents and such questions of law as
I have considered necessary or appropriate for the purpose of this
opinion. I have not examined the Bonds, except for the specimen
thereof attached as Exhibit A to the certificate of the Trustee of
even date herewith as to due authentication and delivery of the Bonds,
have assumed that the Bonds conform in all respects to such specimen,
and have relied on such certificate as to the due authentication and
delivery of the Bonds. On the basis of my examinations as aforesaid,
I advise you that, in my opinion:
(1) The Company has been duly incorporated and is now
validly existing as a corporation in good standing under the laws of
the District of Columbia; is also now validly existing and in good
standing as a domestic corporation of the Commonwealth of Virginia;
has charter power to carry on the business in which it is now engaged
as set forth in the Prospectus; is legally qualified to carry on in
the State of Maryland the business in which it is now engaged in said
State; and is legally qualified to carry on business within the
<PAGE>
Commonwealth of Pennsylvania, limited, however, to its participation
in the construction, ownership and operation of the Conemaugh
generating station and certain related transmission lines.
(2) The Underwriting Agreement has been duly authorized,
executed and delivered by the Company.
(3) The Indenture has been duly and validly authorized,
executed and delivered by the Company and is a valid and legally
binding instrument of the Company enforceable against the Company in
accordance with its terms, except as the same may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, or
other laws of general application relating to the enforcement of
creditors' rights.
(4) The Bonds have been duly and validly authorized by all
necessary corporate action of the Company, have been duly and validly
issued in accordance with the provisions of the Indenture, and
constitute the valid and legally binding obligations of the Company
enforceable against the Company in accordance with their terms, except
as the same may be limited as set forth in paragraph (3) above, and
are entitled to the benefit and security afforded by the Indenture.
(5) The Registration Statements are effective under the
Securities Act of 1933, as amended (the "1933 Act"); no stop order
suspending the effectiveness of either Registration Statement has been
issued and to the best of my knowledge no proceedings for that purpose
are pending or threatened under Section 8(d) of the 1933 Act; the
approval of the Public Service Commission of the District of Columbia
which is required for the valid authorization, issuance and sale of
the Bonds by the Company in accordance with the Underwriting Agreement
has been obtained and is in full force and effect; no approval by the
State Corporation Commission of Virginia is necessary for the valid
authorization, issuance and sale of the Bonds by the Company in
accordance with the Underwriting Agreement; and I do not know of any
other approvals of any governmental body required in that connection
(other than in connection or in compliance with the securities or
"blue sky" laws of any jurisdiction, as to which I express no opinion
herein). No approval, consent or order of the Maryland Public Service
Commission or any other regulatory authority of the State of Maryland
is required for the valid authorization, issuance and sale of the
Bonds by the Company in accordance with the Underwriting Agreement
(other than any applicable requirements of the Maryland Securities
Law, as to which I am not required to express an opinion).
(6) The summary of the terms of the Indenture and the Bonds
contained in the Registration Statements and Prospectus fairly
- 2 -
<PAGE>
describes the provisions thereof required to be described by the
registration form.
(7) The Indenture constitutes a valid first lien or charge,
to the extent that it purports to be such, upon the interest held by
the Company in its property covered by the Indenture, subject only to
such exceptions, defects, qualifications and other matters as may be
permitted by the Indenture and to such other matters as in my opinion
do not materially affect the security for the Bonds; the Mortgage and
Deed of Trust dated July 1, 1936, and the supplements and amendments
thereto other than the Supplemental Indenture have been duly recorded
and filed for record in the only counties in which any real property
subject to the lien of the Indenture is located, and the Supplemental
Indenture has also been so recorded or filed for recording, and all
requisite steps have been taken to perfect the security interest of
the Indenture in personal property of the Company.
(8) The Company holds valid franchises, permits and other
rights adequate for the business of the Company in the territory which
it serves, and such franchises, permits and other rights contain no
unduly burdensome restrictions.
(9) There are no material pending legal proceedings (other
than ordinary routine litigation incidental to the business or as
disclosed in the Prospectus) to which the Company is a party or of
which any of its property is the subject.
(10) The Company has good and valid title in and to all of
the real property reflected in its most recent audited balance sheet,
incorporated by reference in the Registration Statements (except real
property disposed of in the ordinary course of business since that
date), free and clear of all liens, charges and encumbrances against
the same, except for the lien of the Indenture and for such liens,
charges, encumbrances, defects, qualifications and other matters
affecting title, possession or use as may be permitted by the
Indenture.
I also advise you that, in my opinion, each Registration
Statement and the prospectus contained therein, as of the effective
date of such Registration Statement, appeared on its face to be
appropriately responsive in all material respects to the requirements
of the 1933 Act, and to the extent applicable, the Securities Exchange
Act of 1934, as amended, and the applicable rules and regulations of
the Securities and Exchange Commission thereunder and that the
Supplemental Indenture appears on its face to be appropriately
responsive in all material respects to the requirements of the 1939
Act and the applicable rules and regulations of the Securities and
Exchange Commission thereunder. I believe, moreover, that the
statements made in the Registration Statements and the Prospectus in
- 13 -
<PAGE>
the section thereof entitled "Description of Bonds and Mortgage"
fairly present the information respecting the same required to be set
forth therein. Except as specifically noted in the preceding
sentence, I am not passing upon and do not assume any responsibility
for the accuracy, completeness or fairness of the statements contained
in the Registration Statements and Prospectus and make no
representations that I have independently verified the accuracy,
completeness or fairness of such statements, except insofar as such
statements relate to me. However, based on my examination of the
Registration Statements and Prospectus and of the documents
specifically referred to in the section thereof entitled "Description
of Bonds and Mortgage," on my general familiarity with the affairs of
the Company and on my participation in conferences with officials and
other representatives of, and other counsel for, the Company, with
Price Waterhouse LLP, the independent accountants of the Company, and
with your representatives and your counsel, I do not believe that the
Registration Statements at the time of their effectiveness, contained
an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading or that the Prospectus at the time it was filed
with, or transmitted for filing to, the Commission pursuant to Rule
424 or at the date hereof contained or contains an untrue statement of
a material fact or omitted or omits to state a material fact necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. I am
expressing no opinion or belief, however, as to the financial
statements or other financial data constituting a part of the
Registration Statements or the Prospectus.
I have assumed, with your approval, but not independently
verified, that the signatures on all documents examined by me are
genuine.
This opinion is given to you solely for your use in connection
with the Underwriting Agreement and the transactions contemplated
thereunder and may not be relied upon for any manner by any other
person or for any other purpose, without my prior written consent,
except that Covington & Burling may rely on this opinion with respect
to paragraph 8 above, and Winthrop, Stimson, Putnam & Roberts may rely
on this opinion with respect to the application of the laws of the
District of Columbia, the State of Maryland and the Commonwealths of
Pennsylvania and Virginia that are relevant to its opinion, in
connection with the delivery of their opinions required to be
delivered under the Underwriting Agreement.
Very truly yours,
William T. Torgerson
- 4 -
<PAGE>
Exhibit 5
August 13, 1997
Potomac Electric Power Company
Washington, D. C.
Dear Sirs:
Reference is made to the proposed issuance and sale, pursuant to rule
415, by Potomac Electric Power Company (the "Company") of up to $200,000,000
aggregate principal amount of its Debt Securities, which may consist of First
Mortgage Bonds (the "New Bonds") and/or its Medium-Term Notes (the "Notes");
and with respect to which the Company is today filing with the Securities and
Exchange Commission a registration statement on Form S-3 under the Securities
Act of 1933, as amended (the "1933 Act") (which registration statement, as
amended by all amendments, is hereinafter called the "Registration
Statement").
As counsel for the Company, I have examined such certificates, corporate
records and other documents and such questions of law as I have considered
necessary or appropriate for the purposes of this opinion, and, on the basis
of such examination, advise that, in my opinion:
(1) The Company has been duly incorporated and is now validly existing
as a corporation under the laws of the District of Columbia and is also now
validly existing as a domestic corporation of the Commonwealth of Virginia.
(2) The New Bonds will have been duly and validly issued and will
constitute legal, valid and binding obligations of the Company upon (a) the
due authorization by the Board of Directors or by the Executive Committee of
the Board of Directors of the Company of an appropriate indenture supplemental
to the Company's Mortgage and Deed of Trust dated July 1, 1936, providing for
the creation of the New Bonds and the due execution and delivery of such
instrument by the Company and the Trustee named therein, (b) the due
authorization, by the Board of Directors or by the Executive Committee of the
Board of Directors of the Company, of the specific terms of the New Bonds and
of their issuance and sale in the manner and upon the terms set forth in the
Registration Statement, (c) the due authorization of such issuance and sale by
the Public Service Commission of the District of Columbia, (d) the recording
upon the books of the Company of the certificate of said Public Service
Commission, (e) the Registration Statement becoming effective under the 1933
<PAGE>
Potomac Electric Power Company
Page Two
August 13, 1997
Act, (f) the qualification under the Trust Indenture Act of 1939, as amended
(the "1939 Act"), of the Company's Mortgage and Deed of Trust dated July 1,
1936, as amended and supplemented by all indentures supplemental thereto, to
and including the above-mentioned supplemental indenture (the "Mortgage"), (g)
the execution of the New Bonds by the Company, the filing with the Trustee
under the Mortgage of the appropriate certificates, instruments and opinions
called for thereby, and the authentication of the New Bonds by the Trustee,
all in accordance with the provisions of the Mortgage, and (h) the delivery of
the New Bonds against payment therefor in accordance with such authorizations
of the Board of Directors or the Executive Committee of the Board of Directors
of the Company and of said Public Service Commission.
(3) The Notes will have been duly and validly issued and will
constitute legal, valid and binding obligations of the Company upon (a) the
due authorization, by the Board of Directors or by the Executive Committee of
the Board of Directors of the Company, of the terms of the Notes and of their
issuance and sale in the manner and upon the terms set forth in the
Registration Statement, (b) the due authorization of such issuance and sale by
the Public Service Commission of the District of Columbia, (c) the recording
upon the books of the Company of the certificate of said Public Service
Commission, (d) the Registration Statement becoming effective under the 1933
Act, (e) the qualification under the 1939 Act of an indenture governing the
issuance of the Notes (the "Indenture"), (f) the execution of the Notes by the
Company, the filing with the Trustee under the Indenture of the appropriate
certificates, instruments and opinions called for thereby, and the
authentication of the Notes by the Trustee, if required, all in accordance
with the provisions of the Indenture, and (g) the delivery of the Notes
against payment therefor in accordance with such authorizations of the Board
of Directors or the Executive Committee of the Board of Directors of the
Company and of said Public Service Commission.
I hereby consent to the filing of a copy of this opinion as an exhibit
to said Registration Statement and to the making in the said Registration
Statement of the statements with respect to me which are made under the
captions "Experts" and "Legal Opinions" in the form of First Mortgage Bond
Prospectus and under the caption "Legal Opinions" in the form of Medium-Term
Note Prospectus, which prospectuses constitute a part of said Registration
Statement.
Very truly yours,
/S/ WILLIAM T. TORGERSON
William T. Torgerson
Exhibit 15
August 13, 1997
Securities and Exchange Commission
450 Fifth Street, N. W.
Washington, D. C. 20549
Ladies and Gentlemen:
We are aware that Potomac Electric Power Company has incorporated by reference
our reports dated May 14, 1997 and August 13, 1997 (issued pursuant to the
provisions of Statement on Auditing Standards Number 71) in the Prospectuses
constituting part of its Registration Statement on Form S-3 to be filed on or
about August 13, 1997. We are also aware of our responsibilities under the
Securities Act of 1933.
Yours very truly,
/S/ PRICE WATERHOUSE LLP
PRICE WATERHOUSE LLP
Exhibit 23.3
August 13, 1997
We hereby consent to the reference to this Firm under the heading "Legal
Opinions" in the Prospectuses constituting part of the Registration Statement
on Form S-3 of Potomac Electric Power Company, as filed the date hereof,
relating to $125,000,000 of Debt Securities.
/S/ COVINGTON & BURLING
COVINGTON & BURLING
P O T O M A C E L E C T R I C P O W E R C O M P A N Y
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned directors and
officers of POTOMAC ELECTRIC POWER COMPANY (the "Company") hereby constitute
and appoint Edward F. Mitchell, William T. Torgerson, Dennis R. Wraase,
Anthony J. Kamerick, Peyton G. Middleton, Jr. and Ellen Sheriff Rogers, and
each of them, their true and lawful attorneys and agents with full power and
authority, in their names and on their behalf, or otherwise, to do any and all
acts and things and to execute any and all instruments which said attorneys
and agents, or any of them, may deem necessary or advisable to enable Potomac
Electric Power Company to comply with the Securities Act of 1933, as amended
(the "Act"), and any rules, regulations and requirements of the Securities and
Exchange Commission in respect thereof, in connection with a Registration
Statement on Form S-3 to be filed under the Act for the registration of
$200,000,000 aggregate principal amount of First Mortgage Bonds and/or
Medium-Term Notes of the Company (the "Securities"), and a Registration
Statement for the registration of up to an additional 20% of aggregate
principal amount of securities filed in accordance with Rule 462(b) under the
Act, including specifically, but without limiting the generality of the
foregoing, power and authority to sign the names of the undersigned directors
and officers in the respective capacities indicated below, to any and all
amendments to said Registration Statements and to any instruments or documents
filed as a part of or in connection with said Registration Statements or
amendments thereto; and each of the undersigned hereby ratifies and confirms
all that said attorneys and agents, or any of them, shall do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, each of the undersigned has subscribed, or caused to
be subscribed, these presents this 5th day of August, 1997.
Signature
/S/ EDWARD F. MITCHELL
Principal Executive Officers: EDWARD F. MITCHELL
Chairman of the Board and
Chief Executive Officer
/S/ JOHN M. DERRICK, JR.
JOHN M. DERRICK, JR.
President and Director
Principal Financial Officer: /S/ DENNIS R. WRAASE
Principal Accounting Officer: DENNIS R. WRAASE
Senior Vice President and
Chief Financial Officer (over)
<PAGE>
/S/ ROGER R. BLUNT, SR.
Director ___________________________________
ROGER R. BLUNT, SR.
/S/ A. JAMES CLARK
Director ___________________________________
A. JAMES CLARK
/S/ H. LOWELL DAVIS
Director ___________________________________
H. LOWELL DAVIS
/S/ RICHARD E. MARRIOTT
Director ___________________________________
RICHARD E. MARRIOTT
/S/ DAVID O. MAXWELL
Director ___________________________________
DAVID O. MAXWELL
/S/ FLORETTA D. MCKENZIE
Director ___________________________________
FLORETTA D. McKENZIE
/S/ ANN D. MCLAUGHLIN
Director ___________________________________
ANN D. McLAUGHLIN
/S/ PETER F. O'MALLEY
Director ___________________________________
PETER F. O'MALLEY
/S/ LOUIS A. SIMPSON
Director ___________________________________
LOUIS A. SIMPSON
/S/ A. THOMAS YOUNG
Director ___________________________________
A. THOMAS YOUNG
==============================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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) |__|
____________________
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
___________________
POTOMAC ELECTRIC POWER COMPANY
(Exact name of obligor as specified in its charter)
District of Columbia and Virginia 53-0127880
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
1900 Pennsylvania Avenue, N.W.
Washington, D.C. 20068
(Address of principal executive offices) (Zip code)
____________________
Debt Securities
(Title of the indenture securities)
==============================================================================
<PAGE>
1. General information. Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
- ------------------------------------------------------------------------------
Name Address
- ------------------------------------------------------------------------------
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany,
N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
(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 affilia-
tion.
None.
16. List of Exhibits.
Exhibits identified in parentheses below, on file with the Commission, are
incorporated herein by reference as an exhibit hereto, pursuant to Rule
7a-29 under the Trust Indenture Act of 1939 (the "Act") and 17 C.F.R.
229.10(d).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
<PAGE>
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No.
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New York,
and State of New York, on the 14th day of July, 1997.
THE BANK OF NEW YORK
By: /s/ THOMAS E. TABOR
Name: Thomas E. Tabor
Title: Assistant Treasurer
<PAGE>
Exhibit 7
______________________________________________________________________________
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business March 31,
1997, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts
ASSETS in Thousands
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin .................. $ 8,249,820
Interest-bearing balances .......... 1,031,026
Securities:
Held-to-maturity securities ........ 1,118,463
Available-for-sale securities ...... 3,005,838
Federal funds sold and Securities pur-
chased under agreements to resell...... 3,100,281
Loans and lease financing
receivables:
Loans and leases, net of unearned
income .................32,895,077
LESS: Allowance for loan and
lease losses ..............633,877
LESS: Allocated transfer risk
reserve........................429
Loans and leases, net of unearned
income, allowance, and reserve 32,260,771
Assets held in trading accounts ...... 1,715,214
Premises and fixed assets (including
capitalized leases) ................ 684,704
Other real estate owned .............. 21,738
Investments in unconsolidated
subsidiaries and associated
companies .......................... 195,761
Customers' liability to this bank on
acceptances outstanding ............ 1,152,899
Intangible assets .................... 683,503
Other assets ......................... 1,526,113
___________
Total assets ......................... $54,746,131
===========
LIABILITIES
Deposits:
In domestic offices ................ $25,614,961
Noninterest-bearing ......10,564,652
Interest-bearing .........15,050,309
In foreign offices, Edge and
Agreement subsidiaries, and IBFs ... 15,103,615
Noninterest-bearing .........560,944
Interest-bearing .........14,542,671
Federal funds purchased and Securities
sold under agreements to repurchase. 2,093,286
Demand notes issued to the U.S.
Treasury ........................... 239,354
Trading liabilities .................. 1,399,064
Other borrowed money:
With remaining maturity of one year
or less .......................... 2,075,092
With remaining maturity of more than
one year ......................... 20,679
Bank's liability on acceptances exe-
cuted and outstanding .............. 1,160,012
Subordinated notes and debentures .... 1,014,400
Other liabilities .................... 1,840,245
__________
Total liabilities .................... 50,560,708
__________
EQUITY CAPITAL
Common stock ........................ 942,284
Surplus ............................. 731,319
Undivided profits and capital
reserves .......................... 2,544,303
Net unrealized holding gains
(losses) on available-for-sale
securities ........................ ( 19,449)
Cumulative foreign currency transla-
tion adjustments .................. ( 13,034)
___________
Total equity capital ................ 4,185,423
___________
Total liabilities and equity
capital ........................... $54,746,131
===========
I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
Alan R. Griffith )
J. Carter Bacot ) Directors
Thomas A. Renyi )
_____________________________________________________________________________
