Registration No.
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-8
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933
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POTOMAC ELECTRIC POWER COMPANY
(Exact name of registrant as specified in its charter)
District of Columbia and Virginia 53-0127880
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
1900 Pennsylvania Avenue, N.W.
Washington, D.C. 20068
202-872-2000
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(Address of registrant's Executive Offices)
POTOMAC ELECTRIC POWER COMPANY
LONG-TERM INCENTIVE PLAN
ELLEN SHERIFF ROGERS
Potomac Electric Power Company
1900 Pennsylvania Avenue, N.W.
Washington, D.C. 20068
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(Name and address of agent for service)
(202) 872-3526
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Telephone number, including area code, of agent for service)
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CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
Proposed Proposed
maximum maximum
Amount offering aggregate Amount of
Title of Securities to be price offering Registration
to be registered registered per unit (1) price Fee
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock,
$1 par value . . . .750,000 shares $25.0625/sh $18,796,875 $5,545
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(1) This registration fee has been calculated pursuant to Rule 457(h) on the
basis of the average high and low prices of the Company's common stock
on the New York Stock Exchange on June 10, 1998.
</TABLE>
In addition, pursuant to Rule 416(c) under the Securities act of 1933, this
Registration Statement also covers an indeterminate amount of interests to be
offered or sold pursuant to the employee benefit plan described herein.
PART II.
INFORMATION REQUIRED IN
REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by Potomac Electric Power Company
("PEPCO" or the "Company") with the Securities and Exchange Commission are
incorporated in this Registration Statement by reference and made a part of
this Registration Statement:
(a) The Company's latest annual report on Form 10-K for the
year ended December 31, 1997, filed pursuant to Section 13(a) of the
Securities Exchange Act of 1934, as amended (the "1934 Act");
(b) The Company's Form 10-Q for the quarter ended March 31,
1998;
(c) All other reports filed by the Company pursuant to
Sections 13(a) or 15(d) of the 1934 Act since the end of the fiscal
year covered by the annual report on Form 10-K referred to above; and
(d) The description of the Company's Common Stock set forth
in the Company's Registration Statement filed pursuant to Section 12
of the 1934 Act, including any amendments or reports updating such
description.
All documents filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the 1934 Act on or subsequent to the date of this
Registration Statement and prior to the filing of a post-effective amendment
which indicates that all securities offered hereby have been sold or which
deregisters all securities then remaining unsold shall be deemed to be
incorporated by reference in this Registration Statement and to be a part
hereof from the date of filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference in this Registration Statement shall be deemed to be
modified or superseded for purposes of this Registration Statement to the
extent that a statement contained in this Registration Statement or in any
other contemporaneously or subsequently filed document which also is or is
deemed to be incorporated by reference in this Registration Statement 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 Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Under Section 29-304(1b) of the District of Columbia Business
Corporation Act, a corporation may indemnify against expenses any directors or
officers made party to a proceeding by reason of his service as such, except
in relation to matters as to which any such director or officer shall be
adjudged to be liable for negligence or misconduct in the performance of duty.
Such indemnification is not exclusive of any other rights to which those
indemnified may be entitled under any by-law, agreement, vote of shareholders
or otherwise.
Under Section 13.1-697 of the Virginia Stock Corporation Act
("VSCA"), a Virginia corporation may indemnify a director who was, is or is
threatened to be made a party to any proceeding if the director acted in good
faith and (i) he believed, in the case of conduct in his official capacity
with the corporation, that his conduct was in the best interests of the
corporation or, in the case of other conduct, that his conduct was at least
not opposed to the best interests of the corporation, or (ii) in the case of a
criminal proceeding, he had no reasonable cause to believe his conduct was
unlawful. A corporation may not indemnify a director in connection with (i) a
proceeding by or in the right of the corporation in which the director was
found liable to the corporation or (ii) any other proceeding charging improper
personal benefit to him, whether or not involving action in his official
capacity, in which he was adjudged liable on the basis that personal benefit
was improperly received. Indemnification permitted under this section of the
VSCA in connection with a proceeding by or in the right of the corporation is
limited to reasonable expenses incurred in connection with the proceeding.
Under VSCA Section 13.1-698, unless limited by its Articles of
Incorporation, a corporation must indemnify against reasonable expenses a
director who entirely prevails in the defense of any proceeding to which he
was a party because he is or was a director of the corporation.
Under VSCA Section 13.1-700.1, a court of appropriate
jurisdiction, upon the application of a director, may order a corporation to
advance or reimburse expenses or provide indemnification if the court
determines that the director is so entitled. With respect to a proceeding by
or in the right of the corporation, a court may order indemnification of the
director to the extent of his reasonable expenses even though he was adjudged
liable to the corporation.
Under VSCA Section 13.1-699, a corporation may advance reasonable
expenses to a director made a party to a proceeding under certain
circumstances, including the furnishing by the director of (i) a written
statement of his good faith belief that he has met the standard of conduct
necessary to obtain indemnification and (ii) a written undertaking to repay
the advance if it is ultimately determined that he did not meet that standard.
Under VSCA Section 13.1-702, a corporation may indemnify an officer, employee
or agent of a corporation to the same extent as a director. Under VSCA
Section 13.1-704, a corporation may provide indemnification in addition to
that provided by statute if authorized by its Articles of Incorporation, a
bylaw made by the shareholders, or any resolution adopted by the shareholders,
except indemnification against willful misconduct or a knowing violation of
the criminal law.
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.
The Company also has policies of insurance which insure officers
and directors against certain liabilities and expenses incurred by them in
such capacities.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
Exhibit No. Description of Exhibits
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3 Articles of Incorporation of the Company (incorporated by
reference to the Company's Form 10-K for the fiscal year
ended December 31, 1997. SEC File No. 1-1072)
4 Potomac Electric Power Company Long-Term Incentive Plan
5 Opinion of William T. Torgerson, Esquire
15 Letter re unaudited financial information
23.1 Consent of Price Waterhouse LLP
23.2 Consent of William T. Torgerson, Esquire (included in
Exhibit No. 5)
24 Power of Attorney and Board Resolutions
ITEM 9. UNDERTAKINGS.
(a) Rule 415 offering.
The Company 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;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to such information
in the registration statement;
PROVIDED, HOWEVER, that paragraphs (1)(i) and (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 those paragraphs is contained in periodic reports filed by the
Company pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by references in this
registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof; and
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) Filing incorporating subsequent Exchange Act Documents by
Reference.
The undersigned registrant hereby undertakes 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 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.
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Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "1933 Act") may be permitted to directors,
officers and controlling persons of the registrant pursuant to the foregoing
provisions, 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 1933 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 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 1933 Act and will be governed by the final
adjudication of such issue.
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 Form S-8 and had duly caused this
registration statement to be signed on its behalf by the undersigned, who is
duly authorized to sign, in the City of Washington, District of Columbia, on
the 12th day of June, 1998.
POTOMAC ELECTRIC POWER COMPANY
/s/ D. R. WRAASE
By __________________________
Dennis R. Wraase
Senior Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated.
Signature: Title: Date:
Edward F. Mitchell* Chairman of the Board
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Edward F. Mitchell and Director June 12, 1998
John M. Derrick, Jr.* President, Chief Executive
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John M. Derrick, Jr. Officer and Director June 12, 1998
Dennis R. Wraase* Senior Vice President,
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Dennis R. Wraase Chief Financial Officer
and Director June 12, 1998
Roger R. Blunt, Jr.* Director June 12, 1998
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Roger R. Blunt, Jr.
Edmund B. Cronin, Jr.* Director June 12, 1998
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Edmund B. Cronin, Jr.
Richard E. Marriott* Director June 12, 1998
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Richard E. Marriott
David O. Maxwell* Director June 12, 1998
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David O. Maxwell
Floretta D. McKenzie* Director June 12, 1998
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Floretta D. McKenzie
Ann D. McLaughlin* Director June 12, 1998
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Ann D. McLaughlin
Peter F. O'Malley* Director June 12, 1998
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Peter F. O'Malley
_______________________ Director
Louis A. Simpson
A. Thomas Young* Director June 12, 1998
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A. Thomas Young
/s/ ELLEN SHERIFF ROGERS
*By __________________________
Ellen Sheriff Rogers
Attorney-in-Fact
Exhibit No. Description of Exhibits
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3 Articles of Incorporation of the Company (incorporated by
reference to the Company's Form 10-K for the fiscal year
ended December 31, 1997. SEC File No. 1-1072)
4 Potomac Electric Power Company Long-Term Incentive Plan
5 Opinion of William T. Torgerson, Esquire
15 Letter re unaudited financial information
23.1 Consent of Price Waterhouse LLP
23.2 Consent of William T. Torgerson, Esquire (included in
Exhibit No. 5)
24 Power of Attorney and Board Resolutions
Exhibit 4
POTOMAC ELECTRIC POWER COMPANY
LONG-TERM INCENTIVE PLAN
This document provides information about 5,000,000 shares of the common
stock, $1.00 par value ("Common Stock"), of Potomac Electric Power Company
(the "Company"), issuable to officers, key employees and directors of the
Company and its subsidiaries under the Company's Long-Term Incentive Plan (the
"Plan").
____________________
THIS DOCUMENT RELATES TO CERTAIN SECURITIES THAT HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933.
No person is authorized to give any information or make any
representation in connection with the offer described in this document, other
than those contained herein or in another document specifically identified as
part of the information statement of which this document is a part. Any
information or representation not contained herein or in such other document
must not be relied upon as having been so authorized. This document does not
constitute an offer to sell, or a solicitation of any offer to buy, the
securities described in this document in any State or other jurisdiction in
which, or to any person to whom, it is unlawful to make such an offer or
solicitation.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR A STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS INFORMATION STATEMENT. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
____________________
April 22, 1998
The Board of Directors of the Company (the "Board") adopted a Long-Term
Incentive Plan (the "Plan" or "LTIP") for key employees (including officers)
and directors of the Company and its subsidiaries. The shareholders of the
Company approved the Plan on April 22, 1998, effective May 1, 1998. Awards
may be made under the Plan until April 30, 2008. The Plan will continue in
effect until all matters relating to the payment of awards have been settled.
A summary of the principal provisions of the Plan is set forth below.
OBJECTIVE
The objective of the LTIP is to increase shareholder value by providing
a long-term incentive to reward officers, key employees and directors of the
Company and its subsidiaries for the profitable performance of the Company and
its subsidiaries, and to increase the ownership of Common Stock by such
individuals.
SHARES AVAILABLE UNDER THE PLAN
The number of shares of Common Stock that may be granted to participants
under the proposed LTIP is 5,000,000. If an award lapses or the participant's
rights with respect to an award otherwise terminate, any shares of Common
Stock subject to such award will again be available for future awards under
the LTIP.
ADMINISTRATION
The LTIP will be administered by the Board. The LTIP gives the Board
broad authority to determine the persons to whom, and the times at which,
awards will be granted or lapse under the LTIP, the types of awards to be
granted, the number of shares of Common Stock to be covered by each award, and
all other terms and conditions for awards granted under the LTIP.
PARTICIPATION
Each officer or key employee of the Company or its subsidiaries
designated by the Board will be eligible to participate in the LTIP.
Non-employee directors will receive a non-qualified stock option for 1,000
shares of Common Stock on or about May 1 of each year.
AWARDS
Under the LTIP, the following types of awards may be granted from time
to time by the Board:
RESTRICTED STOCK. The Board may grant awards of Common Stock bearing
restrictions ("Restricted Stock") prohibiting a participant's transfer of the
Restricted Stock until the lapse of a restriction period. No consideration is
payable by the participant as a result of the grant. The Board may establish
the terms and conditions of each grant, including the restriction period
(which will be not less than one and not more than 10 years), whether
dividends will be paid currently or accumulated and the form of any dividend
payment, and may also condition the awards on the completion of a specified
period of service or on attainment, during a performance period established by
the Board, of one or more performance objectives established by the Board.
Performance objectives, which may vary from participant to participant, are
determined by the Board and may include, but are not limited to, the
performance of the participant, the Company, one or more of its subsidiaries,
or any combination thereof. On completion of the restriction period and
attainment of any performance objectives, the restrictions will expire with
respect to one or more shares of Restricted Stock. If target performance
objectives are exceeded, the Board may award additional Common Stock to a
participant.
OPTIONS. The Board may grant either incentive stock options ("ISO") that
are qualified under Section 422 of the Code or options not intended to qualify
under Section 422 of the Code ("Nonqualified Options"). No consideration is
payable by the participant as a result of the grant. The Board may establish
the terms and conditions of each grant; PROVIDED, HOWEVER, that an option to
purchase a share of Common Stock may not be granted with an exercise price of
less than 100% of the fair market value of a share of Common Stock on the
grant date. Further, the period during which the options are exercisable will
not exceed 10 years from the date of grant. In the Board's discretion, the
exercise price may be paid in cash, shares of Common Stock, or both.
PERFORMANCE UNITS. The Board may make performance awards payable in
cash, Common Stock or both, upon attainment during a performance period
established by the Board, of one or more performance objectives established by
the Board. Performance objectives, which may vary from participant to
participant, are determined by the Board and may include, but are not limited
to, the performance of the participant, the Company, one or more of its
subsidiaries, or any combination thereof.
STOCK APPRECIATION RIGHTS. The Board may grant awards of stock
appreciation rights in conjunction with an option or as a separate award. No
consideration is payable by the participant as a result of the grant. The
Board may establish the terms and conditions of each grant; PROVIDED, HOWEVER,
the period during which the rights are exercisable may not exceed 10 years.
Stock appreciation rights provide the right to receive a payment in
cash, Common Stock, or both in the Board's discretion. If a grant is in
conjunction with an option, the option must be surrendered, and the amount of
the payment will be determined, in the Board's sole discretion, based on (i)
the excess of the fair market value of the Common Stock at the date of
exercise over the option price or (ii) the excess of the book value of the
Common Stock at the date of exercise over the book value of the Common Stock
at the date the underlying option was granted. If a grant is not in
conjunction with an option, the payment will be determined, in the Board's
sole discretion, based on (i) the excess of the fair market value of the
Common Stock at the date of exercise over the fair market value of the Common
Stock at the date of grant of the stock appreciation right or (ii) the excess
of the book value of the Common Stock at the date of exercise over the book
value of the Common Stock at the date of grant of the stock appreciation
right.
DIVIDEND EQUIVALENTS. The Board may grant awards of dividend equivalents
in conjunction with an option, a separately awarded stock appreciation right,
performance units or awards of additional Common Stock if performance-based
Restricted Stock target performance objectives are exceeded. No consideration
is payable by the participant as a result of the grant. Each dividend
equivalent entitles the participant to receive an amount, at such times and in
a form and manner in the Board's discretion, equal to the dividend actually
paid with respect to a share of Common Stock on each dividend payment date
from the date of grant until the dividend equivalent lapses. Dividend
equivalents will lapse at a date no later than the date the underlying award
lapses or is exercised.
ACCELERATED AWARD
If a participant is terminated as an employee or director or suffers a
diminution of responsibility, authority, position or salary following a change
in control of the Company, a participant with an outstanding restricted stock
or performance unit award will be entitled to an accelerated, prorated payout,
and any outstanding option or stock appreciation right award will be
immediately exercisable. If the original award provided for payment in Common
Stock, any required payout will be made in Common Stock. For purposes of the
LTIP, the term "change in control" means (i) the purchase or acquisition by
any person, entity or group of persons (within the meaning of Section 13(d) or
14(d) of the Exchange Act, or any comparable successor provisions), of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 30% or more of the combined voting power of the Company's
then outstanding shares of voting securities, or (ii) the approval by the
shareholders of the Company of a merger or consolidation with respect to which
persons who were shareholders of the Company immediately prior to such merger
or consolidation do not, immediately thereafter, own more than 70% of the
combined voting power of the merged or consolidated entity's then outstanding
securities, or (iii) a liquidation of the Company or the sale of substantially
all of its assets, or (iv) within a 24-month period, a change of more than
one-half of the members of the Board whose election by the Board or nomination
for election by the Company's shareholders was approved by a vote of at least
2/3 of the directors who were directors at the beginning of the period or
whose election or nomination was previously so approved.
TAX WITHHOLDING
The Company or its subsidiaries may withhold any applicable federal,
state or local taxes upon payment under an award. Subject to any applicable
law, if payment under an award is to be made in Common Stock, the Board may in
its discretion permit or require a participant to satisfy any withholding or
other taxes payable through (i) the payment of cash by the participant to the
Company or its subsidiaries, (ii) the retention by the Company or its
subsidiaries of shares of Common Stock or (iii) the delivery by the
participant to the Company or its subsidiaries of Common Stock owned by the
participant. Special rules apply to participants subject to the reporting
requirements of Section 16(a) of the Exchange Act.
FEDERAL INCOME TAX CONSEQUENCES
The federal income tax consequences of an award under the LTIP depend on
the type of award. The following is a summary of the Federal income tax
consequences of each type of award. There may also be state and local income
taxes applicable to these transactions. Plan participants are urged to
consult their own tax advisors regarding the tax consequences of an award
under the LTIP. The Plan does not qualify for special tax treatment under
Section 401(a) of the Internal Revenue Code of 1986.
RESTRICTED STOCK. The grant of Restricted Stock does not result in
taxable income to a participant or a tax deduction for the Company. At the
time the restrictions expire, however, a participant will realize ordinary
taxable income in an amount equal to the fair market value of the Common Stock
on the date the restrictions expire, and the Company will be entitled to a
corresponding deduction. In addition, during or after the restriction period
(depending on whether the dividends are paid to the individuals or
accumulated), a participant will be taxed on the dividends paid with respect
to Restricted Stock as compensation, and the Company will be entitled to a
corresponding deduction.
INCENTIVE STOCK OPTIONS. ISOs under the Plan are intended to meet the
requirements of Section 422 of the Code. The grant of an ISO does not result
in taxable income to the participant or a tax deduction for the Company. The
exercise of an ISO will not result in ordinary taxable income to the
participant (although the difference between the exercise price and the fair
market value of the Common Stock subject to the option may result in
alternative minimum tax liability to the participant) and the Company will not
be allowed a deduction at any time in connection with such award, if the
following conditions are met: (i) at all times during the period beginning
with the date of grant and ending on the day three months before the date of
exercise, the participant is an employee of the Company or of a subsidiary;
and (ii) the participant makes no disposition of Common Stock within two years
from the date of grant nor within one year after the Common Stock is
transferred to the participant. The three-month period is extended to one year
in the event of disability and is waived in the event of death of the
participant. If the Common Stock is sold by the participant after meeting
these conditions, any gain realized over the exercise price ordinarily will be
treated as long-term capital gain, and any loss will be treated as long-term
capital loss, in the year of the sale.
If the participant fails to comply with the employment or holding period
requirements discussed above, the participant will recognize ordinary taxable
income in an amount equal to the lesser of (i) the excess of the fair market
value of the Common Stock on the date of exercise over the exercise price or
(ii) the excess of the amount realized upon such disposition over the exercise
price. If the participant realizes ordinary taxable income on account of such
a disqualifying disposition (described above), a corresponding deduction will
be allowed to the Company for the same year.
NONQUALIFIED STOCK OPTIONS. The grant of a Nonqualified Option does not
result in taxable income to the participant or a tax deduction for the
Company. Upon exercise of a nonqualified stock option, the participant will
realize compensation taxable as ordinary income in an amount equal to the
difference between the exercise price and the fair market value of the Common
Stock on the date of exercise, and the Company will be entitled to a
corresponding deduction for the same year. The participant's basis in such
shares will be the fair market value on the date income is realized, and when
the participant disposes of the shares he or she will recognize capital gain
or loss, either long-term or short-term, depending on the holding period of
the shares.
STOCK APPRECIATION RIGHTS. The grant of a stock appreciation right does
not result in taxable income to the participant or a tax deduction for the
Company. Upon exercise of a stock appreciation right, the participant will
realize ordinary taxable income in an amount equal to the excess of the fair
market value of the Common Stock or cash received over any amount paid by the
participant upon exercise, and the Company will be entitled to a corresponding
deduction for the same year.
PERFORMANCE UNITS. The grant of a performance unit does not result in
taxable income to the participant or a tax deduction for the Company. Upon the
expiration of the applicable award cycle and receipt of the Common Stock
distributed in payment of the award or an equivalent amount of cash, the
participant will realize ordinary taxable income equal to the full fair market
value of the shares delivered or the amount of cash paid. At that time, the
Company generally will be allowed a corresponding tax deduction equal to the
compensation taxable to participant.
Accounting principles require that restricted share awards be charged
against earnings on a pro rata basis over the restriction period and will be
based on the value of the stock at the date of grant. Under the terms of the
LTIP, the granting of ISOs or Nonqualified Options, without accompanying stock
appreciation rights, will not require a charge against earnings. The granting
of stock appreciation rights, however, will require that earnings be charged
over the specified award period for any appreciation in the value of the
underlying stock subsequent to the date of grant.
SOURCE OF SHARES
Shares to satisfy awards made under the Plan will be purchased either
from the Company or on the open market. Shares acquired from the Company will
be legally authorized but unissued shares of Common Stock of the Company.
Shares acquired on the open market will be purchased through a registered
broker-dealer. Open market purchases may be made on any securities exchange
where shares of the Company's Common Stock are traded, in the over-the-counter
markets or in negotiated transactions. The Company bears all of the costs of
administering the Plan, including the payment of all brokerage commissions
incurred in the purchase of Common Stock to satisfy awards under the Plan.
FORFEITURE
In the event a participant ceases to be a director or ceases employment,
an award will lapse, become exercisable or be forfeited in accordance with the
Plan and the terms of the award granted under the Plan.
NONTRANSFERABILITY
Participants may not assign or transfer any benefits under the Plan,
except by will or by the laws of descent and distribution. Benefits are not
subject to attachment or other legal process except as specifically mandated
by statute, and, as requested by the participant and approved by the Board, to
satisfy income tax withholding. Upon the death of a participant, his
designated personal representative or beneficiary may exercise his rights to
the extent permitted by the Plan and the award granted under the Plan.
AMENDMENT AND TERMINATION OF THE PLAN AND AWARDS
The Board may amend, suspend, alter or terminate the Plan; provided
that, the shareholders of the Company must approve any amendment that would
(i) materially increase the benefits accruing to participants under the Plan,
(ii) materially increase the number of securities that may be issued under the
Plan, (iii) extend the period for granting options under the Plan or
(iv) materially modify the requirements of eligibility for participation in
the Plan. Awards granted under the Plan may be amended with the consent of
the recipient so long as the amended award is consistent with the terms of the
Plan under which the award was made, except that the Plan may be terminated or
amended as required by law. However, the Board may amend the Plan as it deems
appropriate to ensure compliance with Rule 16b-3 under the Securities Exchange
Act of 1934, as amended (the "Exchange Act") and to address issues concerning
the deductibility by the Company of executive compensation under
Section 162(m) of the Internal Revenue Code.
RESALE RESTRICTIONS
Shares of Common Stock acquired under the Plan by participants who are
affiliates of the Company (generally, officers at the level of vice president
and above and directors) will be subject to certain resale restrictions under
Rule 144 promulgated by the Securities and Exchange Commission (the "SEC")
pursuant to the Securities Act of 1933, as amended (the "Securities Act").
Sales under Rule 144 must comply with certain manner of sale requirements and,
unless qualifying for an exception based on a limited number of shares to be
sold, must be preceded by the filing of a Form 144 with the SEC. In addition,
the number of shares sold by an affiliate under Rule 144 during any
three-month period may not exceed the greater of (i) one percent of the
outstanding Common Stock or (ii) the average weekly trading volume of the
Common Stock during the four-week period prior to the filing of the Form 144
with the SEC.
Plan participants who are or become directors of the Company and policy-
making officers of the Company will be subject to certain reporting
requirements and trading restrictions under Section 16 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
promulgated by the SEC pursuant thereto.
ERISA
The Company believes the Plan is neither currently qualified under the
Internal Revenue Code nor subject to the Employee Retirement Income Security
Act of 1974, as amended.
ADDITIONAL INFORMATION
For additional information about the Plan and its administrators, you
may contact the Secretary of the Company at the Company's principal offices at
1900 Pennsylvania Avenue, N.W., Washington, D.C. 20068 (telephone number
(202) 872-3526).
The following documents filed with the Securities and Exchange
Commission are hereby incorporated by reference:
(a) The Company's Annual Report on Form 10-K for the
year ended December 31, 1997.
(b) All other reports filed pursuant to Section 13(a) or
15(d) of the Exchange Act since December 31, 1997.
(c) The description of the Company's Common Stock included in
registration statements and reports filed under the 1934 Act including
any amendment or report filed for the purposes of updating such
description.
Each document or report subsequently filed by the Company with the SEC
pursuant to Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act after the
date of the Registration Statement on Form S-8 to which this document relates
(the "Registration Statement"), but prior to the filing of a post effective
amendment to the Registration Statement which indicates that all securities
offered by the Registration have been sold or which deregisters all such
securities then remaining unsold, shall be deemed to be incorporated by
reference therein.
Any statement contained in this document or in a document incorporated
or deemed to be incorporated by reference herein shall be deemed to be
modified or superseded to the extent that a statement contained herein or in
any subsequent document that also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this document.
The Company will provide without charge to each person to whom this
document is delivered a copy of its Annual Report for its latest fiscal year,
copies of each document that is incorporated by reference in this document
(but not including any exhibit to such documents unless such exhibit is
specifically incorporated by reference in such document) and copies of all
reports, proxy statements and other communications distributed to the
Company's shareholders generally. Persons desiring copies of these documents
should direct requests, orally or in writing to the Secretary of the Company
at the address or telephone number listed above.
Exhibit 5
June 12, 1998
Securities and Exchange Commission
450 - 5th Street, N.W.
Washington, D.C. 20549
Dear Sirs:
This opinion is given in connection with the Registration Statement on
Form S-8 filed by Potomac Electric Power Company (the Company) with the
Securities and Exchange Commission for registration under the Securities Act
of 1933, as amended, of up to 750,000 shares of Common Stock (Shares) and
interests in the Company's Long-Term Incentive Plan (Plan).
Based upon my review and knowledge of applicable regulatory and
corporate action authorizing issuance of the Shares and interests in the Plan,
it is my opinion that:
(1) The Company is duly organized and validly existing under the
laws of the District of Columbia and Virginia;
(2) The Shares and interests in the Plan will, when issued
pursuant to the Plan, be legally issued, fully paid and
non-assessable.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Sincerely,
/S/ WILLIAM T. TORGERSON
William T. Torgerson
Exhibit 15
June 12, 1998
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 report dated May 13, 1998 (issued pursuant to the provisions of Statement
on Auditing Standards No. 71) in its Registration Statement on Form S-8 to be
filed on or about June 12, 1998. We are also aware of our responsibilities
under the Securities Act of 1933.
Yours very truly,
/s/ Price Waterhouse LLP
Exhibit 23.1
Consent of Independent Accountants
----------------------------------
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated January 16, 1998, which appears on
page 32 of the 1997 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, 1997. We
also consent to the incorporation by reference of our report on the
Consolidated Financial Statement Schedule, which appears on page 49 of such
Annual Report on Form 10-K.
/s/ PRICE WATERHOUSE LLP
Washington, DC
June 12, 1998
Exhibit 24
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 John M. Derrick, Jr., Dennis R. Wraase, William T. Torgerson,
Anthony J. Kamerick, Ellen Sheriff Rogers, Peyton G. Middleton, Jr. and Karen
G. Almquist, and each of them, their true and lawful attorneys and agents with
full power and authority, in their names and on their behalf, 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 Exchange
Act of 1933, as amended (the "Act"), the Securities Exchange Act of 1934, as
amended, and the rules, regulations and requirements of the Securities and
Exchange Commission thereunder, and to comply with the securities laws of any
state of the United States or any other jurisdiction, in connection with a
Registration Statement on Form S-8 to be filed under the Act for the public
offering and sale of up to 1,000,000 shares of the Common Stock of the
Company, $1 par value, in connection with the Long-Term Incentive Plan and the
Director Stock Plan of the Company, 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 of said Registration Statements and to any instruments or
documents filed as a part of or in connection with said Registration
Statements or amendment 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 22nd day of April, 1998.
Signature
/s/ JOHN M. DERRICK
Principal Executive Officer: JOHN M. DERRICK, JR.
President, Chief Executive
Officer and Director
Principal Financial Officer and /s/ D. R. WRAASE
Principal Accounting Officer: DENNIS R. WRAASE
Senior Vice President, Chief
Financial Officer and Director
/s/ ROGER R. BLUNT
Director ___________________________________
ROGER R. BLUNT, SR.
/s/ EDMUND B. CRONIN, JR.
Director ___________________________________
EDMUND B. CRONIN, JR.
/s/ R. 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/ EDWARD F. MITCHELL
Director __________________________________
EDWARD F. MITCHELL
/s/ PETER F. O'MALLEY
Director ___________________________________
PETER F. O'MALLEY
Director ___________________________________
LOUIS A. SIMPSON
/s/ A. T. YOUNG
Director ___________________________________
A. THOMAS YOUNG
SECRETARY'S CERTIFICATE
I, Ellen Sheriff Rogers, Secretary of Potomac Electric Power Company,
hereby certify that the folowing resolutions were adopted by the Board of
Directors of the Company on April 22, 1998, and they remain in full force and
effect this 12th day of June, 1998.
/s/ ELLEN SHERIFF ROGERS
_________________________
Ellen Sheriff Rogers
RESOLVED, that original issue shares of Common Stock of the Company when
issued and sold in accordance with the terms of the Long-Term Incentive Plan
or the Director Stock Plan (collectively "the Plans"), if any, be, and hereby
are, declared to be fully paid and non-assessable; and further
RESOLVED, that appropriate officers of the Company be, and hereby are,
authorized to engage the services of a broker for the purpose of acquiring
shares of the Company's Common Stock for use under the Plans; and further
RESOLVED, that the officers of the Company be, and hereby are,
authorized and empowered to prepare, execute and file, in the name and on
behalf of the Company, with the Securities and Exchange Commission, the Public
Service Commission of the District of Columbia, and the New York Stock
Exchange, Inc., any and all such registration statements, listing applications
and other applications and documents, and any and all such subsequent
amendments thereto, for the registration, listing, or authorization of up to
1,000,000 shares of the Common Stock of the Company, as said officers, acting
with the advice of counsel, may deem necessary or desirable in connection with
the issuance and sale of such shares of Common Stock of the Company under the
Long-Term Incentive Plan and the Director Stock Plan; and further
RESOLVED, that William T. Torgerson and Ellen Sheriff Rogers be, and
hereby are, designated as the persons authorized to receive notices and
communications from the Securities and Exchange Commission with respect to the
registration statements filed under the Securities Act of 1933 and Securities
Exchange Act of 1934; and further
RESOLVED, that the officers of the Company be, and hereby are,
authorized and empowered to prepare, execute and deliver, in the name and on
behalf of the Company, powers of attorney in favor of John M. Derrick, Jr.,
Dennis R. Wraase, William T. Torgerson, Anthony J. Kamerick, Ellen Sheriff
Rogers, Karen G. Almquist and Peyton G. Middleton, Jr., and each of them,
authorizing said attorneys-in-fact, among other things, to sign on behalf of
the Company such registration statements, listing applications and other
applications and documents, and any and all subsequent amendments thereto,
filed in connection therewith; and further
RESOLVED, that, if shares of the Common Stock of the Company proposed to
be issued and sold, are listed on the New York Stock Exchange, Inc., the
officers of the Company be, and hereby are, authorized by the Company to
appear before the Exchange, with authority to make such changes in the
application or applications for such listings or in any agreements relating
thereto, as may be necessary to conform with the requirements for listing; and
further
RESOLVED, that the officers of the Company be, and hereby are,
authorized and empowered to execute and file, in the name and on behalf of the
Company or otherwise, all such applications, consents to service of process,
powers of attorney and other instruments, notices and documents, and to do any
and all such other acts and things as they may, with the advice of counsel,
deem necessary or desirable to obtain the approval of any regulatory
commission or authority whose approval of the issuance and sale of the shares
of Common Stock of the Company is or may be required, or to qualify the
Company for the sale of the shares of Common Stock of the Company under the
Securities or Blue Sky Laws of such states of the United States as the
officers of the Company may deem advisable; and further
RESOLVED, that the officers of the Company are authorized and directed,
on behalf of the Company, to take or cause to be taken all such actions as
they may deem necessary or desirable in order to carry into effect the
purposes and intent of these resolutions.
