As filed with the Securities and Exchange Commission on October 26,
1998
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
incorporation or organization) Identification No.)
____________________
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, ESQ.
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 &
1201 Pennsylvania Avenue, N.W. Roberts
Washington, D.C. 20004 One Battery Park Plaza
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]
<PAGE>
If this Form is filed to register additional securities
for an offering pursuant to Rule 462(b) under the Securities Act,
please check the following box and list the Securities Act
registration statement number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant
to Rule 462(c) under the Securities Act, check the following box
and list the Securities Act registration 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
Proposed
Maximum
Aggregate
Title of Each Class of Offering Price(1) Amount of
Securities to be Registered Registration Fee
- -----------------------------------------------------------------
Senior Notes.............. $270,000,000 $75,060
- -----------------------------------------------------------------
(1) Estimated solely for the purpose of calculating the
registration fee.
____________________
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.
<PAGE>
PRELIMINARY PROSPECTUS DATED OCTOBER 26, 1998
SUBJECT TO COMPLETION
POTOMAC ELECTRIC POWER COMPANY
SENIOR NOTES
____________________
Potomac Electric Power Company (the "Company") may offer
from time to time up to $270,000,000 in principal amount of
Senior Notes (the "Senior Notes"). The Company will offer the
Senior Notes in separate series. 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 each such series of Senior Notes will be determined at
the time of sale and will be described in a Prospectus Supplement
that will accompany this Prospectus (the "Prospectus
Supplement").
Until the Release Date, payment of principal, premium, if
any, and interest on the Senior Notes will be secured by a
corresponding series of First Mortgage Bonds issued under the
Company's Mortgage and Deed of Trust. The First Mortgage Bonds
will have terms that are substantially the same as the Senior
Notes, including the same interest rate, interest payment dates
and maturity date. The payment of principal, premium, if any,
and interest on all First Mortgage Bonds issued under the
Mortgage and Deed of Trust is secured by a first lien on
substantially all of the Company's assets. The trustee under the
indenture for the Senior Notes will hold the First Mortgage Bonds
for the benefit of the holders of the secured series of Senior
Notes.
The Release Date is the date on which all outstanding
First Mortgage Bonds, other than First Mortgage Bonds that secure
any series of Senior Notes, are repaid. From and after the Release
Date, the Senior Notes (and all other series of Senior Notes that
are secured by First Mortgage Bonds) will cease to be secured by
Senior Note Mortgage Bonds or any other specific assets, and
instead will become general unsecured obligations of the Company.
See "Description of Senior Notes" "Description of the Indenture"
and "Description of Senior Note Mortgage Bonds and Mortgage."
The Company may sell the Senior Notes through underwriters
that it selects or through dealers or agents. The Company also
may sell Senior Notes directly to a limited number of
institutional purchasers. See "Plan of Distribution." The
Prospectus Supplement will set forth the names of any
underwriters, dealers or agents, the amount of any commissions or
discounts allowed them for selling the Senior Notes, and the net
proceeds the Company receives from the sale of the Senior Notes.
________________________________
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY
STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE
SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
____________________
THE DATE OF THIS PROSPECTUS IS ________, 1998
<PAGE>
The Information in this Prospectus is not complete and may be
changed. The Company may not sell these securities until the
registration statement filed with the Securities and Exchange
Commission is effective. This Prospectus is not an offer to sell
these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
<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 US. 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 OUR AFFAIRS THEREAFTER.
____________________
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by the Company with the
Securities and Exchange Commission (the "SEC") under the
Securities Exchange Act of 1934, as amended (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, 1997.
(b) The Company's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1998.
(c) The Company's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1998.
(d) The Company's Current Reports on Form 8-K, dated
January 26, 1998, and July 1, 1998.
All documents that the Company files with the SEC
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 will 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 will 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 will provide to each person, including any
beneficial owner, to whom a copy of this Prospectus has been
delivered, a copy of any or all of the information that has been
or may be incorporated by reference in this Prospectus but not
delivered with the Prospectus (including any exhibits that are
specifically incorporate by reference in that information). The
Company will provide this information upon written or oral
request and at no cost to the requestor. Requests for such
information 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 is subject to the informational reporting
requirements of the 1934 Act, and therefore files Annual Reports
on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on
Form 8-K, proxy statements and other information with the SEC.
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
documents. The public may read and copy these documents at the
SEC's Public Reference Room at 450 Fifth Street, N.W.,
Washington, D.C. 20549. The public may obtain information on the
operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330. The SEC maintains an Internet site that contains
reports, proxy and information statements, and other information
regarding issuers that file electronically with the SEC. The
address of that site is http://www.sec.gov. Information
concerning the Company also can be obtained at the Company's
website, the address of which is http://www.pepco.com.
The Company has filed a registration statement on Form S-3
with the SEC relating to the Senior Notes that are being offered
by this Prospectus (which, together with all amendments and
exhibits, is referred to herein as the "Registration Statement")
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 Statement, certain parts of which are omitted
in accordance with the rules and regulations of the SEC. For
further information, please read the Registration Statement.
-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 and investment programs. PCI's principal investments
consist of equipment leases and marketable securities, primarily
preferred stock with mandatory redemption features, and real
estate. PCI also is involved with activities which provide
telecommunication and energy services. 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 $270,000,000 of
Senior Notes.
Except as more fully described in the Supplemental
Prospectus, the proceeds from the sale of the Senior Notes will
be used for one or more of the following purposes (i) to refund
short-term debt incurred primarily to finance, on a temporary
basis, the Company's utility construction program and operations
or (ii) to refund the Company's senior securities, including the
retirement of long-term debt and the satisfaction of contractual
sinking fund requirements, as more fully set forth in the
Prospectus Supplement.
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, 1997, and the unaudited
consolidated financial information contained in its Quarterly
Report on Form 10-Q for the quarter ended June 30, 1998, which
are available as described herein under "Incorporation of Certain
Information 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.
-4-
<PAGE>
<TABLE>
<CAPTION>
12 Months Ended
-------------------------------------------------------
June 30, Dec. 31, Dec. 31, Dec. 31,
1998 1997 1996 1995
-------- -------- -------- --------
(Thousands of Dollars Except Per Share Data)
<S> <C> <C> <C> <C>
Income Statement Data:
Total Revenue............................... $1,932,387 $1,863,510 $2,010,311 $1,876,102
Operating Revenue........................... 1,845,999 1,810,829 1,834,857 1,822,432
Net Income.................................. 182,224 181,830 236,960 94,391
Earnings for Common Stock................... 159,814 165,251 220,356 77,540
Basic Earnings Per Share of Common Stock.... 1.35 1.39 1.86 .65
Diluted Earnings Per Share of Common Stock.. 1.34 1.38 1.82 .65
Balance Sheet Data at end of period:
Property and Plant, net..................... $4,507,943 $4,486,334 $4,423,249 $4,400,311
</TABLE>
<TABLE>
<CAPTION>
As of June 30, 1998
-------------------------------
Amount Ratio
----------- -----
(Thousands)
<S> <C> <C>
Capital Structure (excluding nonutility subsidiary debt and
current maturities):
Long-Term Debt.................................................... $1,857,893 46.9%
Preferred Securities.............................................. 125,000 3.2
Preferred Stock................................................... 150,000 3.8
Common Equity..................................................... 1,826,723 46.1
---------- ------
Total Capitalization............................................ $3,959,616 100.0%
========== ======
Parent Company Long-Term Debt and Preferred Stock Redemption
Due in One Year and Short-Term Debt............................... $ 290,400
==========
</TABLE>
<TABLE>
RATIOS OF EARNINGS TO FIXED CHARGES
<CAPTION>
12 Months Ended
-------------------------------------------------------------
June 30, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31,
1998 1997 1996 1995 1994 1993
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Parent company only..................... 2.57 2.54 3.08 3.05 3.23 3.20
Fully consolidated...................... 2.17 2.03 2.24 1.52 2.37 2.31
</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 SENIOR NOTES
GENERAL.
The Senior Notes will be issued under an Indenture, dated
as of __________, 1998, between the Company and The Bank of New
York, as trustee (the "Indenture Trustee"), as supplemented by a
separate supplemental indenture (a "Senior Note Supplemental
Indenture") each time a new series of Senior Notes is issued.
The Indenture will be qualified under the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act"). The terms of the
Indenture consist of those set forth in the Indenture and those
made part of the Indenture by the Trust Indenture Act. The
Indenture, as supplemented by each Senior Note Supplemental
Indenture, is referred to herein as the "Indenture." See
"Description of Indenture." The Indenture and the form of Senior
Note Supplemental Indenture are filed as exhibits to the
Registration Statement and are hereby incorporated herein by
reference.
Reference is made to the accompanying Prospectus
Supplement for the following terms and other information with
respect to the Senior Notes being offered hereby: (i) the
designation and aggregate principal amount of such Senior Notes,
(ii) the date on which such Senior Notes will mature, (iii) the
rate per annum at which such Senior Notes will bear interest, or
the method of determining such rate, (iv) the dates on which such
interest will be payable, (v) any redemption terms; (vi) whether
such Senior Notes will be issued in certificated or book-entry
form, and (vii) other specific terms applicable to such Senior
Notes.
Until the Release Date (as hereinafter defined), the
Senior Notes will be secured by a corresponding series of Mortgage
Bonds ("Senior Note Mortgage Bonds") issued under the Mortgage (as
hereinafter defined) and delivered to and held by the Indenture
Trustee. On the Release Date, all outstanding Senior Notes
issued under the Indenture (including the Senior Notes offered
hereby) will cease to be secured by a corresponding series Senior
Note Mortgage Bonds, and will become unsecured general
obligations of the Company and will rank on a parity with all
other unsecured indebtedness of the Company. See "Security;
Release of Security."
The Indenture does not contain any covenants or other
provisions that specifically are intended to afford holders of
the Senior Notes special protection in the event of a highly
leveraged transaction.
The following summary of the terms of the Senior Notes
does not purport to be complete and is subject in all respects to
the provisions of, and is qualified in its entirety by reference
to, the Indenture and the Prospectus Supplement. The cited
Articles and Sections, unless otherwise indicated, are citations to
the Indenture.
-6-
<PAGE>
REGISTRATION OF TRANSFER AND EXCHANGE.
The Senior Notes will be fully registered and will be
issued in either certificated or book-entry form without coupons
(Section 302). Except as otherwise specified in the Prospectus
Supplement, the Senior Notes will be issued in denominations of
$1,000 or any integral multiple thereof (Section 302).
So long as a Senior Note remains outstanding, the Company
is required to maintain an office or agency where the Senior Notes
may be presented or surrendered for payment or for registration
of transfer or exchange and where notices and demands to or upon
the Company may be served. The Company has designated the
corporate trust office of the Indenture Trustee in New York, New
York, as its agent for these purposes (Section 1002). See
"Relationships with Indenture Trustee."
Senior Notes in certificated form may be exchanged for
other Senior Notes of the same series of any authorized
denomination and of a like aggregate principal amount and tenor
(Section 305(c)). In the event that a series of Senior Notes is to
be redeemed in whole or in part, the Indenture Trustee is not
required to register the transfer or exchange of the Senior Notes
called or to be selected for redemption, except, in the case of a
Senior Note to be redeemed in part, for the portion thereof that
is not to be redeemed (Section 305(g)).
No service charge will be made to holders of Senior Notes
for any registration of transfer or exchange of Senior Notes, but
the Company may require payment of a sum sufficient to cover any
tax or governmental charge incident to the registration of
transfer or exchange (Section 305(f)).
PAYMENT OF PRINCIPAL AND INTEREST.
Payments of principal, premium, if any, and interest at
maturity (or on the redemption date, if redeemed prior to
maturity) on Senior Notes in certificated form will be made in
immediately available funds at the corporate trust office of the
Institutional Trustee or at the office of any paying agent
designated by the Company (Section 1002). Interest payments
other than at maturity will be made in the same manner or, at the
option of the Company, by check mailed to the address of the
registered holder of a Senior Note.
If the date on which any payment of principal, premium or
interest is due to be made is not a Business Day in the place of
payment, then such payment need not be made on such date and
instead may be made, at the election of the Company, on the next
succeeding Business Day in the place of payment with the same
effect as if made on the scheduled payment date, and no interest
shall accrue from the scheduled payment date through such next
succeeding Business Day (Section 114). The term "Business Day"
means each Monday, Tuesday, Wednesday, Thursday and Friday that
is not a day in the place of payment on which banking
institutions are authorized or obligated by law or executive
order to close.
-7-
<PAGE>
BOOK-ENTRY SENIOR NOTES.
The Senior Notes of any series may be issued in whole or
in part in the form of one or more fully-registered global notes
(each, a "Book-Entry Note"), which will be deposited with a
depositary (the "Depositary") and registered in the name of the
Depositary or its nominee (Section 301). So long as the
Depositary 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 of the Senior Notes represented by such
Book-Entry Note for all purposes under the Indenture (Section
308). Except as described below, owners of beneficial interests
in a Book-Entry Note will not be entitled to have Senior Notes
represented by such Book-Entry Note registered in their names,
will not receive or be entitled to receive physical delivery of
Senior Notes in certificated form, and will not be considered the
owners thereof under the Indenture.
Principal, premium, if any, and interest payments on
Senior 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 registered owner of the related Book-Entry
Note. Neither the Company nor the Indenture Trustee will have
any responsibility or liability for any aspect of the records
relating to, or payments made on account of, beneficial ownership
interests in a Book-Entry Note, or for maintaining, supervising
or reviewing any records relating to such beneficial ownership
interests. Payments of principal, premium, if any, and interest
on the Senior Notes issued in the form of Book-Entry Notes will
be made to DTC in immediately available funds.
A Book-Entry Note may not be transferred other than to
the Depositary or its nominee or to a successor of the Depositary
or its nominee, except that, if at any time (i) the Depositary is
unwilling or unable to continue as depository or it ceases to be
a "clearing agency" registered under the 1934 Act and a successor
depository is not appointed by the Company within 90 days, (ii)
the Company determines that one or more Book-Entry Notes will be
exchangeable for certificated Senior Notes, or (iii) an Event of
Default under the Indenture (or any event which with notice or
the lapse of time or both would become an Event of Default under
the Indenture) has occurred and is continuing with respect to
Senior Notes represented by a Book-Entry Note, all affected
Book-Entry Notes may be exchanged for Senior Notes in
certificated form registered in the names of such persons as the
Depositary shall direct (Section 305(h)).
If any series of Senior Notes is issued in whole or in
part in the form of a Book-Entry Note, the Depository Trust Company
("DTC") will act as the Depositary for such series of Senior
Notes and such Senior Notes will be issued in the name of Cede &
Co., as DTC's nominee. The following description of DTC and its
activities is based on information provided to the Company by
DTC.
DTC has advised the Company that it is a limited-purpose
trust company organized under the New York Banking Law, a
"banking organization" within the meaning of the New
-8-
<PAGE>
York Banking Law, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the New York Uniform
Commercial Code, and a "clearing agency" registered pursuant to
the provisions of Section 17A of the 1934 Act. DTC holds
securities that its participants deposit with DTC. DTC also
facilitates the clearance and settlement of securities
transactions among its participants in deposited securities
through electronic book-entry changes in the accounts of the
participants, thereby eliminating the need for physical movement
of securities certificates. Participants in DTC include
securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations. DTC is owned by a
number of its participants and by The New York Stock Exchange,
Inc., the American Stock Exchange, Inc., and the National
Association of Securities Dealers, Inc. Access to DTC's
book-entry system also is available to others, such as securities
brokers and dealers, banks and trust companies that clear
transactions through, or maintain a custodial relationship with,
a participant, either directly or indirectly. The rules of DTC
are on file with the SEC.
Purchasers of Senior Notes within the DTC system must be
made by or through participants, which will receive a credit for
the Senior Notes on DTC's records. The ownership interest of
each actual purchaser of a Senior Note (a "beneficial owner")
will in turn to be recorded on the records of direct and indirect
DTC participants. Beneficial owners will not receive written
confirmation from DTC of their purchases, but beneficial owners
are expected to receive written confirmations providing details
of the transactions, as well as periodic statements of their
holdings, from the participant or indirect participant through
which the beneficial owners purchase Senior Notes. Transfers of
ownership interests in the Senior Notes will be accomplished by
entries made on the books of participants acting directly or
indirectly on behalf of beneficial owners.
DTC will credit participants' accounts on the relevant
payment date in accordance with their respective holdings shown
on DTC's records. Payments by participants and indirect
participants to beneficial owners will be governed by standing
instructions and customary practices and will be the
responsibility of such participants and indirect participants and
not of DTC, the Indenture Trustee or the Company, subject to any
statutory or regulatory requirements as may be in effect from
time to time.
DTC has no knowledge of the actual beneficial owners of
the Senior Notes in book-entry form. DTC's records reflect only
the identity of the participants to whose accounts such Senior
Notes are credited, which may or may not be the beneficial owners.
The participants and indirect participants will remain responsible
for keeping account of their holdings on behalf of their
customers.
Conveyance of notices and other communications by DTC to
participants, by participants to indirect participants, and by
participants and indirect participants to beneficial owners will
be governed by arrangements among them, subject to any statutory
or regulatory requirements as may be in effect from time to time.
-9-
<PAGE>
Redemption notices in respect of the Senior Notes held in
book-entry form will be sent to DTC or its nominee. If less than
all of the Senior Notes are being redeemed, DTC will determine
the pro rata amount of the interest of each participant to be
redeemed in accordance with its procedures.
The laws of some jurisdictions require that certain
purchasers of securities take physical delivery of securities in
certificated form. Such laws may impair the ability to transfer
beneficial interests in Senior Notes represented by a Book-Entry
Note.
SECURITY; RELEASE OF SECURITY.
Until the Release Date, Senior Notes of each series
offered hereby and under the accompanying Prospectus Supplement
will be secured by a corresponding series of Senior Note Mortgage
Bonds issued under, and secured by the lien of, the Mortgage. See
"Description of Senior Note Mortgage Bonds and Mortgage". The
"Release Date" is the date on which all Mortgage Bonds issued and
outstanding under the Mortgage, other than Senior Note Mortgage
Bonds securing any Senior Notes issued under the Indenture, have
been retired through payment or redemption (including those
Mortgage Bonds "deemed to have been paid" within the meaning of
Article XVI of the Mortgage). From and after the Release Date,
the Senior Note Mortgage Bonds held by the Indenture Trustee will
cease to secure any obligation of the Company under the Indenture
or the Senior Notes, including the payment of principal of, and
any premium or interest on, the Senior Notes, and the Senior
Notes will become unsecured general obligations of the Company
(Section 1404).
Pledge of Senior Note Mortgage Bonds. Simultaneously with
or prior to the issuance of the Senior Notes of each series, the
Company will issue, deliver and pledge to the Indenture Trustee,
for the benefit of the holders of the Senior Notes of such
series, Senior Note Mortgage Bonds registered in the name of the
Indenture Trustee (i) in an aggregate principal amount equal to
or exceeding the aggregate principal amount of the Senior Notes
of such series, (ii) with a stated maturity date not earlier than
the stated maturity date of the Senior Notes of such series,
(iii) bearing an interest rate equal to the interest rate borne
by the Senior Notes of such series, (iv) having interest payment
dates that are the same as the interest payment dates of the
Senior Notes of such series, (v) with the same redemption
provisions, if any, as the Senior Notes of such series (in
addition to those described below under "Description of Senior
Note Mortgage Bonds and Mortgage -- Mandatory Redemption"), and
(vi) in all other material respects conforming as nearly as is
practicable to the terms of the Senior Notes of such series
(Section 1402).
Until the Release Date, the Senior Note Mortgage Bonds
delivered to and pledged with the Indenture Trustee will be held
in trust by the Indenture Trustee for the equal and proportionate
benefit and security of the holders from time to time of the
corresponding series of Senior Notes, and shall serve as security
for (i) the full and prompt payment of the principal of and
premium, if any, on the corresponding series of Senior Notes when
and as the same
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<PAGE>
shall become due in accordance with the terms and provisions of
the Senior Notes and the Indenture, whether at the stated
maturity or by declaration of acceleration, call for redemption
or otherwise, and (ii) the full and prompt payment of interest on
such Senior Notes when and as the same shall become due in
accordance with the terms and provisions of the Senior Notes and
the Indenture (Section 1404).
Each series of Senior Notes will be secured by only one
corresponding series of Senior Note Mortgage Bonds, and each such
series of Senior Note Mortgage Bonds will secure only that series
of Senior Notes (Section 1402). No series of Senior Notes will
be secured by any particular assets, franchises, rights, powers
or entitlements of the Company other than the series of Senior
Note Mortgage Bonds pledged to the Indenture Trustee with respect
to such series of Senior Notes (Section 1405).
Payment of Principal, Premium and Interest on Senior Note
Mortgage Bonds. The obligation of the Company to make any
payment of principal of, or premium, if any, or interest on, any
Senior Note Mortgage Bonds securing Senior Notes will be deemed
to be satisfied and discharged to the extent that payment of the
principal of, or premium, if any, or interest on, the
corresponding Senior Notes has been made or otherwise discharged
by the Company (Section 1406).
Restrictions on Transfer of Senior Note Mortgage Bonds.
Except as required to effect an assignment of its rights and
obligations under the Indenture to a successor trustee and except
for the release of the Senior Note Mortgage Bonds to the Company
or the Mortgage Trustee in accordance with the Indenture, the
Indenture Trustee may not transfer any Senior Note Mortgage Bonds
pledged to it as security for Senior Notes (Section 1408).
Redemption of Senior Note Mortgage Bonds. The Senior Note
Mortgage Bonds securing any series of Senior Notes will be
redeemable upon the acceleration of maturity of the series of
Senior Notes secured thereby as the result of any Event of
Default under the Indenture, at a redemption price equal to the
principal amount of such Senior Note Mortgage Bonds, plus accrued
and unpaid interest thereon to the date of the redemption demand
(Part III, Section 2, of the Mortgage Bond Supplemental
Indenture). In such event, the Indenture Trustee is required
under the Indenture to file with the Company a demand for
redemption (Section 502).
Effect of Release Date. After the Release Date (which is
the date on which the Mortgage ceases to secure any debt
obligations of the Company, other than Senior Note Mortgage
Bonds) the Indenture Trustee is required to surrender to the
Company or the Mortgage Trustee all Senior Note Mortgage Bonds
then held by it and the Company is required to terminate the
Mortgage and may not issue any additional Mortgage Bonds
thereunder (Sections 1404 and 1409). The Company is required to
cause the Indenture Trustee to provide notice to all holders of
Senior Notes of the occurrence of the Release Date. (Section
1409(e)).
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Release of Security Prior to Release Date. The Indenture
permits the Company to reduce, prior to the Release Date, the
aggregate principal amount of a series of Senior Note Mortgage
Bonds securing a series of Senior Notes to the extent of payment
or provision for the payment, in whole or part, of the principal
of such Senior Notes. In no event may the principal amount of
Senior Note Mortgage Bonds pledged to the Indenture Trustee as
security for the Senior Notes of any series be reduced prior to
the Release Date to an amount less than the aggregate principal
amount of outstanding Senior Notes of such series (Section 1409).
Voting of Senior Note Mortgage Bonds. At any meeting of
the holders of any series of Senior Note Mortgage Bonds, or if the
consent of holders of such series of Senior Note Mortgage Bonds
is sought without a meeting, the Indenture Trustee is required to
vote all Senior Note Mortgage Bonds of such series then held by
it, or to grant or withhold its consent with respect thereto, as
the Indenture Trustee determines to be in the best interests of
the holders of the corresponding series of Senior Notes, unless
the Trustee is directed otherwise by the holders of not less than
a majority in aggregate principal amount of such series of Senior
Notes. In exercising such responsibilities, the Trustee may
solicit instructions from the holders of any series of Senior
Notes and, if so, shall vote or shall grant or withhold its
consent with respect to the Senior Note Mortgage Bonds as
directed by the holders of a majority in aggregate principal
amount of the Senior Notes (Section 1407).
DESCRIPTION OF INDENTURE
The following summary of the terms of the Indenture does
not purport to be complete and is subject in all respects to the
provisions of, and is qualified in its entirety by reference to,
the Indenture. The cited Articles and Sections are citations to
the Indenture. Capitalized terms that are not defined in this
Prospectus are used as defined in the Indenture.
ISSUANCE OF ADDITIONAL SENIOR NOTES.
The principal amount of debt securities that may be issued
under the Indenture is unlimited (Section 301). However, the
principal amount of Mortgage Bonds that may be issued under the
Mortgage (and thereby serve as security for Senior Notes) is
limited by the terms of the Mortgage. See "Description of Senior
Note Mortgage Bonds and Mortgage -- Issuance of Additional
Bonds." As determined by the Board of Directors of the Company,
debt securities issued under the Indenture (i) may be secured as
to payment of principal, premium, if any, and interest by Senior
Note Mortgage Bonds or they may be unsecured (Section 301) and
(ii) may have such other terms and conditions consistent with the
Indenture as are established by the Board of Directors at the
time of issuance.
CERTAIN COVENANTS OF THE COMPANY.
Limitations on Liens. From and after the Release Date and
so long as the Senior Notes of any series are outstanding, the
Company may not create, incur, assume or permit to exist
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any indebtedness that is secured by a mortgage, deed of trust,
lien, pledge or similar encumbrance (a "Lien") on its property or
assets, unless all Senior Notes then outstanding and subsequently
issued under the Indenture are secured equally and ratably with
all other indebtedness secured by such Lien (Section 1006). This
restriction does not apply to certain Liens, including (i) Liens
existing as of _________, 1998, (ii) any Lien existing on any
property or asset prior to the acquisition thereof by the Company
(provided that such Lien was not created in contemplation of or
in connection with such acquisition and does not extend to any
other property or assets of the Company), (iii) Liens for taxes
not yet due or that are being contested, (iv) various types of
Liens incurred in the ordinary course of business, (v)
restrictions on the use of real property and similar encumbrances
that are not substantial in amount and do not materially detract
from the value of such property or interfere with the ordinary
course of business of the Company, (vi) Liens on any property
acquired, constructed or improved by the Company that are created
or incurred within 18 months after such acquisition, construction
or improvement to secure or provide for payment of any part of
the purchase price for such property or the cost of construction
or improvement, (vii) liens upon bills, notes and accounts
receivable, cash, contracts, operating agreements and leases in
which the Company is the lessor, (viii) liens on stock, bonds,
notes or other securities owned by the Company, (ix) liens on
equipment and material not installed as a part of the fixed
property of the Company and merchandise and supplies acquired by
the Company for the purpose of resale or leasing to customers in
the ordinary course of business, (x) liens on electric energy and
other materials or products generated, manufactured, produced or
purchased by the Company for sale, distribution or use in the
ordinary course of business, (xi) extensions, renewals and
replacements of Liens referred to in clauses (i) through (x)
above, (xii) Liens on the capital stock or assets of any
subsidiary of the Company, and (xiii) Liens to secure
indebtedness if immediately after the incurrence thereof the
amount of all indebtedness secured by Liens that would not be
permitted but for this clause (xiii) does not exceed 20% of the
Company's stockholders' equity (in each case, a "Permitted
Lien").
Limitation on Sale and Lease-back Transactions. From and
after the Release Date and so long as the Senior Notes of any
series are outstanding, the Company will not enter into any
arrangement pursuant to which the Company sells any electric
generation plant or electric transmission and distribution
facility located in the United States (except for any plant or
facility that the Board of Directors of the Company by resolution
determines is not of material importance to the total business
conducted by the Company and its subsidiaries as an entirety) and
thereafter leases back such property (Section 1007). This
limitation does not apply to any sale and lease-back transaction
(i) entered into prior to September __, 1998, (ii) involving a
lease with a term of four years or less, (iii) if the lease with
respect to any property is entered into within 18 months after
the later of the acquisition, completion of construction or
commencement of operation such property, or (iv) if within 120
days after the effective date of the lease the Company applies to
the retirement of indebtedness maturing more than one year from
the date of such payment an amount equal to the greater of (a)
the net proceeds from the sale of the property and (b) the fair
market value of the property.
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INDENTURE DEFAULTS.
Events of Default under the Indenture with respect to the
Senior Notes of any series include (i) the failure to pay
principal when it becomes due (whether at the stated maturity or
otherwise), (ii) the failure to pay interest or to satisfy any
sinking fund obligation within 30 days after it becomes due,
(iii) the failure to observe or perform any other covenant or
agreement, which failure continues for at least 60 days after
notice to the Company by the Trustee or the holders of at least a
majority in principal amount of such series of Senior Notes, and
(iv) certain events of bankruptcy, insolvency or reorganization
(Section 501). In the case of Senior Notes of any series that
are secured by Senior Note Mortgage Bonds, the occurrence of an
"event of default" under the Mortgage (a "Mortgage Default") also
constitutes an Event of Default under the Indenture (Section
501). See "Description of Senior Note Mortgage Bonds and
Mortgage -- Mortgage Defaults".
Upon the occurrence of an Event of Default under the
Indenture, other than as the result of a Mortgage Default, the
Indenture Trustee or the holders of not less than 33% in
outstanding principal amount of the Senior Notes of the affected
series may declare all of the Senior Notes of such series to be
immediately due and payable (Section 502(a)). In the case of an
Event of Default under the Indenture by reason of a Mortgage
Default, the Senior Notes of all series that are secured by
Senior Note Mortgage Bonds automatically will become due and
payable effective upon the acceleration of the Senior Note
Mortgage Bonds in accordance with the terms of the Mortgage
(Section 502(b)).
If following a declaration that the principal of any
series of Senior Notes is immediately due and payable, and before
any judgment or decree for the payment of the moneys due is
obtained, all matured installments of interest have been paid and
all defaults have been cured, then the holders of a majority is
aggregate principal amount of the Senior Notes of such series may
waive such defaults and rescind the acceleration of the Senior
Notes (Section 502(c)). The waiver or cure of any Mortgage
Default and the rescission and annulment of its consequences in
accordance with the terms of the Mortgage also will constitute an
automatic waiver of the corresponding Event of Default under the
Indenture and a rescission and annulment of the consequences
thereunder (Section 502(b)).
If an Event of Default with respect to any series of
Senior Notes occurs and is continuing, the Indenture Trustee may,
in its discretion, proceed to protect and enforce its rights and
the rights of the holders of Senior Notes of such series by such
appropriate judicial proceeds as the Indenture Trustee shall deem
most effectual to protect and enforce such rights, including,
prior to the Release Date, the exercise of all rights that the
Indenture Trustee may have as the holder of the Senior Note
Mortgage Bonds securing that series of Senior Notes (Sections 504
and 518).
The holders of a majority in principal amount of Senior
Notes of such series, subject to certain limitations, may direct
the time, method and place of conducting any proceeding for
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any remedy available to the Indenture Trustee, or for exercising
any trust or power conferred on the Indenture Trustee, including
the exercise by the Indenture Trustee of the rights, powers and
privileges possessed by the Indenture Trustee as a holder of the
Senior Note Mortgage Bonds securing such series of Senior Notes
(Section 513).
No Holder of Senior Notes of any series has the right to
institute any proceeding for the enforcement of the Indenture, or
for any remedy thereunder, unless (i) such holder previously has
given written notice to the Indenture Trustee of a continuing
Event of Default with respect to the Senior Notes of that series,
(ii) the holders of not less than a majority in principal amount
of the Senior Notes of that series have requested in writing that
the Indenture Trustee institute proceedings in respect of such
Event of Default, (iii) such holder or holders have offered to
the Indenture Trustee reasonable indemnity against the costs,
expenses and liabilities to be incurred in compliance with such
request, (iv) the Indenture Trustee for 60 days after its receipt
of such notice, request and offer of indemnity has failed to
institute any such proceeding, and (v) no direction inconsistent
with such written request has been given to the Indenture Trustee
during such 60-day period by the holders of a majority in
principal amount of the Senior Notes of that series (Section
508). However, this provision does not impair the right of any
holder of a Senior Note to enforce the obligation of the Company
to pay principal and any premium or interest on such Senior Note
(Section 509).
The Indenture requires the Company to furnish to the
Indenture Trustee annually a certificate as to compliance with
the terms of the Indenture (Section 1005).
MODIFICATION OF INDENTURE.
The Company with the consent of the holders of not less
than a majority in principal amount of Senior Notes of all series
affected by such change (voting as a single class), by entry into
a supplemental indenture, may add to, change in any manner or
eliminate any of the provisions of the Indenture or modify the
rights of the holders of Senior Notes, except that, without the
consent of the holder of each Senior Note affected thereby, the
Indenture may not be amended (i) to change the terms of payment
of the principal or interest on any Senior Notes, (ii) to reduce
the percentage of holders of Senior Notes required to effect any
amendment to the Indenture or any waiver provided for in the
Indenture, and (iii) with respect to any Senior Notes secured by
Senior Note Mortgage Bonds, to impair the security interest under
the Indenture in such Senior Note Mortgage Bonds or reduce the
principal amount of such Senior Note Mortgage Bonds held by the
Indenture Trustee to an amount that is less than the outstanding
principal amount of the Senior Notes secured thereby (Section
902).
Certain changes to the Indenture may be effected by the
Company without the consent of the holders of the Senior Notes,
including (i) to add to the covenants of the Company for the
benefit of the holders of all or any series of Senior Notes and
(ii) to cure any ambiguity, to correct or supplement any
provision that is inconsistent with any other provision, or to
make any other provisions with respect to matters or questions
arising under the Indenture, provided
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that such action does not adversely affect the interests of the
holders of Senior Notes of any series in any material respect
(Section 901).
DEFEASANCE AND DISCHARGE.
The Indenture provides that the Company will be deemed to
have paid and discharged its entire indebtedness with respect to
the Senior Notes of any series and to have satisfied all of its
obligations under the Indenture in respect of such series of
Senior Notes (except for certain obligations, including the
obligation to register the transfer or exchange of Senior Notes,
the replacement of lost, stolen or mutilated Senior Notes and the
maintenance of a paying agency) if the Company, in addition to
satisfying certain other requirements, irrevocably deposits with
the Trustee, in trust for the benefit of holders of Senior Notes
of such series, (i) money in an amount, (ii) certain United
States government obligations, which through the scheduled
payment of principal and interest in accordance with their terms
will provide money in an amount, or (iii) a combination of money
and such United States Government obligations, that is
sufficient, without reinvestment, to make all payments of
principal of, and any premium and interest on, the Senior Notes
on the dates such payments are due in accordance with the terms
of the Indenture and the Senior Notes. Thereafter, the holders
of Senior Notes of such series may look only to such deposit for
payment of the principal and any interest or premium (Article
13).
CONSOLIDATIONS, MERGERS AND DISPOSITION OF ASSETS.
Nothing contained in the Indenture, or in any Senior Notes
issued under the Indenture, prevents the consolidation or merger
of the Company with or into any other entity, or the sale or
other disposition of the Company's property or assets to another
entity, provided that (i) the entity formed by such consolidation
or into which the Company is merged or any entity that acquires
the property or assets of the Company as an entirety or
substantially as an entirety must be a corporation organized and
existing under the laws of the United States, any State thereof
or the District of Columbia that is authorized to acquire and
operate the assets acquired, (ii) such successor assumes by
supplemental indenture under the Indenture the due and punctual
payment of the principal of, and any premium or interest on, the
Senior Notes and the due and punctual performance and observance
of all covenants and conditions under the Indenture, and (iii) if
prior to the Release Date, such successor also assumes by
supplemental indenture under the Mortgage the due and punctual
payment of the principal of, and any premium or interest on, the
Senior Note Mortgage Bonds securing any series of Senior Notes
and the due and punctual performance and observance of all
covenants and conditions of the Mortgage required to be performed
by the Company with respect to such Senior Note Mortgage Bonds
(Section 801(a)). Upon any such consolidation, merger or sale or
transfer of assets as an entirety or substantially as an
entirety, the successor corporation will succeed to and be
substituted for the Company under the Indenture, and will be
entitled to exercise every right and power of the Company under
the Indenture (Section 802(a)). Nothing contained in the
Indenture or in any of the Senior Notes issued under the
Indenture prevents
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the Company from merging into itself any other entity, from
acquiring by purchase or otherwise all or part of the property or
assets or any other entity, or from selling or disposing of its
property or assets not as an entirety or substantially as an
entirety (Section 802(b)).
For purposes of the Indenture, the conveyance or other
transfer by the Company, in a single transaction or a series of
related transactions, of either (i) all or any portion of the
Company's facilities for the generation and transmission of
electric energy or (ii) all or any portion of the Company's
facilities for the distribution of electric energy, in either
case alone or in combination with other assets (but not in
combination with the other) will not be deemed to constitute a
conveyance or other transfer of the properties and assets of the
Company as an entirety or substantially as an entirety. The
character of particular facilities will be determined in
accordance with the Uniform System of Accounts prescribed for
public utilities and licensees subject to the Federal Power Act,
as amended, to the extent applicable (Section 801(b)).
RESIGNATION OR REMOVAL OF THE INDENTURE TRUSTEE.
The Indenture Trustee may resign at any time with respect
to the Senior Notes of any series, which resignation shall become
effective upon the appointment of a successor trustee (Section
609). If the Indenture Trustee acquires a conflicting interest
within the meaning of the Trust Indenture Act, the Indenture
Trustee is obligated to eliminate such conflicting interest or
resign (Section 607).
The Indenture Trustee may be removed as trustee with
respect to any series or Senior Notes at any time by action of the
holders of a majority of the principal amount of Senior Notes of
such series, and under certain circumstances may be removed by
the Company (Section 609).
GOVERNING LAW.
The Indenture and the Senior Notes are governed by, and
construed in accordance with, New York law.
RELATIONSHIPS WITH INDENTURE TRUSTEE.
The Bank of New York, the Indenture Trustee under the
Indenture, also is the trustee under the Mortgage and under other
indentures of the Company relating to its (i) medium-term notes,
(ii) 5% Convertible Debentures due 2002, (iii) 7% Convertible
Debentures due 2018, (iv) 7-3/8% Junior Subordinated Debentures
due 2038 and (v) sale and leaseback of the Company's Control
Center. The Company maintains with The Bank of New York or its
affiliates, as it does with various other banks, a demand deposit
account and conventional and revolving credit arrangements. The
Bank of New York also is the issuing and paying agent
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for medium-term notes issued by PCI and is the institutional
trustee of Potomac Electric Power Company Trust I, the Company's
wholly owned financing subsidiary trust.
The Indenture provides that any money collected by the
Trustee following an Event of Default first shall be applied to
discharge the Company's obligations to compensate the Indenture
Trustee, to reimburse the Indenture Trustee for expenses,
disbursements and advances, and to satisfy the Company's
indemnification obligations to the Trustee (Sections 507 and
606).
DESCRIPTION OF SENIOR NOTE MORTGAGE BONDS AND MORTGAGE
GENERAL.
The Senior Note Mortgage Bonds will be issued under the
Mortgage and Deed of Trust, dated July 1, 1936, between the
Company and The Bank of New York, as trustee and as successor in
such capacity to The Riggs National Bank of Washington, D.C. (the
"Mortgage Trustee"), as amended and supplemented and as to be
further supplemented by a separate supplemental indenture (a
"Mortgage Bond Supplemental Indenture") each time a new series of
Mortgage Bonds is issued under the Mortgage and Deed of Trust
(including a series of Senior Note Mortgage Bonds issued in
connection with the issuance of a new series of Senior Notes).
The Mortgage and Deed of Trust, as so amended and supplemented
and as it is further supplemented, is referred to herein as the
"Mortgage." Copies of the documents currently constituting the
Mortgage and the form of Mortgage Bond Supplemental Indenture are
filed as exhibits to the Registration Statement and are hereby
incorporated by reference.
The Mortgage does not contain any covenants or other
provisions that specifically are intended to afford holders of
the Senior Note Mortgage Bonds special protection in the event of
a highly leveraged transaction.
The following summary of the terms of the Senior Note
Mortgage Bonds and the Mortgage does not purport to be complete
and is subject in all respects to the provisions of, and is
qualified by reference to, the Mortgage and the Prospectus
Supplement. The cited Sections and Articles, unless otherwise
indicated, are citations to the Mortgage. Capitalized terms that
are not defined in this Prospectus are used as defined in the
Mortgage. Unless the context otherwise requires, all references
to Mortgage Bonds include the Senior Note Mortgage Bonds.
ISSUANCE OF ADDITIONAL BONDS.
Additional Mortgage Bonds may be issued under the Mortgage
in an aggregate principal amount of up to (i) 60% of the net
bondable value of property additions that are not subject to a
prior lien, (ii) the amount of cash deposited with the Mortgage
Trustee for such purpose (which cash thereafter may be withdrawn
on the same basis that additional Mortgage
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Bonds may be issued, and if not withdrawn within three years must
be used by the Mortgage Trustee to purchase or redeem outstanding
Mortgage Bonds), and (iii) the aggregate principal amount of
Mortgage Bonds paid at maturity, redeemed or repurchased (other
than with funds from the trust estate) and not previously used as
the basis for the issuance of additional Mortgage Bonds, the
withdrawal of cash or the reduction of the amount of cash
required to be paid to the Mortgage Trustee upon the release of
property ("Refundable Bonds"), in each case, subject to the
limitation described below (Sections 4, 6 and 7 of Article III;
and Section 4 of Article VIII).
Additional Mortgage Bonds may not be issued unless Net
Earnings of the Company Available for Interest and Property
Retirement Appropriations (defined generally as earnings before
depreciation, amortization, income taxes and interest charges)
for any 12 consecutive calendar months during the immediately
preceding 15 calendar months have been at least two times the
aggregate annual interest charges on all outstanding Mortgage
Bonds and the additional Mortgage Bonds then being issued.
However, this limitation does not apply if the Mortgage Bonds are
being issued on the basis of (i) Mortgage Bonds paid at or
redeemed or purchased within two years prior to maturity or (ii)
under limited circumstances, certain property additions (Sections
3, 4 and 7 of Article III). Giving effect to the issuance of the
Senior Note Mortgage Bonds at an assumed rate of interest of 7%,
such Net Earnings for the twelve months ended June 30, 1998,
would be approximately 5.4 times such annual interest charges.
This level of coverage would permit issuance of approximately
$2.9 billion of additional Mortgage Bonds (in addition to the
Senior Note Mortgage Bonds) at an assumed average interest rate
of 7% per annum, against property additions or cash deposits,
although only approximately $650 million of additional Mortgage
Bonds could be issued on the basis of unbonded net property
additions.
So long as any Senior Note Mortgage Bonds are outstanding,
property additions constructed or acquired on or before
December 31, 1946, may not be made the basis for the issuance of
Mortgage Bonds, the withdrawal of cash or the reduction of cash
required to be paid to the Mortgage Trustee (Part IV, Section 2,
of the Mortgage Bond Supplemental Indenture).
The issuance by the Company of bonds secured by a lien
that is prior to the lien of the Mortgage is permitted by the
Mortgage under certain circumstances (Section 16 of Article IV).
After giving effect to the issuance of the Senior Note
Mortgage Bonds (which are to be issued against property
additions), approximately $630 million of property additions and
$1.2 billion of Refundable Bonds will remain available for the
purposes permitted in the Mortgage, including the issuance of
additional Mortgage Bonds.
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SECURITY.
Mortgage Lien. The Senior Note Mortgage Bonds will be
secured, together with all other Mortgage Bonds now or hereafter
issued under the Mortgage, by a direct first lien (subject to
certain permitted leases, liens and other minor encumbrances) on
substantially all of the properties and franchises of the Company
(the principal properties being the Company's generating stations
and its electric transmission and distribution systems), but
excluding 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, other materials, merchandise and supplies acquired by
the Company for the purpose of resale or leasing to its customers
in the ordinary course of business, and all electric energy and
other materials or products generated, manufactured, produced or
purchased by the Company for sale, distribution or use in the
ordering course of business. 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 lien of the Mortgage extends to after-acquired
property, subject to rights of persons having superior equities
attaching prior to the recording or filing of an appropriate
supplemental indenture.
Release of Property from Mortgage Lien. The Mortgage
permits property to be released from the lien of the Mortgage
upon the deposit with the Mortgage Trustee of cash or purchase
money obligations secured by the property released, in an
aggregate amount at least equal to the fair value of the property
to be released. The Mortgage alternatively permits the Company
to reduce the amount required to be deposited upon the release of
property by reducing by an equal amount the principal amount of
Refundable Bonds against which additional Mortgage Bonds may be
issued. The Mortgage also contains certain requirements relating
to the withdrawal of cash deposited to obtain a release of
property (Articles VII and VIII).
MORTGAGE DEFAULTS.
Upon the occurrence of an Event of Default under the
Mortgage, the Mortgage Trustee may, and upon the written request
of the holders of not less than 25% of the principal amount of
all outstanding Mortgage Bonds the Mortgage Trustee shall,
declare all of the outstanding Mortgage Bonds immediately due and
payable. Such declaration, however, is subject to the condition
that, if all interest in arrears has been paid and all defaults
have been cured, the
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holders of a majority of the outstanding principal amount of
Mortgage Bonds may waive such default and rescind such
acceleration (Section 1 of Article IX).
Upon the occurrence of an Event of Default the Mortgage
Trustee may, and upon the written request of the holders of not
less than 25% of the principal amount of all outstanding Mortgage
Bonds the Mortgage Trustee shall, enforce the lien of the
Mortgage by foreclosing on the trust estate (Section 4 of Article
IX). The holders of a majority in principal amount of Mortgage
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 may not involve the Mortgage Trustee in any
personal liability without indemnifying it to its satisfaction
(Section 11 of Article IX).
No holder of a Mortgage Bond has the right to institute
proceedings for the enforcement of the Mortgage, unless (i) such
holder previously has given the Mortgage Trustee written notice
of an existing default, (ii) the holders of at least 25% of the
outstanding principal amount of the Mortgage Bonds have requested
in writing that the Mortgage Trustee take action under the
Mortgage (and provided the Mortgage Trustee with indemnity
satisfactory to it), and (iii) the Mortgage Trustee refuses or
neglects to comply with such request within a reasonable time
(Section 12 of Article IX). However, this provision does not
impair the right of any holder of a Mortgage Bond to enforce the
obligation of the Company to pay the principal and interest on
such Mortgage Bond when due.
Events of Defaults under the Mortgage include (i) the
failure to pay principal when it becomes due (whether at the
stated maturity or otherwise), (ii) the failure to pay interest
or to satisfy any sinking fund obligation within 30 days after
the date on which it becomes due, (iii) the failure to perform or
observe any other covenant, agreement or condition of the
Mortgage, which failure continues for at least 60 days after
notice to the Company by the Mortgage Trustee or the holders of
at least 15% in principal amount of Mortgage Bonds, and (iv)
certain events of bankruptcy, insolvency or reorganization
(Section 1 of Article IX).
While the Mortgage by its terms does not require that
periodic evidence be furnished to the Mortgage Trustee as to the
absence of defaults or as to compliance with the terms of the
Mortgage, the Trust Indenture Act requires the Company to provide
to the Mortgage Trustee annually a certificate as to compliance
with the conditions and covenants under the Mortgage.
MODIFICATION OF MORTGAGE.
With the consent of the holders of 80% in principal amount
of Mortgage Bonds, and of 80% in principal amount of Mortgage
Bonds of each series affected if less than all are affected, the
Mortgage may be amended to alter the rights and obligations of
the Company and of the holders of Mortgage Bonds, except that no
such amendment may change the terms of payment of the principal
or interest on any Mortgage Bonds or reduce the percentage of
holders whose consent is required to effect any change (Section 6
of Article XV).
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<PAGE>
The Mortgage Bond Supplemental Indenture provides that the
foregoing percentages shall be reduced to 60% upon the consent or
agreement to such change by the holders of all outstanding
Mortgage Bonds. The Indenture Trustee, as registered holder of
the Senior Note Mortgage Bonds, will be deemed to have agreed to
such reduction pursuant to the terms of the Mortgage Bond
Supplemental Indenture. This change will become effective as to
all of the outstanding Mortgage Bonds, including the Senior Note
Mortgage Bonds that will secure the Senior Notes to be issued
pursuant to this Prospectus, at such time as all of the
supplemental indentures with respect to outstanding Mortgage
Bonds include this provision. After giving effect to the
issuance of Senior Note Mortgage Bonds securing the Senior Notes
offered hereby, 7.8% of the outstanding Mortgage Bonds will have
been issued under a supplemental indenture containing the
modified provision.
DEFEASANCE AND DISCHARGE.
If moneys for the payment or redemption of Mortgage Bonds,
including the payment of all interest due thereon, is deposited
with the Mortgage Trustee and the Company has observed all of its
covenants under the Mortgage, the Mortgage Bonds will be deemed
paid under the Mortgage and, upon the request of the Company, the
Mortgage Trustee is obligated cancel and discharge the lien of
the Indenture (Article XVI).
CONSOLIDATIONS, MERGERS AND DISPOSITIONS OF ASSETS.
Nothing contained in the Mortgage, or any Mortgage Bonds
issued under the Mortgage, prevents the consolidation with the
Company or the merger into the Company of another corporation,
the merger of the Company into another corporation, or the sale
or lease by the Company of its property as an entirety or
substantially as an entirety, provided that (i) the transaction
is permitted by law and is approved by all required governmental
entities, (ii) the terms of the transaction do not impair the
lien and security of the Mortgage on any part of the trust estate
or the rights and powers of the Mortgage Trustee or the holders
of Mortgage Bonds, (iii) in the case that the Company is not the
surviving corporation or in the case of a sale of assets, the
surviving or acquiring corporation satisfies certain financial
requirements, and (iv) the successor corporation assumes by
supplemental indenture the obligations of the Company under the
Mortgage (Section 1 of Article XII).
PLAN OF DISTRIBUTION
The Company may sell the Senior Notes: (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
Senior Notes being offered thereby sets forth the terms of the
offering of such Senior Notes, including the name or names of any
underwriters, the purchase price of such Senior Notes and the
proceeds to the Company from such sale, any underwriting
discounts and other items constituting
-22-
<PAGE>
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 Senior Notes
may be listed.
If underwriters are used in the sale, the Senior Notes
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 Senior Notes
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 Senior Notes
offered thereby will be subject to certain conditions precedent,
and the underwriters will be obligated to purchase all such
Senior Notes 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.
Senior Notes 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 Senior Notes 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 Senior Notes
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.
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, 1997 have been so
incorporated in reliance on the report of PricewaterhouseCoopers
LLP, independent accountants, given on the authority of said firm
as experts in auditing and accounting.
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<PAGE>
With respect to the unaudited consolidated financial
information of the Company for the six- and twelve-month periods
ended June 30, 1998 and 1997 incorporated by reference in this
Prospectus, PricewaterhouseCoopers LLP reported that they have
applied limited procedures in accordance with professional
standards for a review of such information. However, their
separate report dated August 11, 1998, incorporated by reference
herein, states that they did not audit and they do not express
opinions on that unaudited consolidated financial information.
PricewaterhouseCoopers LLP has not carried out any significant or
additional audit tests beyond those which would have been
necessary if the report had not been included. Accordingly, the
degree of reliance on their report on such information should be
restricted in light of the limited nature of the review
procedures applied. PricewaterhouseCoopers LLP is not subject to
the liability provisions of Section 11 of the 1933 Act for their
report on the unaudited consolidated financial information
because such report is not a "report" or a "part" of the
registration statement prepared or certified by
PricewaterhouseCoopers LLP within the meaning of Sections 7 and
11 of the 1933 Act.
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.
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<PAGE>
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Estimated expenses relating to the Senior Notes (assuming
an issuance of $270,000,000) are as follows:
Registration fee...................... $ 79,650
Recordation taxes..................... 1,200,000
Rating Agency fees.................... 50,000
Printing.............................. 40,000
Trustee's fees and expenses........... 50,000
Fee of independent accountants........ 25,000
Fees of counsel....................... 115,000
Expenses incidental to qualification
under Blue Sky Laws................. 10,000
Miscellaneous......................... 20,305
----------
Total....................... $1,590,000
==========
ITEM 15. 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.
II-1
<PAGE>
Under 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 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 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 Section 13.1-702, a corporation may indemnify an officer,
employee or agent of a corporation to the same extent as a
director. Under Section 13.1-704, a corporation may provide
indemnification in addition to that provided by statute if
authorized by its Articles of Incorporation, a by-law 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.
In the Underwriting Agreement, the underwriters 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-2
<PAGE>
ITEM 16. EXHIBITS.
EXHIBIT NO. DESCRIPTION OF EXHIBIT REFERENCE*
- ----------- ---------------------- ----------
1.1 --Form of Underwriting Agreement Filed herewith.
for the Senior Notes
4.1 --Form of the Senior Note Mortgage Included in
Bonds Exhibit No. 4.4.
4.2 --Form of the Senior Notes Included in
Exhibit No. 4.6.
4.3.1 --Mortgage and Deed of Trust, Exh. B-4 to
dated July 1, 1936, of the Company First Amendment,
to The Riggs National Bank of 6/19/36, to
Washington, D.C., as Trustee, Registration
securing First Mortgage Bonds Statement No.
of the Company, and Supplemental 2-2232.
Indenture dated 7/1/36
--Supplemental Indentures, to
the aforesaid Mortgage and Deed
of Trust, dated--
4.3.2 December 1, 1939 and Exhs. A & B
December 10, 1939 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, 1942 Exh. B-1 to
Amendment No. 2,
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.
II-3
<PAGE>
EXHIBIT NO. DESCRIPTION OF EXHIBIT REFERENCE*
- ----------- ---------------------- ----------
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 Exh. 4-B to
March 15, 1955 Registration
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.
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.
II-4
<PAGE>
EXHIBIT NO. DESCRIPTION OF EXHIBIT REFERENCE*
- ----------- ---------------------- ----------
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 Exh. A-1 to
April 3, 1961 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.
II-5
<PAGE>
EXHIBIT NO. DESCRIPTION OF EXHIBIT REFERENCE*
- ----------- ---------------------- ----------
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.
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.
II-6
<PAGE>
EXHIBIT NO. DESCRIPTION OF EXHIBIT REFERENCE*
- ----------- ---------------------- ----------
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.
II-7
<PAGE>
EXHIBIT NO. DESCRIPTION OF EXHIBIT REFERENCE*
- ----------- ---------------------- ----------
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.
4.3.83 October 2, 1997 Exh. 4 to
Form 10-K,
3/26/98.
4.4 --Form of Supplemental Indenture Filed herewith.
between the Registrant and
The Bank of New York, as successor
Trustee, with respect to the Senior
Note Mortgage Bonds
4.5 Form of Indenture, dated ________, Filed herewith.
1998, between the Registrant and
The Bank of New York, as Indenture
Trustee, with respect to the
Senior Notes
4.6 --Form of Supplemental Indenture Filed herewith.
between the Registrant and The
Bank of New York, as Indenture
Trustee, with respect to the
Senior Notes
5 --Opinion of William T. Torgerson Filed herewith.
12 --Computation of Ratios Exh. 12 to Form
10-Q, 8/11/98.
15 --Letter re Unaudited Financial Filed herewith.
Information
23.1 --Consent of Filed herewith.
PricewaterhouseCoopers LLP
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.
II-8
<PAGE>
EXHIBIT NO. DESCRIPTION OF EXHIBIT REFERENCE*
- ----------- ---------------------- ----------
25.1 --Form T-1 Statement of Filed herewith.
Eligibility and Qualification
under the Trust Indenture Act
of 1939 of The Bank of New York,
with respect to the Senior Note
Mortgage Bonds
25.2 --Form T-1 Statement of Filed herewith.
Eligibility and Qualification
under the Trust Indenture Act
of 1939 of The Bank of New York,
with respect to the Senior Notes
* 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.
II-9
<PAGE>
(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 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) That, for the purpose of determining any liability
under the Securities Act of 1933, each post-effective amendment
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
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.
(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 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-10
<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 26th day of
October, 1998.
POTOMAC ELECTRIC POWER COMPANY
By John M. Derrick, Jr.*
------------------------------------
(JOHN M. DERRICK, JR., PRESIDENT AND
CHIEF EXECUTIVE OFFICER)
Pursuant to the requirements of the Securities Act of
1933, this Registration Statement has been signed by the following
persons in the capacities and on the date indicated.
(i) Principal Executive Officer:
John M. Derrick, Jr.* President, Chief Executive
- -----------------------
(JOHN M. DERRICK, JR.) Officer and Director April 22, 1998
(ii) Principal Financial Officer and
(iii) Principal Accounting Officer:
D. R. Wraase* Senior Vice President,
- -----------------------
(DENNIS R. WRAASE) Chief Financial Officer
and Director April 22, 1998
(iv) Directors:
Roger R. Blunt, Sr.* Director
- -----------------------
(ROGER R. BLUNT, SR.) April 22, 1998
Edmund B. Cronin, Jr.* Director
- -----------------------
(EDMUND B. CRONIN, JR.) April 22, 1998
Richard E. Marriott* Director
- -----------------------
(RICHARD E. MARRIOTT) April 22, 1998
II-11
<PAGE>
David O. Maxwell* Director
- -----------------------
(DAVID O. MAXWELL) April 22, 1998
Floretta D. McKenzie* Director
- -----------------------
(FLORETTA D. McKENZIE) April 22, 1998
Edward F. Mitchell* Director
- -----------------------
(EDWARD F. MITCHELL) April 22, 1998
Peter F. O'Malley* Director
- -----------------------
(PETER F. O'MALLEY) April 22, 1998
Director
- -----------------------
(LOUIS A. SIMPSON)
A. Thomas Young* Director
- -----------------------
(A. THOMAS YOUNG) April 22, 1998
*By: /s/ Ellen Sheriff Rogers
------------------------
(ELLEN SHERIFF ROGERS,
ATTORNEY-IN-FACT)
II-12
<PAGE>
POTOMAC ELECTRIC POWER COMPANY
Senior Notes
UNDERWRITING AGREEMENT
[Date]
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 Senior Notes of the designation, with
the terms and in the amount, specified in Schedule I hereto (the
"Senior Notes"). 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 Senior Notes. The Company has
---------------------------
authorized by appropriate corporate action and proposes to issue
and sell the Senior Notes, to be issued under an Indenture, dated
_______________, 1998, between the Company and The Bank of New
York, as trustee (the "Indenture Trustee"), and the indenture
supplemental thereto relating to the Senior Notes (herein
collectively called the "Senior Note Indenture"). The Senior Notes
will be secured by a corresponding series of First Mortgage Bonds
(the "First Mortgage Bonds") issued under the Company's 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 First
Mortgage Bonds (herein collectively called the "Mortgage Bond
Indenture"). Certain of the terms and provisions relating to the
Senior Notes, the First Mortgage Bonds, the Senior Note Indenture
and the Mortgage Bond 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") a registration
statement on Form S-3 (No. 333- )(the "Registration
Statement"), including a prospectus, for the registration of
the Senior Notes 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 Statement has been declared effective by the
Commission and which Indenture has been qualified under the
1939 Act. Such Registration Statement, 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 Indenture Trustee, and
the prospectus contained in
<PAGE>
the Registration Statement as supplemented either
by a prospectus supplement, dated the date hereof,
relating to the terms and offering of the Senior
Notes 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 (including, in each case, the documents
incorporated by reference therein pursuant to Item 12 of
Form S-3 under the 1933 Act) is hereinafter called
the "Prospectus;" 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 Senior Notes 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
senior notes other than the Senior Notes 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
Senior Notes (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 form of Senior
Note Indenture and the Mortgage Bond 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 Senior
Note Indenture and the Mortgage Bond 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
- 2 -
<PAGE>
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 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 when filed included or will include any
untrue statement of a material fact or omitted 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 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
PricewaterhouseCoopers LLP ("PWC"), 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 Senior Notes for the consideration herein
specified and upon the terms and conditions herein contained
will not result in a breach of any of the
- 3 -
<PAGE>
terms or provisions of or constitute a default under the
Company's Certificate of Incorporation 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.
(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 Senior Notes. 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 Senior Notes set forth opposite the name of such
Underwriter in Schedule II hereto.
SECTION 4. Time and Place of Closing. Payment for the
-------------------------
Senior Notes 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 Senior Notes, at the office of The Bank of New York, 101
Barclay Street, New York, N.Y., to the Representatives for the
respective accounts of the several Underwriters. The date and time
of such delivery and payment are herein called the "Closing Date."
Payment for the Senior Notes shall be in immediately available
funds. Certificates for the Senior Notes 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 Senior Notes
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 Bank of New York.
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 Senior Notes.
(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
- 4 -
<PAGE>
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.
(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 Senior Notes
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 Senior Notes under securities laws and
the determination of the legality of the Senior Notes 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 Senior
Notes; 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 Senior Notes 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
- 5 -
<PAGE>
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 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 number of copies of 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
this subparagraph; and
- 6 -
<PAGE>
(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.
(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
Rule 158 of 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 Senior Notes 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 Senior Notes or First Mortgage Bonds
of the Company.
- 7 -
<PAGE>
(l) The Company will use the net proceeds received
from the sale of the Senior Notes in the manner specified in
the Prospectus under "Use of Proceeds".
SECTION 6. Conditions of Underwriters' Obligations. The
---------------------------------------
several obligations of the Underwriters to purchase and pay for the
Senior Notes 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, 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., each 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, sale and delivery of the
Senior Notes shall be in effect; that at or prior to the
Closing Date the certificate of such Public Service
Commission permitting the issue of the Senior Notes 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 which they were made, not misleading, other
than any statement contained in, or any matter omitted from,
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.
(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
- 8 -
<PAGE>
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 PWC 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 (i) 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
(ii) 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 PWC: (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 (1) 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 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; (2) the
- 9 -
<PAGE>
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; (3) the ratios of earnings to
fixed charges, actual and (if any) pro forma, as set forth in
the Registration Statement were not arithmetically correct;
(4) 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 (5) 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 or (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 7% Convertible Debentures and the
5% Convertible Debentures. The letter of PWC 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.
(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
Underwriter shall have
- 10 -
<PAGE>
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 Senior Notes 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 Senior Notes 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
telephone, 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 Senior Notes 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
Senior Notes 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 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.
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
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<PAGE>
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 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 Prospectus as originally filed or as subsequently
amended or supplemented, 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 Prospectus as originally filed or as subsequently
amended or supplemented; 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 Senior Notes to any
person if such Underwriter failed to send or give a copy of the
Prospectus (as it may have been amended or supplemented) (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 Senior Notes. 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 Senior Notes.
(b) Each Underwriter agrees to indemnify and hold harmless
the Company, its officers and directors, and each person who
controls the Company or any of its officers and directors 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
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<PAGE>
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 written consent of the Representatives) 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 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 Prospectus as originally filed or as
subsequently amended or supplemented, 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 Prospectus as originally filed
or as subsequently amended or supplemented. 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 Senior
Notes. The Company agrees promptly to notify the Representatives
of the commencement of any litigation or proceedings against the
Company, any of its officers or directors or any controlling person
in connection with the sale of Senior Notes. 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 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
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<PAGE>
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 Senior Notes, 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 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 Senior Notes shall be deemed to be in the
same proportion as the total net proceeds from the offering of such
Senior Notes (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
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<PAGE>
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 Senior Notes, or (iv) the Company shall have sustained
a substantial loss by fire, flood, accident or other calamity which
renders it impracticable to consummate the sale of the Senior Notes
and the delivery of the Senior Notes 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 Senior Notes which
it or they are obligated to purchase hereunder (the "Defaulted
Senior Notes"), then the remaining Underwriters (the "Non-
Defaulting Underwriters") shall have the right, within 24
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<PAGE>
hours after the Closing 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 Senior Notes
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
Senior Notes, then:
(a) If the principal amount of the Defaulted Senior
Notes does not exceed 10% of the principal amount of the
Senior Notes, the Non-Defaulting Underwriters shall be
obligated to purchase the total number of such Defaulted
Senior Notes 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 Senior
Notes exceeds 10% of the principal amount of the Senior
Notes, 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 Senior Notes to the Underwriters.
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, heirs or legal representatives. 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
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<PAGE>
or any provision herein contained. The term "successors" as used in
this Agreement shall not include any purchaser, as such purchaser,
of any Senior Notes 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 Senior Notes
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.
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.
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<PAGE>
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 _________________________________
Dennis R. Wraase
Senior Vice President and
Chief Financial Officer
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 Statement No. 333-_____
Representative and Address:
Senior Notes:
Designation: Senior Notes, _____% Series
due ____
Principal Amount: $___________
Supplemental Indenture dated as of _________, 199_
Date of Maturity:
Interest Rate:
Purchase Price: ______% of the principal
amount thereof
Public Offering Price: ______% of the principal amount
thereof, plus accrued interest, if
any, from the date of delivery to
the Underwriters
Closing Date and Location: _________, 199_ at 10:00 a.m.
At the offices of Potomac Electric Power Company
Suite 841
1900 Pennsylvania Avenue, N.W.
Washington, DC 20068
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<PAGE>
SCHEDULE II
Principal
Amount
Name of Underwriters of Senior Notes
$
Total $
- 20 -
<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 Senior Notes, ___%
Series due _____ (the "Senior Notes"), which are being issued under
an Indenture, dated ____, 1998 (the "Senior Note Indenture"),
between the Company and The Bank of New York, as trustee (the
"Senior Note Trustee"), as supplemented by a Supplemental Indenture
thereto, dated _____, 19__, with respect to the Senior Notes (the
"Senior Note Supplemental Indenture"), and which are being
purchased by the Underwriters named in the Underwriting Agreement,
dated _____, 19__, and between the Underwriters and the Company
with respect to the Senior Notes (the "Underwriting Agreement").
The Senior Notes will be secured by First Mortgage Bonds, ___%
Series due ____ (the "First Mortgage Bonds"), of an equal principal
amount 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 "Mortgage Bond Trustee"), as heretofore supplemented
and amended (the "Mortgage Bond Indenture"), and as now further
supplemented and amended by a Supplemental Indenture, dated ____,
19__, with respect to the First Mortgage Bonds (the "Mortgage Bond
Supplemental Indenture"). As used herein, the term "Registration
Statement" means the registration statement of the Company on Form
S-3 filed with the Securities and Exchange Commission, File No. 33-
___. All other capitalized terms used in this opinion letter that
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 in the
Underwriting Agreement.
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 Senior Notes, except for the
specimen thereof attached as Exhibit A to the certificate of the
Senior Note Trustee of even date herewith as to due authentication
and delivery of the Senior Notes, have assumed that the Senior
Notes conform in all respects to such specimen, and have relied on
such certificate as to the due authentication and delivery of the
Senior Notes. I likewise have not examined the First Mortgage
Bonds, except for the specimen thereof attached as Exhibit A to the
certificate of the Mortgage Bond Trustee of even date herewith as
to the due authentication and delivery of the First
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<PAGE>
Mortgage Bonds, have assumed that the First Mortgage Bonds conform
in all respects to such specimen, and have relied on such
certificate as to the due authentication and delivery of the First
Mortgage 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 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 Senior Note Indenture and the Senior Note
Supplemental Indenture each has been duly and validly authorized,
executed and delivered by the Company. The Senior Note Indenture,
as supplemented by the Senior Note Supplemental Indenture, is a
valid and legally binding instrument of the Company that is
enforceable against the Company in accordance with its terms,
except as the same may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance or other laws of general
application relating to the enforcement of creditors' rights or by
general principles of equity.
4. The Mortgage Bond Indenture and the Mortgage Bond
Supplemental Indenture each has been duly and validly authorized,
executed and delivered by the Company. The Mortgage Bond
Indenture, as supplemented by the Mortgage Bond Supplemental
Indenture, is a valid and legally binding instrument of the Company
that is enforceable against the Company in accordance with its
terms, except as the same may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance or other laws of general
application relating to the enforcement of creditors' rights or by
general principles of equity.
5. The Senior Notes have been duly and validly authorized by
all necessary corporate action, have been duly and validly issued
in accordance with the provisions of the Senior Note Indenture and
the Senior Note Supplemental Indenture, and constitute valid and
legally binding obligations of the Company enforceable in
accordance with their terms, except as the same may be limited by
bankruptcy, insolvency, reorganization, fraudulent conveyance or
other laws of general application relating to the enforcement of
creditors' rights or by general principles of equity, and are
entitled to the benefit and security afforded by the Senior Note
Indenture.
- 22 -
<PAGE>
6. The First Mortgage Bonds have been duly and validly
authorized by all necessary corporate action, have been duly and
validly issued in accordance with the provisions of the Mortgage
Bond Indenture and the Mortgage Bond Supplemental Indenture, and
constitute valid and legally binding obligations of the Company
enforceable in accordance with their terms, except as the same may
be limited by bankruptcy, insolvency, reorganization, fraudulent
conveyance or other laws of general application relating to the
enforcement of creditors' rights or by general principles of
equity, and are entitled to the benefit and security afforded by
the Mortgage Bond Indenture.
7. The Registration Statement is effective under the
Securities Act of 1933, as amended (the "1933 Act"), no stop order
suspending the effectiveness of the 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.
8. The approval of the Public Service Commission of the
District of Columbia, which is required for the valid
authorization, issuance and sale of the Senior Notes 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 Senior Notes by the Company in accordance
with the Underwriting Agreement. 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 Senior Notes by the Company
in accordance with the Underwriting Agreement (other than any
applicable requirements of the Maryland Securities Law, as to which
I express an opinion). I 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 Senior Notes (other than compliance with the securities or
"blue sky" laws of any jurisdiction, as to which I express no
opinion).
9. The summary of the terms of the Senior Note Indenture,
the Senior Notes, the Mortgage Bond Indenture and the First
Mortgage Bonds contained in the Registration Statement and
Prospectus fairly describes the provisions thereof required to be
described by the registration form.
10. The Mortgage Bond 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
Mortgage Bond Indenture, subject only to such exceptions, defects,
qualifications and other matters as may be permitted by the
Mortgage Bond Indenture and to such other matters as in my opinion
do not materially affect the security for the First Mortgage Bonds.
The Mortgage and Deed of Trust dated July 1, 1936, and the
supplements and amendments thereto, other than the Mortgage Bond
Supplemental Indenture, have been duly recorded and
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<PAGE>
filed for record in the only counties in which any real property
subject to the lien of the Mortgage Bond Indenture is located, and
the Mortgage Bond Supplemental Indenture also has been so recorded
and filed, and all requisite steps have been taken to perfect the
security interest of the Mortgage Bond Indenture in personal
property of the Company.
11. The Senior Note Indenture constitutes a valid first lien
on the First Mortgage Bonds.
12. 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.
13. 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.
14. The Company has good and valid title in and to all of the
real property reflected in its most recent audited balance sheet
that is incorporated by reference in the Registration Statement
(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 Mortgage
Bond Indenture and for such liens, charges, encumbrances, defects,
qualifications and other matters affecting title, possession or use
as may be permitted by the Mortgage Bond Indenture.
I also advise you that, in my opinion, Registration Statement,
as of the effective date thereof, 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 Senior Note Indenture and the Senior Note
Supplemental Indenture appear on their 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.
Except as set forth in paragraph 9 above, I am not passing
upon, and do not assume any responsibility for, the accuracy,
completeness or fairness of the statements contained in the
Registration Statement and Prospectus and make no representation
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 Senior
Notes," "Description of Indenture" and "Description of Senior Note
Mortgage Bonds and Mortgage," on my general familiarity with the
affairs of the Company, and on my participation in conferences with
officials and
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<PAGE>
other representatives of, and other counsel for, the Company, with
PricewaterhouseCoopers LLP, the independent accountants of the
Company, and with your representatives and your counsel, I do not
believe that Registration Statement, at the time it 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) under the 1933 Act 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 belief,
however, as to the financial statements or other financial or
statistical data constituting a part of, or incorporated by
reference in, the Registration Statement or the Prospectus or as to
the parts of the Registration Statement the constitute the
statement of eligibility of the Senior Note Trustee.
I have assumed, with your approval, but not independently
verified, that the signatures on all documents examined by me are
genuine.
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<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 $____ in principal amount of Senior Notes, ___%
Series due ____ (the "Senior Notes"), which are being issued under
an Indenture, dated _____, 1998 (the "Senior Note Indenture")
between the Company and The Bank of New York, as trustee (the
"Senior Note Trustee"), as supplemented by a Supplemental Indenture
thereto, dated _____, 19__, with respect to the Senior Notes (the
"Senior Note Supplemental 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 Senior Notes (the "Underwriting Agreement").
The Senior Notes will be secured by First Mortgage Bonds, ___%
Series due ____ (the "First Mortgage Bonds") of an equal principal
amount 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 "Mortgage Bond Trustee"), as heretofore supplemented
and amended (the "Mortgage Bond Indenture") and as now further
supplemented and amended by a Supplemental Indenture, dated _____,
19__, with respect to the First Mortgage Bonds (the "Mortgage Bond
Supplemental Indenture").
As used herein, the term "Registration Statement" means the
registration statement of the Company on Form S-3, File No. 33-
_____. All other terms used herein that 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 opinions rendered below. In such examination, we
have assumed the genuiness 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, the
conformity of the Senior Notes to the specimen thereof attached as
Exhibit A to the certificate of the Senior Note Trustee of even
date herewith regarding the due authentication and delivery of the
Senior Notes and the conformity of the First Mortgage Bonds to the
specimen thereof attached as Exhibit A to the certificate of the
Mortgage Bond Trustee of even date herewith regarding due
authentication and delivery of the First Mortgage Bonds. As to any
facts material to our opinion we have, when relevant facts were not
independently established, relied upon the aforesaid certificates.
- 26 -
<PAGE>
Based on the foregoing, and subject to the following
limitations and qualifications, we are of the opinion that:
1. The Company has been duly incorporated and is validly
existing as a corporation 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, the Senior Note Indenture, the Senior Note Supplemental
Indenture and the Mortgage Bond Supplemental Indenture, and to
issue and sell the Senior Notes and to issue the First Mortgage
Bonds.
2. The Underwriting Agreement has been duly authorized,
executed and delivered by the Company.
3. The Senior Note Indenture and the Senior Note
Supplemental Indenture each have been duly and validly authorized
by all necessary corporate action, and have been duly and validly
executed and delivered by the Company. As supplemented by the
Senior Note Supplemental Indenture, the Senior Note Indenture
constitutes a valid and legally binding instrument of the Company
that is enforceable against the Company in accordance with its
terms, except as such enforcement may be limited by bankruptcy,
insolvency, reorganization or other laws affecting the enforcement
of creditors' rights or by general principles of equity. The
Senior Note Indenture, as supplemented by the Senior Note
Supplemental Indenture, has been qualified under the Trust
Indenture Act of 1939, as amended (the "1939 Act").
4. The Mortgage Bond Supplemental Indenture has been duly
and validly authorized by all necessary corporate action, has been
duly and validly executed and delivered by the Company. As
supplemented and amended by the Mortgage Bond Supplemental
Indenture, the Mortgage Bond Indenture constitutes a valid and
legally binding instrument of the Company that is enforceable
against the Company in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency,
reorganization or other laws affecting the enforcement of
creditors' rights or by general principles of equity.
5. The Senior Notes have been duly and validly authorized by
all necessary corporate action, have been duly and validly issued
in accordance with the provisions of the Senior Note Indenture and
the Senior Note Supplemental Indenture, and constitute valid and
legally binding obligations of the Company enforceable in
accordance with their terms, except as such enforcement may be
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 Senior Note Indenture.
- 27 -
<PAGE>
6. The Mortgage Bonds have been duly and validly authorized
by all necessary corporate action, have been duly and validly
issued in accordance with the provisions of the Mortgage Bond
Indenture and the Mortgage Bond Supplemental Indenture, and
constitute valid and legally binding obligations of the Company
enforceable in accordance with their terms, except as such
enforcement may be 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 Mortgage Bond Indenture.
7. The Registration Statement is 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
the Registration Statement has been issued and no proceedings for
that purpose are pending or threatened under Section 8(d) of the
1933 Act. The Registration Statement, 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 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
Form T-1 filed as an exhibit thereto. 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, at
the 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.
8. The approval of the Public Service Commission of the
District of Columbia which is required for the valid authorization,
issuance and sale of the Senior Notes by the Company in accordance
with the Underwriting Agreement has been obtained and, 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 Senior Notes 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 under the laws of the
District of Columbia or the Commonwealth of Virginia that are
legally required as a condition to the valid authorization and
issuance of the Senior Notes (other compliance with the securities
or "blue sky" laws of such jurisdiction, as to which we express no
opinion).
9. The summary of the terms of the Senior Note Indenture,
the Senior Notes, the Mortgage Bond Indenture and the First
Mortgage Bonds contained in the Registration Statement and the
Prospectus fairly describes the provisions thereof required to be
described by the registration statement form.
- 28 -
<PAGE>
In passing upon the forms of the Registration Statement 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 9 above. In connection with the Company's preparation of
the Registration Statement and the Prospectus, we had discussions
with certain of its officers and representatives. Our examination
of the Registration Statement and the Prospectus and our
discussions did not disclose to us any information which gives us
reason to believe that, at the time the Registration Statement
became effective, it 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 are
not making any statement as to the financial statements and other
financial and statistical data constituting a part of the
Registration Statement or the Prospectus.
The opinions set forth herein are solely for your benefit in
connection with the consummation of the transactions contemplated
by the Underwriting Agreement, and may not be relied upon by you
for any other purpose or by any other person for any purpose.
Very truly yours,
Covington & Burling
- 29 -
<PAGE>
[LETTERHEAD OF WINTHROP, STIMSON, PUTMAN & ROBERTS]
Ladies and Gentlemen:
We have acted as counsel for you in connection with your
purchase from Potomac Electric Power Company (the "Company") of
$___ principal amount of its Senior Notes, ___% Series due _____
(the "Senior Bonds"), pursuant to the Underwriting Agreement, dated
_____, 19__, between you and the Company (the "Underwriting
Agreement"). The Senior Notes have been issued under an Indenture,
dated ____, 1998 (the "Senior Note Indenture"), between the Company
and The Bank of New York, as trustee (the "Senior Note Trustee"),
as supplemented by a Supplemental Indenture thereto, dated _____,
19__, with respect to the Senior Notes (the "Senior Note
Supplemental Indenture").
The Senior Notes will be secured by First Mortgage Bonds, ___%
series due ____ (the "First Mortgage Bonds"), of an equal principal
amount 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 "Mortgage Bond Trustee"), as heretofore supplemented
and amended (the "Mortgage Bond Indenture"), and as now further
supplemented and amended by a Supplemental Indenture, dated _____,
19__, with respect to the First Mortgage Bonds (the "Mortgage Bond
Supplemental Indenture").
We are members of the New York Bar and, for purposes of this
opinion, 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, as to all matters covered in such opinion relating to the
laws of the District of Columbia, the State of Maryland and the
Commonwealths of Pennsylvania or Virginia. We do not pass upon the
organization of the Company, titles to property, franchises or the
lien of the Senior Note Indenture or the Mortgage Bond 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 Senior Notes or the
First Mortgage Bonds, except for specimens thereof, and we have
relied upon certificates of the Senior Note Trustee and the
Mortgage Bond Trustee, respectively, 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
- 30 -
<PAGE>
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 copies.
Subject to the foregoing and to the further exceptions and
qualifications set forth below, we are of the opinion that:
1. The Senior Notes 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 Senior Note
Indenture and the Senior Note Supplemental 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 (regardless of whether enforceability is
considered in a proceeding at equity or in law), and by an implied
covenant of good faith and fair dealing; and the Senior Notes are
entitled to the benefits and security afforded by the Senior Note
Indenture.
2. The Mortgage 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
Mortgage Bond Indenture and the Mortgage Bond Supplemental
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 of general
application affecting the enforcement of mortgagees' and other
creditors' rights and by general principles of equity (regardless
of whether enforceability is considered in a proceeding at equity
or in law), and by an implied covenant of good faith and fair
dealing; and the Mortgage Bonds are entitled to the benefits and
security afforded by the Mortgage Bond Indenture.
3. The Underwriting Agreement has been duly authorized,
executed and delivered by the Company.
4. The Senior Note Indenture and the Senior Note Supplemental
Indenture, each 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 of general application
relating to the enforcement of mortgagees' and other creditors'
rights and by general principles of equity (regardless of whether
enforceability is considered in a proceeding at equity or in law),
and by an implied covenant of good faith and fair dealing. The
Senior Note Indenture has been qualified under the Trust Indenture
Act of 1939, as amended (the "1939 Act").
- 31 -
<PAGE>
5. The Mortgage Bond Indenture and the Mortgage Bond
Supplemental each 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 of general application
relating to the enforcement of mortgagees' and other creditors'
rights and by general principles of equity (regardless of whether
enforceability is considered in a proceeding at equity or in law),
and by an implied covenant of good faith and fair dealing.
6. The Registration Statement is 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 the Registration Statement has been issued and no proceedings
for that purpose are pending or threatened under Section 8(d) of
the 1933 Act. The Registration Statement, 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, 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, except that we express no opinion on the
Form T-1 filed as an exhibit thereto. 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 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.
7. The summary of the terms of the Senior Note Indenture,
the Senior Notes, the Mortgage Bond Indenture, and the First
Mortgage Bonds contained in the Registration Statement and
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 the Senior Note Mortgage Bonds and Mortgage --
Security."
8. The approval of the Public Service Commission of the
District of Columbia, which is required for the valid
authorization, issuance and sale of the Senior Notes by the Company
in accordance with the Underwriting Agreement, has been obtained
and, 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
- 32 -
<PAGE>
Senior Notes 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, as to which we express no
opinion herein.)
All legal proceedings and legal opinions rendered in
connection with the issuance and sale of the Senior Notes,
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 Statement 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 Statement and the Prospectus, we have had
conferences with certain of its officers and representatives, with
counsel for the Company, with PricewaterhouseCoopers 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 Statement
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 the Registration Statement, at the time it
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) 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 Statement or the Prospectus or as to
the parts of the Registration Statement that constitute the
statement of eligibility of the Senior Note 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 by any other person or for
any other purpose, without our prior written consent.
- 33 -
==================================================================
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 __________ __, 199_
------------------
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 __________ __, 199_
TABLE OF CONTENTS*
PAGE
Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recitals . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART I
Description of Bonds
Section 1. General description of Bonds of ____ Series. . . . . .
Section 2. Form of face of Bond of ____ Series. . . . . . . . . .
Form of Trustee's certificate. . . . . . . . . . . . .
Text appearing on reverse side of Bond of ____ Series.
Section 3. Denominations of Bonds of ____ Series. . . . . . . . .
Section 4. Execution and form of temporary Bonds of ___ Series. .
PART II
Issue of Bonds
Section 1. Limitation as to principal amount. . . . . . . . . . .
Section 2. Issue of Bonds of ___ Series . . . . . . . . . . . . .
PART III
Redemption at Option of Company
Section 1. Bonds of ____ Series redeemable. . . . . . . . . . . .
Section 2. Event of Default under Senior Note Indenture . . . . .
Section 3. Occurrence of Release Date . . . . . . . . . . . . . .
Section 4. Cancellation . . . . . . . . . . . . . . . . . . . . .
PART IV
Additional Particular Covenants of the Company
Section 1. Company not to withdraw moneys pursuant to Section 2 of
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 to be used for any purpose under the Indenture .
<PAGE>
PART V
Amendment of Indenture to Permit Qualification Under Trust
Indenture Act of 1939. . . . . . . . . . . . . . . . . . . .
PART VI
Amendment of Original Indenture. . . . . . . . . . . . . . . . . .
PART VII
The Trustee
Acceptance of trusts by the Trustee. . . . . . . . . . . . . . . .
Trustee not responsible for validity of the Supplemental Indenture
PART VIII
Miscellaneous Provisions
Execution of Supplemental Indenture in counterparts. . . . . . . .
Appointment of attorneys-in-fact by parties. . . . . . . . . . . .
Testimonium. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Execution. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Company's Acknowledgments. . . . . . . . . . . . . . . . . . . . .
Trustee's Acknowledgments. . . . . . . . . . . . . . . . . . . . .
____________________
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.
ii
<PAGE>
SUPPLEMENTAL INDENTURE, dated as of the ___ day of _________,
nineteen hundred and ninety-_________ (199_), 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 sometimes
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 mentioned, 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; and
WHEREAS, pursuant to the terms and provisions of the Original
Indenture, indentures supplemental thereto dated as of July 1,
1936, December 1, 1939, August 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, August 15, 1974, June 15, 1977, July 1,
1979, 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, September 7, 1995 and October 2, 1997
have been heretofore entered into between the Company and the
Trustee to provide, respectively, for the creation of the first
through the sixty-second series of Bonds thereunder and, in the
case of the supplemental indentures 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, October 2,
1997 and one of the supplemental indentures dated August 15, 1974,
to convey additional property; and
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 seventh 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%
<PAGE>
- 2-
Series due 1991 (the eleventh series), $25,000,000 principal 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 thirteenth series), $40,000,000 principal amount of Bonds of
the 5% Series due 1995 (the fourteenth series), $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
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 twenty-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% Series 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 series), $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% Series 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
series), $60,000,000 principal amount of Bonds of the 14-1/4%
Series due 1992 (the thirty-fifth series), $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% Series
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 series), $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% Series 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 forty-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: $45,000,000 principal amount of Bonds of the
4-1/2% Series due 1999 (the sixteenth series); $15,000,000
principal 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 eighteenth 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
Adjustable Rate Series due 2001 (the thirty-fourth series);
$100,000,000 principal 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 fifty-first series);
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$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 fifty-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 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);
$75,000,000 principal amount of Bonds of the 7-3/8% Series due 2025
(the sixty-first series); and $175,000,000 principal amount of
Bonds of the 6-1/4% Series due 2007 (the sixty-second series); and
WHEREAS, for the purpose of conforming the Original Indenture
to the standards 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, September 7, 1995 and October 2, 1997 have been
heretofore entered into between the Company and the Trustee, and
for the purpose of conveying additional property, indentures
supplemental thereto dated July 15, 1942, October 15, 1947,
December 31, 1948, December 31, 1949, February 15, 1951, February
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, July 1, 1993 and
October 2, 1997 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 indenture dated October 15, 1942
supplemental thereto has been heretofore entered 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 additional Bonds on the basis of the net bondable value
of property additions, upon compliance with the provisions of
Section 4 of Article III of the Original Indenture as amended; and]
WHEREAS, the Company has entered into an Indenture, dated as
of __________ __, 1998 (the "Senior Note Indenture"), with The Bank
of New York, as trustee (the "Senior Note Trustee"), providing for
the issuance thereunder of senior debt securities ("Senior Notes");
and
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WHEREAS, the Company has determined to issue pursuant to a
supplemental indenture to be entered into under the Senior Note
Indenture a series of Senior Notes in the principal amount of
$___,000,000, to be known as the Senior Notes, __% Series due ____
(hereinafter called "Senior Notes of ____ Series); and
WHEREAS, pursuant to Article Fourteen of the Senior Note
Indenture, the Company wishes to issue to the Senior Note Trustee,
as security for the Senior Notes of ____ Series, a new Series of
Bonds under the Original Indenture as amended (i) that have an
aggregate principal amount equal to the principal amount of the
Senior Notes of ___ Series, (ii) that have a stated maturity date
not earlier than the stated maturity of the Senior Notes of ___
Series, (iii) that bear interest at a rate equal to the interest
rate borne by the Senior Notes of ____ Series, (iv) that have
interest payment dates that are the same as the interest payment
dates of the Senior Notes of ____ Series, and (v) that in all other
material respects conform as nearly as is practicable to the terms
of the Senior Notes of ____ Series; and
WHEREAS, for such purposes the Company has determined to
issue a sixty-third series of Bonds under the Original Indenture as
amended in the principal amount of $___,000,000, to be known as
First Mortgage Bonds, __% Series due ____ (hereinafter 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 execution 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 delivery of these presents, and for other
valuable considerations, the receipt whereof is hereby
acknowledged, hereby covenants, declares and agrees with the
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Trustee and its successors in the trust under the Original
Indenture as amended, 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 covenants 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
hereinafter called an "interest payment date"). The Bonds of ____
Series shall be payable 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.
Upon any payment of the principal of, premium, if any, and
interest on, all or any portion of the Senior Notes of ____ Series,
whether at maturity or prior to maturity by redemption or
otherwise, or upon provision for the payment thereof having been
made in accordance with Section ___ of the Senior Note Indenture,
Bonds of ____ Series in a principal amount equal to the principal
amount of such Senior Notes of ____ Series shall, to the extent of
such payment of principal, premium, if any, and interest, be deemed
paid and the obligation of the Company thereunder to make such
payment shall be discharged to such extent and, in the case of the
payment of principal (and premium, if any) Bonds of _____ Series
shall be surrendered to the Company for cancellation as provided in
Section 1409 of the Senior Note Indenture. The Trustee may at
anytime and all times conclusively assume that the obligation of
the Company to make payments with respect to the principal of,
premium, if any, and interest on the Bonds of ____ Series, so far
as such payments at the time have become due, has been fully
satisfied and discharged pursuant to the foregoing sentence unless
and until the Trustee shall have received a written notice from the
Senior Note Trustee signed by one of its officers stating (i) that
timely payment of principal of or premium or interest on, the
Senior Notes of ____ Series has not been so made and (ii) providing
the details of such nonpayment.
Subject to the preceding paragraph, the interest 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 "record
date") which is more than ten days prior to such interest
<PAGE>
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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 default 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.
Each Bond of ____ Series is to be issued to and registered in
the name of the Senior Note Trustee to be held under the terms of
the Senior Note Indenture as security for the Senior Notes of ____
Series. The Bonds of ____ Series shall not be assignable or
transferable except as permitted or required by Section 1408 of the
Senior Note Indenture.
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 ____ Series,
whichever is later. Notwithstanding Section 6 of Article II of the
Original Indenture, any Bond of ____ Series authenticated and
delivered by the Trustee after the close of business on the record
date with respect to any interest 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 delivery of the initial Bonds of ____ Series,
whichever is later.
SECTION 2. The Bonds of ____ Series, and the Trustee's
certificate to be endorsed on the Bonds of ____ Series, shall be
substantially in the following forms, respectively:
[FORM OF FACE OF BOND OF ____ SERIES]
THIS BOND IS NOT TRANSFERABLE EXCEPT TO A SUCCESSOR TRUSTEE UNDER
THE INDENTURE, DATED _____, 1998, AS SUPPLEMENTED, BETWEEN POTOMAC
ELECTRIC POWER COMPANY AND THE BANK OF NEW YORK, AS TRUSTEE
POTOMAC ELECTRIC POWER COMPANY
(A District of Columbia and Virginia corporation)
First Mortgage Bond, __% Series Due ____
No. $_______
CUSIP No. _______
POTOMAC ELECTRIC POWER COMPANY, a corporation organized and
existing under the laws of the District of Columbia and a domestic
corporation of the
<PAGE>
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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 The Bank of New York, as trustee, or
registered assigns, the sum of __________________ dollars, on the
____ day of ______________, in lawful money of the United States of
America, 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 until 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
interest so payable on any ___________ or ________________ will,
subject to certain exceptions provided in the indenture dated as of
___________________, supplemental to the Amended Indenture, 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 payable at the agency of the
Company in the Borough of Manhattan, The City of New York.
Under an Indenture dated as of ________, 1998 (hereinafter
sometimes referred to as the "Senior Note Indenture"), between
Potomac Electric Power Company and The Bank of New York, as trustee
(hereinafter sometimes called the "Senior Note Trustee"), the
Company will issue, concurrently with the issuance of this Bond, an
issue of senior notes under the Senior Note Indenture entitled
Senior Notes, ___% Series due _____________ (the "Senior Notes of
____ Series"). Pursuant to Article XIV of the Senior Note
Indenture, this Bond is issued to the Senior Note Trustee to secure
any and all obligations of the Company under the Senior Notes of
____ Series. Payment of principal of, or premium, if any, or
interest on, the Senior Notes of ____ Series shall constitute
payments on this Bond.
Reference is made to the further provisions of this Bond set
forth on the reverse 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.
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
<PAGE>
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affixed and attested by the facsimile signature of its Secretary or
an Assistant Secretary.
POTOMAC ELECTRIC POWER COMPANY
By __________________________
Vice President
Attest:
____________________________
Secretary
[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 _____________________.
Dated: The Bank of New York
Trustee.
By __________________________
Authorized Signatory
[TEXT APPEARING ON REVERSE SIDE OF BOND OF ____ SERIES]
This Bond is one of a duly authorized issue of Bonds of the
Company (hereinafter called the "Bonds") in unlimited aggregate
principal amount, of the series hereinafter specified, all issued
and to be issued under and equally secured (except in so far as any
purchase or sinking fund or analogous provisions for any particular
series of Bonds, established by any indenture supplemental 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 National 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, September 7,
1995 and October 2, 1997 (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 description
of the properties mortgaged and pledged, the nature and extent of
the security, the rights of the owners of the Bonds and of the
Trustee in respect thereto, and the
<PAGE>
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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, modifications or alterations of the Amended
Indenture, or of any indenture supplemental thereto, and of the
rights and obligations of the Company and of the holders 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 outstanding, 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 amendment will
become effective upon the consent or agreement thereto of the
holders 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 _______________, between the Company and
the Trustee, supplemental to the Amended Indenture.
Upon any payment of the principal of, premium, if any, and
interest on, all or any portion of the Senior Notes of ___ Series,
whether at maturity or prior to maturity by redemption or otherwise
or upon provision for the payment thereof having been made in
accordance with Section 1302 of the Senior Note Indenture, Bonds
of___ Series in a principal amount equal to the principal amount of
such Senior Notes of ___ Series (having both a corresponding
maturity date and interest rate) shall, to the extent of such
payment of principal, premium, if any, and interest, be deemed paid
and the obligation of the Company thereunder to make such payment
shall be discharged to such extent and, in the case of the payment
of principal (and premium, if any) such Bonds of ___ Series shall
be surrendered to the Company for cancellation as provided in
Section 1409 of the Senior Note Indenture. The Trustee may at
anytime and all times conclusively assume that the obligation of
the Company to make payments with respect to the principal of and
premium, if any, and interest on the Senior Notes of ___ Series, so
far as such payments at the time have become due, has been fully
satisfied and discharged pursuant to the foregoing sentence unless
and until the Trustee shall have received a written notice from the
Senior Note Trustee signed by one of its officers stating (i) that
timely payment of, or premium or interest on, the Senior Notes of
___ Series not been made (ii) providing the details thereof.
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This Bond is redeemable (i) on such dates, in such principal
amounts and at the redemption prices as the corresponding Senior
Notes of ____ Series and (ii) upon written demand of the Senior
Note Trustee following the occurrence of an Event of Default under
the Senior Note Indenture and the acceleration of the corresponding
Senior Notes of ____ Series as provided in Section 502 of the
Senior Note Indenture.
This Bond shall not be assignable or transferable except as
permitted or required by Section 1408 of the Senior Note Indenture.
As provided in Section 1409 of the Senior Note Indenture,
from and after the Release Date (as defined in the Senior Note
Indenture), the obligation of the Company with respect to this Bond
shall be deemed to be satisfied and discharged, this Bond shall
cease to secure in any manner the Senior Notes of ___ Series or any
other senior notes outstanding under the Senior Note Indenture and,
pursuant to Section 1409 of the Senior Note Indenture, the Senior
Note Trustee shall forthwith deliver this Bond to the Company for
cancellation.
In case an event of default, as defined in the Amended
Indenture, shall occur, 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 conditions and in the manner and
with the effect provided in the Amended Indenture. 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.
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, either directly or through the Company or any such
predecessor or successor corporation, whether for amounts unpaid on
stock subscriptions or by virtue of any constitution, statute or
rule of law, or by the enforcement of any assessment or penalty or
otherwise, all such liability, whether at common law, in equity, by
any constitution, statute or otherwise, of incorporators,
stockholders, directors or officers being released by every owner
hereof by the acceptance 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 ____.
Section 4. Until Bonds of____ Series in definitive form are
ready for delivery, the Company may execute, and upon its request
in writing the Trustee shall authenticate and deliver, in lieu
thereof, Bonds for such series in temporary form, as provided in
Section 9 of Article II of the Original Indenture as amended.
<PAGE>
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PART II.
Issue of Bonds.
Section 1. Except for Bonds of ____ Series issued pursuant to
Section 13 of Article II of the Original Indenture as amended, the
principal amount of Bonds of ____ Series which may be authenticated
and delivered hereunder is limited to $___,000,000 aggregate
principal amount.
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 authenticated by the Trustee
and delivered (either before or after the recording hereof) 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 Section 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 Indenture 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 authentication 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 and Cancellation of Bonds.
SECTION 1. Bonds of _____ Series shall not be redeemable
except on the respective dates, in the respective principal amounts
and for the respective redemption prices that correspond to the
redemption dates for, the principal amounts to be redeemed of, and
the redemption prices for, the Senior Notes of ____ Series and
except as set forth in Section 2 herein.
In the event the Company redeems any Senior Notes of ____
Series prior to maturity in accordance with the provisions of the
Senior Note Indenture, the
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Senior Note Trustee shall on the same date deliver to the Company
the Bonds of ____ Series in principal amounts corresponding to the
Senior Notes of ____ Series so redeemed, as provided in Section
1409 of the Senior Note Indenture. The Company agrees to give the
Senior Note Trustee notice of any such redemption of the Senior
Notes of ____ Series on or before the date fixed for any such
redemption.
SECTION 2. Upon the occurrence of an Event of Default under
the Senior Note Indenture and the acceleration of the Senior Notes
of ____ Series, the Bonds of ____ Series shall be redeemable in
whole upon receipt by the Company of a written demand (hereinafter
called a "Redemption Demand") from the Senior Note Trustee stating
that there has occurred under the Senior Note Indenture both an
Event of Default and a declaration of acceleration of payment of
principal, accrued interest and premium, if any, on the Senior
Notes of ____ Series, specifying the last date to which interest on
such notes has been paid (such date being hereinafter referred to
as the "Initial Interest Accrual Date") and demanding redemption of
Bonds of ____ Series. The Company waives any right it may have to
prior notice of such redemption under the Original Indenture as
amended. Upon surrender of the Bonds of ____ Series by the Senior
Note Trustee to the Trustee, the Bonds of ____ Series shall be
redeemed at a redemption price equal to the principal amount
thereof plus accrued interest thereon from the Initial Interest
Accrual Date to the date of the Redemption Demand; provided,
however, that in the event of a rescission of acceleration of
Senior Notes of ___ Series pursuant to paragraph of Section ___ of
the Senior Note Indenture, then any Redemption Demand shall thereby
be deemed to be rescinded by the Senior Note Trustee; but no such
rescission or annulment shall extend to or affect any subsequent
default or impair any right consequent thereon.
SECTION 3. As provided in Section 1404 of the Senior Note
Indenture, from and after the Release Date (as defined in the
Senior Note Indenture), the obligations of the Company with respect
to the Bonds of ___ Series shall be deemed to be satisfied and
discharged, the Bonds of ___ Series shall cease to secure in any
manner the Senior Notes of ___ Series or any other senior notes
outstanding under the Senior Note Indenture and, pursuant to
Section 1409 of the Senior Note Indenture, the Senior Note Trustee
shall forthwith deliver the Bonds of ___ Series to the Company for
cancellation.
Section 4. All Bonds delivered to or redeemed by the Trustee
pursuant to the provisions of this Part III shall forthwith be
cancelled.
PART IV.
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 Section 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 an amount equal to the aggregate principal
amount of such of the refundable Bonds as were theretofore
<PAGE>
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issued by the Company; and that upon any such withdrawal 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 V.
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 provisions of the
Original Indenture so as to permit the qualification of the
Original Indenture under the Trust Indenture Act of 1939.
Except to the extent specifically provided herein, no
provision of this Supplemental 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 VI.
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 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 VII.
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:
<PAGE>
- 14 -
The Trustee shall not be responsible in any manner whatsoever
for or in respect 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
Indenture 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 VIII.
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 original; but such counterparts shall together
constitute but one and the same instrument.
Potomac Electric Power Company hereby constitutes and
appoints Dennis R. Wraase, one of its Senior Vice Presidents, 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
Potomac Electric Power Company.
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.
IN WITNESS WHEREOF, said Potomac Electric Power Company 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 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
acceptance of the trust hereby created, has caused this
Supplemental Indenture to be executed on its behalf by one of its
________________, and its corporate seal to be hereto affixed and
said seal and this Supplemental Indenture to be
<PAGE>
- 15 -
attested by one of its _________________, all as of the ____ day of
______________, One thousand nine hundred and ninety-____.
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, as Trustee
(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
<PAGE>
- 16 -
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 _________________, 199_
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 acknowledged the same before me
in my District aforesaid and acknowledged the foregoing instrument
to be the act and deed of Potomac Electric Power Company.
Given under my hand and official seal this ____ day of
____________, 199_.
(Notarial Seal)
..................................
Notary Public
District of Columbia
<PAGE>
- 17 -
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 _____________, 199_
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 executed 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
affixed 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
______________, 199_.
(Notarial Seal)
...........................
Notary Public
District of Columbia
<PAGE>
- 18 -
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 President 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 _____________, 199_, 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
____________, 199_.
(Notarial Seal)
.............................
Notary Public
New York, New York
My Commission Expires .
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 _________________, 199_, that he is the agent of said Trustee
for the purpose of perfecting such Supplemental Indenture and that
the consideration in the Original Indenture referred to therein and
in all indentures supplemental to said Original Indenture,
including the foregoing Supplemental Indenture, is true and bona
fide as therein set forth.
.............................
Subscribed and sworn to before me
this ____ day of ___________, 199_.
...................................
Notary Public
My Commission Expires .
(Notarial Seal)
<PAGE>
- 19 -
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
corporation, one of the parties to the foregoing instrument bearing
date as of the ____ day of _______________, 199_, and hereto
annexed, this day personally appeared before 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 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 The Bank of New York, and
delivered 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 affixed 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
_____________, 199_.
(Notarial Seal)
...........................
Notary Public
New York, New York
My Commission Expires ____________.
<PAGE>
- 20 -
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
POTOMAC ELECTRIC POWER COMPANY
AND
THE BANK OF NEW YORK,
Trustee
___________________
SENIOR DEBT SECURITIES
___________________
INDENTURE
Dated as of ____________ __, 1998
___________________
<PAGE>
Certain Sections of this Indenture relating to
Sections 310 through 318, inclusive, of the
Trust Indenture Act of 1939:
Trust Indenture Indenture
Act Section Section
- --------------- ---------
Section 310 (a)(1) ........................... 609
(a)(2) ........................... 609
(a)(3) ........................... Not Applicable
(a)(4) ........................... Not Applicable
(a)(5) ........................... 609
(b)............................... 608, 610
Section 311 (a)............................... 613
(b)............................... 613
Section 312 (a)............................... 701, 702(a)
(b)............................... 702(b)
(c)............................... 702(c)
Section 313 (a)............................... 703(a)
(b)............................... 703(a)
(c)............................... 703(a)
(d)............................... 703(b)
Section 314 (a)............................... 704
(a)(4) ........................... 101, 1007
(b)(1)............................ 303(c)
(b)(2)............................ 1008
(c)(1) ........................... 102
(c)(2) ........................... 102
(c)(3) ........................... Not Applicable
(d)(1)............................ 1409
(d)(2)............................ 1403
(d)(3) ........................... Not Applicable
(e)............................... 102
Section 315 (a)............................... 601(a)
(b)............................... 602
(c)............................... 601(b)
(d)............................... 601
(e)............................... 514
Section 316 (a)............................... 101
(a)(1)(A)......................... 502, 512
(a)(1)(B)......................... 513
(a)(2)............................ Not Applicable
(b)............................... 508
(c)............................... 104(c)
Section 317 (a)(1)............................ 503(b)
(a)(2)............................ 504
(b)............................... 1004
Section 318 (a)............................... 108
______________
NOTE: This reconciliation and tie shall not, for any
purpose, be deemed to be a part of the Indenture.
<PAGE>
TABLE OF CONTENTS
Page
----
PARTIES ..................................................
RECITALS OF THE COMPANY ..................................
ARTICLE ONE
Definitions and Other Provisions of General Application
Section 101. Definitions ...............................
Section 102. Compliance Certificates and Opinions ......
Section 103. Form of Documents Delivered to Trustee ....
Section 104. Acts of Holders; Record Dates .............
Section 105. Notices, Etc., to Trustee and Company .....
Section 106. Notice to Holders; Waiver .................
Section 107. Language of Notices .......................
Section 108. Conflict with Trust Indenture Act .........
Section 109. Effect of Headings and Table of Contents...
Section 110. Successors and Assigns ....................
Section 111. Separability Clause .......................
Section 112. Benefits of Indenture .....................
Section 113. Governing Law .............................
Section 114. Legal Holidays ............................
ARTICLE TWO
Security Forms
Section 201. Forms Generally ...........................
Section 202. Form of Legend for Global Security ........
Section 203. Form of Trustee's Certificate of
Authentication ..........................
ARTICLE THREE
The Securities
Section 301. Amount Unlimited; Issuable in Series.......
Section 302. Denominations..............................
Section 303. Execution, Authentication, Delivery and
Dating.....................................
Section 304. Temporary Securities.......................
Section 305. Registration, Registration of Transfer and
Exchange...................................
Section 306. Mutilated, Destroyed, Lost and Stolen
Securities.................................
Section 307. Payment of Interest; Interest Rights
Preserved..................................
Section 308. Persons Deemed Owners......................
Section 309. Cancellation...............................
Section 310. Computation of Interest....................
Section 311. CUSIP Numbers..............................
______________
NOTE: This table of contents shall not, for any purpose,
be deemed to be a part of the Indenture.
<PAGE>
Page
----
ARTICLE FOUR
Satisfaction and Discharge
Section 401. Satisfaction and Discharge of Indenture....
Section 402. Application of Trust Money.................
ARTICLE FIVE
Remedies
Section 501. Events of Default..........................
Section 502. Acceleration of Maturity; Rescission and
Annulment..................................
Section 503. Collection of Indebtedness
Section 504. Suits for Enforcement by Trustee ..........
Section 505. Trustee May File Proofs of Claim...........
Section 506. Trustee May Enforce Claims Without
Possession of Securities...................
Section 507. Application of Money Collected.............
Section 508. Limitation on Suits........................
Section 509. Unconditional Right of Holders to Receive
Principal, Premium and Interest............
Section 510. Restoration of Rights and Remedies.........
Section 511. Rights and Remedies Cumulative.............
Section 512. Delay or Omission Not Waiver...............
Section 513. Control by Holders.........................
Section 514. Waiver of Past Defaults....................
Section 515. Undertaking for Costs......................
Section 516. Waiver of Stay or Extension Laws...........
Section 517. Notice of Defaults.........................
Section 518. Defaults under the Mortgage ...............
ARTICLE SIX
The Trustee
Section 601. Certain Duties and Responsibilities........
Section 602. Certain Rights of Trustee..................
Section 603. Not Responsible for Recitals or Issuance of
Securities.................................
Section 604. May Hold Securities........................
Section 605. Money Held in Trust........................
Section 606. Compensation and Reimbursement.............
Section 607. Disqualification; Conflicting Interests....
Section 608. Corporate Trustee Required; Eligibility....
Section 609. Resignation and Removal; Appointment of
Successor..................................
Section 610. Acceptance of Appointment by Successor.....
______________
NOTE: This table of contents shall not, for any purpose,
be deemed to be a part of the Indenture.
- ii -
<PAGE>
Page
----
Section 611. Merger, Conversion, Consolidation or
Succession to Business.....................
Section 612. Preferential Collection of Claims Against
Company....................................
Section 613. Appointment of Authenticating Agent........
ARTICLE SEVEN
Holders' Lists and Reports by Trustee and Company
Section 701. Company to Furnish Trustee Names and
Addresses of Holders.......................
Section 702. Preservation of Information; Communications to
Holders....................................
Section 703. Reports by Trustee.........................
Section 704. Reports by Company.........................
ARTICLE EIGHT
Consolidation, Merger, Conveyance, Transfer or Lease
Section 801. Company May Consolidate, Etc., Only on
Certain Terms..............................
Section 802. Successor Corporation to be Substituted....
Section 803. Opinion of Counsel to Be Given Trustee.....
ARTICLE NINE
Supplemental Indentures
Section 901. Supplemental Indentures Without Consent of
Holders....................................
Section 902. Supplemental Indentures with Consent of
Holders....................................
Section 903. Execution of Supplemental Indentures.......
Section 904. Effect of Supplemental Indentures..........
Section 905. Conformity with Trust Indenture Act........
Section 906. Reference in Securities to Supplemental
Indentures.................................
ARTICLE TEN
Covenants
Section 1001. Payment of Principal, Premium and
Interest.................................
Section 1002. Maintenance of Office or Agency............
Section 1003. Vacancy in the Office of Trustee...........
Section 1004. Money for Securities Payments to Be
Held in Trust............................
_______________
NOTE: This table of contents shall not, for any purpose,
be deemed to be a part of the Indenture.
- iii -
<PAGE>
Page
----
Section 1005. Officers' Certificate Concerning Defaults;
Notices of Default under Mortgage........
Section 1006. Liens......................................
Section 1007. Limitation on Sale and Leaseback
Transactions.............................
Section 1008. Perfection of Security Interests ..........
Section 1009. Calculation of Original Issue Discount.....
ARTICLE ELEVEN
Redemption of Securities
Section 1101. Applicability of Article...................
Section 1102. Election to Redeem; Notice to Trustee......
Section 1103. Selection by Trustee of Securities to Be
Redeemed...................................
Section 1104. Notice of Redemption.......................
Section 1105. Deposit of Redemption Price................
Section 1106. Securities Payable on Redemption Date......
Section 1107. Securities Redeemed in Part................
ARTICLE TWELVE
Sinking Funds
Section 1201. Applicability of Article...................
Section 1202. Satisfaction of Sinking Fund Payments with
Securities.................................
Section 1203. Redemption of Securities for Sinking Fund..
ARTICLE THIRTEEN
Defeasance and Covenant Defeasance
Section 1301. Applicability of Article; Company's
Option to Effect Defeasance or
Covenant Defeasance......................
Section 1302. Defeasance and Discharge...................
Section 1303. Covenant Defeasance........................
Section 1304. Conditions to Defeasance or Covenant
Defeasance...............................
Section 1305. Deposited Money and U.S. Government
Obligations to be Held in Trust; Other
Miscellaneous Provisions................
Section 1306. Reinstatement..............................
ARTICLE FOURTEEN
Security
Section 1401. Applicability of Article...................
_______________
NOTE: This table of contents shall not, for any purpose,
be deemed to be a part of the Indenture.
- iv -
<PAGE>
Page
----
Section 1402. Delivery of First Mortgage Bonds to
Trustee..................................
Section 1403. Authentication of Securities...............
Section 1404. First Mortgage Bonds as Security for
Securities...............................
Section 1405. No Other Security; No Modification of
Mortgage.................................
Section 1406. Payments on First Mortgage Bonds...........
Section 1407. Certain Responsibilities of Trustee with
Respect to First Mortgage Bonds..........
Section 1408. Permitted Transfers of First Mortgage
Bonds by the Trustee.....................
Section 1409. Release of First Mortgage Bonds............
Section 1410. Further Assurances.........................
ARTICLE FIFTEEN
Immunity of Incorporators, Stockholders,
Officers and Directors
Section 1501. Indenture, Securities and First Mortgage
Bonds Solely Corporate Obligations .......
TESTIMONIUM...............................................
SIGNATURES AND SEALS......................................
ACKNOWLEDGMENTS...........................................
______________
NOTE: This table of contents shall not, for any purpose,
be deemed to be a part of the Indenture.
- v -
<PAGE>
This INDENTURE, dated as of __________ __, 1998, is
entered into between Potomac Electric Power Company, a corporation
duly organized and existing under the laws of the District of
Columbia and the Commonwealth of Virginia (herein called the
"Company"), having its principal offices at 1900 Pennsylvania
Avenue, N.W., Washington, D.C. 20068, and The Bank of New York, a
New York banking corporation, as trustee (herein called the
"Trustee"), having its Corporate Trust Office (as hereinafter
defined) at 101 Barclay Street, Floor 21 West, New York, New York
10286.
RECITALS OF THE COMPANY
WHEREAS, the Company has duly authorized the execution
and delivery of this Indenture to provide for the issuance from
time to time of its senior debentures, notes or other evidences of
indebtedness (herein called the "Securities"), to be issued in one
or more series as in this Indenture provided;
WHEREAS, the Securities to be issued hereunder may
include one or more series of Securities that are secured by First
Mortgage Bonds (as hereinafter defined) issued under the Mortgage
(as hereinafter defined), but with such security to remain in
effect only for so long as any First Mortgage Bonds issued under
the Mortgage (other than the First Mortgage Bonds that secure
Securities issued under this Indenture) remain outstanding, at
which time each series of Securities issued under this Indenture
that is secured by First Mortgage Bond would cease to be so
secured; and
WHEREAS, all things necessary to make this Indenture a
valid agreement of the Company, in accordance with its terms, have
been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
In order to declare the terms and conditions upon which
Securities are to be authenticated, issued and delivered, and for
and in consideration of the premises and the purchase of the
Securities by the Holders thereof, the Company and the Trustee
covenant and agree, for the equal and proportionate benefit of all
Holders of the Securities and of any series thereof, as follows:
ARTICLE ONE
Definitions and Other Provisions
of General Application
Section 101. Definitions.
-----------
For all purposes of this Indenture, except as otherwise
expressly provided or unless the context otherwise requires:
(i) the terms defined in this Article One
have the meanings assigned to them in this Article and include
the plural as well as the singular;
<PAGE>
- 2 -
(ii) all other terms used herein that are
defined in the Trust Indenture Act, either directly or by
reference therein, have the meanings assigned to them therein;
(iii) all accounting terms not otherwise
defined herein have the meanings assigned to them in
accordance with generally accepted accounting principles, and,
except as otherwise herein expressly provided, the term
"generally accepted accounting principles" with respect to any
computation required or permitted hereunder shall mean such
accounting principles as are generally accepted at the date of
such computation; and
(iv) the words "herein", "hereof" and
"hereunder" and other words of similar import refer to this
Indenture as a whole and not to any particular Article,
Section or other subdivision.
"Act", when used with respect to any Holder, has the
---
meaning specified in Section 104.
"Affiliate" of any specified Person means any other
---------
Person directly or indirectly controlling or controlled by or under
direct or indirect common control with such specified Person. For
the purposes of this definition, "control" when used with respect
-------
to any specified Person means the power to direct the management
and policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or
otherwise; and the term "controlling" and "controlled" have
meanings correlative to the foregoing.
"Authenticating Agent" means any Person authorized by the
--------------------
Trustee pursuant to Section 614 to act on behalf of the Trustee to
authenticate Securities of one or more series.
"Board of Directors" means either the Board of Directors
------------------
of the Company or any duly authorized committee of the Board or
Directors to which the Board of Directors shall have delegated its
authority to act hereunder.
"Board Resolution" means a copy of a resolution that is
----------------
certified by the Secretary or an Assistant Secretary of the Company
to have been duly adopted by the Board of Directors and to be in
full force and effect on the date of such certification, and that
is delivered to the Trustee.
"Business Day", when used with respect to any Place of
------------
Payment, means each Monday, Tuesday, Wednesday, Thursday and Friday
that is not a day on which banking institutions in that Place of
Payment are authorized or obligated by law or executive order to
close.
"Capitalization" shall mean the total of all the
--------------
following items appearing on, or included in, the consolidated
balance sheet of the Company: (i) liabilities for Indebtedness
maturing more than twelve months from the date of determination and
(ii) common stock, preferred stock, Hybrid Preferred Securities,
premium on capital stock, capital surplus, capital in excess of par
value, and retained earnings (however the foregoing may be
designated),
<PAGE>
- 3 -
less, to the extent not otherwise deducted, the cost of shares of
capital stock of the Company held in its treasury.
"Commission" means the Securities and Exchange
----------
Commission, as from time to time constituted, created under the
Exchange Act, or, if at any time after the execution of this
instrument such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
"Company" means the Person named as the "Company" in the
-------
first paragraph of this instrument until a successor Person shall
have become such pursuant to the applicable provisions of this
Indenture, and thereafter "Company" shall mean such successor
Person.
"Company Order" or "Company Request" means a written
------------- ---------------
order or request delivered to the Trustee that is signed in the
name of the Company (i) by the Chairman of the Board, the
President, a Vice President, the Chief Financial Officer or the
Controller and (ii) by the Treasurer, an Assistant Treasurer, the
Secretary or an Assistant Secretary.
"Company Sale" has the meaning specified in Section 801.
------------
"Corporate Trust Office" means the office of the Trustee
----------------------
at which at any particular time its corporate trust business shall
be principally administered, which initially shall be the address
set forth in the first paragraph of this Indenture.
"Corporation" (whether or not capitalized) means a
-----------
corporation, association, company, joint-stock company or business
trust.
"Defaulted Interest" has the meaning specified in Section
------------------
307(b).
"Defeasible Covenant" has the meaning specified in
-------------------
Section 1303.
"Depositary" means, with respect to the Securities of any
----------
series issuable or issued in whole or in part in the form of one or
more Global Securities, the Person designated as Depositary for
such series by the Company pursuant to Section 301, which Person
shall be a "clearing agency" registered under the Exchange Act; and
if at any time there is more than one such Person, "Depositary", as
used with respect to the Securities of any series, shall mean the
Depositary with respect to the Securities of such series.
"Event of Default" has the meaning specified in Section
----------------
501.
"Exchange Act" means the Securities Exchange Act of 1934,
------------
as it may be amended, and any successor act thereto.
"First Mortgage Bonds" shall mean mortgage bonds issued
--------------------
and outstanding under the Mortgage.
"Funded Debt" of any Person means all Indebtedness of
-----------
such Person that will mature, pursuant to a mandatory sinking fund
or prepayment provision
<PAGE>
- 4 -
or otherwise, and all installments of Indebtedness that will fall
due, more than one year from the date of determination. In
calculating the maturity of any Indebtedness, there shall be
included the term of any unexercised right of the debtor to renew
or extend such Indebtedness existing at the time of determination.
"GAAP" means United States generally accepted accounting
----
principles applied on a consistent basis.
"Global Security" means a Security bearing the legend
---------------
prescribed in Section 202 (or such legend as may be specified as
contemplated by Section 301 for such Securities) evidencing all or
part of a series of Securities, authenticated and delivered to the
Depositary for such series or to its nominee, and registered in the
name of such Depositary or nominee.
"Holder" means a Person in whose name a Security is
------
registered in the Security Register.
"Hybrid Preferred Securities" shall mean any preferred
---------------------------
securities issued by a Hybrid Preferred Securities Subsidiary,
where such preferred securities have the following characteristics:
(i) such Hybrid Preferred Securities Subsidiary
uses substantially all of the proceeds from the issuance of such
preferred securities to purchase Junior Subordinated Indebtedness
issued by the Company;
(ii) such preferred securities contain terms
providing for the deferral of interest payments corresponding to
provisions, if any, providing for the deferral of interest payments
on the Junior Subordinated Indebtedness; and
(iii) the Company makes periodic interest payments
on the Junior Subordinated Indebtedness, which interest payments
are in turn used by the Hybrid Preferred Securities Subsidiary to
make corresponding payments to the holders of the preferred
securities.
"Hybrid Preferred Securities Subsidiary" shall mean any
--------------------------------------
business trust (or similar entity) (i) all of the common equity
interest of which is owned (either directly or indirectly through
one or more wholly owned Subsidiaries of the Company) at all times
by the Company, (ii) that has been formed for the purpose of
issuing Hybrid Preferred Securities, and (iii) substantially all of
the assets of which consist at all times of Junior Subordinated
Indebtedness issued by the Company and payments made from time to
time in respect of such Junior Subordinated Indebtedness.
"Indebtedness" of any Person shall mean, as at any date
------------
of determination, all indebtedness (including capitalized lease
obligations) of such Person and its consolidated subsidiaries at
such date that would be required to be included as a liability on
a consolidated balance sheet (excluding the footnotes thereto) of
such Person prepared in accordance with GAAP.
<PAGE>
- 5 -
"Indenture" means this instrument as originally executed
---------
or as it may from time to time be supplemented or amended by one or
more indentures supplemental hereto entered into pursuant to the
applicable provisions hereof, including, for all purposes of this
instrument, and any such supplemental indenture, the provisions of
the Trust Indenture Act that are deemed to be a part of and govern
this instrument and any such supplemental indenture, respectively.
The term "Indenture" also shall include the terms of particular
series of Securities established as contemplated by Section 301.
"Independent Expert" shall mean an accounting firm, an
------------------
investment banking firm, an appraiser or valuation firm or other
expert selected by the Company that is not generally engaged in a
major part in the service of the Company.
"Interest" (whether or not capitalized), when used with
--------
respect to an Original Issue Discount Security that by its terms
bears interest only after Maturity, means interest payable after
Maturity.
"Interest Payment Date", when used with respect to any
---------------------
Security, means the Stated Maturity of an installment of interest
on such Security.
"Issuance Fair Value Certificate" means a certificate or
-------------------------------
opinion delivered to the Trustee in accordance with Section 1403,
which includes: (i) a statement that the Person executing the
Certificate is familiar with the provisions of the First Mortgage
Bonds that are being pledged as security for a series of Securities
and with the provisions of this Indenture, (ii) a statement of the
principal amount of the First Mortgage Bonds to be pledged, the
stated interest rate of such First Mortgage Bonds and the stated
maturity date of such First Mortgage Bonds, (iii) a statement of
the fair value to the Company of such First Mortgage Bonds, (iv) a
statement identifying the Securities that are to be secured by such
First Mortgage Bonds, and (v) a statement that, based solely upon
the provisions of the First Mortgage Bonds and the Securities, the
fair value of the Securities to be secured by such First Mortgage
Bonds does not exceed the fair value to the Company of such First
Mortgage Bonds. For this purpose, the "fair value to the Company"
of First Mortgage Bonds and the "fair value" of Securities that are
secured by First Mortgage Bonds shall mean the principal amount
thereof. The Issuance Fair Value Certificate shall be made by an
Independent Expert, unless the Trust Indenture Act permits the
Certificate to be made by an engineer, appraiser or other expert
who is an officer or employee of the Company and who is duly
authorized to make such Certificate by the Company.
"Junior Subordinated Indebtedness" shall mean any
--------------------------------
unsecured Indebtedness of the Company (i) issued in consideration
of the proceeds of the sale of Hybrid Preferred Securities and (ii)
subordinated to the rights of the Holders hereunder.
"Lien" means, with respect to any asset of any Person,
----
(i) any mortgage, deed of trust, lien, pledge, encumbrance, charge
or security interest in or on such asset, (ii) the interest of a
vendor or a lessor under any conditional sale agreement, capital
lease or title retention agreement (or any financing lease having
substantially the same economic effect as any of
<PAGE>
- 6 -
the foregoing) relating to such asset, and (iii) in the case of
securities that constitute assets of such Person, any purchase
option, call or similar right of a third party with respect to such
securities.
"Maturity", when used with respect to any Security, means
--------
the date on which the principal of such Security or an installment
of principal becomes due and payable as therein or herein provided,
whether at the Stated Maturity or by declaration of acceleration as
authorized by or pursuant to this Indenture, upon call for
redemption or otherwise.
"Mortgage" means the Mortgage and Deed of Trust, dated as
--------
of July 1, 1936, from the Company to The Bank of New York, as
successor trustee to The Riggs National Bank of Washington, D.C.,
as it heretofore has been and hereafter is supplemented and
amended.
"Mortgage Default" has the meaning specified in Section
----------------
501(7).
"Mortgage Trustee" means the Person serving as trustee at
----------------
the time under the Mortgage.
"Officers' Certificate" means a certificate delivered to
---------------------
the Trustee that is signed (i) by the Chairman of the Board, the
President, a Vice President, the Chief Financial Officer or the
Controller of the Company and (ii) by the Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary of the Company.
One of the officers signing an Officers' Certificate given pursuant
to Section 1005 shall be the principal executive officer, the
principal financial officer or the principal accounting officer of
the Company.
"Opinion of Counsel" means a written opinion of counsel,
------------------
who may (expect as otherwise expressly provided in this Indenture)
be an employee of or be counsel for the Company.
"Original Issue Discount Security" means any Security
--------------------------------
that provides for an amount less than the principal amount thereof
to be due and payable upon a declaration of acceleration of the
Maturity thereof pursuant to Section 502.
"Outstanding", when used with respect to Securities,
-----------
means, as of the date of determination, all Securities theretofore
authenticated and delivered under this Indenture, except:
(i) Securities theretofore cancelled by the
Trustee or delivered to the Trustee for cancellation;
(ii) Securities for whose payment or
redemption money in the necessary amount has been theretofore
deposited with the Trustee or any Paying Agent (other than the
Company) in trust or set aside and segregated in trust by the
Company (if the Company shall act as its own Paying Agent) for
the Holders of such Securities; provided that, if such
Securities are to be redeemed, notice of such redemption has
been duly
<PAGE>
- 7 -
given pursuant to this Indenture or provision therefor
satisfactory to the Trustee has been made;
(iii) Securities as to which defeasance has
been effected pursuant to Section 1302; and
(iv) Securities that have been paid pursuant
to Section 306 or in exchange for or in lieu of which other
Securities have been authenticated and delivered pursuant to
this Indenture, other than any such Securities in respect of
which there shall have been presented to the Trustee proof
satisfactory to it that such Securities are held by a bona
fide purchaser in whose hands such Securities are valid
obligations of the Company;
provided, however, that in determining whether the Holders of the
requisite principal amount of the Outstanding Securities have given
any request, demand, authorization, direction, notice, consent or
waiver hereunder, (i) the principal amount of an Original Issue
Discount Security that shall be deemed to be Outstanding shall be
the amount of the principal thereof that would be due and payable
as of the date of such determination upon acceleration of the
Maturity thereof pursuant to Section 502, (ii) the principal amount
of a Security denominated in one or more foreign currencies or
currency units shall be the U.S. dollar equivalent, determined in
the manner provided as contemplated by Section 301 on the date of
original issuance of such Security, of the principal amount (or, in
the case of an Original Issue Discount Security, the U.S. dollar
equivalent on the date of original issuance of such security of the
amount determined as provided in (i) above) of such Security, and
(iii) Securities owned by the Company or any other obligor upon
the Securities or any Affiliate of the Company or of such other
obligor shall be disregarded and deemed not to be Outstanding,
except that, in determining whether the Trustee shall be protected
in relying upon any such request, demand, authorization, direction,
notice, consent or waiver, only Securities which a Responsible
Officer of the Trustee actually knows to be so owned shall be so
disregarded. Securities owned by the Company or any other obligor
upon the Securities or any Affiliate of the Company or of such
other obligor that have been pledged in good faith may be regarded
as Outstanding if the pledgee establishes to the satisfaction of
the Trustee (i) the pledgee's right so to act with respect to such
Securities and (ii) that the pledgee is not the Company or any
other obligor upon the Securities or any Affiliate of the Company
or of such other obligor.
"Paying Agent" means any Person authorized by the Company
------------
to pay the principal of or any premium or interest on any
Securities on behalf of the Company. Unless otherwise provided in
one or more indentures supplemental hereto, in a Board Resolution
or in an Officers' Certificate pursuant to a Board Resolution, the
Trustee shall be the Paying Agent with respect to the Securities of
each series.
"Person" means a legal person, including any individual,
------
corporation, estate, partnership, limited liability company, joint
venture, trust, unincorporated organization, or government or any
agency or political subdivision thereof or any other entity of
whatever nature.
<PAGE>
- 8 -
"Place of Payment", when used with respect to the
----------------
Securities of any series, means the place or places where the
principal of and any premium or interest on the Securities of that
series are payable as contemplated by Section 301.
"Predecessor Security" of any particular Security means
--------------------
every previous Security evidencing all or a portion of the same
debt as that evidenced by such particular Security; and, for the
purposes of this definition, any Security authenticated and
delivered under Section 306 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to
evidence the same debt as the mutilated, destroyed, lost or stolen
Security.
"Principal Property" means all electric generation plants
------------------
and all electric transmission and distribution facilities (but
excluding all equipment and material not installed as part of the
fixed property) of the Company that is located within the United
States of America, except any such plant or facility that the Board
of Directors by resolution determines is not of material importance
to the total business conducted by the Company and its Subsidiaries
as an entirety.
"Redemption Date", when used with respect to any Security
---------------
to be redeemed, means the date fixed for such redemption by or
pursuant to this Indenture.
"Redemption Price", when used with respect to any
----------------
Security to be redeemed, means the price at which the Security is
to be redeemed pursuant to this Indenture.
"Regular Record Date" for the interest payable on any
-------------------
Interest Payment Date on the Securities of any series means the
date specified for that purpose as contemplated by Section 301.
"Release Date" means the date as of which all First
------------
Mortgage Bonds, other than First Mortgage Bonds held by the Trustee
pursuant to Article Fourteen, have been retired through payment or
redemption (including those First Mortgage Bonds "deemed to have
been paid" within the meaning of that term as used in Article XVI
of the Mortgage) at, before or after the maturity thereof.
"Release Fair Value Certificate" means a certificate or
------------------------------
opinion delivered to the Trustee in accordance with Section 1409,
which includes: (i) a statement that the Person executing the
Certificate is familiar with the provisions of the First Mortgage
Bonds that are being released from the lien of this Indenture and
with the provisions of this Indenture, (ii) a statement of the
principal amount of the First Mortgage Bonds to be released, the
stated interest rate of such First Mortgage Bonds and the stated
maturity date of such First Mortgage Bonds, (iii) a statement of
the fair value of such First Mortgage Bonds, (iv) a statement
identifying the Securities, the payment of the interest on and
principal of which has been secured by such First Mortgage Bonds,
and (v) a statement that, in the opinion of the Person executing
the Certificate, such release will not, in contravention of the
provisions of this
<PAGE>
- 9 -
Indenture, impair the lien of the Indenture on the First Mortgage
Bonds not being released. For this purpose, the "fair value" of
First Mortgage Bonds shall mean the principal amount thereof. The
Release Fair Value Certificate shall be made by an Independent
Expert, unless the Trust Indenture Act permits the Certificate to
be made by an engineer, appraiser or other expert who is an officer
or employee of the Company and who is duly authorized to make such
Certificate by the Company.
"Responsible Officer", when used with respect to the
-------------------
Trustee, means any officer in the Corporate Trust Office of the
Trustee or any other officer of the Trustee customarily performing
functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate
trust matter, any other officer to whom such matter is referred
because of his knowledge of and familiarity with the particular
subject.
"Sale and Lease-Back Transaction" shall mean any
-------------------------------
arrangement with any Person providing for the leasing to the
Company of any Principal Property, which Principal Property has
been, or prior to the leasing thereof to the Company is, sold by
the Company to such Person; provided, however, Sale and Lease-back
Transaction shall not include any arrangement first entered into
prior to the date of this Indenture.
"Securities" has the meaning stated in the first recital
----------
of this Indenture and more particularly means any Securities
authenticated and delivered under this Indenture.
"Security Register" and "Security Registrar" have the
----------------- ------------------
respective meanings specified in Section 305. Unless otherwise
provided in one or more indentures supplemental hereto, in a Board
Resolution or in an Officers' Certificate pursuant to a Board
Resolution, the Trustee shall be the Security Registrar and shall
maintain the Security Register with respect to the Securities of
each series of Securities.
"Special Record Date" for the payment of any Defaulted
-------------------
Interest means a date fixed by the Trustee pursuant to Section
307(b).
"Stated Maturity", when used with respect to any Security
---------------
or any installment of principal thereof or interest thereon, means
the date specified in such Security as the fixed date on which the
principal of such Security or such installment of principal or
interest is due and payable.
"Subsidiary" means a Person (other than an individual or
----------
a government or any agency or political subdivision thereof) more
than 50% of the outstanding voting interest of which is owned,
directly or indirectly, by the Company or by one or more other
Subsidiaries, or by the Company and one or more other Subsidiaries.
"Successor Company" has the meaning specified in Section
-----------------
801.
"Trustee" means the Person named as the "Trustee" in the
-------
first paragraph of this Indenture until a successor Trustee shall
have become such
<PAGE>
- 10 -
pursuant to the applicable provisions of this Indenture, and
thereafter "Trustee" shall mean or include each Person who is then
a Trustee hereunder, and if at any time there is more than one such
Person, "Trustee" as used with respect to the Securities of any
series shall mean the Trustee with respect to Securities of that
series.
"Trust Indenture Act" means the Trust Indenture Act of
-------------------
1939 as in force at the date as of which this Indenture was
executed; provided, however, that in the event the Trust Indenture
Act of 1939 is amended after such date, "Trust Indenture Act"
means, to the extent required by any such amendment, the Trust
Indenture Act of 1939, as so amended.
"U.S. Government Obligations" means securities that are
---------------------------
(i) direct obligations of the United States of America for the
payment of which its full faith and credit is pledged or (ii)
obligations of a Person controlled or supervised by and acting as
an agency or instrumentality of the United States of America the
payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either
case, are not callable or redeemable at the option of the issuer
thereof, and shall also include a depository receipt issued by a
bank (as defined in Section 3(a)(2) of the Securities Act of 1933,
as amended) as custodian with respect to any such U.S. Government
Obligation or a specific payment of principal of or interest on any
such U.S. Government Obligation held by such custodian for the
account of the holder of such depository receipt, provided that
(except as required by law) such custodian is not authorized to
make any deduction from the amount payable to the holder of such
depository receipt from any amount received by the custodian in
respect of the U.S. Government Obligation or the specific payment
of principal of or interest on the U.S. Government Obligation
evidenced by such depository receipt.
"Vice President", when used with respect to the Company
--------------
or the Trustee, means any vice president, whether or not designated
by a number or a word or words added before or after the title
"vice president".
Section 102. Compliance Certificates and Opinions.
------------------------------------
(a) Upon any application or request by the Company to
the Trustee to take any action under any provision of this
Indenture, the Company shall furnish to the Trustee such
certificates and opinions as may be required under the Trust
Indenture Act. Each such certificate or opinion shall be given in
the form of an Officers' Certificate, if to be given by an officer
of the Company, or an Opinion of Counsel, if to be given by
counsel, and shall comply with the requirements of the Trust
Indenture Act and any other requirements set forth in this
Indenture.
(b) Every certificate (other than the Officers'
Certificate provided pursuant to Section 1005) or opinion with
respect to compliance with a condition or covenant provided for in
this Indenture shall include:
(1) a statement that each individual signing such
certificate or opinion has read such covenant or condition and
the definitions herein relating thereto;
<PAGE>
- 11 -
(2) a brief statement as to the nature and scope of
the examination or investigation upon which the statements or
opinions contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such
individual, he has made such examination or investigation as
is necessary to enable him to express an informed opinion as
to whether or not such covenant or condition has been complied
with; and
(4) a statement as to whether, in the opinion of
each such individual, such condition or covenant has been
complied with.
Section 103. Form of Documents Delivered to Trustee.
--------------------------------------
(a) In any case where several matters are required to be
certified by, or covered by an opinion of, any specified Person, it
is not necessary that all such matters be certified by, or covered
by the opinion of, only one such Person, or that they be so
certified or covered by only one document, but one such Person may
certify or give an opinion with respect to some matters and one or
more other such Persons as to other matters, and any such Person
may certify or give an opinion as to such matters in one or several
documents.
(b) Any certificate or opinion of an officer of the
Company may be based, insofar as it relates to legal matters, upon
a certificate or opinion of, or representations by, counsel, unless
such officer knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with
respect to the matters upon which his certificate or opinion is
based are erroneous. Any such certificate or opinion of counsel
may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an officer or
officers of the Company stating that the information with respect
to such factual matters is in the possession of the Company, unless
such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with
respect to such matters are erroneous.
(c) Where any Person is required to make, give or
execute two or more applications, requests, consents, certificates,
statements, opinions or other instruments under this Indenture,
they may, but need not, be consolidated and form one instrument.
Section 104. Acts of Holders; Record Dates.
-----------------------------
(a) Any request, demand, authorization, direction,
notice, consent, waiver or other action provided by this Indenture
to be given or taken by Holders may be embodied in and evidenced by
one or more instruments of substantially similar tenor signed by
such Holders in person or by agent duly appointed in writing; and,
except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments are received
by the Trustee and, where it is hereby expressly required, to the
Company. Such instrument or instruments (and the action embodied
therein and evidenced thereby) are herein sometimes referred to as
the "Act" of the
<PAGE>
- 12 -
Holders signing such instrument or instruments. Proof of execution
of any such instrument or of a writing appointing any such agent
shall be sufficient for any purpose of this Indenture and (subject
to Section 601) conclusive in favor of the Trustee and the
Company, if made in the manner provided in this Section 104.
Without limiting the generality of the foregoing, a Holder,
including a Depositary that is a Holder of a Global Security, may
make, give or take, by a proxy or proxies, duly appointed in
writing, any request, demand, authorization, direction, notice,
consent, waiver or other Act provided or permitted in this
Indenture to be made, given or taken by Holders, and a Depositary
that is a Holder of a Global Security may provide its proxy or
proxies to the beneficial owners of interest in any such Global
Security.
(b) The fact and date of the execution by any Person of
any instrument or writing may be proved by the affidavit of a
witness of such execution or by a certificate of a notary public or
other officer authorized by law to take acknowledgments of deeds,
certifying that the individual signing such instrument or writing
acknowledged to him the execution thereof. Where such execution is
by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute
sufficient proof of his authority. The fact and date of the
execution of any instrument or writing, or the authority of the
Person executing the same, also may be proved in any other manner
which the Trustee deems sufficient.
(c) The Company may, in the circumstances permitted by
the Trust Indenture Act, fix any day as the record date for the
purpose of determining the Holders of Securities of any series
entitled to give or take any request, demand, authorization,
direction, notice, consent, waiver or other Act, or to vote on any
action authorized or permitted to be given or taken by Holders of
Securities of such series. If not set by the Company prior to the
first solicitation of a Holder of Securities of such series made
by any Person in respect of any such action, or, in the case of any
such vote, prior to such vote, the record date for any such action
or vote shall be the 30th day (or, if later, the date of the most
recent list of Holders required to be provided pursuant to Section
701) prior to such first solicitation or vote, as the case may be.
Any request, demand, authorization, direction, notice, consent,
waiver or other Act may be given before or after such record date,
but only the Holders of record at the close of business on such
record date shall be deemed to be Holders for the purposes of
determining whether Holders of the requisite proportion of
Outstanding Securities have authorized, or agreed or consented to,
such request, demand, authorization, direction, notice, consent,
waiver or other Act, and for that purpose the Outstanding
Securities shall be computed as of such record date.
(d) The ownership of Securities, including the dates of
holding thereof, shall be proved by the Security Register.
(e) Any request, demand, authorization, direction,
notice, consent, waiver or other Act of the Holder of any Security
shall bind every future Holder of the same Security and the Holder
of every Security issued upon the registration of transfer thereof
or in exchange therefor or in lieu thereof in respect of anything
done, omitted or suffered to be done by the
<PAGE>
- 13 -
Trustee or the Company in reliance thereon, whether or not notation
of such action is made upon such Security.
(f) Without limiting the foregoing, a Holder entitled
hereunder to give or take any action hereunder with regard to any
particular Security may do so with regard to all or any part of the
principal amount of such Security or by one or more duly appointed
agents each of which may do so pursuant to such appointment with
regard to all or any different part of such principal amount.
Section 105. Notices, Etc., to Trustee and Company.
-------------------------------------
Any request, demand, authorization, direction, notice,
consent, waiver or Act of the Holders or other document provided or
permitted by this Indenture to be made upon, given or furnished to,
or filed with:
(1) the Trustee by any Holder or by the
Company shall be sufficient for every purpose hereunder if
made, given, furnished or filed in writing to or with the
Trustee at its Corporate Trust Office, or
(2) the Company by the Trustee or by any
Holder shall be sufficient for every purpose hereunder (unless
otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to the Company addressed to it at
the address of its principal office specified in the first
paragraph of this instrument, marked "Attention: Treasurer",
or at any other address previously furnished in writing to the
Trustee by the Company.
Section 106. Notice to Holders; Waiver.
-------------------------
(a) Where this Indenture provides for any notice to
Holders, such notice shall be sufficiently given (unless otherwise
herein expressly provided) if in writing and mailed, first-class
postage prepaid, to each Holder entitled to receive such notice, at
his address as it appears in the Security Register, not later than
the latest date (if any), and not earlier than the earliest date
(if any), prescribed for the giving of such notice. In any case
where notice to Holders is given by mail, neither the failure to
mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with
respect to other Holders. Any notice that is mailed in the manner
herein provided shall be conclusively presumed to have been duly
given or provided, whether or not such notice is received by the
Holder.
(b) In case, by reason of the suspension of regular mail
service or by reason of any other cause, it shall be impracticable
to give notice by mail, then such notification as shall be made
with the approval of the Trustee shall constitute a sufficient
notification for every purpose hereunder.
(c) Where this Indenture provides for notice in any
manner, such notice may be waived in writing by the Person entitled
to receive such notice, either before or after the event, and such
waiver shall be the equivalent of
<PAGE>
- 14 -
such notice. Waivers of notice by Holders shall be filed with the
Trustee, but such filing shall not be a condition precedent to the
validity of any action taken in reliance upon such waiver.
Section 107. Language of Notices.
-------------------
Any request, demand, authorization, direction, notice,
consent, election or waiver required or permitted under this
Indenture shall be in the English language.
Section 108. Conflict with Trust Indenture Act.
---------------------------------
If any provision hereof limits, qualifies or conflicts
with a provision of the Trust Indenture Act that is required under
the Trust Indenture Act to be a part of and govern this Indenture,
the provision of the Trust Indenture Act shall control. If any
provision of this Indenture modifies or excludes any provision of
the Trust Indenture Act that may be so modified or excluded, the
provision of the Trust Indenture Act shall be deemed to apply to
this Indenture as so modified or to be excluded.
Section 109. Effect of Headings and Table of Contents.
----------------------------------------
The Article and Section headings herein and the Table of
Contents are for convenience of reference only and shall not affect
the construction of this Indenture.
Section 110. Successors and Assigns.
----------------------
All covenants and agreements in this Indenture by the
Company shall bind its successors and assigns, whether or not so
expressed.
Section 111. Separability Clause.
-------------------
In case any provision in this Indenture or in the
Securities shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions
shall not in any way be affected or impaired thereby.
Section 112. Benefits of Indenture.
---------------------
Nothing in this Indenture or in the Securities, express
or implied, shall give to any Person, other than the parties hereto
and their successors hereunder and the Holders, any benefit or any
legal or equitable right, remedy or claim under this Indenture.
Section 113. Governing Law.
-------------
This Indenture and the Securities shall be governed by
and construed in accordance with the laws of the State of New York,
without regard to the conflicts of laws principles thereof.
<PAGE>
- 15 -
Section 114. Legal Holidays.
--------------
In any case where any Interest Payment Date, Redemption
Date or Stated Maturity of any Security shall not be a Business Day
at any Place of Payment, then (notwithstanding any other provision
of this Indenture or of the Securities (other than a provision of
the Securities of any series which specifically states that such
provision shall apply in lieu of this Section)) payment of the
principal, premium or interest need not be made at such Place of
Payment on such date, but may be made on the next succeeding
Business Day at such Place of Payment with the same force and
effect as if made on the Interest Payment Date or Redemption Date,
or at the Stated Maturity, and no interest shall accrue for the
period from and after such Interest Payment Date, Redemption Date
or Stated Maturity.
ARTICLE TWO
Security Forms
Section 201. Forms Generally.
---------------
(a) The Securities of each series shall be in
substantially the form set forth in Attachment A to this Indenture,
or in such other form as shall be established by one or more
indentures supplemental hereto, by a Board Resolution or by an
Officers' Certificate pursuant to a Board Resolution, in each case
with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Indenture,
and may have such letters, numbers or other marks of identification
and such legends or endorsements placed thereon as may be required
to comply with the rules of any securities exchange or as may,
consistently herewith, be determined by the officers executing such
Securities, as evidenced by their execution of the Securities. If
the form of Securities of any series is established by action taken
pursuant to a Board Resolution or an Officers' Certificate pursuant
to a Board Resolution, the Board Resolution or Officers'
Certificate (accompanied by the Board Resolution) shall be
delivered to the Trustee at or prior to the delivery of the Company
Order contemplated by Section 303 for the authentication and
delivery of such Securities.
(b) The definitive Securities shall be printed,
lithographed or engraved on steel engraved borders or may be
produced in any other manner, all as determined by the officers
executing such Securities, as evidenced by their execution of such
Securities.
Section 202. Form of Legend for Global Security.
----------------------------------
Unless otherwise specified as contemplated by Section 301
for the Securities evidenced thereby, any Global Security
authenticated and delivered hereunder shall bear a legend in
substantially the following form:
"This Security is a Global Security within the meaning of
the Indenture hereinafter referred to and is registered in the
name of a Depositary or a nominee thereof. This Security may
not be transferred to, or registered or exchanged for
Securities registered in the name of,
<PAGE>
- 16 -
any Person other than the Depositary or a nominee thereof and
no such transfer may be registered, except in the limited
circumstances described in the Indenture. Every Security
authenticated and delivered upon registration of transfer of,
or in exchange for or in lieu of, this Security shall be a
Global Security that is subject to the foregoing, except in
such limited circumstances."
Section 203. Form of Trustee's Certificate of Authentication.
-----------------------------------------------
The Trustee's certificate of authentication shall be in
substantially the following form:
This is one of the Securities of the series designated
therein referred to in the within-mentioned Indenture.
Dated: THE BANK OF NEW YORK
As Trustee
By: _________________________
Authorized Signatory
ARTICLE THREE
The Securities
Section 301. Amount Unlimited; Issuable in Series.
------------------------------------
(a) The aggregate principal amount of Securities that
may be authenticated and delivered under this Indenture is
unlimited.
(b) Securities may be issued in one or more series.
Prior to the issuance of Securities of any series, there shall be
established, by an indenture supplemental hereto, by a Board
Resolution or by an Officer's Certificate pursuant to a Board
Resolution, with respect to such series:
(1) the title of the Securities of the series
(which shall distinguish the Securities of the series from
Securities of any other series);
(2) any limit upon the aggregate principal amount
of the Securities of the series that may be authenticated and
delivered under this Indenture (except for Securities
authenticated and delivered upon registration of transfer of,
or in exchange for, or in lieu of, other Securities of the
series pursuant to Section 304, 305, 306, 906 or 1107, and
except for any Securities which, pursuant to Section 303(h),
are deemed never to have been authenticated and delivered
hereunder);
<PAGE>
- 17 -
(3) the Person to whom any interest on a Security
of the series shall be payable, if other than the Person in
whose name that Security (or one or more Predecessor
Securities) is registered at the close of business on the
Regular Record Date for such interest;
(4) the date or dates on which the principal of the
Securities of the series is payable;
(5) the rate or rates at which the Securities of
the series shall bear interest, if any, the date or dates from
which such interest shall accrue, the Interest Payment Dates
on which any such interest shall be payable and the Regular
Record Date for any interest payable on any Interest Payment
Date;
(6) the place or places where the principal of and
any premium or interest on Securities of the series shall be
payable;
(7) the period or periods within which, the price
or prices at which and the terms and conditions upon which
Securities of the series may be redeemed, in whole or in part,
at the option of the Company;
(8) the obligation, if any, of the Company to
redeem or purchase Securities of the series pursuant to any
sinking fund or analogous provisions or at the option of a
Holder thereof, and the period or periods within which, the
price or prices at which and the terms and conditions upon
which Securities of the series shall be redeemed or purchased,
in whole or in part, pursuant to such obligation;
(9) if other than denominations of $1,000 and any
integral multiple thereof, the denominations in which
Securities of the series shall be issuable;
(10) the currency, currencies or currency units in
which payment of the principal of and any premium or interest
on any Securities of the series shall be payable, if other
than the currency of the United States of America, and the
manner of determining the equivalent thereof in the currency
of the United States of America for purposes of the definition
of "Outstanding" in Section 101;
(11) if the amount of payments of principal of or
any premium or interest on any Securities of the series may be
determined by reference to an index or formula, the manner in
which such amounts shall be determined;
(12) if the principal of or any premium or interest
on any Securities of the series is to be payable, at the
election of the Company or a Holder thereof, in one or more
currencies or currency units other than that or those in which
the Securities are stated to be payable, the currency,
currencies or currency units in which payment of the principal
of and any premium or interest on Securities of such series as
to which such election is made shall be payable, and the
<PAGE>
- 18 -
periods within which and the terms and conditions upon which
such election is to be made;
(13) if other than the principal amount thereof, the
portion of the principal amount of Securities of the series
that shall be payable upon declaration of acceleration of the
Maturity thereof pursuant to Section 502;
(14) the application, if any, of either or both of
Section 1302 and Section 1303 to the Securities of the series;
(15) whether the Securities of the series shall be
issuable in whole or in part in the form of one or more Global
Securities and, in such case, the Depositary or Depositaries
for such Global Security or Global Securities, and any
circumstances, other than those set forth in Section 305(h),
in which any such Global Security may be transferred to, and
registered and exchanged for Securities registered in the name
of, a Person other than the Depositary for such Global
Security or a nominee thereof and in which any such transfer
may be registered;
(16) if other than as specified in Section 501, the
events of default applicable with respect to the Securities of
the series;
(17) if other than as specified in Section 502, the
events of default the occurrence of which would permit the
declaration of the acceleration of maturity pursuant to
Section 502;
(18) any other covenant or warranty included for the
benefit of Securities of the series in addition to (and not
inconsistent with) those included in this Indenture for the
benefit of Securities of all series, or any other covenant or
warranty included for the benefit of Securities of the series
in lieu of any covenant or warranty included in this Indenture
for the benefit of Securities of all series, or any provision
that any covenant or warranty included in this Indenture for
the benefit of Securities of all series shall not be for the
benefit of Securities of such series, or any combination of
such covenants, warranties or provisions;
(19) prior to the Release Date, whether the
Securities shall be secured by First Mortgage Bonds as
provided in Article Fourteen and, if so, the designation of
the related series of First Mortgage Bonds being delivered to
the Trustee in connection with the issuance of the securities;
and
(20) any other term of the series (which terms shall
not be inconsistent with the provisions of this Indenture,
except as permitted by Section 901(7)).
(c) All Securities of any one series shall be
substantially identical, except as to denomination and except as
may otherwise be provided in or pursuant to the indenture
supplemental hereto, the Board Resolution or
<PAGE>
- 19 -
the Officers' Certificate pursuant to a Board Resolution with
respect to such series.
(d) If any of the terms of the Securities of any series
are established by action taken pursuant to a Board Resolution, a
copy of an appropriate record of such action shall be certified by
the Secretary or an Assistant Secretary of the Company and
delivered to the Trustee at or prior to the delivery of the
Officers' Certificate setting forth the terms of such series.
Section 302. Denominations.
-------------
The Securities of each series shall be issuable in
registered form without coupons in such denominations as shall be
specified as contemplated by Section 301. In the absence of any
such provisions with respect to the Securities of any series, the
Securities of such series shall be issuable in denominations of
$1,000 and any integral multiple thereof.
Section 303. Execution, Authentication, Delivery and Dating.
----------------------------------------------
(a) The Securities shall be executed on behalf of the
Company by its Chairman of the Board, President or a Vice
President, under its corporate seal, or a facsimile thereof,
reproduced thereon and attested by its Secretary or an Assistant
Secretary. The signature of any of these officers on the
Securities may be manual or facsimile.
(b) Securities bearing the manual or facsimile
signatures of individuals who were at any time the proper officers
of the Company shall bind the Company, notwithstanding that such
individuals or any of them have ceased to hold such offices prior
to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
(c) At any time and from time to time after the
execution and delivery of this Indenture, the Company may deliver
Securities of any series executed by the Company to the Trustee for
authentication, together with the supplemental indenture, Board
Resolution or Officers' Certificate with respect to such Securities
referred to in Section 301 and a Company Order for the
authentication and delivery of such Securities, and the Trustee in
accordance with the Company Order, subject to the provisions
hereof, shall authenticate and deliver such Securities. In
authenticating such Securities, and accepting the additional
responsibilities under this Indenture in relation to such
Securities, the Trustee shall be entitled to receive, and (subject
to Section 601) shall be fully protected in relying upon, an
Opinion of Counsel stating to the effect:
(1) that the form and terms of such Securities have
been established in conformity with the provisions of this
Indenture;
(2) that all conditions precedent to the execution
and delivery by the Company of the Securities have been
complied with;
<PAGE>
- 20 -
(3) that such Securities, when authenticated and
delivered by the Trustee and issued by the Company in the
manner and subject to any conditions specified in such Opinion
of Counsel, will constitute valid and legally binding
obligations of the Company enforceable in accordance with
their terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors'
rights and to general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at
law);
(4) that all laws in respect of the issuance,
execution and delivery by the Company of the Securities have
been complied with; and
(5) in the case of the issuance of a series of
Securities that is secured by First Mortgage Bonds in
accordance with Article Fourteen, that the security interest
of the Trustee in the First Mortgage Bonds delivered to the
Trustee pursuant to Section 1402 is a valid and perfected
first priority security interest.
(d) Notwithstanding the provisions of Section 301 and
paragraph (c) of this Section 303, if all Securities of a series
are not to be originally issued at one time, it shall not be
necessary to deliver the Board Resolution or Officers' Certificate
otherwise required pursuant to Section 301, or the Company Order
and Opinion of Counsel otherwise required pursuant to paragraph
(c), at or prior to the time of authentication of each Security of
such series if such documents are delivered at or prior to the
authentication upon original issuance of the first Security of such
series to be issued.
(e) The Trustee shall not be required to authenticate
such Securities if the issue of such Securities pursuant to this
Indenture would affect the Trustee's own rights, duties or
immunities under the Securities and this Indenture or otherwise in
a manner that is not reasonably acceptable to the Trustee or if the
Trustee, being advised by counsel, determines that such action may
not lawfully be taken.
(f) If the Company shall establish pursuant to Section
301 that the Securities of a series are to be issued in whole or in
part in the form of one or more Global Securities, then the Company
shall execute and the Trustee shall, in accordance with this
Section 303 and the Company Order with respect to such series,
authenticate and deliver one or more Global Securities in permanent
form that (i) shall represent and shall be denominated in an amount
equal to the aggregate principal amount of the Outstanding
Securities of such series to be represented by such Global Security
or Securities, (ii) shall be registered in the name of the
Depositary for such Global Security or Securities or the nominee of
such Depositary, (iii) shall be delivered by the Trustee to such
Depositary or pursuant to such Depositary's instruction.
(g) Each Security shall be dated the date of its
authentication.
(h) No Security shall be entitled to any benefit under
this Indenture or be valid or obligatory for any purpose unless
there appears on
<PAGE>
- 21 -
such Security a certificate of authentication substantially in the
form provided for herein executed by the Trustee by manual
signature of an authorized signatory of the Trustee, and such
certificate upon any Security shall be conclusive evidence, and the
only evidence, that such Security has been duly authenticated and
delivered hereunder. Notwithstanding the foregoing, if any
Security shall have been authenticated and delivered hereunder, but
never issued and sold by the Company, and the Company shall deliver
such Security to the Trustee for cancellation as provided in
Section 309, for all purposes of this Indenture such Security shall
be deemed never to have been authenticated and delivered hereunder
and shall never be entitled to the benefits of this Indenture.
Section 304. Temporary Securities.
--------------------
(a) Pending the preparation of definitive Securities of
any series, the Company may execute, and upon Company Order the
Trustee shall authenticate and deliver, temporary Securities that
are printed, lithographed, typewritten, mimeographed or otherwise
produced, in any authorized denomination, substantially of the
tenor of the definitive Securities in lieu of which they are issued
and with such appropriate insertions, omissions, substitutions and
other variations as the officers executing such Securities may
determine, as evidenced by their execution of such Securities.
(b) If temporary Securities of any series are issued,
the Company will cause definitive Securities of that series to be
prepared without unreasonable delay. After the preparation of
definitive Securities of such series, the temporary Securities of
such series shall be exchangeable, upon the request of the Holder,
for definitive Securities of such series upon surrender of the
temporary Securities of such series at the office or agency of the
Company in a Place of Payment for that series, without charge to
the Holder. Upon surrender for cancellation of any one or more
temporary Securities of any series the Company shall execute and
the Trustee shall authenticate and deliver in exchange therefor one
or more definitive Securities of the same series, of any authorized
denominations and of a like aggregate principal amount and tenor.
Until so exchanged, the temporary Securities of any series shall in
all respects be entitled to the same benefits under this Indenture
as definitive Securities of such series and tenor.
Section 305. Registration, Registration of Transfer and Exchange.
---------------------------------------------------
(a) The Company shall cause to be kept at an office or
agency maintained by the Company in accordance with Section 1002 a
register (herein sometimes referred to as the "Security Register")
in which, subject to such reasonable regulations as it may
prescribe, the Company shall provide for the registration of
Securities and of transfers of Securities.
(b) Upon surrender for registration of transfer of any
Security of any series at the office or agency in a Place of
Payment for that series, the Company shall execute, and the Trustee
shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more new
<PAGE>
- 22 -
Securities of the same series, of any authorized denominations and
of a like aggregate principal amount and tenor.
(c) At the option of the Holder, Securities of any
series may be exchanged for other Securities of the same series, of
any authorized denominations and of a like aggregate principal
amount and tenor, upon surrender of the Securities to be exchanged
at such office or agency. Whenever any Securities are so
surrendered for exchange, the Company shall execute, and the
Trustee shall authenticate and deliver, the Securities which the
Holder making the exchange is entitled to receive.
(d) All Securities issued upon any registration of
transfer or exchange of Securities shall be the valid obligations
of the Company, evidencing the same debt, and entitled to the same
benefits under this Indenture, as the Securities surrendered upon
such registration of transfer or exchange.
(e) Every Security presented or surrendered for
registration of transfer or for exchange shall (if so required by
the Company or the Trustee) be duly endorsed, or be accompanied by
a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed, by the Holder
thereof or his attorney duly authorized in writing.
(f) No service charge shall be made to a Holder for any
registration of transfer or exchange of Securities, but the Company
may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any
registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 304, 906 or 1107 not involving any
transfer.
(g) The Company shall not be required (i) to issue,
register the transfer of or exchange Securities of any series
during a period beginning at the opening of business 15 days before
the day of the mailing of a notice of redemption of Securities of
that series selected for redemption under Section 1103 and ending
at the close of business on the day of such mailing, or (ii) to
register the transfer of or exchange any Security so selected for
redemption in whole or in part, except the unredeemed portion of
any Security being redeemed in part.
(h) Notwithstanding the foregoing and except as
otherwise specified or contemplated by Section 301, no Global
Security shall be exchangeable pursuant to this Section 305 or
Sections 304, 906 and 1107 for Securities registered in the name
of, and no transfer of a Global Security of any series may be
registered to, any Person other than the Depositary for such
Security or its nominee, unless (i) such Depositary (A) notifies
the Company that it is unwilling or unable to continue as
Depositary for such Global Security or (B) ceases to be a "clearing
agency" registered under the Exchange Act, and the Company within
90 days after it receives such notice or becomes aware of such
ineligibility does not appoint successor Depository, (ii) the
Company executes and delivers to the Trustee a Company Order that
such Global Security shall be so exchangeable and the transfer
thereof so registerable, or (iii) there shall have occurred and be
continuing an Event of Default, or an
<PAGE>
- 23 -
event which with notice or lapse of time or both would become an
Event of Default, with respect to the Securities evidenced by such
Global Security. Upon the occurrence in respect of any Global
Security of any series of any one or more of the conditions
specified in clause (i), (ii) or (iii) of the preceding sentence or
such other conditions as may be specified as contemplated by
Section 301 for such series, such Global Security may be exchanged
for Securities registered in the names of, and the transfer of such
Global Security may be registered to, such Persons (including
Persons other than the Depositary with respect to such series and
its nominees) as such Depositary shall direct. Notwithstanding any
other provision of this Indenture, any Security authenticated and
delivered upon registration of transfer of, or in exchange for, or
in lieu of, any Global Security shall also be a Global Security and
shall bear the legend specified in Section 202, except for any
Security authenticated and delivered in exchange for, or upon
registration of transfer of, a Global Security pursuant to the
preceding sentence.
Section 306. Mutilated, Destroyed, Lost and Stolen Securities.
------------------------------------------------
(a) If any mutilated Security is surrendered to the
Trustee, the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a new Security of the
same series and of like tenor and principal amount and bearing a
number not contemporaneously outstanding.
(b) If there shall be delivered to the Company and the
Trustee (i) evidence to their satisfaction of the destruction, loss
or theft of any Security and (ii) such security or indemnity as may
be required by them to save each of them and any agent of either of
them harmless, then, in the absence of notice to the Company or the
Trustee that such Security has been acquired by a bona fide
purchaser, the Company shall execute and the Trustee shall
authenticate and deliver, in lieu of any such destroyed, lost or
stolen Security, a new Security of the same series and of like
principal amount and tenor and bearing a number not
contemporaneously outstanding.
(c) In case any such mutilated, destroyed, lost or
stolen Security has become or is about to become due and payable,
the Company in its discretion may, instead of issuing a new
Security, pay such Security.
(d) Upon the issuance of any new Security under this
Section 306, the Company may require the payment of a sum
sufficient to cover any tax or other governmental charge that may
be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee) connected therewith.
(e) Every new Security of any series issued pursuant to
this Section 306 in lieu of any destroyed, lost or stolen Security
shall constitute an original additional contractual obligation of
the Company, whether or not the destroyed, lost or stolen Security
shall be at any time enforceable by anyone, and shall be entitled
to all the benefits of this Indenture equally and proportionately
with any and all other Securities of that series duly issued
hereunder.
<PAGE>
- 24 -
(f) The provisions of this Section 306 are exclusive and
shall preclude (to the extent permitted by law) all other rights
and remedies with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities.
Section 307. Payment of Interest; Interest Rights Preserved.
----------------------------------------------
(a) Except as otherwise provided as contemplated by
Section 301 with respect to any series of Securities, interest on
any Security which is payable, and is punctually paid or duly
provided for, on any Interest Payment Date shall be paid to the
Person in whose name that Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular
Record Date for such interest.
(b) Any interest on any Security of any series which is
payable, but is not punctually paid or duly provided for, on any
Interest Payment Date (herein called "Defaulted Interest") shall
forthwith cease to be payable to the Holder on the relevant Regular
Record Date by virtue of having been such Holder, and such
Defaulted Interest may be paid by the Company, at its election in
each case, as provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any
Defaulted Interest to the Persons in whose names the
Securities of such series (or their respective Predecessor
Securities) are registered at the close of business on a
Special Record Date for the payment of such Defaulted
Interest, which shall be fixed in the following manner. The
Company shall notify the Trustee in writing of the amount of
Defaulted Interest proposed to be paid on each Security of
such series and the date of the proposed payment, and at the
same time the Company shall deposit with the Trustee an amount
of money equal to the aggregate amount proposed to be paid in
respect of such Defaulted Interest or shall make arrangements
satisfactory to the Trustee for such deposit prior to the date
of the proposed payment, such money when deposited to be held
in trust for the benefit of the Persons entitled to such
Defaulted Interest as in this clause provided. Thereupon the
Trustee shall fix a Special Record Date for the payment of
such Defaulted Interest which shall be not more than 15 days
and not less than ten days prior to the date of the proposed
payment and not less than ten days after the receipt by the
Trustee of the notice of the proposed payment. The Trustee
shall promptly notify the Company of such Special Record Date
and, in the name and at the expense of the Company, shall
cause notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor to be mailed,
first-class postage prepaid, to each Holder of Securities of
such series at his address as it appears in the Security
Register, not less than ten days prior to such Special Record
Date. Notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor having been so
mailed, such Defaulted Interest shall be paid to the Persons
in whose names the Securities of such series (or their
respective Predecessor Securities) are registered at the close
of business on such Special Record Date and shall not be
payable pursuant to the following clause (2).
<PAGE>
- 25 -
(2) The Company may make payment of any Defaulted
Interest on the Securities of any series in any other lawful
manner not inconsistent with the requirements of any
securities exchange on which such Securities may be listed,
and upon such notice as may be required by such exchange, if,
after notice given by the Company to the Trustee of the
proposed payment pursuant to this clause, such manner of
payment shall be deemed practicable by the Trustee.
(c) Subject to the foregoing provisions of this Section
307, each Security delivered under this Indenture upon registration
of transfer of or in exchange for or in lieu of any other Security
shall carry the rights to interest accrued and unpaid, and to
accrue, which were carried by such other Security.
Section 308. Persons Deemed Owners.
---------------------
Prior to due presentment of a Security for registration
of transfer, the Company, the Trustee and any agent of the Company
or the Trustee may treat the Person in whose name such Security is
registered as the owner of such Security for the purpose of
receiving payment of principal of and any premium or (subject to
Section 307) interest on such Security and for all other purposes
whatsoever, whether or not such Security be overdue, and neither
the Company, the Trustee nor any agent of the Company or the
Trustee shall be affected by notice to the contrary.
Section 309. Cancellation.
------------
All Securities surrendered for payment, redemption,
registration of transfer or exchange or for credit against any
sinking fund payment shall, if surrendered to any Person other than
the Trustee, be delivered to the Trustee and shall be promptly
cancelled by the Trustee. The Company may at any time deliver to
the Trustee for cancellation any securities previously
authenticated and delivered hereunder which the Company may have
acquired in any manner whatsoever, and may deliver to the Trustee
(or to any other Person for delivery to the Trustee) for
cancellation any Securities previously authenticated hereunder
which the Company has not issued and sold, and all securities so
delivered shall be promptly cancelled by the Trustee. No
Securities shall be authenticated in lieu of or in exchange for any
Securities cancelled as provided in this Section 309, except as
expressly permitted by this Indenture. All cancelled Securities
held by the Trustee shall be disposed of as directed by a Company
Order; provided that the Trustee shall not be required to destroy
such cancelled Securities.
Section 310. Computation of Interest.
-----------------------
Except as otherwise specified as contemplated by Section
301 for Securities of any series, interest on the Securities of
each series shall be computed on the basis of a 360-day year of
twelve 30-day months.
<PAGE>
- 26 -
Section 311. CUSIP Numbers.
-------------
The Company in issuing the Securities may use "CUSIP"
numbers (if then generally in use), and, if so, the Trustee shall
use "CUSIP" numbers in notices of redemption as a convenience to
Holders; provided that any such notice may state that no
representation is made as to the correctness of such numbers either
as printed on the Securities or as contained in any notice of a
redemption and that reliance may be placed only on the other
identification numbers printed on the Securities, and any such
redemption shall not be affected by any defect in or omission of
such numbers. The Company will promptly notify the Trustee of any
change in the "CUSIP" numbers.
ARTICLE FOUR
Satisfaction and Discharge
Section 401. Satisfaction and Discharge of Indenture.
---------------------------------------
(a) Upon the direction of the Company, by a Company
Order, this Indenture shall cease to be of further effect (except
as to any surviving rights of registration of transfer or exchange
of Securities herein expressly provided for), and the Trustee, at
the expense of the Company, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture, when
(1) either:
(A) all Securities theretofore authenticated
and delivered (other than (i) Securities which have been
destroyed, lost or stolen and which have been replaced or paid
as provided in Section 306 and (ii) Securities the payment for
which money has theretofore been deposited in trust or
segregated and held in trust by the Company and thereafter
repaid to the Company or discharged from such trust, as
provided in Section 1004) have been delivered to the Trustee
for cancellation; or
(B) all such Securities not theretofore
delivered to the Trustee for cancellation (i) have become due
and payable, (ii) will become due and payable at their Stated
Maturity within one year, or (iii) are to be called for
redemption within one year under arrangements satisfactory to
the Trustee for the giving of notice of redemption by the
Trustee in the name, and at the expense, of the Company, and
the Company, in the case of (i), (ii) or (iii) above, has
deposited or caused to be deposited with the Trustee as trust
funds in trust (A) lawful money of the United States, (B) U.S.
Government Obligations which through the payment of scheduled
principal and interest in accordance with the terms thereof
will provide, not later than one day before the due date of
any payment such money, or (C) a combination thereof, in an
amount sufficient, without reinvestment, to pay and discharge
the entire indebtedness on such Securities not theretofore
delivered to the Trustee for cancellation for principal and
any premium or interest to the date of such deposit (in the
case of Securities which
<PAGE>
- 27 -
have become due and payable) or to the Stated Maturity or
Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all
other sums payable hereunder by the Company; and
(3) the Company has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating
that all conditions precedent herein provided for relating to
the satisfaction and discharge of this Indenture have been
complied with.
(b) Notwithstanding the satisfaction and discharge of
this Indenture, the obligations of the Company to the Trustee under
Section 606, the obligations of the Company to any Authenticating
Agent under Section 613, and, if money or U.S. Government
Securities shall have been deposited with the Trustee pursuant to
paragraph (a)(1)(B) of this Section 401, the obligations of the
Trustee under Section 402 and paragraph (e) of Section 1004, shall
survive.
(c) The Company shall pay and indemnify the Trustee
against any tax, fee or other charge imposed on or assessed against
the U.S. Government Securities deposited pursuant to this Section
401, or the principal and interest received in respect thereof,
other than any such tax, fee or other charge that by law is for the
account of the Holders of Outstanding Securities.
Section 402. Application of Trust Money.
--------------------------
Subject to the provisions of paragraph (e) of Section
1004, all money deposited with the Trustee pursuant to Section 401
shall be held in trust and applied by it, in accordance with the
provisions of the Securities and this Indenture, to the payment,
either directly or through any Paying Agent (including the Company
acting as its own Paying Agent) as the Trustee may determine, to
the Persons entitled thereto, of the principal and any premium or
interest for the payment of which such money has been deposited
with the Trustee.
ARTICLE FIVE
Remedies
Section 501. Events of Default.
-----------------
"Event of Default", wherever used herein with respect to
Securities of any particular series, means any one of the following
events (whatever the reason for such Event of Default and whether
it shall be voluntary or involuntary or be effected by operation of
law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental
body):
(1) default in the due and punctual payment of any
installment of interest upon any of the Securities of that
series as and
<PAGE>
- 28 -
when the same shall become due and payable, and continuance of
such default for a period of 30 days; or
(2) default in the due and punctual payment of the
principal of (or premium, if any, on) any of the Securities of
that series as and when the same shall become due and payable
at Maturity; or
(3) default in the deposit of any sinking fund
payment, when and as due by the terms of a Security of that
series, and the continuance of such default for a period of 30
days; or
(4) failure on the part of the Company duly to
observe or perform any covenant or agreement on the part of
the Company (other than a failure that constitutes another
Event of Default under this Section 501) set forth in this
Indenture or in the Securities of a particular series (other
than those covenants and agreements that have been included in
this Indenture for the benefit of Securities of other series
or are set forth exclusively in the terms of Securities of
another series), and the continuance of such failure for a
period of 60 days after there has been given, by registered or
certified mail, to the Company by the Trustee, or to the
Company and the Trustee by the Holders of at least a majority
in principal amount of the Securities of that series at the
time Outstanding, a written notice specifying such failure and
requiring the same to be remedied and stating that such notice
is a "Notice of Default" hereunder; or
(5) the entry of a decree or order by a court
having jurisdiction in the premises granting relief in respect
of the Company in an involuntary case under any applicable
Federal or State bankruptcy, insolvency, reorganization or
other similar law adjudging the Company as being bankrupt or
insolvent, or approving as properly filed a petition seeking
reorganization, arrangement, adjustment or composition of or
in respect of the Company under any applicable Federal or
State law, or appointing a receiver, liquidator, custodian,
assignee, trustee, sequestrator (or other similar official) of
the Company, or of any substantial part of its properties, or
ordering the winding up or liquidation of the affairs of the
Company, and the continuance of any such decree or order
unstayed and in effect for a period of 60 consecutive days; or
(6) the institution by the Company of proceedings
to be adjudicated as being bankrupt or insolvent, or the
consent by the Company to the institution of bankruptcy or
insolvency proceedings against it, or the filing by the
Company of a petition or answer or consent seeking
reorganization or relief under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law,
or the consent by the Company to the filing of any such
petition or to the appointment of a receiver, liquidator,
custodian, assignee, trustee, sequestrator (or other similar
official) of the Company, or of any substantial part of its
properties, or the making by the Company of an assignment for
the benefit of creditors, or the admission by the Company in
writing of its inability to pay its debts generally as they
become
<PAGE>
- 29 -
due, or the taking of corporate action by the Company in
furtherance of any such action; or
(7) in the case of any series of Securities that is
secured by First Mortgage Bonds in accordance with Article
Fourteen, prior to the Release Date, an "event of default"
under Article IX, Section 1, of the Mortgage has occurred and
is continuing (a "Mortgage Default"); or
(8) any other Event of Default provided for in
accordance with Section 301 with respect to Securities of that
series.
Section 502. Acceleration of Maturity; Rescission and Annulment.
--------------------------------------------------
(a) In case one or more of the Events of Default
specified in Section 501 (other than as provided in Section 501(7))
shall have occurred and be continuing with respect to any
particular series of Securities, then and in each and every such
case (unless the principal of all of the Securities of that series
shall have already become due and payable) either the Trustee or
the Holders of not less than thirty-three percent (33%) in
aggregate principal amount of the Securities of that series then
Outstanding hereunder, by notice in writing to the Company (and to
the Trustee, if given by Holders), may declare the principal (or,
in the case of Original Issue Discount Securities, such amount of
principal as may be provided for in such Securities) of all the
Securities of that series to be due and payable immediately, and
upon any such declaration the same shall become and shall be
immediately due and payable, anything in this Indenture or in the
Securities of that series contained to the contrary
notwithstanding, subject only to the provisions paragraph (c) of
this Section 502.
(b) In the case of an Event of Default specified in
Section 501(7), (i) the principal (or, in the case of Original
Issue Discount Securities, such amount of principal as may be
provided for in such Securities) of all of the Securities of each
series of Securities that is secured by First Mortgage Bonds in
accordance with Article Fourteen (unless the principal of all of
the Securities of any such series shall have already become due and
payable) shall become immediately due and payable if and only if
the First Mortgage Bonds securing such series of Securities shall
have become immediately due and payable in accordance with the
terms of the Mortgage (which acceleration shall occur without any
further action on the part of the Trustee (other than action by the
Trustee as a holder of Mortgage Bonds under the Mortgage) or the
Holders of such Securities, and (ii) the waiver or cure of any
Mortgage Default and the rescission and annulment of its
consequences in accordance with the terms of the Mortgage shall
constitute an automatic waiver of the corresponding Event of
Default under this Indenture and rescission and annulment of the
consequences thereof under this Indenture, in either case, anything
in this Indenture or in the Securities of that series contained to
the contrary notwithstanding, subject only to paragraph (c) of this
Section 502. Upon an acceleration of the Securities pursuant to
this paragraph (b), the Trustee shall immediately file with the
Company a written demand for redemption of the Mortgage Bonds, if
any, securing such Securities pursuant to Article Fourteen to the
extent such redemption is provided for
<PAGE>
- 30 -
with respect to such series of First Mortgage Bonds either in the
Mortgage or in an indenture supplemental thereto.
(c) The provisions of paragraphs (a) and (b) are subject
to the condition that if, at any time after the principal or the
amount of principal, as the case may be, of any series of
Securities, shall have been so declared or shall have become due
and payable, and before any judgment or decree for the payment of
the moneys due shall have been obtained or entered as hereinafter
provided,
(1) the Company shall pay or shall deposit with the
Trustee a sum sufficient to pay
(A) all matured installments of interest upon
all Securities of that series and the principal of (and
premium, if any, on) any and all Securities of that series
that shall have become due otherwise than by acceleration
(with interest on overdue installments of interest (to the
extent that payment of such interest is enforceable under
applicable law) and on such principal (and premium, if any) at
the rate of interest prescribed therefor by such Securities,
to the date of such payment or deposit), and
(B) the fees and expenses of the Trustee,
including the reasonable fees and disbursements of its
counsel, and
(2) any and all defaults under this Indenture with
respect to the Securities of the series, other than the
nonpayment of principal of (and premium, if any) and accrued
interest on the Securities of that series which shall have
become due solely by acceleration, shall have been cured or
waived (including, if applicable, a Mortgage Default)
then the Holders of a majority in aggregate principal amount of the
Securities of that series then Outstanding, by written notice to
the Company and to the Trustee, may waive all defaults and rescind
and annul such declaration and its consequences; but no such waiver
or rescission and annulment shall extend to or shall affect any
subsequent default, or shall impair any right consequent thereon.
Section 503. Collection of Indebtedness.
--------------------------
(a) The Company covenants that if:
(1) default is made in the payment of any interest
on any Security when such interest becomes due and payable and
such default continues for a period of 30 days, or
(2) default is made in the payment of the principal
of (or premium, if any, on) any Security at the Maturity
thereof,
the Company will, upon written demand of the Trustee, pay to the
Trustee, for the benefit of the Holders of such Securities, the
whole amount then due and payable on such Securities for principal
and any premium or interest and, to
<PAGE>
- 31 -
the extent that payment of such interest shall be legally
enforceable, interest on any overdue principal and premium and on
any overdue interest, at the rate or rates prescribed therefor in
such Securities, and, in addition thereto, such further amount as
shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.
Section 504. Suits for Enforcement by Trustee.
--------------------------------
If an Event of Default with respect to Securities of any
series occurs and is continuing, the Trustee, in its own name and
as trustee as an express trust, may in its discretion proceed to
protect and enforce its rights and the rights of the Holders of
Securities of such series by such appropriate judicial proceedings
as the Trustee shall deem most effectual to protect and enforce any
such rights (including, prior to the Release Date, in the case of
any series of Securities that is secured by First Mortgage Bonds in
accordance with Article Fourteen, the exercise of all rights to
that end that the Trustee may have as a holder of the First
Mortgage Bonds that secure such series of Securities), whether for
the specific enforcement of any covenant or agreement in this
Indenture or in aid of the exercise of any power granted under this
Indenture, or to enforce any other legal or equitable right vested
in the Trustee by this Indenture or by law.
Section 505. Trustee May File Proofs of Claim.
--------------------------------
(a) In case of any judicial proceeding relative to the
Company (or any other obligor upon the Securities), its property or
its creditors, the Trustee shall be entitled and empowered, by
intervention in such proceeding or otherwise, to take any and all
actions authorized under the Trust Indenture Act in order to have
claims of the Holders and the Trustee allowed in any such
proceeding (including, prior to the Release Date, in the case of
any series of Securities that is secured by First Mortgage Bonds in
accordance with Article Fourteen, any claims of the Trustee as a
holder of First Mortgage Bonds). In particular, the Trustee shall
be authorized to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the
same; and any custodian, receiver, assignee, trustee, liquidator,
sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Holder to make such
payments to the Trustee and, in the event that the Trustee shall
consent to the making of such payments directly to the Holders, to
pay to the Trustee any amount due it for the compensation,
expenses, disbursements and advances of the Trustee, its agents and
counsel, and any other amounts due the Trustee under Section 606.
(b) No provision of this Indenture shall be deemed to
authorize the Trustee to authorize or consent to or accept or adopt
on behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Securities or the rights of
any Holder thereof or to authorize the Trustee to vote in respect
of the claim of any Holder in any such proceeding; provided,
however, the Trustee may vote on behalf of the Holders for the
election of a trustee in bankruptcy or similar official and may be
a member of a creditors' or other similar committee.
<PAGE>
- 32 -
Section 506. Trustee May Enforce Claims Without Possession of
------------------------------------------------
Securities.
- ----------
All rights of action and claims under this Indenture or
the Securities may be prosecuted and enforced by the Trustee
without the possession of any of the Securities or the production
thereof in any proceeding relating thereto, and any such proceeding
instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment shall,
after provision for the payment of the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and
counsel, be for the ratable benefit of the Holders of the
Securities in respect of which such judgment has been recovered.
Section 507. Application of Money Collected.
------------------------------
Any money collected by the Trustee pursuant to this
Article Five shall be applied in the following order, at the date
or dates fixed by the Trustee and, in case of the distribution of
such money on account of principal or any premium or interest, upon
presentation of the Securities and the notation thereon of the
payment if only partially paid and upon surrender thereof if fully
paid:
FIRST: To the payment of all amounts due the Trustee
under Section 606;
SECOND: To the payment of the amounts then due and
unpaid for principal of and any premium or interest on the
Securities in respect of which or for the benefit of which
such money has been collected, ratably, without preference or
priority of any kind, according to the amounts due and payable
on such Securities for principal and any premium or interest,
respectively; and
THIRD: To the Company or its assigns, or as a court of
competent jurisdiction may determine.
Section 508. Limitation on Suits.
-------------------
No Holder of any Security of any series shall have any
right to institute any proceeding, judicial or otherwise, with
respect to this Indenture, or for the appointment of a receiver or
trustee, or for any other remedy hereunder, unless
(1) such Holder has previously given written notice
to the Trustee of a continuing Event of Default with respect
to the Securities of that series;
(2) the Holders of not less than a majority in
principal amount of the Outstanding Securities of that series
shall have made written request to the Trustee to institute
proceedings in respect of such Event of Default in its own
name as Trustee hereunder;
<PAGE>
- 33 -
(3) such Holder or Holders have offered to the
Trustee indemnity and security satisfactory to the Trustee
against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of
such notice, request and offer of indemnity and security has
failed to institute any such proceeding; and
(5) no direction inconsistent with such written
request has been given to the Trustee during such 60-day
period by the Holders of a majority in principal amount of the
Outstanding Securities of that series;
it being understood and intended that no one or more of such
Holders shall have any right in any manner whatever by virtue of,
or by availing of, any provision of this Indenture to affect,
disturb or prejudice the rights of any other of such Holders or the
Holders of any other series, or to obtain or to seek to obtain
priority or preference over any other of such Holders or to enforce
any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all of such
Holders.
Section 509. Unconditional Right of Holders to Receive Principal,
---------------------------------------------------
Premium and Interest.
--------------------
Notwithstanding any other provision in this Indenture,
the Holder of any Security shall have the right, which is absolute
and unconditional, to receive payment of the principal of and any
premium and (subject to Section 307) any interest on such Security
on the Stated Maturity or Maturities expressed in such Security
(or, in the case of redemption, on the Redemption Date) and to
institute suit for the enforcement of any such payment, and such
rights shall not be impaired without the consent of such Holder.
Section 510. Restoration of Rights and Remedies.
----------------------------------
If the Trustee or any Holder has instituted any
proceeding to enforce any right or remedy under this Indenture and
such proceeding has been discontinued or abandoned for any reason,
or has been determined adversely to the Trustee or to such Holder,
then and in every such case, subject to any determination in such
proceeding, the Company, the Trustee and the Holders shall be
restored severally and respectively to their former positions
hereunder and thereafter all rights and remedies of the Trustee and
the Holders shall continue as though no such proceeding had been
instituted.
Section 511. Rights and Remedies Cumulative.
------------------------------
Except as otherwise provided with respect to the
replacement or payment of mutilated, destroyed, lost or stolen
Securities in Section 306(f), no right or remedy herein conferred
upon or reserved to the Trustee or to the Holders is intended to be
exclusive of any other right or remedy, and every right and remedy
shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or
hereafter
<PAGE>
- 34 -
existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
Section 512. Delay or Omission Not Waiver.
----------------------------
No delay or omission of the Trustee or of any Holder of
any Securities to exercise any right or remedy accruing upon any
Event of Default shall impair any such right or remedy or
constitute a waiver of any such Event of Default or an acquiescence
therein. Every right and remedy given by this Article Five or by
law to the Trustee or to the Holders may be exercised from time to
time, and as often as may be deemed expedient, by the Trustee or by
the Holders, as the case may be.
Section 513. Control by Holders.
------------------
The Holders of a majority in principal amount of the
Outstanding Securities of any series 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 (including, prior to the Release Date, in
the case of First Mortgage Bonds that secure any series of
Securities in accordance with Article Fourteen, the exercise by the
Trustee of any rights, powers or privileges possessed by the
Trustee as a holder of such First Mortgage Bonds under terms of
such First Mortgage Bonds or under the Mortgage), with respect to
the Securities of such series, provided that:
(1) such direction shall not be in conflict with
any provision of law or with this Indenture (and, in the case
of the First Mortgage Bonds, the terms such First Mortgage
Bonds and the Mortgage), and
(2) the Trustee may take any other action deemed
proper by the Trustee that is not inconsistent with such
direction.
Section 514. Waiver of Past Defaults.
-----------------------
The Holders of not less than a majority in principal
amount of the Outstanding Securities of any series may on behalf of
the Holders of all the Securities of such series waive any past
default hereunder with respect to such series and its consequences,
except a default
(1) in the payment of the principal of, or any
premium or interest on, any Security of such series, or
(2) in respect of a covenant or provision hereof
which under Article Nine cannot be modified or amended without
the consent of the Holder of each Outstanding Security of such
series affected.
Upon any such waiver, such default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been
cured, for every
<PAGE>
- 35 -
purpose of this Indenture; but no such waiver shall extend to any
subsequent or other default or impair any right consequent thereon.
Section 515. Undertaking for Costs.
---------------------
Each party to this Indenture agrees, and each Holder of
any Security by his acceptance thereof shall be deemed to have
agreed, that in any suit for the enforcement of any right or remedy
under this Indenture, or in any suit against the Trustee for any
action taken, suffered or omitted by it as Trustee, a court may in
its discretion require any party litigant in such suit to file an
undertaking to pay the costs of such suit, and may assess
reasonable costs, including reasonable attorneys' fees and
disbursements, against any party litigant in any such suit, in the
manner and to the extent provided in the Trust Indenture Act. This
Section 515 does not apply to a suit instituted (i) by the Trustee,
(ii) by a Holder pursuant to Section 509, or (iii) by a Holder or
Holders of more than 10% in principal amount of the then
Outstanding Securities.
Section 516. Waiver of Stay or Extension Laws.
--------------------------------
The Company covenants (to the extent that it may lawfully
do so) that it will not at any time insist upon, or plead, or in
any manner whatsoever claim or take the benefit or advantage of,
any stay or extension law wherever enacted, now or at any time
hereafter in force, that may affect the covenants or the
performance of this Indenture; and the Company (to the extent that
it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such
power as though no such law had been enacted.
Section 517. Notice of Defaults.
------------------
If a default occurs hereunder with respect to Securities
of any series that is actually known to a Responsible Officer of
the Trustee, the Trustee shall give the Holders of Securities of
such series notice of such default as and to the extent required,
and in the manner provided, by the Trust Indenture Act. For the
purpose of this Section 517, the term "default" means any event
which is, or after notice or lapse of time or both would become, an
Event of Default with respect to Securities of such series.
Section 518. Defaults Under the Mortgage.
---------------------------
In the case of any series of Securities that is secured
by First Mortgage Bonds in accordance with Article Fourteen, in
addition to every other right and remedy provided in this
Indenture, the Trustee, subject to Section 513, may exercise any
right or remedy available to the Trustee in its capacity as owner
and holder of First Mortgage Bonds that arises as a result of a
default under the Mortgage.
<PAGE>
- 36 -
ARTICLE SIX
The Trustee
Section 601. Certain Duties and Responsibilities.
-----------------------------------
(a) Except during the continuance of an Event of
Default,
(1) the Trustee undertakes to perform such duties,
and only such duties, as specifically are set forth in this
Indenture, and no implied covenants or obligations shall be
read into this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture;
but in the case of any such certificates or opinions which by
any provisions hereof are specifically required to be
furnished to the Trustee, the Trustee shall be under a duty to
examine such certificates or opinions to determine whether or
not they conform to the requirements of this Indenture.
(b) In case an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and
powers vested in it by this Indenture, and use the same degree of
care and skill in their exercise, as a prudent person would
exercise or use under the circumstances in the conduct of such
person's own affairs.
(c) No provision of this Indenture shall be construed to
relieve the Trustee from liability for its own negligent action,
its own negligent failure to act, or its own willful misconduct,
except that:
(1) this paragraph (c) shall not be construed to
limit the effect of paragraph (a) of this Section 601;
(2) the Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer,
unless it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of a majority in
principal amount of the Outstanding Securities of any series,
relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee,
under this Indenture with respect to the Securities of such
series, provided such direction shall not be in conflict with
any rule of law or with this Indenture; and
<PAGE>
- 37 -
(4) no provision of this Indenture shall require
the Trustee to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers.
(d) Whether or not therein expressly so provided, every
provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the
Trustee shall be subject to the provisions of this Section
601.
Section 602. Certain Rights of Trustee.
-------------------------
Subject to the provisions of Section 601:
(1) the Trustee may conclusively rely and shall be
protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper
or document believed by it to be genuine and to have been
signed or presented by the proper party or parties;
(2) any request or direction of the Company
referred to herein shall be sufficiently evidenced by a
Company Order or Company Request and any resolution of the
Board of Directors may be sufficiently evidenced by a Board
Resolution;
(3) whenever in the administration of this
Indenture the Trustee shall deem it desirable that a matter be
proved or established prior to taking, suffering or omitting
any action hereunder, the Trustee (unless other evidence be
herein specifically prescribed) may, in the absence of bad
faith on its part, rely upon an Officers' Certificate, except
that in the case of any such Officers' Certificate that by any
provision hereof is specifically required to be furnished to
the Trustee, the Trustee shall be under a duty to examine the
same to determine whether or not it conforms to the
requirements of this Indenture;
(4) the Trustee may consult with counsel of its
selection and the advice of such counsel or any Opinion of
Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reliance thereon, except
that in the case of any such Opinion of Counsel that by any
provision hereof is specifically required to be furnished to
the Trustee, the Trustee shall be under a duty to examine the
same to determine whether or not it conforms to the
requirements of this Indenture;
(5) the Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this
Indenture at the request or direction of any of the Holders
pursuant to this Indenture, unless such Holders shall have
offered to the Trustee security or indemnity satisfactory to
the Trustee against the costs, expenses and
<PAGE>
- 38 -
liabilities which might be incurred by it in compliance with
such request or direction;
(6) the Trustee shall not be bound to make any
investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper
or document, but the Trustee, in its discretion, may make such
further inquiry or investigation into such facts or matters as
it may see fit, and, if the Trustee shall determine to make
such further inquiry or investigation, it shall be entitled to
examine the books, records and premises of the Company,
personally or by agent or attorney;
(7) the Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either
directly or by or through agents or attorneys and the Trustee
shall not be responsible for any misconduct or negligence on
the part of any agent or attorney appointed with due care by
it hereunder;
(8) the Trustee shall not be liable for any action
taken, suffered or omitted to be taken by it in good faith and
reasonably believed by it to be authorized or within the
discretion, rights or powers conferred upon it by this
Indenture;
(9) the Trustee shall not be deemed to have notice
of any default or Event of Default unless a Responsible
Officer of the Trustee has actual knowledge thereof or unless
(i) written notice of any event which is in fact such a
default or Event of Default is received by the Trustee at the
Corporate Trust Office of the Trustee and (ii) such notice
references the Securities and this Indenture; and
(10) the rights, privileges, protections, immunities
and benefits given to the Trustee, including, without
limitation, its right to be indemnified, are extended to, and
shall be enforceable by, the Trustee in each of its capacities
hereunder, and to each agent, custodian and other Person
employed to act hereunder.
Section 603. Not Responsible for Recitals or Issuance of
-------------------------------------------
Securities.
- ----------
The recitals contained in this Indenture and in the
Securities, except the Trustee's certificate of authentication,
shall be taken as the statements of the Company, and the Trustee or
any Authenticating Agent assumes no responsibility for their
correctness. The Trustee makes no representations as to the
validity or sufficiency of this Indenture or of the Securities.
The Trustee or any Authenticating Agent shall not be accountable
for the use or application by the Company of Securities or the
proceeds thereof.
Section 604. May Hold Securities.
-------------------
The Trustee, any Authenticating Agent, any Paying Agent,
any Security Registrar or any other agent of the Company, in its
individual or any
<PAGE>
- 39 -
other capacity, may become the owner or pledgee of Securities and,
subject to Sections 607 and 612, may otherwise deal with the
Company with the same rights it would have if it were not Trustee,
Authenticating Agent, Paying Agent, Security Registrar or such
other agent.
Section 605. Money Held in Trust.
-------------------
Money held by the Trustee in trust hereunder need not be
segregated from other funds except to the extent required by law.
The Trustee shall be under no liability for interest on any money
received by it hereunder except as otherwise agreed in writing with
the Company.
Section 606. Compensation and Reimbursement.
------------------------------
(a) The Company agrees:
(1) to pay to the Trustee from time to time such
compensation as the Company and the Trustee agree in writing
for all services rendered by it hereunder (which compensation
shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein,
to reimburse the Trustee upon its request for all expenses,
disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Indenture (including the
reasonable compensation and the expenses and disbursements of
its agents and counsel), except any such expense, disbursement
or advance as may be attributable to its negligence or bad
faith; and
(3) to indemnify the Trustee for, and to hold it
harmless against, any and all loss, damage, claim, liability
or expense, including taxes (other than taxes based on the
income of the Trustee), incurred without negligence or willful
misconduct on its part, arising out of or in connection with
the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses of defending
itself against any claim (whether asserted by the Company, any
Holder or any other Person) or liability in connection with
the exercise or performance of any of its powers or duties
hereunder; provided that:
(i) with respect to any such claim, the
Trustee shall have given the Company written notice thereof
promptly after the Trustee shall have knowledge thereof, but
failure by the Trustee to give such notice shall not affect
the Trustee's right or the Company's obligation to indemnity
hereunder;
(ii) while maintaining absolute control over
its own defense, the Trustee shall cooperate and consult with
the Company in preparing such defense; and
(iii) notwithstanding anything to the contrary
in this Section 606(3), the Company shall not be liable for
settlement of any
<PAGE>
- 40 -
such claim by the Trustee entered into without the prior
written consent of the Company, which consent shall not be
unreasonably withheld.
(b) The Trustee shall have a lien prior to the
Securities as to all property and funds held by it hereunder for
any amount owing it or any predecessor Trustee pursuant to this
Section 606, except with respect to funds held in trust for the
benefit of the Holders of particular Securities.
(c) When the Trustee incurs expenses or renders services
in connection with an Event of Default specified in Section 501(5)
or Section 501(6), the expenses (including the reasonable charges
and expenses of its counsel) and the compensation for the services
are intended to constitute expenses of administration under any
applicable Federal or State bankruptcy, insolvency or other similar
law.
(d) The provisions of this Section 606 shall survive the
termination of this Indenture.
Section 607. Disqualification; Conflicting Interests.
---------------------------------------
If the Trustee has or shall acquire a conflicting
interest within the meaning of the Trust Indenture Act, the Trustee
shall either eliminate such interest or resign, to the extent and
in the manner provided by, and subject to the provisions of, the
Trust Indenture Act and this Indenture.
Section 608. Corporate Trustee Required; Eligibility.
---------------------------------------
There shall at all times be a Trustee under this
Indenture which shall be a corporation that (i) is organized and
doing business under the laws of the United States, any State
thereof or the District of Columbia, (ii) is authorized under such
laws to exercise corporate trust power, (iii) has a combined
capital and surplus of at least $50,000,000, (iv) is subject to
supervision or examination by Federal, State or District of
Columbia authority, (v) has its Corporate Trust Office in the
United States, and (vi) is otherwise qualified to act as Trustee
under the Trust Indenture Act. If such Person publishes reports of
condition at least annually, pursuant to law or to the requirements
of said supervising or examining authority, then for the purposes
of this Section 609, the combined capital and surplus of such
Person shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If
at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section 609, it shall resign
immediately in the manner and with the effect hereinafter specified
in this Article Six.
Section 609. Resignation and Removal; Appointment of Successor.
-------------------------------------------------
(a) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article Six
shall become effective until the acceptance of appointment by the
successor Trustee in accordance with the applicable requirements of
Section 610.
<PAGE>
- 41 -
(b) The Trustee may resign at any time with respect to
the Securities of one or more series by giving written notice
thereof to the Company. If the instrument of acceptance by a
successor Trustee required by Section 610 shall not have been
delivered to the Trustee within 60 days after the giving of such
notice of resignation, the resigning Trustee may petition, at the
expense of the Company, any court of competent jurisdiction for the
appointment of a successor Trustee with respect to the Securities
of such series.
(c) The Trustee may be removed at any time with respect
to the Securities of any series by Act of the Holders of a majority
in principal amount of the Outstanding Securities of such series,
delivered to the Trustee and to the Company. If the instrument of
acceptance by a successor Trustee required by Section 610 shall not
have been delivered to the Trustee within 60 days after the giving
of such notice of removal, the Trustee being removed may petition,
at the expense of the Company, any court of competent jurisdiction
for the appointment of a successor Trustee with respect to the
Securities of such series.
(d) If at any time:
(1) the Trustee shall fail to comply with Section
607 after written request therefor by the Company or by any
Holder who has been a bona fide Holder of a Security for at
least six months, or
(2) the Trustee shall cease to be eligible under
Section 608 and shall fail to resign after written request
therefor by the Company or by any such Holder, or
(3) the Trustee shall become incapable of acting or
shall be adjudged as being bankrupt or insolvent or a receiver
of the Trustee or of its property shall be appointed or any
public officer shall take charge or control of the Trustee or
of its property or affairs for the purpose of rehabilitation,
conservation or liquidation,
then, in any such case, (i) the Company by a Board Resolution may
remove the Trustee with respect to all Securities, or (ii) subject
to Section 515, any Holder who has been a bona fide Holder of a
Security for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee with respect to all
Securities and the appointment of a successor Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of
Trustee for any cause, with respect to the Securities of one or
more series, the Company, by a Board Resolution, shall promptly
appoint a successor Trustee or Trustees with respect to the
Securities of that or those series (it being understood that any
such successor Trustee may be appointed with respect to the
Securities of one or more or all of such series and that at any
time there shall be only one Trustee with respect to the Securities
of any particular series) and shall comply with the applicable
requirements of Section 610. If, within one year after such
resignation, removal or incapability, or the occurrence of such
<PAGE>
- 42 -
vacancy, a successor Trustee with respect to the Securities of any
series shall be appointed by Act of the Holders of a majority in
principal amount of the Outstanding Securities of such series
delivered to the Company and the retiring Trustee, the successor
Trustee so appointed shall, forthwith upon its acceptance of such
appointment in accordance with the applicable requirements of
Section 610, become the successor Trustee with respect to the
Securities of such series and to that extent supersede the
successor Trustee appointed by the Company. If no successor
Trustee with respect to the Securities of any series shall have
been so appointed by the Company or the Holders and accepted
appointment in the manner required by Section 610, any Holder who
has been a bona fide Holder of a Security of such series for at
least six months may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to the Securities
of such series.
(f) The Company shall give notice of each resignation
and each removal of the Trustee with respect to the Securities of
any series and each appointment of a successor Trustee with respect
to the Securities of any series to all Holders of Securities of
such series in the manner provided in Section 106. Each notice
shall include the name of the successor Trustee with respect to the
Securities of such series and the address of its Corporate Trust
Office.
Section 610. Acceptance of Appointment by Successor.
--------------------------------------
(a) In case of the appointment hereunder of a successor
Trustee or Trustees with respect to all Securities, every successor
Trustee so appointed shall execute, acknowledge and deliver to the
Company and to the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the
retiring Trustee shall become effective and such successor Trustee,
without any further act, deed or conveyance, shall become vested
with all the rights, powers, trusts and duties of the retiring
Trustee; but, on the request of the Company or the successor
Trustee, such retiring Trustee shall, upon payment of its fees and
expenses, execute and deliver an instrument transferring to such
successor Trustee all the rights, powers and trusts of the retiring
Trustee and shall duly assign, transfer and deliver to such
successor Trustee all property and money held by such retiring
Trustee hereunder (including all right, title and interest in any
Mortgage Bonds held by the retiring Trustee in accordance with
Article Fourteen).
(b) In case of the appointment hereunder of a successor
Trustee with respect to the Securities of one or more (but not all)
series, the Company, the retiring Trustee and each successor
Trustee with respect to the Securities of such series shall execute
and deliver an indenture supplemental hereto wherein each successor
Trustee shall accept such appointment and which (i) shall contain
such provisions as shall be necessary or desirable to transfer and
confirm to, and to vest in, each successor Trustee all the rights,
powers, trusts and duties of the retiring Trustee with respect to
the Securities of that or those series to which the appointment of
such successor Trustee relates, (ii) if the retiring Trustee is not
retiring with respect to all Securities, shall contain such
provisions as shall be deemed necessary or desirable to confirm
that all the rights, powers, trusts and duties of the
<PAGE>
- 43 -
retiring Trustee with respect to the Securities of that or those
series as to which the retiring Trustee is not retiring shall
continue to be vested in the retiring Trustee, and (iii) shall add
to or change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of the
trusts hereunder by more than one Trustee, it being understood that
nothing herein or in such supplemental indenture shall constitute
such Trustees co-trustees of the same trust and that each such
Trustee shall be trustee of a trust or trusts hereunder separate
and apart from any trust or trusts hereunder administered by any
other such Trustee and that no Trustee shall be responsible for any
notice given to, or received by, or any act or failure to act on
the part of any other Trustee; and upon the execution and delivery
of such supplemental indenture the resignation or removal of the
retiring Trustee shall become effective to the extent provided
therein and each such successor Trustee, without any further act,
deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Trustee with respect to
the Securities of that or those series to which the appointment of
such successor Trustee relates; but, on request of the Company or
any successor Trustee, such retiring Trustee shall duly assign,
transfer and deliver to such successor Trustee all property and
money held by such retiring Trustee hereunder with respect to the
Securities of that or those series to which the appointment of such
successor Trustee relates (including all right, title and interest
in any Mortgage Bonds held by the retiring Trustee in accordance
with Article Fourteen).
(c) Upon request of any such successor Trustee, the
Company shall execute any and all instruments for more fully and
certainly vesting in and confirming to such successor Trustee all
such rights, powers and trusts referred to in paragraph (a) or (b)
of this Section 610, as the case may be.
(d) No successor Trustee shall accept its appointment
unless at the time of such acceptance such successor Trustee shall
be qualified and eligible under this Article Six.
Section 611. Merger, Conversion, Consolidation or Succession to
--------------------------------------------------
Business.
- --------
Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation succeeding to all or
substantially all the corporate trust business of the Trustee,
shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this
Article Six, without the execution or filing of any paper or any
further act on the part of any of the parties hereto. In case any
Securities shall have been authenticated, but not delivered by the
Trustee then in office, any successor by merger, conversion or
consolidation to such authenticating Trustee may adopt such
authentication and deliver the Securities so authenticated with the
same effect as if such successor Trustee had itself authenticated
such Securities.
<PAGE>
- 44 -
Section 612. Preferential Collection of Claims Against Company.
-------------------------------------------------
If and when the Trustee shall be or become a creditor of
the Company (or any other obligor upon the Securities), the Trustee
shall be subject to the provisions of the Trust Indenture Act
regarding the collection of claims against the Company (or any such
other obligor).
Section 613. Appointment of Authenticating Agent.
-----------------------------------
(a) The Trustee may appoint an Authenticating Agent or
Agents acceptable to the Company with respect to one or more series
of Securities which shall be authorized to act on behalf of the
Trustee to authenticate Securities of such series issued upon
original issue and upon exchange, registration of transfer or
partial redemption thereof or pursuant to Section 306, and
Securities so authenticated shall be entitled to the benefits of
this Indenture and shall be valid and obligatory for all purposes
as if authenticated by the Trustee hereunder. Wherever reference
is made in this Indenture to the authentication and delivery of
Securities by the Trustee or the Trustee's certificate of
authentication, such reference shall be deemed to include
authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed
on behalf of the Trustee by an Authenticating Agent. Each
Authenticating Agent shall be at all times be a corporation
organized and doing business under the laws of the United States of
America, any State thereof or the District of Columbia, authorized
under such laws to act as Authenticating Agent, having a combined
capital and surplus of not less than $50,000,000 and subject to
supervision or examination by Federal, State or District of
Columbia authority. If such Authenticating Agent publishes reports
of condition at least annually, pursuant to law or to the
requirements of said supervising or examining authority, then for
the purposes of this Section 613, the combined capital and surplus
of such Authenticating Agent shall be deemed to be its combined
capital and surplus as set forth in its most recent report of
condition so published. If at any time an Authenticating Agent
shall cease to be eligible in accordance with the provisions of
this Section 613, such Authenticating Agent shall resign
immediately in the manner and with the effect specified in this
Section.
(b) Any corporation into which an Authenticating Agent
may be merged or converted or with which it may be consolidated, or
any corporation resulting from any merger, conversion or
consolidation to which such Authenticating Agent shall be a party,
or any corporation succeeding to all or substantially all of the
corporate agency or corporate trust business of an Authenticating
Agent, shall continue to be an Authenticating Agent, provided such
corporation shall be otherwise eligible under this Section 613,
without the execution or filing of any paper or any further act on
the part of the Trustee or the Authenticating Agent.
(c) An Authenticating Agent may resign at any time by
giving written notice thereof to the Trustee and to the Company.
The Trustee may at any time terminate the agency of an
Authenticating Agent by giving written notice thereof to such
Authenticating Agent and to the Company. Upon receiving such a
notice of resignation or upon such a termination, or in case
<PAGE>
- 45 -
at any time such Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section 613, the Trustee may
appoint a successor Authenticating Agent which shall be acceptable
to the Company and shall mail written notice of such appointment by
first-class mail, postage prepaid, to all Holders of Securities of
the series with respect to which such Authenticating Agent will
serve, as their names and addresses appear in the Security
Register. Any successor Authenticating Agent upon acceptance of
its appointment hereunder shall become vested with all the rights,
powers and duties of an Authenticating Agent hereunder, with like
effect as if originally named as an Authenticating Agent. No
successor Authenticating Agent shall be appointed unless eligible
under the provisions of this Section 613.
(d) The Company agrees to pay to each Authenticating
Agent from time to time reasonable compensation for its services
under this Section 613.
(e) If an appointment of an Authenticating Agent with
respect to one or more series is made pursuant to this Section 613,
the Securities of such series may have endorsed thereon an
alternative certificate of authentication in the following form:
This is one of the Securities of the series designated
therein referred to in the within-mentioned Indenture.
THE BANK OF NEW YORK
As Trustee
By: ______________________________
As Authenticating Agent
By: ______________________________
Authorized Signatory
ARTICLE SEVEN
Holders' Lists and Reports by Trustee and Company
Section 701. Company to Furnish Trustee Names and Addresses of
-------------------------------------------------
Holders.
- -------
The Company will furnish or cause to be furnished to the
Trustee:
(1) semi-annually, not later then June 30 and
December 31 in each year, a list for each series of
Securities, in such form as the Trustee may reasonably
require, of the names and addresses of the Holders of
Securities of such series as of the preceding June 15 or
December 15, and
(2) at such other times as the Trustee may request
in writing, within 30 days after the receipt by the Company of
any such
<PAGE>
- 46 -
request, a list of similar form and content as of a date not
more than 45 days prior to the time such list is furnished;
provided, however, that if the Trustee is acting in the capacity as
Security Registrar, no delivery of such lists shall be required.
Section 702. Preservation of Information; Communications to
----------------------------------------------
Holders.
- -------
(a) The Trustee shall preserve, in as current a form as
is reasonably practicable and for so long as is required by the
Trust Indenture Act, the names and addresses of Holders of each
series of Securities (i) contained in the most recent list, if any,
furnished to the Trustee as provided in Section 701 and (ii)
received by the Trustee in the capacity as Security Registrar, if
the Trustee is then acting in such capacity.
(b) The rights of the Holders to communicate with other
Holders with respect to their rights under this Indenture or under
the Securities of any series, and the corresponding rights and
privileges of the Trustee, shall be as provided by the Trust
Indenture Act.
(c) Every Holder of Securities, by receiving and holding
the same, agrees with the Company and the Trustee that neither the
Company nor the Trustee nor any agent of either of them shall be
held accountable by reason of any disclosure of information as to
names and addresses of Holders made pursuant to the Trust Indenture
Act.
Section 703. Reports by Trustee.
------------------
(a) The Trustee shall transmit to Holders such reports
concerning the Trustee, its relationship to the Company (or any
other obligor under the Securities) and its actions under this
Indenture as are required pursuant to the Trust Indenture Act at
the times or such intervals and in the manner provided for in the
Trust Indenture Act. If required, the report contemplated by
Section 313(a) of the Trust Indenture Act, shall be dated May 15
and shall be delivered to the Holders by the Trustee within sixty
days after each May 15 following the date of this Indenture.
(b) A copy of each report required by paragraph (a), at
the time of transmission to Holders, shall be filed by the Trustee
with the Commission and with each stock exchange upon which any
Securities of any series are listed and shall be furnished to the
Company. If and when Securities of any series are listed on any
stock exchange, the Company shall notify the Trustee promptly of
such listing and of any subsequent delisting thereof.
Section 704. Reports by Company.
------------------
(a) The Company shall:
(1) file with the Trustee, within 15 days after the
Company is required to file the same with the Commission,
copies of the annual reports and of the information, documents
and other reports (or copies of such portions of any of the
foregoing as the Commission may
<PAGE>
- 47 -
from time to time by rules and regulations prescribe pursuant
to the Trust Indenture Act) that the Company is required to
file with the Commission pursuant to Section 13 or Section
15(d) of the Exchange Act; or, if the Company is not required
to file information, documents or reports pursuant to either
of said sections of the Exchange Act, then it shall file with
the Trustee and the Commission, in accordance with rules and
regulations prescribed from time to time by the Commission
pursuant to the Trust Indenture Act, such of the supplementary
and periodic information, documents and reports which may be
required pursuant to Section 13 of the Exchange Act in respect
of a security listed and registered on a national securities
exchange as may be prescribed from time to time in such rules
and regulations;
(2) file with the Trustee and the Commission, in
accordance with rules and regulations prescribed from time to
time by the Commission pursuant to the Trust Indenture Act,
such additional information, documents and reports with
respect to compliance by the Company with the conditions and
covenants of this Indenture as may be required from time to
time by such rules and regulations; and
(3) transmit, within 30 days after the filing
thereof with the Trustee, in the manner and to the extent
required by the Trust Indenture Act, such summaries of any
information, documents and reports required to be filed by the
Company pursuant to clauses (1) and (2) of this Section 704 as
may be required by rules and regulations prescribed from time
to time by the Commission pursuant to the Trust Indenture Act.
(b) Delivery to the Trustee of the reports, information
and documents contemplated by this Section 704 is for informational
purposes only and the Trustee's receipt thereof shall not
constitute (unless otherwise provided in the Trust Indenture Act or
the rules and regulations of the Commission thereunder)
constructive notice of any information contained therein or
determinable from information contained therein, including the
Company's compliance with any of its covenants hereunder (as to
which the Trustee is entitled to rely exclusively on an Officers'
Certificate).
ARTICLE EIGHT
Consolidation, Merger, Conveyance, Transfer or Lease
Section 801. Company may Consolidate, Etc., Only on Certain
----------------------------------------------
Terms.
- -----
(a) Nothing contained in this Indenture or in any of the
Securities shall prevent any consolidation or merger of the Company
with or into any other Person, or successive consolidations or
mergers in which the Company or its successor or successors shall
be a party or parties, or shall prevent any sale, conveyance,
transfer, lease or other disposition of the properties and assets
of the Company, or its successor or successors, to any other
Person; provided that (i) the Person formed by such consolidation
or into which the Company is merged or any Person that acquires by
sale, conveyance, transfer or otherwise, or which leases, the
properties and assets of the Company as an entirety or
substantially as an entirety (a "Company
<PAGE>
- 48 -
Sale") shall be a corporation, organized and validly existing under
the laws of the United States of America, any State thereof or the
District of Columbia and shall be authorized to acquire and operate
the assets so acquired (the "Successor Company"), (ii) as a
condition precedent to a Company Sale, (A) the due and punctual
payment of the principal of and any premium or interest on all of
the Securities, according to their tenor, and the due and punctual
performance and observance of all of the covenants and conditions
of this Indenture to be performed by the Company shall be expressly
assumed by supplemental indenture to this Indenture, reasonably
satisfactory in form to the Trustee, executed and delivered to the
Trustee by the Successor Company and (B) if the Company Sale occurs
prior to the Release Date, the due and punctual payment of the
principal of and any premium or interest on the First Mortgage
Bonds securing any series of Securities, according to their tenor,
and the due and punctual performance and observance of all of the
covenants and conditions of the Mortgage to be performed by the
Company with respect to such First Mortgage Bonds shall be
expressly assumed by supplemental indenture to the Mortgage
executed and delivered to the Mortgage Trustee by the Successor
Company, and (iii) the Company shall not be permitted to effect any
Company Sale if the completion of such Company Sale would create an
Event of Default or an event under this Indenture which, with the
passage of time or the giving of notice or both, would become an
Event of Default.
(b) Anything in this Indenture to the contrary
notwithstanding, the conveyance or other transfer by the Company,
in a single transaction or a series of related transactions, of
either (i) all or any portion of its facilities for the generation
and transmission of electric energy or (ii) all of any portion of
its facilities for the distribution of electric energy, in either
case alone or in combination with other assets (but not in
combination with the other) shall in no event be deemed to
constitute a conveyance or other transfer of the properties and
assets of the Company as an entirety or substantially as an
entirety. The character of particular facilities shall be
determined in accordance with the Uniform System of Accounts
prescribed for public utilities and licensees subject to the
Federal Power Act, as amended, to the extent applicable.
Section 802. Successor Corporation to Be Substituted.
---------------------------------------
(a) In case of any Company Sale, the Successor Company
shall succeed to and be substituted for the Company, with the same
effect as if it had been named herein as the Company. The
Successor Company thereupon may cause to be signed, and may issue
either in its own name or in the name of Potomac Electric Power
Company or in the name of any corporation which previously shall
have become the Company in accordance with the provisions of this
Article Eight any or all of the Securities issuable hereunder,
which theretofore shall not have been signed by the Company and
delivered to the Trustee; and, upon the order of the Successor
Company instead of the Company, and subject to all the terms,
conditions and limitations in this Indenture prescribed, the
Trustee shall authenticate and shall deliver, any Securities which
previously shall have been signed and delivered by the officers of
the Company to the Trustee for authentication, and any Securities
which the Successor Company thereafter shall cause to be signed and
delivered to the Trustee for that purpose. All of the Securities
of a particular series so
<PAGE>
- 49 -
issued shall in all respects have the same legal rank and benefit
under this Indenture as the Securities of such series theretofore
or thereafter issued in accordance with the terms of this Indenture
as though all of such Securities had been issued at the date or the
execution hereof.
(b) Nothing contained in this Indenture or in any of the
Securities shall prevent the Company (i) from merging into itself
any other Person, (ii) from selling or otherwise disposing of its
property or assets not as an entirety or substantially as an
entirety, or (iii) from acquiring by purchase or otherwise all or
any part of the property of any other Person.
Section 803. Opinion of Counsel to Be Given Trustee.
--------------------------------------
The Trustee, subject to Sections 601 and 602, may receive
an Opinion of Counsel as conclusive evidence that any such
consolidation, merger, sale or conveyance and any such assumption
complies with the provisions of this Article Eight.
ARTICLE NINE
Supplemental Indentures
Section 901. Supplemental Indentures Without Consent of Holders.
--------------------------------------------------
Without the consent of any Holders, the Company, when
authorized by a Board Resolution, and the Trustee, at any time and
from time to time, may enter into one or more indentures
supplemental hereto, in form reasonably satisfactory to the
Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to
the Company and the assumption by any such successor of the
covenants of the Company herein and in the Securities; or
(2) to add to the covenants of the Company for the
benefit of the Holders of all or any series of Securities (and
if such covenants are to be for the benefit of less than all
series of Securities, stating that such covenants are
expressly being included solely for the benefit of such
series) or to surrender any right or power herein conferred
upon the Company; or
(3) to add to or change any of the provisions of
this Indenture to such extent as shall be necessary to permit
or facilitate the issuance of Securities in bearer form,
registrable or not registrable as to principal, and with or
without interest coupons, or to permit or facilitate the
issuance of Securities in uncertificated form; or
(4) to establish the form and terms of Securities
of any series as permitted by Sections 201 and 301; or
(5) to evidence and provide for the acceptance of
appointment hereunder by a successor Trustee with respect to
the
<PAGE>
- 50 -
Securities of one or more series and to add to or change any
of the provisions of this Indenture as shall be necessary to
provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, pursuant to the
requirements of Section 610(b); or
(6) to cure any ambiguity, to correct or supplement
any provision herein that may be inconsistent with any other
provision herein, or to make any other provisions with respect
to matters or questions arising under this Indenture, provided
that such action shall not adversely affect the interests of
the Holders of Securities of any series in any material
respect; or
(7) to add to, change or eliminate any of the
provisions of this Indenture in respect of one or more series
of Securities, provided that any such addition, change or
elimination (i) shall neither (A) apply to any Security of any
series created prior to the execution of such supplemental
indenture and entitled to the benefit of such provision nor
(B) modify the rights of the Holders of any such Security with
respect to such provision or (ii) shall become effective only
when there is no such Security Outstanding; or
(8) to secure the Securities of one or more series
(other than as provided in Article Fourteen); or
(9) to establish the terms upon which the
Securities of one or more series may be convertible into, or
exchangeable for, shares of common stock, preferred stock or
other securities of the Company; or
(10) to modify, eliminate or add to the provisions
of this Indenture to such extent as shall be necessary to
effect the qualification of this Indenture under the Trust
Indenture Act or under any similar Federal statute hereafter
enacted and to add to this Indenture such other provisions as
may be expressly required under the Trust Indenture Act.
Section 902. Supplemental Indentures with Consent of Holders.
-----------------------------------------------
(a) With the consent of the Holders of not less than a
majority in principal amount of the Outstanding Securities of all
series affected by such supplemental indenture (voting as a single
class), by Act of said Holders delivered to the Company and the
Trustee, the Company, when authorized by a Board Resolution, and
the Trustee may enter into an indenture or indentures supplemental
hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture
or of modifying in any manner the rights of the Holders of
Securities of each such series under this Indenture; provided,
however that no such supplemental indenture shall, without the
consent of the Holder of each Outstanding Security affected
thereby,
(1) change the Stated Maturity of the principal of,
or any installment of principal of or interest on, any
Security, or reduce the principal amount thereof or the rate
of interest thereon or any premium
<PAGE>
- 51 -
payable upon the redemption thereof, or reduce the amount of
the principal of an Original Issue Discount Security that
would be due and payable upon a declaration of acceleration of
the Maturity thereof pursuant to Section 502, or change any
Place of Payment where, or the coin or currency in which, any
Security or any premium or interest thereon is payable or
impair the right to institute suit for the enforcement of any
such payment on or after the Stated Maturity thereof (or, in
the case of redemption, on or after the Redemption Date), or
(2) reduce the percentage in principal amount of
the Outstanding Securities of any series, the consent of whose
Holders is required for any such supplemental indenture, or
the consent of whose Holders is required for any waiver (of
compliance with certain provisions of this Indenture or
certain defaults hereunder and their consequences) provided
for in this Indenture, or
(3) modify any of the provisions of this Section
902 or Section 514, except to increase any such percentage or
to provide that certain other provisions of this Indenture
cannot be modified or waived without the consent of the Holder
of each Outstanding Security affected thereby, provided,
however, that this clause shall not be deemed to require the
consent of any Holder with respect to changes in the
references to "the Trustee" and concomitant changes in this
Section 902, or the deletion of this proviso, in accordance
with the requirements of Sections 610(b) and 901(5), or
(4) in the case of any series of Securities that is
secured by First Mortgage Bonds in accordance with Article
Fourteen, impair the security interest of the Trustee
hereunder in such First Mortgage Bonds, or reduce the
principal amount of First Mortgage Bonds securing the
Securities of a series to an amount less than the principal
amount of Outstanding Securities of such series.
(b) A supplemental indenture that changes or eliminates
any covenant or other provision of this Indenture that has
expressly been included solely for the benefit of one or more
particular series of Securities, or that modifies the rights of the
Holders of Securities of such series with respect to such covenant
or other provision, shall be deemed not to affect the rights under
this Indenture of the Holders of Securities of any other series.
(c) It shall not be necessary for any Act of Holders
under this Section 902 to approve the particular form of any
proposed supplemental indenture, but it shall be sufficient if such
Act shall approve the substance thereof.
Section 903. Execution of Supplemental Indentures.
------------------------------------
In executing, or accepting the additional trusts created
by, any supplemental indenture permitted by this Article Nine or
the modifications thereby of the trusts created by this Indenture,
the Trustee shall be entitled to receive, and (subject to Section
601) shall be fully protected in conclusively relying upon, an
Opinion of Counsel and an Officers' Certificate
<PAGE>
- 52 -
stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but
shall not be obligated to, enter into any such supplemental
indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
Section 904. Effect of Supplemental Indentures.
---------------------------------
Upon the execution of any supplemental indenture under
this Article Nine, this Indenture shall be modified in accordance
therewith, and such supplemental indenture shall form a part of
this Indenture for all purposes; and every Holder of Securities (or
the applicable series) theretofore or thereafter authenticated and
delivered hereunder shall be bound thereby.
Section 905. Conformity with Trust Indenture Act.
-----------------------------------
Every supplemental indenture executed pursuant to
this Article Nine shall conform to the requirements of the Trust
Indenture Act.
Section 906. Reference in Securities to Supplemental Indentures.
--------------------------------------------------
Securities of any series authenticated and delivered
after the execution of any supplemental indenture pursuant to this
Article Nine may, and shall if required by the Trustee, bear a
notation in form approved by the Trustee as to any matter provided
for in such supplemental indenture. If the Company shall so
determine, new Securities of any series so modified as to conform,
in the opinion of the Trustee and the Company, to any such
supplemental indenture may be prepared and executed by the Company
and authenticated and delivered by the Trustee in exchange for
outstanding Securities of such series.
ARTICLE TEN
Covenants
Section 1001. Payment of Principal, Premium and Interest.
The Company covenants and agrees for the benefit of each
series of Securities that it will duly and punctually pay or cause
to be paid the principal of and any premium or interest on the
Securities of that series in accordance with the terms of the
Securities and this Indenture. Interest on Securities shall be
payable without presentment of such Securities, and only to the
registered Holders thereof determined as provided in Section 307.
The Company shall have the right to require a Holder, in connection
with the payment of the principal of and any premium or interest on
a Security, to present at the office or agency of the Company at
which such payment is made a certificate, in such form as the
Company may from time to time prescribe, to enable the Company to
determine its duties and liabilities with respect to any taxes,
assessments or governmental charges that it may be required to
deduct or withhold therefrom under any present or future law of the
United States of America or of any State, county, municipality or
taxing or withholding authority therein, and the Company shall be
entitled to determine its duties
<PAGE>
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and liabilities with respect to such deduction or withholding on
the basis of information contained in such certificate or, if no
such certificate shall be so presented, on the basis of any
presumption created by any such law, and shall be entitled to act
in accordance with such determination.
Section 1002. Maintenance of Office or Agency.
-------------------------------
(a) So long as any Securities remain outstanding, the
Company will maintain in each Place of Payment for any series of
Securities an office or agency where Securities of that series may
be presented or surrendered for payment, where Securities of that
series may be surrendered for registration of transfer or exchange,
and where notices and demands to or upon the Company in respect of
the Securities of that series and this Indenture may be served.
The Company will give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency.
If at any time the Company shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and
demands may be made or served at the Corporate Trust Office of the
Trustee, and the Company hereby appoints the Trustee as its agent
to receive all such presentations, surrenders, notices and demands.
(b) The Company may also from time to time designate one
or more other offices or agencies where the Securities of one or
more series may be presented or surrendered for any or all purposes
referred to in paragraph (a) and may from time to time rescind such
designations; provided, however, that no such designation or
rescission shall in any manner relieve the Company of its
obligation to maintain an office or agency in each Place of Payment
for Securities of any series for such purposes. The Company will
give prompt written notice to the Trustee of any such designation
or rescission and of any change in the location of any such other
office or agency.
(c) Unless otherwise set forth in one or more indentures
supplemental hereto, a Board Resolution or an Officers' Certificate
pursuant to a Board Resolution with respect to a series of
Securities, the Company hereby designates, as the Place of Payment
for each series of Securities, the Borough of Manhattan, The City
of New York, and initially appoints The Bank of New York at its
Corporate Trust Office as the Company's office or agency for each
of such purposes in such city.
Section 1003. Vacancy in the Office of Trustee.
--------------------------------
The Company, whenever necessary to avoid or fill a
vacancy in the office of Trustee, will appoint, in the manner
provided in Article Six, a Trustee, so that there shall at all
times be a Trustee hereunder.
Section 1004. Money for Securities Payments to Be Held in Trust.
-------------------------------------------------
(a) If the Company shall at any time act as its own
Paying Agent with respect to any series of Securities, it will, on
or before each due date of the principal of or any premium or
interest on any of the Securities of that series, segregate and
hold in trust for the benefit of the Persons entitled thereto a sum
sufficient to pay the principal and any premium or
<PAGE>
- 54 -
interest so becoming due until such sums shall be paid to such
Persons or otherwise disposed of as herein provided, and will
promptly notify the Trustee of its action or failure so to act.
(b) Whenever the Company shall have one or more Paying
Agents for any series of Securities, it will, prior to 10:00 a.m.
(New York City time) on due date for the payment of the principal
of or any premium or interest on any Securities of that series,
deposit with a Paying Agent a sum sufficient to pay such amount,
such sum to be held as provided by the Trust Indenture Act, and
(unless such Paying Agent is the Trustee) the Company will promptly
notify the Trustee of its action or failure so to act.
(c) The Company will cause each Paying Agent for any
series of Securities, other than the Trustee, to execute and
deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this
Section 1004, that such Paying Agent will (i) hold all sums held by
it for the payment of the principal of and any premium or interest
on Securities of that series in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to such
Persons or otherwise disposed of as herein provided, (ii) give the
Trustee notice of any default by the Company (or any other obligor
upon the Securities of that series) in the making of any payment of
principal, premium or interest on the Securities of that series,
and (iii) during the continuance of any default by the Company (or
any other obligor upon the Securities of that series) in the making
of any payment in respect of the Securities of that series, and
upon the written request of the Trustee, forthwith pay to the
Trustee all sums held in trust by such Paying Agent for payment in
respect of the Securities of that series.
(d) The Company may at any time, for the purpose of
obtaining the satisfaction and discharge of this Indenture or for
any other purpose, pay, or by Company Order direct any Paying Agent
to pay, to the Trustee all sums held in trust by the Company or
such Paying Agent, such sums to be held by the Trustee upon the
same trusts as those upon which such sums were held by the Company
or such Paying Agent; and, upon such payment by any Paying Agent to
the Trustee, such Paying Agent shall be released from all further
liability with respect to such money.
(e) Any money deposited with the Trustee or any Paying
Agent, or then held by the Company, in trust for the payment of the
principal of or any premium or interest on any Security of any
series and remaining unclaimed for two years after such principal,
premium or interest has become due and payable shall be paid to the
Company on Company Request, or (if then held by the Company) shall
be discharged from such trust; and the Holder of such Security
shall thereafter, as an unsecured general creditor, look only to
the Company for payment thereof, and all liability of the Trustee
or such Paying Agent with respect to such trust money, and all
liability of the Company as trustee thereof, shall thereupon cease;
provided, however, that the Trustee or such Paying Agent, before
being required to make any such repayment, may at the expense of
the Company cause to be published once, in a newspaper published in
the English language customarily published on each Business Day and
of general circulation in the Place of Payment, notice that such
money remains unclaimed and that, after a date specified therein,
which shall not be less than 30 days
<PAGE>
- 55 -
after the date of such publication, any unclaimed balance of such
money then remaining will be repaid to the Company.
Section 1005. Officers' Certificate Concerning Defaults; Notice of
----------------------------------------------------
Default Under Mortgage.
----------------------
(a) The Company shall deliver to the Trustee, within 120
days after the end of each fiscal year of the Company ending after
the date hereof, an Officers' Certificate covering such preceding
fiscal year and stating whether or not, to the knowledge of the
signers thereof, the Company has complied with all conditions and
covenants under this Indenture (determined without regard to any
period of grace or requirement of notice provided hereunder) and,
if not, describing in reasonable detail such noncompliance and the
status thereof.
(b) Prior to the Release Date, upon the occurrence of an
"event of default" under Article IX, Section 1, of the Mortgage,
the Company shall promptly deliver to the Trustee an Officers'
Certificate notifying the Trustee of such Event of Default.
Section 1006. Liens.
-----
(a) Except as provided in paragraph (b) of this Section
1006, from and after the Release Date and for so long as the
Securities of any series are Outstanding, the Company will not
create, incur, assume or permit to exist any Indebtedness secured
by any Lien on any property or assets now owned or hereafter
acquired by the Company without making effective provision, and the
Company covenants that in any such case it will make effective
provision, whereby the Securities of any series then or thereafter
Outstanding shall be secured by such Lien equally and ratably with
the Indebtedness thereby secured, so long as such Indebtedness
shall be so secured.
(b) Nothing in this Section 1006 shall be construed to
prevent the Company from creating, incurring, assuming or
permitting to exist any Lien of the following character, to all of
which the provisions of paragraph (a) of this Section 1006 shall
not be applicable:
(1) Liens on property or assets of the Company
existing on the date hereof, provided that such Liens shall
secure only those obligations which they secure as of the date
hereof;
(2) any Lien existing on any property or asset
prior to the acquisition thereof by the Company, provided that
(i) such Lien is not created in contemplation of or in
connection with such acquisition and (ii) such Lien does not
extend to any other property or assets of the Company;
(3) Liens for taxes not yet due or that are being
contested in good faith by appropriate proceedings and with
respect to which adequate reserves, to the extent required by
GAAP, have been set aside;
<PAGE>
- 56 -
(4) carriers', warehousemen's, mechanics',
materialmen's, repairmen's or other like Liens arising in the
ordinary course of business and securing obligations that are
not due and payable or that are being contested in good faith
by appropriate proceedings and with respect to which adequate
reserves, to the extent required by GAAP, have been set aside;
(5) pledges and deposits made in the ordinary
course of business in compliance with workmen's compensation,
unemployment insurance and other social security laws or
regulations;
(6) deposits to secure the performance of bids,
trade contracts (other than for Indebtedness), leases (other
than capital leases), statutory obligations, surety and appeal
bonds, advance payment bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course
of business;
(7) zoning restrictions, easements, rights-of-way,
restrictions on use of real property and other similar
encumbrances incurred in the ordinary course of business
which, in the aggregate, are not substantial in amount and do
not materially detract from the value of the property subject
thereto or interfere with the ordinary conduct of the business
of the Company;
(8) Liens upon any property acquired, constructed
or improved by the Company that are created or incurred within
18 months after such acquisition, construction or improvement
to secure or provide for the payment of any part of the
purchase price of such property or the cost of such
construction or improvement, including carrying costs;
provided that any such Lien shall not apply to any other
property of the Company;
(9) Liens upon bills, notes and accounts
receivable, cash, contracts, operating agreements, and leases
in which the Company is lessor;
(10) Liens upon shares of stock and other
certificates or evidences of interest therein, and all bonds,
notes and other evidences of indebtedness or certificates of
interest therein and other securities now owned or hereafter
acquired or possessed by the Company;
(11) Liens upon equipment and materials not
installed as a part of the fixed property 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;
(12) Liens upon electric energy and other materials
or products generated, manufactured, produced or purchased by
the Company for sale, distribution or use in the ordinary
course and conduct of its business;
<PAGE>
- 57 -
(13) extensions, renewals and replacements of Liens
referred to in paragraphs (1) through (12) of this Section
1006(b), provided that any such extension, renewal or
replacement Lien shall be limited to the property or assets
covered by the Lien extended, renewed or replaced and that the
obligations secured by any such extension, renewal or
replacement Lien shall be in an amount not greater than the
amount of the obligations secured by the Lien extended,
renewed or replaced;
(14) any Lien, of the type described in clause (iii)
of the definition of the term "Lien", on securities imposed
pursuant to an agreement entered into for the sale or
disposition of such securities pending the closing of such
sale or disposition; provided such sale or disposition is
otherwise permitted under this Indenture;
(15) Liens on the capital stock or other securities,
or on the property, permits, franchises or other assets of,
any Subsidiary of the Company; and
(16) Liens to secure Indebtedness if, immediately
after the grant thereof, the aggregate amount of all
Indebtedness secured by Liens that would not be permitted but
for this clause (16) does not exceed 20% of Capitalization as
shown on the most recent consolidated balance sheet of the
Company and its Subsidiaries filed with the Commission
pursuant to the Exchange Act.
(c) If the Company shall issue, assume, or guarantee any
Indebtedness secured by any Lien and if Section 1006(a) requires
that the outstanding Securities be secured equally and ratably with
such Indebtedness, the Company will promptly execute, at its
expense, any instruments necessary to so equally and ratably secure
the outstanding Securities and deliver the same to the Trustee
along with:
(i) An Officers' Certificate stating that the
covenant of the Company contained in this Section 1006(c) has
been complied with; and
(ii) An Opinion of Counsel to the effect that
the Company has complied with the covenant contained in that
Section 1006(c), and that all instruments executed by the
Company in the performance of such covenant comply with the
requirements of such covenant and this Indenture.
(d) In the event that the Company shall hereafter secure
outstanding Securities equally and ratably with any other
Indebtedness pursuant to the provisions of this Section 1006, the
Company will enter into an indenture or agreement supplemental
hereto and take such other action, if any, as is reasonably
necessary to enable the Trustee to enforce effectively the rights
of the Holders of outstanding Securities so secured equally and
ratably with such other Indebtedness.
<PAGE>
- 58 -
Section 1007. Limitation on Sale and Leaseback Transactions.
---------------------------------------------
From and after the Release Date, and for so long as the
Securities of any series are Outstanding, the Company will not
enter into or permit to exist any Sale and Lease-Back Transaction;
provided, however, that this Section 1007 shall not prevent the
Company from;
(1) entering into any Sale and Lease-Back
Transaction not involving a lease with a term of more than
four years;
(2) entering into any Sale and Lease-Back
Transaction to the extent a Lien on the Principal Property
subject to such Sale and Lease-Back Transaction would be
permitted under Section 1006;
(3) entering into any Sale and Lease-Back
Transaction with respect to any property if such lease is
entered into within eighteen months after the later of the
acquisition, completion of construction or commencement of
operation of such Principal Property; and
(4) entering into any Sale and Lease-Back
Transaction if the Company, within 120 days after the
effective date of the lease, applies an amount equal to the
greater of (i) the net proceeds of the sale of the Principal
Property leased in such Sale and Lease-Back Transaction or
(ii) the fair market value (as determined in good faith by the
Board of Directors) of such Principal Property on any date
within 90 days prior to the effective date of the lease, to
the retirement of Funded Debt of the Company; provided,
however, that the amount required to be applied to the
retirement of Funded Debt of the Company shall be reduced by:
(A) the principal amount of any
Securities surrendered to the Trustee by the Company for
cancellation within 120 days after the effective date of the
lease, and
(B) the principal amount of Funded Debt,
other than Securities, voluntarily retired by the Company
within 120 days after the effective date of the lease; and
provided further that no retirement referred to in this clause
(4) may be effected by payment on Maturity or pursuant to any
mandatory sinking fund or prepayment provision.
Section 1008. Perfection of Security Interests.
--------------------------------
(a) The Company will cause this Indenture, any
indentures supplemental to this Indenture, and any financing or
continuation statements to be promptly recorded and filed, and
re-recorded and refiled, in such a manner, at such times and in
such places as may be required by law in order fully to preserve,
protect and perfect the security, if any, for any series of
Securities (including the security contemplated by Article
Fourteen) and all rights therein of the Trustee.
<PAGE>
- 59 -
(b) The Company shall deliver to the Trustee, within 120
days after the end of each fiscal year of the Company ending after
the date hereof, an Opinion of Counsel stating that in the opinion
of such counsel either (i) such action has been taken, with respect
to the recording, filing, re-recording and refiling of this
Indenture, each supplemental indenture and any financing or
continuation statements, as is necessary to maintain and perfect
the security interest of the Trustee intended to be created by this
Indenture or any supplemental indenture for the benefit of the
Holders from time to time of any series of Securities that is so
secured (including any series of Securities that is secured by
First Mortgage Bonds in accordance with Article Fourteen), and
reciting the details of such action, or (ii) no such action is
necessary to maintain and perfect such security interest.
Section 1009. Calculation of Original Issue Discount.
--------------------------------------
In the event that there is issued and outstanding under
this Indenture any Original Issue Discount Security, the Company
shall file with the Trustee promptly following the end of each
calendar year (i) a written notice specifying the amount of
original issue discount (including daily rates and accrual periods)
accrued on such Securities as of the end of such year and (ii) such
other specific information relating to such original issue discount
as may then be relevant under the Internal Revenue Code of 1986, as
amended from time to time.
ARTICLE ELEVEN
Redemption of Securities
Section 1101. Applicability of Article.
------------------------
Securities of any series that are redeemable before their
Stated Maturity shall be redeemable in accordance with their terms
and (except as otherwise specified as contemplated by Section 301
for Securities of any series) in accordance with this Article
Eleven.
Section 1102. Election to Redeem; Notice to Trustee.
-------------------------------------
The election of the Company to redeem any Securities
shall be evidenced by a Board Resolution. In case of any
redemption at the election of the Company of the Securities of any
series, the Company shall, at least 60 days prior to the Redemption
Date fixed by the Company (unless a shorter notice period shall be
satisfactory to the Trustee), notify the Trustee of such Redemption
Date, of the principal amount of Securities of such series to be
redeemed and, if applicable, of the tenor of the Securities to be
redeemed. In the case that the redemption of Securities of any
series is subject to any restriction on such redemption provided
for in the terms of such Securities or elsewhere in this Indenture,
the Company shall furnish the Trustee with an Officers' Certificate
evidencing compliance with such restriction.
<PAGE>
- 60 -
Section 1103. Selection by Trustee of Securities to Be Redeemed.
-------------------------------------------------
(a) If less than all the Securities of any series are to
be redeemed in accordance with this Article Eleven (unless all of
the Securities of such series and of a specified tenor are to be
redeemed), the particular Securities to be redeemed shall be
selected not more than 60 days prior to the Redemption Date by the
Trustee, from the Outstanding Securities of such series not
previously called for redemption, pro rata, by lot or by such other
method as the Trustee shall deem fair and appropriate and which may
provide for the selection for redemption of portions (equal to the
minimum authorized denomination for Securities of that series or
any integral multiple thereof) of the principal amount of
Securities of such series of a denomination larger than the minimum
authorized denomination for Securities of that series. If less
than all of the Securities of such series and of a specified tenor
are to be redeemed, the particular Securities to be redeemed shall
be selected not more than 60 days prior to the Redemption Date by
the Trustee from the Outstanding Securities of such series and
specified tenor not previously called for redemption in accordance
with the preceding sentence.
(b) The Trustee shall promptly notify the Company in
writing of the Securities selected for redemption and, in the case
of any Securities selected for partial redemption, the principal
amount thereof to be redeemed.
(c) For all purposes of this Indenture, unless the
context otherwise requires, all provisions relating to the
redemption of Securities shall relate, in the case of any
Securities redeemed or to be redeemed only in part, to the portion
of the principal amount of such Securities which has been or is to
be redeemed.
Section 1104. Notice of Redemption.
--------------------
(a) Notice of redemption shall be given by first-class
mail, postage prepaid, mailed not less than 30 nor more than 60
days prior to the Redemption Date (unless a shorter period is
specified in the Securities to be redeemed), to each Holder of
Securities to be redeemed, at his address appearing in the Security
Register.
(b) All notices of redemption shall identify the
Securities to be redeemed (including the CUSIP number(s)) and shall
state:
(1) the Redemption Date,
(2) the Redemption Price and accrued interest, if
any,
(3) if less than all the Outstanding Securities of
any series are to be redeemed, the identification (and, in the
case of partial redemption of any Securities, the principal
amounts) of the particular securities to be redeemed,
(4) in case any Security is to be redeemed in part
only, the notice that relates to such Security shall state
that on and after the Redemption Date, upon surrender of such
Security, the Holder of such
<PAGE>
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Security will receive, without charge, a new Security or
Securities of authorized denominations for the principal
amount thereof remaining unredeemed,
(5) that on the Redemption Date the Redemption
Price and accrued interest, if any, will become due and
payable upon each such Security to be redeemed and, if
applicable, that interest thereon will cease to accrue on and
after said date,
(6) the place or places where such Securities are
to be surrendered for payment of the Redemption Price and
accrued interest, if any, and
(7) that the redemption is for a sinking fund, if
such is the case.
(c) Notice of redemption of Securities to be redeemed at
the election of the Company shall be given by the Company or, at
the Company's written request, by the Trustee in the name and at
the expense of the Company and shall be irrevocable.
Section 1105. Deposit of Redemption Price.
---------------------------
Prior to any Redemption Date, the Company shall deposit
by 10:00 a.m. (New York City time) on the Redemption Date) with the
Trustee or with a Paying Agent (or, if the Company is acting as its
own Paying Agent, segregate and hold in trust as provided in
Section 1004) an amount of money sufficient to pay the Redemption
Price of, and (except if the Redemption Date shall be an Interest
Payment Date) accrued interest on, all the Securities which are to
be redeemed on that date.
Section 1106. Securities Payable on Redemption Date.
-------------------------------------
(a) Notice of redemption having been given as aforesaid,
the Securities so to be redeemed shall, on the Redemption Date,
become due and payable at the Redemption Price therein specified,
and from and after such date (unless the Company shall default in
the payment of the Redemption Price and accrued interest) such
Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with said notice, such
Security shall be paid by the Company at the Redemption Price,
together with accrued interest to the Redemption Date; provided,
however, that, unless otherwise specified as contemplated by
Section 301, installments of interest whose Stated Maturity is on
or prior to the Redemption Date shall be payable to the Persons who
are Holders of such Securities, or one or more Predecessor
Securities, at the close of business on the Regular Record Dates
according to their terms and the provisions of Section 307.
(b) If any Security called for redemption shall not be
so paid upon surrender thereof for redemption due to the failure of
Company to deposit the Redemption Price as provided in Section
1105, the principal and any premium shall, until paid, bear
interest from the Redemption Date at the rate prescribed therefor
in the Security.
<PAGE>
- 62 -
Section 1107. Securities Redeemed in Part.
---------------------------
Any Security that is to be redeemed only in part shall be
surrendered at a Place of Payment therefor (with, if the Company or
the Trustee so requires, due endorsement by, or a written
instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the Holder thereof or his
attorney duly authorized in writing), and the Company shall
execute, and the Trustee shall authenticate and deliver to the
Holder of such Security, without service charge, a new Security or
Securities of the same series and of like tenor, of any authorized
denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the
principal of the Security so surrendered.
ARTICLE TWELVE
Sinking Funds
Section 1201. Applicability of Article.
------------------------
(a) The provisions of this Article Twelve shall be
applicable to any sinking fund for the retirement of Securities of
a series except as otherwise specified as contemplated by Section
301 for Securities of such series.
(b) The minimum amount of any sinking fund payment
provided for by the terms of Securities of any series is herein
referred to as a "mandatory sinking fund payment", and any payment
in excess of such minimum amount provided for by the terms of
Securities of any series is herein referred to as an "optional
sinking fund payment". If provided for by the terms of Securities
of any series, the cash amount of any sinking fund payment may be
subject to reduction as provided in Section 1202. Each sinking
fund payment shall be applied to the redemption of Securities of
any series as provided for by the terms of Securities of such
series.
Section 1202. Satisfaction of Sinking Fund Payments with
------------------------------------------
Securities.
- ----------
The Company may, in satisfaction of all or any part of
any sinking fund payment with respect to the Securities of such
series required to be made pursuant to the terms of such Securities
as provided for by the terms of such series, (i) deliver
Outstanding Securities of a series (other than any Securities
previously called for redemption) and (ii) apply as a credit
Securities of a series that have been redeemed either at the
election of the Company pursuant to the terms of such Securities or
through the application of permitted optional sinking fund payments
pursuant to the terms of such Securities; provided that such
Securities have not been previously so credited. Such Securities
shall be received and credited for such purpose by the Trustee at
the Redemption Price specified in such Securities for redemption
through operation of the sinking fund and the amount of such
sinking fund payment shall be reduced accordingly.
<PAGE>
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Section 1203. Redemption of Securities for Sinking Fund.
-----------------------------------------
Not less than 60 days prior to each sinking fund payment
date for any series of Securities, the Company shall deliver to the
Trustee an Officers' Certificate specifying the amount of the next
ensuing sinking fund payment for that series pursuant to the terms
of that series, the portion thereof, if any, that is to be
satisfied by payment of cash and the portion thereof, if any, that
is to be satisfied by delivering and crediting Securities of that
series pursuant to Section 1202 and also shall deliver to the
Security Registrar any Securities to be so delivered. If such
Officers' Certificate shall specify an optional amount to be added
in cash to the next ensuing mandatory sinking fund payment, the
Company shall thereupon be obligated to pay the amount therein
specified. Not less than 30 days before each such sinking fund
payment date the Trustee shall select the Securities to be redeemed
upon such sinking fund payment date in the manner specified in
Section 1103 and cause notice of the redemption thereof to be given
in the name of and at the expense of the Company in the manner
provided in Section 1104. Such notice having been duly given, the
redemption of such Securities shall be made upon the terms and in
the manner stated in Sections 1106 and 1107.
ARTICLE THIRTEEN
Defeasance and Covenant Defeasance
Section 1301. Applicability of Article; Company's Option to Effect
----------------------------------------------------
Defeasance or Covenant Defeasance.
---------------------------------
If pursuant to Section 301 provision is made for either
or both of (i) defeasance of the Securities of a series under
Section 1302 or (ii) covenant defeasance of the Securities of a
series under Section 1303, then the provisions of such Section or
Sections, as the case may be, together with the other provisions of
this Article Thirteen, shall be applicable to the Securities of
such series, and the Company may at its option by Board Resolution,
at any time, with respect to the Securities of such series, elect
to have either Section 1302 (if applicable) or Section 1303 (if
applicable) be applied to the Outstanding Securities of such series
upon compliance with the conditions set forth below in this Article
Thirteen.
Section 1302. Defeasance and Discharge.
------------------------
Upon the Company's exercise of the above option
applicable to this Section 1302, the Company shall be deemed to
have been discharged from its obligations with respect to the
Outstanding Securities of such series on and after the date the
conditions precedent set forth in Section 1304 are satisfied
(hereinafter, "defeasance"). For this purpose, such defeasance
means that the Company shall be deemed to have paid and discharged
the entire indebtedness represented by the Outstanding Securities
of such series and to have satisfied all of its other obligations
under such Securities and this Indenture insofar as such Securities
are concerned (and the Trustee, at the expense of the Company,
shall execute proper instruments acknowledging the same), except
for the following which shall survive until otherwise terminated
<PAGE>
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or discharged hereunder: (i) the rights of Holders of Outstanding
Securities of such series to receive, solely from the trust fund
described in Section 1305 as more fully set forth in such Section,
payments of the principal of and any premium or interest on such
Securities when such payments are due, (ii) the Company's
obligations with respect to such Securities under Sections 304,
305, 306, 1002 and 1004 and such obligations as shall be ancillary
thereto, (iii) the rights, powers, trusts, duties, immunities and
other provisions in respect of the Trustee under this Indenture and
(iv) this Article Thirteen. Subject to compliance with this
Article Thirteen, the Company may exercise its option under this
Section 1302 notwithstanding the prior exercise of its option under
Section 1303 with respect to the Securities of such series.
Following a defeasance, payment of the Securities of such series
may not be accelerated because of an Event of Default.
Section 1303. Covenant Defeasance.
-------------------
Upon the Company's exercise of the above option
applicable to this Section 1303 and after the date the conditions
set forth in Section 1304 are satisfied, the Company shall be
released from its obligations under any additional or substitute
covenant established with respect to the Securities of any series
pursuant to Section 301(20) if the Securities of such series have
been determined pursuant to Section 301 to be subject to this
provision (with any such additional or substitute covenant referred
to herein as a "Defeasible Covenant"), and the occurrence of an
event specified in Section 501(4) with respect to such Defeasible
Covenant shall not be deemed to be an Event of Default with respect
to the Outstanding Securities of such series (hereinafter,
"covenant defeasance"). For this purpose, such covenant defeasance
means that, with respect to the Outstanding Securities of such
series, the Company may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth
in any such Defeasible Covenant whether directly or indirectly by
reason of any reference elsewhere herein to any such Defeasible
Covenant or by reason of any reference in any such Defeasible
Covenant to any other provision herein or in any other document,
but the remainder of this Indenture and such Securities shall be
unaffected thereby. Following a covenant defeasance, payment of
the Securities of such series may not be accelerated because of an
Event of Default specified in Section 501(5) or Section 501(6) or
by reference to Section 501(4) and such Defeasible Covenant.
Section 1304. Conditions to Defeasance or Covenant Defeasance.
-----------------------------------------------
The following shall be the conditions precedent to
application of either Section 1302 or Section 1303 to the
Outstanding Securities of such series:
(1) The Company shall irrevocably have deposited or
caused to be deposited with the Trustee (or another trustee
satisfying the requirements of Section 608 who shall agree to
comply with the provisions of this Article Thirteen applicable
to it) as trust funds in trust for the purpose of making the
following payments, specifically pledged as security for, and
dedicated solely to the benefit of the Holders of such
Securities, (A) money in an amount, or (B) U.S.
<PAGE>
- 65 -
Government Obligations which through the scheduled payment of
principal and interest in respect thereof in accordance with
their terms will provide, not later than one day before the
due date of any payment, money in an amount, or (C) a
combination thereof, sufficient, without reinvestment, in the
opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof
delivered to the Trustee, to pay and discharge, and which
shall be applied by the Trustee (or other qualifying trustee)
to pay and discharge, the principal of and any premium or
interest on the Outstanding Securities of such series on the
Maturity of such principal, premium or interest and any
mandatory sinking fund payments or analogous payments
applicable to the Outstanding Securities of such series on the
due dates thereof. Before such a deposit, the Company may
make arrangements satisfactory to the Trustee for the
redemption of Securities at a future date or dates in
accordance with Article Eleven, which shall be given effect in
applying the foregoing.
(2) No Event of Default or event which with notice
or lapse of time or both would become an Event of Default with
respect to the Securities of such series shall have occurred
and be continuing (A) on the date of such deposit or (B)
insofar as subsections 501(5) and (6) are concerned, at any
time during the period ending on the 91st day after the date
of such deposit or, if longer, ending on the day following the
expiration of the longest preference period applicable to the
Company in respect of such deposit (it being understood that
the condition in this clause (B) shall not be deemed satisfied
until the expiration of such period).
(3) Such defeasance or covenant defeasance shall
not (A) cause the Trustee for the Securities of such series to
have a conflicting interest referred to in Section 607 or for
purposes of the Trust Indenture Act with respect to any
securities of the Company or (B) result in the trust arising
from such deposit to constitute, unless it is qualified as, a
regulated investment company under the Investment Company Act
of 1940, as amended.
(4) Such defeasance or covenant defeasance shall
not result in a breach or violation of, or constitute a
default under, this Indenture or any other agreement or
instrument to which the Company is a party or by which it is
bound.
(5) Such defeasance or covenant defeasance shall
not cause any Securities of such series then listed on any
registered national securities exchange under the Exchange Act
to be delisted.
(6) In the case of an election under Section 1302,
the Company shall have delivered to the Trustee an Opinion of
Counsel stating that (i) the Company has received from, or
there has been published by, the Internal Revenue Service a
ruling, or (ii) since the date of this Indenture there has
been a change in the applicable Federal income tax law, in
either case to the effect that, and based thereon such opinion
shall confirm that, the Holders of the Outstanding
<PAGE>
- 66 -
Securities of such series will not recognize income, gain or
loss for Federal income tax purposes as a result of such
defeasance and will be subject to Federal income tax on the
same amounts, in the same manner and at the same times as
would have been the case if such defeasance had not occurred.
(7) In the case of an election under Section 1303,
the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that the Holders of the Outstanding
Securities of such series will not recognize income, gain or
loss for Federal income tax purposes as a result of such
covenant defeasance and will be subject to Federal income tax
on the same amounts, in the same manner and at the same times
as would have been the case if such covenant defeasance had
not occurred.
(8) Such defeasance or covenant defeasance shall be
effected in compliance with any additional terms, conditions
or limitations which may be imposed on the Company in
connection therewith pursuant to Section 301.
(9) The Company shall have paid, or provided for
the payment of, the fees and expenses of the Trustee payable
pursuant to Section 606.
(10) The Company shall have delivered to the Trustee
an Officers' Certificate and an Opinion of Counsel, each
stating that all conditions precedent provided for relating to
either the defeasance under Section 1302 or the covenant
defeasance under Section 1303 (as the case may be) have been
complied with.
Section 1305. Deposited Money and U.S. Government Obligations to
--------------------------------------------------
Be Held in Trust; Other Miscellaneous Provisions.
------------------------------------------------
(a) Subject to the provisions of Section 1004(e), all
money and U.S. Government Obligations (including the proceeds
thereof) deposited with the Trustee or other qualifying trustee
(collectively, for purposes of this Section 1305, the "Trustee")
pursuant to Section 1304 in respect of the Outstanding Securities
of such series shall be held in trust and applied by the Trustee,
in accordance with the provisions of such Securities and this
Indenture, to the payment, either directly or through any Paying
Agent (but not including the Company acting as its own Paying
Agent) as the Trustee may determine, to the Holders of such
Securities, of all sums due and to become due thereon in respect of
principal and any premium or interest, but such money need not be
segregated from other funds (except to the extent required by law).
(b) The Company shall pay and indemnify the Trustee
against any tax, fee or other charge imposed on or assessed against
the money or U.S. Government Obligations deposited pursuant to
Section 1304 or the principal and interest received in respect
thereof.
<PAGE>
- 67 -
(c) Anything herein to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon
Company Request any money or U.S. Government Obligations held by it
as provided in Section 1304 which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, are in
excess of the amount thereof which would then be required to be
deposited to effect an equivalent defeasance or covenant
defeasance.
Section 1306. Reinstatement.
-------------
If the Trustee or the Paying Agent is unable to apply any
money in accordance with Section 1305 by reason of any order or
judgment of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, then the
Company's obligations under the Securities of such series shall be
revived and reinstated as though no deposit had occurred pursuant
to this Article Thirteen until such time as the Trustee or Paying
Agent is permitted to apply all such money in accordance with
Section 1305; provided, however, that if the Company makes any
payment of principal, premium or interest on any such Security
following the reinstatement of its obligations, the Company shall
be subrogated to the rights of the Holders of such Securities to
receive such payment from the money held by the Trustee or the
Paying Agent.
ARTICLE FOURTEEN
Security
Section 1401. Applicability of Article.
------------------------
If pursuant to Section 301 provision is made to secure
the payment of the principal of, premium, if any, and interest on
any series of Securities issued under this Indenture by delivery to
and pledging with the Trustee of First Mortgage Bonds issued under
the Mortgage, this Article Fourteen shall apply.
Section 1402. Delivery of First Mortgage Bonds to Trustee.
-------------------------------------------
(a) In order to secure by the lien of the Mortgage the
obligation of the Company to pay duly and punctually the principal
of, premium, if any, and interest on the Securities of any series
issued under this Indenture, the Company, at any time prior to or
concurrently with its delivery to the Trustee of any Securities for
authentication and delivery in accordance with a Company Order
pursuant to Section 303, shall deliver to the Trustee and pledge as
security for payment of the principal of, premium, if any, and
interest on such Securities, and the Trustee, subject to Section
1403, shall accept therefor, First Mortgage Bonds registered in the
name of the Trustee (i) in an aggregate principal amount equal to
or exceeding the aggregate principal amount of Securities of such
series to be authenticated and delivered pursuant to such Company
Order, (ii) with a stated maturity date not earlier than the Stated
Maturity of such Securities, (iii) bearing an interest rate equal
to the interest rate borne by such Securities, (iv) having interest
payment dates that are the same as the
<PAGE>
- 68 -
Interest Payment Dates of such Securities, and (v) in all other
material respects conforming as nearly as is practicable to the
terms of such Securities.
(b) The First Mortgage Bonds shall be in the form
established by or in accordance with the Mortgage and with such
appropriate insertions, omissions, substitutions and other
variations as are required or permitted by the Mortgage, or are
required or permitted by this Indenture and consistent with the
Mortgage.
(c) Any series of First Mortgage Bonds may secure the
payment of the principal, premium, if any, and interest on only one
corresponding series of Securities, and no series of Securities
shall be secured by more than one series of First Mortgage Bonds.
Each Security of a series shall specify the series of First
Mortgage Bond that secures the Securities of such series.
Section 1403. Authentication of Securities.
----------------------------
Prior to the authentication of any Securities secured by
First Mortgage Bonds, in addition to the deliveries to the Trustee
contemplated by Sections 301 and 303, the Trustee shall receive
from the Company, and (subject to Section 601 hereof) shall be
fully protected in relying upon:
(1) the Board Resolution authorizing the issuance
and delivery to the Trustee of the First Mortgage Bonds;
(2) a copy of the Combined Engineer's, Officers'
and Accountant's Certificate delivered to the Mortgage Trustee
pursuant to Article III, Sections 3(b) and 4(a), and Article XVIII,
Sections 1(a), 1(c), 2 and 3(c), of the Mortgage, on which the
Trustee shall be entitled conclusively to rely as if such
Certificate were addressed to the Trustee;
(3) a copy of the Order of the District of Columbia
Public Service Commission and of the order of any other applicable
regulatory authority the consent or approval of which is required
for the issuance of the First Mortgage Bonds;
(4) a copy of the opinion of counsel delivered to
the Mortgage Trustee pursuant to Article III, Section 4, of the
Mortgage, which shall state that the Trustee shall be entitled
conclusively to rely thereon as if addressed to the Trustee; and
(5) if required by the Trust Indenture Act, an
Issuance Fair Value Certificate.
Section 1404. First Mortgage Bonds as Security for Securities.
-----------------------------------------------
(a) Until the Release Date, the First Mortgage Bonds
delivered to and pledged with the Trustee pursuant to Section 1402
shall be held in trust by the Trustee for the equal and
proportionate benefit and security of the Holders from time to time
of the corresponding series of Securities, and shall serve as
security for (i) the full and prompt payment of the principal
<PAGE>
- 69 -
of and premium, if any, on such Securities when and as the same
shall become due in accordance with the terms and provisions of the
Securities and this Indenture, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise, and
(ii) the full and prompt payment of any interest on such Securities
when and as the same shall become due in accordance with the terms
and provisions of the Securities and this Indenture.
(b) Notwithstanding anything in this Indenture to the
contrary, from and after the Release Date, (i) the First Mortgage
Bonds held by the Trustee shall cease to secure any obligation of
the Company under this Indenture, including the payment of
principal of and any premium or interest on all Securities issued
in accordance with this Article Fourteen, (ii) the obligation of
the Company to make payment with respect to the principal of and
any premium or interest on the First Mortgage Bonds held by the
Trustee shall cease, and (iii) the Trustee shall release the First
Mortgage Bonds as provided for in Section 1409.
(c) Following the Release Date, the Company shall cause
the Mortgage to be terminated and the Company shall not issue any
additional First Mortgage Bonds under the Mortgage.
Section 1405. No Other Security; No Modification of Mortgage.
----------------------------------------------
(a) Except for the designated First Mortgage Bonds, the
Securities issued in accordance with this Article Fourteen shall
not be secured by any particular assets, franchises, rights, powers
or entitlements of the Company or any other Person.
(b) The rights, powers, obligations and duties of the
Company and the Mortgage Trustee under the First Mortgage Bonds are
governed exclusively by the terms thereof and the Mortgage, and
nothing herein shall create any additional rights or powers, or any
additional obligation or duty, of any Person in, under or to the
Mortgage or the First Mortgage Bonds (other than the rights and
powers of the Trustee as a holder of First Mortgage Bonds).
Section 1406. Payments on First Mortgage Bonds.
--------------------------------
(a) The obligation of the Company to make any payment of
the principal of, or any premium or interest on, any First Mortgage
Bonds securing any series of Securities in accordance with this
Article Fourteen, whether at Stated Maturity, upon call for
redemption, or otherwise, shall be fully or partially, as the case
may be, deemed to have been satisfied and discharged to the extent
that (i) at the time any such payment shall be due, the then due
principal of or any premium or interest on the corresponding
principal amount of Securities that such First Mortgage Bonds
secure shall have been fully or partially paid, deemed to have been
paid or otherwise satisfied or discharged in accordance with the
terms thereof or this Indenture or (ii) the amount of the Company's
obligation to make any such payment in respect of such First
Mortgage Bonds exceeds the obligation of the Company at that time
to make payment of the principal of, premium, if any, and interest
on the Securities that are secured by such First Mortgage Bonds.
<PAGE>
- 70 -
(b) In the event that the Company fails to make payment
of any principal of, or premium or interest on, any series of
Securities that are secured by First Mortgage Bonds in accordance
with this Article XIV, the Trustee shall, within five days after
the date such payment was due, notify the Mortgage Trustee in
writing of the details of such nonpayment.
Section 1407. Certain Responsibilities of Trustee with
----------------------------------------
Respect to First Mortgage Bonds.
-------------------------------
(a) The Trustee, as a holder of First Mortgage Bonds, or
its agent shall attend any meeting of the holders of First Mortgage
Bonds duly called under the Mortgage as to which it receives due
notice, or, at its option, shall deliver its proxy in connection
therewith, as to matters with respect to which it is entitled to
vote or consent. Either at such meeting, or otherwise where the
consent of holders of First Mortgage Bonds under the Mortgage is
sought without a meeting, the Trustee shall vote the First Mortgage
Bonds held by it, or shall grant or withhold its consent with
respect thereto, as the Trustee determines to be in the best
interests of the Holders of the series of Securities secured by
such First Mortgage Bonds, unless the Trustee is directed otherwise
by the Holders of not less than a majority in aggregate principal
amount of such series of Securities.
(b) In exercising its responsibilities under paragraph
(a), the Trustee may solicit instructions from the Holders of any
series of Securities that is secured by First Mortgage Bonds and,
if so, shall vote or shall grant or withhold its consent with
respect to the First Mortgage Bonds as directed by the Holders of
a majority in aggregate principal amount of the Securities of that
series.
Section 1408. Permitted Transfers of First Mortgage Bonds
___________________________________________
by the Trustee.
--------------
Except (i) as required to effect an assignment to a
successor Trustee under this Indenture, (ii) in accordance with
Section 1409 or (iii) in compliance with a final order of a court
of competent jurisdiction in connection with any bankruptcy or
reorganization proceeding of the Company, the Trustee shall not
sell, assign or transfer the First Mortgage Bonds delivered to the
Trustee pursuant to Section 1402, and the Company shall issue stop
transfer instructions to the Mortgage Trustee and to any transfer
agent for the First Mortgage Bonds to effect compliance with this
Section 1408.
Section 1409. Release of First Mortgage Bonds.
-------------------------------
(a) Following the Release Date, the Trustee shall, upon
the request of the Company set forth in a Company Order and (if
required to be delivered under the Trust Indenture Act) the receipt
of a Release Fair Value Certificate, surrender to the Company or
the Mortgage Trustee (as directed by the Company Order), together
with such appropriate instruments of transfer or release as may be
reasonably requested by the Company, without any payment of
consideration by the Company therefor, all of the First Mortgage
Bonds held by the Trustee.
<PAGE>
- 71 -
(b) If, prior to the Release Date, there shall be
delivered to the Trustee for cancellation all of the Outstanding
Securities of any series that is secured in accordance with this
Article Fourteen by First Mortgage Bonds, or the Company pays or
causes to be paid, or deposits or causes to be deposited with the
Trustee in accordance with Section 1302 funds or U.S. Government
Securities sufficient to pay, the principal of and any premium or
interest on all of the Outstanding Securities of such series, (i)
such Securities shall cease to be entitled to any lien, benefit or
security pursuant to this Article Fourteen, (ii) the obligation of
the Company to make payment with respect to the principal of and
any premium or interest on the First Mortgage Bonds securing such
Securities shall be deemed satisfied and discharged, and (iii) upon
the written request of the Company set forth in a Company Order and
(if required to be delivered under the Trust Indenture Act) the
receipt of a Release Fair Value Certificate, the Trustee shall
surrender to the Company or the Mortgage Trustee (as directed by
the Company Order), together with such appropriate instruments of
transfer or release as may be reasonably requested by the Company,
without any payment of consideration by the Company therefor, all
of the First Mortgage Bonds securing such Securities.
(c) If, prior to the Release Date, there shall be
delivered to the Trustee for cancellation (excluding Securities
delivered to the Trustee for cancellation following the
registration of transfer or exchange thereof pursuant to Section
305 or the replacement thereof pursuant to Section 306) less than
all of the Outstanding Securities of any series that is secured in
accordance with this Article Fourteen by First Mortgage Bonds, or
the Company pays or causes to be paid, the principal of and any
premium or interest on less than all of the Outstanding Securities
of any series, (i) the Securities cancelled shall cease to be
entitled to any lien, benefit or security pursuant to this Article
Fourteen, (ii) the obligation of the Company to make payment with
respect to the principal of and any premium or interest on the
First Mortgage Bonds securing such Securities shall be deemed
satisfied and discharged, and (iii) upon the written request of the
Company set forth in a Company Order and (if required to be
delivered under the Trust Indenture Act) the receipt of a Release
Fair Value Certificate, the Trustee shall surrender to the Company
or the Mortgage Trustee (as directed by the Company Order),
together with such appropriate instruments of transfer or release
as may be reasonably requested by the Company, without any payment
of consideration by the Company therefor, First Mortgage Bonds
securing such Securities in an aggregate principal amount equal to
the aggregate principal amount of Securities delivered to the
Trustee for cancellation.
(d) Prior to the Release Date, the Company shall not
cause the surrender by the Trustee, as contemplated by this Section
1409, of First Mortgage Bonds of any series if, after such
surrender, the aggregate principal amount of First Mortgage Bonds
of such series held by the Trustee would be less than the aggregate
principal amount of Securities that are secured by such series of
First Mortgage Bonds.
(e) The Company shall notify the Trustee promptly in
writing of the occurrence of the Release Date. Notice of the
occurrence of the Release Date shall be prepared by the Company
and, at the written request of the
<PAGE>
- 72 -
Company, shall be given by the Trustee to the Holders of the
Securities in the manner provided in Section 1.06 hereof not later
than 30 days after the receipt of such notice from the Company.
Section 1410. Further Assurances.
------------------
The Company, at its own expense, shall do such further
lawful acts and things, and execute and deliver such additional
conveyances, assignments, assurances, agreements, financing
statements and instruments, as may be necessary in order to better
assign, assure, perfect and confirm to the Trustee its security
interest in the First Mortgage Bonds and for maintaining,
protecting and preserving such security interest.
ARTICLE FIFTEEN
Immunity of Incorporators, Stockholders,
Officers and Directors
Section 15.01. Indenture, Securities and First Mortgage Bonds
----------------------------------------------
Solely Corporate Obligations.
----------------------------
No recourse for the payment of the principal of or any
premium or interest on any Security or on any First Mortgage Bond,
or for any claim based thereon or otherwise in respect thereof, and
no recourse under or upon any obligation, covenant or agreement of
the Company, contained in this Indenture, the Mortgage or in any
supplemental indenture, or in any Security or in any First Mortgage
Bond, or because of the creation of any indebtedness represented
thereby, shall be had against any incorporator, stockholder,
officer or director, as such, past, present or future, of the
Company or of any successor corporation, either directly or through
the Company or any successor corporation, whether by virtue of any
constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise; it being expressly understood
that all such liability is hereby expressly waived and released as
a condition of, and as a consideration for, the execution of this
Indenture and the issuance of the Securities.
* * *
This instrument may be executed in any number of
counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but
one and the same instrument.
<PAGE>
- 73 -
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, all as of the day and year first
above written.
POTOMAC ELECTRIC POWER COMPANY
By: _________________________
Name:
Title:
THE BANK OF NEW YORK, as Trustee
By: ___________________________
Name:
Title:
<PAGE>
- 74 -
Schedule A
Form of Face of Security.
- ------------------------
[Insert any legend required by the Internal Revenue Code
and the regulations thereunder.]
POTOMAC ELECTRIC POWER COMPANY
No._________ $__________
CUSIP No. _________
Potomac Electric Power Company, a corporation duly
organized and existing under the laws of the District of Columbia
and the Commonwealth of Virginia (herein called the "Company",
which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to
pay to ____________, or registered assigns, the principal sum of
__________________ [Dollars] on _____________, [if the Security is
to bear interest prior to Maturity, insert -- , and to pay interest
thereon from __________ or from the most recent Interest Payment
Date to which interest has been paid or duly provided for,
semi-annually on __________ and ___________ in each year (an
"Interest Payment Date"), commencing _________, at the rate of ___%
per annum, until the principal hereof is paid or made available for
payment [if applicable, insert -- , and (to the extent that the
payment of such interest shall be legally enforceable) at the rate
of __% per annum on any overdue principal and premium and on any
overdue installment of interest]. The interest so payable, and
punctually paid or duly provided for, on any Interest Payment Date
will, as provided in such Indenture, be paid to the Person in whose
name this Security (or one or more Predecessor Securities) is
registered at the close of business on the last business day which
is more than ten days prior to Interest Payment Date. Any such
interest not so punctually paid or duly provided for will forthwith
cease to be payable to the Holder on such Regular Record Date and
may either be paid to the Person in whose name this Security (or
one or more Predecessor Securities) is registered at the close of
business on a Special Record Date for the payment of such Defaulted
Interest to be fixed by the Trustee, notice whereof shall be given
to Holders of Securities of this series not less than 10 days prior
to such Special Record Date, or be paid at any time in any other
lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities of this series may be
listed, and upon such notice as may be required by such exchange,
all as more fully provided in said Indenture].
[If the Security is not to bear interest prior to
Maturity, insert -- The principal of this Security shall not bear
interest, except in the case of a default in payment of principal
upon acceleration, upon redemption or at Stated Maturity and in
such case the overdue principal of this Security shall bear
interest at the rate of ___% per annum (to the extent that the
payment of such interest shall be legally enforceable), which shall
accrue from the date of such default in payment to the date payment
of such principal has been made
<PAGE>
- 75 -
or duly provided for. Interest on any overdue principal shall be
payable on demand. Any such interest on any overdue principal that
is not so paid on demand shall bear interest at the rate of ____%
per annum (to the extent that the payment of such interest shall be
legally enforceable), which shall accrue from the date of such
demand for payment to the date payment of such interest has been
made or duly provided for, and such interest shall also be payable
on
demand.]
Payment of the principal of (and premium, if any) and [if
applicable, insert -- any such] interest on this Security will be
made at the office or agency of the Company maintained for that
purpose [insert place of payment] in such coin or currency of the
United States of America [or insert other currency], as at the time
of payment is legal tender for payment of public and private debts
[if applicable, insert --; provided, however, that at the option of
the Company payment of interest may be made by check mailed to the
address of the Person entitled thereto as such address shall appear
in the Security Register].
Until the Release Date, the due and punctual payment of
the principal of, premium, if any, and interest on this Security is
secured pursuant to Article XIV of the Indenture by a series of
First Mortgage Bonds issued by the Company under the Mortgage and
Deed of Trust, dated July 1, 1936, as amended and supplemented,
between the Company and The Bank of New York, as trustee and as
successor in such capacity to The Riggs National Bank of
Washington, D.C., and designated as "First Mortgage Bonds, ___%
Series due _____" and delivered and pledged by the Company to the
Trustee.
Reference is hereby made to the further provisions of
this Security set forth on the reverse hereof, which further
provisions shall for all purposes have the same effect as if set
forth at this place.
Unless the certificate of authentication hereon has been
executed by the Trustee referred to on the reverse hereof by manual
signature, this Security shall not be entitled to any benefit under
the Indenture or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this
instrument to be duly executed under its corporate seal.
Dated:
POTOMAC ELECTRIC POWER COMPANY
By: _________________________
Attest:
_____________________
<PAGE>
- 76 -
Form of Reverse of Security.
- ---------------------------
This Security is one of a duly authorized issue of
securities of the Company (herein called the "Securities"), issued
and to be issued under an Indenture, dated as of _____ __, 1998
(herein called the "Indenture"), between the Company and The Bank
of New York, as Trustee (herein called the "Trustee", which term
includes any successor trustee under the Indenture), to which
Indenture and all indentures supplemental thereto reference is
hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Company, the
Trustee and the Holders of the Securities and of the terms upon
which the Securities are, and are to be, authenticated and
delivered. This Security is one of the series designated on the
face hereof[, limited in aggregate principal amount to $ ________].
[If applicable, insert -- The Securities of this series
are subject to redemption upon not less than 30 days' notice by
mail, [if applicable, insert -- (i) on ___________ in any year
commencing with the year ____ and ending with the year ____ through
operation of the sinking fund for this series at a Redemption Price
equal to 100% of the principal amount, and (ii)] at any time on or
after _________, 19__], as a whole or in part, at the election of
the Company, at the following Redemption Prices (expressed as
percentages of the principal amount): If redeemed [on or before
___________, __%, and if redeemed] during the 12-month period
beginning _________ of the years indicated,
Redemption Redemption
Year Price Year Price
---- ---------- ---- ----------
and thereafter at a Redemption Price equal to ___% of the principal
amount, together in the case of any such redemption [if applicable,
insert -- (whether through operation of the sinking fund or
otherwise)] with accrued interest to the Redemption Date, but
interest installments whose Stated Maturity is on or prior to such
Redemption Date will be payable to the Holders of such Securities,
or one or more Predecessor Securities, of record at the close of
business on the relevant Record Dates referred to on the face
hereof, all as provided in the Indenture.]
[If applicable, insert -- The Securities of this series
are subject to redemption upon not less than 30 days' notice by
mail, (i) on _______ in any year commencing with the year ____ and
ending with the year ____ through operation of the sinking fund for
this series at the Redemption Prices for redemption through
operation of the sinking fund (expressed as percentages of the
principal amount) set forth in the table below, and (ii) at any
time [on or after ____________], as a whole or in part, at the
election of the Company, at the Redemption Prices for redemption
otherwise than through operation of the sinking fund (expressed as
percentages of the principal amount) set forth in the table below:
If redeemed during the 12-month period beginning ___________ of the
years indicated,
<PAGE>
- 77 -
Redemption Price Redemption Price For
For Redemption Redemption Otherwise
Through Operation Than Through Operation
Year of the Sinking Fund of the Sinking Fund
---- ------------------- ----------------------
and thereafter at a Redemption Price equal to ___% of the principal
amount, together in the case of any such redemption (whether
through operation of the sinking fund or otherwise) with accrued
interest to the Redemption Date, but interest installments whose
Stated Maturity is on or prior to such Redemption Date will be
payable to the Holders of such Securities, or one or more
Predecessor Securities, of record at the close of business on the
relevant Record Date referred to on the face hereof, all as
provided in the Indenture.]
[The sinking fund for this series provides for the
redemption on ________ in each year beginning with the year ____
and ending with the year of____ [not less than $_________
("mandatory sinking fund") and not more than] $________ aggregate
principal amount of Securities of this series. Securities of this
series acquired or redeemed by the Company otherwise than through
[mandatory] sinking fund payments may be credited against
subsequent [mandatory] sinking fund payments otherwise required to
be made [if applicable, insert -- in the inverse order in which
they become due].
[If the Security is subject to redemption, insert -- In
the event of redemption of this Security in part only, a new
Security or Securities of this series and of like tenor for the
unredeemed portion hereof will be issued in the name of the Holder
hereof upon the cancellation hereof.]
[If applicable, insert -- This Security is not subject to
redemption prior to maturity.]
[If applicable, insert -- The Indenture contains
provisions for defeasance at any time of [(i)] (the entire
indebtedness evidenced by this Security] [and (ii)] [certain
restrictive covenants,] [in each case] upon compliance by the
Company with certain conditions set forth therein, which provisions
apply to this Security.]
[If the Security is not an Original Issue Discount
Security, insert -- If an Event of Default with respect to
Securities of this series shall occur and be continuing, the
principal of the Securities of this series may be declared due and
payable in the manner and with the effect provided in the
Indenture.]
[If the Security is an Original Issue Discount Security,
insert -- If an Event of Default with respect to Securities of this
series shall occur and be continuing, an amount of principal of the
Securities of this series may be declared due and payable in the
manner and with the effect provided in the Indenture. Such amount
shall be equal to [-- insert formula for determining the amount].
Upon payment [if applicable, insert -- (i)] of the amount of
principal so declared due and payable [if applicable, insert -- and
(ii) of interest on any overdue principal and overdue interest (in
each case to the extent that the payment of such interest shall be
legally enforceable)],
<PAGE>
- 78 -
all of the Company's obligations in respect of the payment of the
principal of and interest, if any, on the Securities of this series
shall terminate.]
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights
and obligations of the Company and the rights of the Holders of the
Securities of each series to be affected under the Indenture at any
time by the Company and the Trustee with the consent of the Holders
of a majority in principal amount of the Securities at the time
Outstanding of all series to be affected (voting as a single
class). The Indenture also contains provisions permitting the
Holders of specified percentages in principal amount of the
Securities of each series at the time Outstanding, on behalf of the
Holders of all Securities of such series, to waive compliance by
the Company with certain provisions of the Indenture and certain
past defaults under the Indenture and their consequences. Any such
consent or waiver by the Holder of this Security shall be
conclusive and binding upon such Holder and upon all future Holders
of this Security and of any Security issued upon the registration
of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this
Security.
No reference herein to the Indenture and no provision of
this Security or of the Indenture shall alter or impair the
obligation of the Company, which is absolute and unconditional, to
pay the principal of and any premium or interest on this Security
at the times, place and rate, and in the coin or currency, herein
prescribed.
As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Security is
registerable in the Security Register, upon surrender of this
Security for registration of transfer at the office or agency of
the Company in any place where the principal of and any premium and
interest on this Security are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly
executed by, the Holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Securities of this series
and of like tenor, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated
transferee or transferees.
The Securities of this series are issuable only in
registered form without coupons in denominations of $ ______ and
any integral multiple thereof. As provided in the Indenture and
subject to certain limitations therein set forth, Securities of
this series are exchangeable for a like aggregate principal amount
of Securities of this series and of like tenor of a different
authorized denomination, as requested by the Holder surrendering
the same.
No service charge shall be made for any such registration
of transfer or exchange, but the Company may require payment of a
sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
Prior to due presentment of this Security for
registration of transfer, the Company, the Trustee and any agent of
the Company or the Trustee
<PAGE>
- 79 -
may treat the Person in whose name this Security is registered as
the owner hereof for all purposes, whether or not this Security be
overdue, and neither the Company, the Trustee nor any such agent
shall be affected by notice to the contrary.
This Security and the Indenture are governed by and shall
be construed in accordance with the laws of the State of New York,
without regard to the conflicts of law principles thereof.
All terms used in this Security that are defined in the
Indenture shall have the meanings assigned to them in the
Indenture.
<PAGE>
=================================================================
POTOMAC ELECTRIC POWER COMPANY
1900 Pennsylvania Avenue, N.W., Washington, D.C.
and
THE BANK OF NEW YORK,
Trustee
101 Barclay Street, New York, NY
------------------
Supplemental Indenture
Dated as of __________ __, 1998
------------------
Supplemental to Indenture
Dated ___________ __, 1998
------------------
SENIOR NOTES, ____ % SERIES DUE ____
=================================================================
<PAGE>
THIS SUPPLEMENTAL INDENTURE, dated as of ________________, is
entered into by and between Potomac Electric Power Company, a
corporation organized and existing under the laws of the District
of Columbia and the Commonwealth of Virginia (herein called the
"Company"), and The Bank of New York, a New York banking
corporation organized and existing under the laws of the State of
New York (herein called the "Trustee"), having its Corporate Trust
Office at 101 Barclay Street, Floor 21 West, New York, New York
10286.
WHEREAS, the Company has heretofore executed and delivered to
the Trustee that certain indenture, dated ___________, 1998 (the
"Indenture"), providing for the issuance by the Company from time
to time of its senior debt securities to be issued in one or more
series (the "Senior Notes"); and
WHEREAS, the Company is entitled to have authenticated and
delivered Senior Notes upon compliance with the provisions of the
Indenture; and
WHEREAS, the Company has determined to issue a series of
Senior Notes under the Indenture in the principal amount of
$___,000,000, to be known as Senior Notes, __% Series due ____
(hereinafter called "Senior Notes of ____ Series"); and
WHEREAS, the Indenture provides that certain terms and
provisions of the Senior Notes of any particular series, as
determined by the Board of Directors of the Company, may be
expressed in and provided by the execution of an appropriate
supplemental indenture;
WHEREAS, the Company, in the exercise of the powers and
authority conferred upon and reserved to it under the provisions of
the Indenture 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 in order to
establish the terms of the Senior Notes of ____ Series, and for and
in consideration of the premises and of the covenants contained
herein and in the Indenture, and for other good ad valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Trustee hereby covenant and agree
as follows:
PART I.
DESCRIPTION OF SENIOR NOTES.
Section 1. The Senior Notes of ____ Series shall be
designated as "Senior Notes, __% Series due ____" of the Company.
The Notes 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 covenants
of the Indenture.
<PAGE>
-2-
Section 2. Except for Senior Notes of ____ Series issued
pursuant to Sections [304,] 305, 306, 906 or 1107 of the Indenture,
the principal amount of Senior Notes of ____ Series which may be
authenticated and delivered hereunder is limited to $___,000,000
aggregate principal amount.
Section 3. The principal of the Senior Notes of ____ Series
shall be due and payable on __________________.
Section 4. Each Senior Note of ____ Series shall be dated as
of the date of its authentication. Each Senior Note of ____ Series
shall bear interest at the rate of________________ (___%) per annum
from _________________ or from the most recent Interest Payment
Date (as hereinafter defined) to which interest has been paid or
duly provided for [and (to the extent that the payment of such
interest shall be legally enforceable) at the rate of __% per annum
on any overdue principal and premium and on any overdue installment
of interest]. Interest shall be calculated on the basis of a 360-
day year of twelve 30-day months. Interest on the Senior Notes of
___ Series shall be payable semiannually on the ____ day of _______
and the ____ day of _________ in each year (each such
______________ and _________________, an "Interest Payment Date"),
commencing _______________. The interest payable, and punctually
paid or duly provided for, on any Interest Payment Date shall be
paid to the Persons in whose names the Senior Notes of ____ Series
are registered at the close of business on the last business day
which is more than ten days prior to such Interest Payment Date
(each such date, a "Regular Record Date"). Any such interest not
so punctually paid or duly provided for will forthwith cease to be
payable to the holder of Senior Notes of ___ Series on such Regular
Record Date and may either be paid to the Persons in whose name the
Senior Notes of ___ Series are registered at the close of business
on a Special Record Date for the payment of such defaulted interest
to be fixed by the Trustee, notice whereof shall be given to
holders of Senior Notes of ___ Series not less than ten days prior
to such Special Record Date, or be paid at any time in any other
lawful manner not inconsistent with the requirements of any
securities exchange on which the Senior Notes of ___ Series may be
listed, and upon such notice as may be required by such exchange.
Section 5. The Senior Notes of ____ Series shall be payable
as to principal, premium, if any, and interest in such coin or
currency of the United States of America as at the time of payment
is legal tender for payment of public and private debts, and shall
be payable at agency of the Company in the Borough of Manhattan,
The City of New York; provided, however, that at the option of the
Company payment of interest may be made by check mailed to the
address of the Person entitled thereto as such address shall appear
on the Security Register.
Section 6. The Senior Notes of ____ Series shall be issued in
registered form without coupons in denominations of any multiple of
$1,000, numbered consecutively upwards from ____. [The Senior
Notes of ___ Series initially shall be issued in the form of Global
Securities, and The Depository Trust Company is hereby designated
as the Depositary for such Global Securities. Global Securities
representing Senior Notes of ___ Series may be transferred to, and
registered and exchanged for Senior Notes registered in the name
of, a Person other than the Depositary only in accordance with the
terms of Section 305(h) of the Indenture.]
<PAGE>
-3-
[Section 7. The Senior Notes of ___ Series shall be subject to
the provisions of Section 1302 Section 1303 of the Indenture.]
Section 8. Until the Release Date, the due and punctual
payment of the principal of, premium, if any, and interest on
Senior Notes of ____ Series shall be secured pursuant to Article
XIV of the Indenture by a series of First Mortgage Bonds issued by
the Company concurrently with the issuance of the Senior Notes of
___ Series, pursuant to a Supplemental Indenture, dated ______,
1998, under the Mortgage and Deed of Trust, dated July 1, 1936, as
amended and supplemented, between the Company and The Bank of New
York, as trustee and as successor in such capacity to The Riggs
National Bank of Washington, D.C., and designated as "First
Mortgage Bonds, __% Series due ______" and delivered and pledged by
the Company to the Trustee.
Section 9. The Senior Notes of ____ Series, and the Trustee's
certificate to be endorsed on the Senior Notes of ____ Series,
shall be substantially in the following forms, respectively:
[FORM OF FACE OF SENIOR NOTE OF ___ SERIES]
[THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF
A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE
TRANSFERRED TO, OR REGISTERED OR EXCHANGED FOR SECURITIES
REGISTERED IN THE NAME OF, ANY PERSON OTHER THAN THE DEPOSITARY OR
A NOMINEE THEREOF AND NO SUCH TRANSFER MAY BE REGISTERED, EXCEPT IN
THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE. EVERY
SECURITY AUTHENTICATED AND DELIVERED UPON REGISTRATION OF TRANSFER
OF, OR IN EXCHANGE FOR OR IN LIEU OF, THIS SECURITY SHALL BE A
GLOBAL SECURITY SUBJECT TO THE FOREGOING, EXCEPT IN SUCH LIMITED
CIRCUMSTANCES.]
POTOMAC ELECTRIC POWER COMPANY
No._________ $__________
CUSIP No. ______
Potomac Electric Power Company, a corporation duly
organized and existing under the laws of the District of Columbia
and the Commonwealth of Virginia (herein called the "Company",
which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to
pay to ____________, or registered assigns, the principal sum of
__________________ [Dollars] on _____________, [if the Senior Notes
of ____ Series are to bear interest prior to Maturity, insert -- ,
and to pay interest thereon from __________ or from the most recent
Interest Payment Date to which interest has been paid or duly
provided for, semi-annually on __________ and ___________ in each
year (an "Interest Payment Date"), commencing _________, at the
rate of ___% per annum, until the principal hereof is paid or made
available for payment [if applicable, insert -- , and (to the
extent that the payment of such interest shall be legally
enforceable) at the rate of __% per annum on any overdue principal
and premium and on any overdue installment of interest]. The
interest so payable, and punctually paid or duly provided for, on
any Interest
<PAGE>
-4-
Payment Date will, as provided in such Indenture, be paid to the
Person in whose name this Senior Note of ____ Series (or one or
more Predecessor Securities) is registered at the close of business
on the last business day which is more than ten days prior to
Interest Payment Date (each such date a "Regular Record Date").
Any such interest not so punctually paid or duly provided for will
forthwith cease to be payable to the Holder on such Regular Record
Date and may either be paid to the Person in whose name this Senior
Note of ____ Series (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest to be fixed by the Trustee,
notice whereof shall be given to Holders of Senior Notes of ____
Series not less than ten days prior to such Special Record Date, or
be paid at any time in any other lawful manner not inconsistent
with the requirements of any securities exchange on which the
Senior Notes of ____ Series may be listed, and upon such notice as
may be required by such exchange, all as more fully provided in
said Indenture].
Payment of the principal of (and premium, if any) and [if
applicable, insert -- any such] interest on this Security will be
made at the office or agency of the Company maintained for that
purpose [in ____________] in such coin or currency of [the United
States of America] [insert other currency, if applicable] as at the
time of payment is legal tender for payment of public and private
debts [if applicable, insert -- ; provided, however, that at the
option of the Company payment of interest may be made by check
mailed to the address of the Person entitled thereto as such
address shall appear in the Security Register].
Until the Release Date, the due and punctual payment of
the principal of, premium, if any, and interest on the Senior Notes
of ____ Series is secured pursuant to Article XIV of the Indenture
by a series of First Mortgage Bonds issued by the Company under the
Mortgage and Deed of Trust, dated July 1, 1936, as amended and
supplemented, between the Company and The Bank of New York, as
trustee and as successor in such capacity to The Riggs National
Bank of Washington, D.C., and designated as "First Mortgage Bonds,
__% Series due ______" and delivered and pledged by the Company to
the Trustee.
Reference is hereby made to the further provisions of the
Senior Notes of ____ Series set forth on the reverse hereof, which
further provisions shall for all purposes have the same effect as
if set forth at this place.
Unless the certificate of authentication hereon has been
executed by the Trustee referred to on the reverse hereof by manual
signature, this Senior Note of ____ Series shall not be entitled to
any benefit under the Indenture or be valid or obligatory for any
purpose.
<PAGE>
-5-
IN WITNESS WHEREOF, the Company has caused this
instrument to be duly executed under its corporate seal.
POTOMAC ELECTRIC POWER COMPANY
By:___________________________
Attest:
_____________________
[FORM OF TRUSTEE'S CERTIFICATE]
This is one of the Securities of the series designated
therein referred to in the within-mentioned Indenture.
THE BANK OF NEW YORK
Dated:
As Trustee
By:_________________________
Authorized Signatory
[FORM OF REVERSE OF SENIOR NOTES OF __ SERIES]
This Senior Note of ____ Series is one of a duly
authorized issue of securities of the Company, issued and to be
issued in under an Indenture, dated as of __________, 1998 (herein
called the "Indenture"), between the Company and The Bank of New
York, as Trustee (herein called the "Trustee", which term includes
any successor trustee under the Indenture), to which Indenture and
all indentures supplemental thereto reference is hereby made for a
statement of the respective rights, limitations of rights, duties
and immunities thereunder of the Company, the Trustee and the
Holders of the Senior Notes of ____ Series and of the terms upon
which the Senior Notes of ____ Series are, and are to be,
authenticated and delivered. This Senior Note of ____ Series is
one of the series designated on the face hereof[, limited in
aggregate principal amount to $ ________].
[If applicable, insert -- The Senior Notes of ____ Series
are subject to redemption upon not less than 30 days' notice by
mail, [if applicable, insert ---- (i) on ___________ in any year
commencing with the year ____ and ending with
<PAGE>
-6-
the year ____ through operation of the sinking fund for this series
at a Redemption Price equal to 100% of the principal amount, and
(ii)] at any time on or after _________, 19__], as a whole or in
part, at the election of the Company, at the following Redemption
Prices (expressed as percentages of the principal amount): If
redeemed [on or before ___________, __%, and if redeemed] during
the 12-month period beginning _________ of the years indicated,
Redemption Redemption
Year Price Year Price
---- ---------- ---- ----------
and thereafter at a Redemption Price equal to ___% of the principal
amount, together in the case of any such redemption [if applicable,
insert -- (whether through operation of the sinking fund or
otherwise)] with accrued interest to the Redemption Date, but
interest installments whose Stated Maturity is on or prior to such
Redemption Date will be payable to the Holders of Senior Notes of
____ Series, or one or more Predecessor Securities, of record at
the close of business on the relevant Record Dates referred to on
the face hereof, all as provided in the Indenture.]
[If applicable, insert -- The Senior Notes of ____ Series
are subject to redemption upon not less than 30 days' notice by
mail, (i) on _______ in any year commencing with the year ____ and
ending with the year ____ through operation of the sinking fund for
this series at the Redemption Prices for redemption through
operation of the sinking fund (expressed as percentages of the
principal amount) set forth in the table below, and (ii) at any
time [on or after ____________], as a whole or in part, at the
election of the Company, at the Redemption Prices for redemption
otherwise than through operation of the sinking fund (expressed as
percentages of the principal amount) set forth in the table below:
If redeemed during the 12-month period beginning ___________ of the
years indicated,
Redemption Price Redemption Price For
For Redemption Redemption Otherwise
Through Operation Than Through Operation
Year of the Sinking Fund of the Sinking Fund
---- ------------------- ----------------------
and thereafter at a Redemption Price equal to ___% of the principal
amount, together in the case of any such redemption (whether
through operation of the sinking fund or otherwise) with accrued
interest to the Redemption Date, but interest installments whose
Stated Maturity is on or prior to such Redemption Date will be
payable to the Holders of Senior Notes of ____ Series, or one or
more Predecessor Securities, of record at the close of business on
the relevant Record Date referred to on the face hereof, all as
provided in the Indenture.]
[The sinking fund for this series provides for the
redemption on ________ in each year beginning with the year ____
and ending with the year of____ [not less than $_________
("mandatory sinking fund") and not more than] $________ aggregate
principal amount of Senior Notes of ____ Series acquired or
<PAGE>
-7-
redeemed by the Company otherwise than through [mandatory] sinking
fund payments may be credited against subsequent [mandatory]
sinking fund payments otherwise required to be made [if applicable,
insert -- in the inverse order in which they become due].
[If the Senior Notes of ____ Series are subject to
redemption, insert -- In the event of redemption of this Senior
Note of ____ Series in part only, a new Senior Note of ____ Series
and of like tenor for the unredeemed portion hereof will be issued
in the name of the Holder hereof upon the cancellation hereof.]
[If applicable, insert -- The Senior Notes of ____ Series
are not subject to redemption prior to maturity.]
[If applicable, insert -- The Indenture contains
provisions for defeasance at any time of [(i)] (the entire
indebtedness evidenced by the Senior Notes of ____ Series] [and
(ii)] [certain restrictive covenants,] [in each case] upon
compliance by the Company with certain conditions set forth
therein, which provisions apply to this Senior Note of ____
Series.]
If an Event of Default with respect to the Senior Notes
of ____ Series shall occur and be continuing, the principal of the
Securities of this series may be declared due and payable in the
manner and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights
and obligations of the Company and the rights of the Holders of the
Securities of each series to be affected under the Indenture at any
time by the Company and the Trustee with the consent of the Holders
of a majority in principal amount of the Securities at the time
Outstanding of all series to be affected (voting as a single
class). The Indenture also contains provisions permitting the
Holders of specified percentages in principal amount of the
Securities of each series at the time Outstanding, on behalf of the
Holders of all Securities of such series, to waive compliance by
the Company with certain provisions of the Indenture and certain
past defaults under the Indenture and their consequences. Any such
consent or waiver by the Holder of this Senior Note of ____ Series
shall be conclusive and binding upon such Holder and upon all
future Holders of this Senior Note of ____ Series and of any
security issued upon the registration of transfer hereof or in
exchange herefor or in lieu hereof, whether or not notation of such
consent or waiver is made upon this Senior Note of ____ Series.
No reference herein to the Indenture and no provision of
this Senior Note of ____ Series or of the Indenture shall alter or
impair the obligation of the Company, which is absolute and
unconditional, to pay the principal of and any premium or interest
on this Senior Note of ____ Series at the times, place and rate,
and in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Senior Note of
____ Series is registerable in the Security Register, upon
surrender of this Senior Note of ____ Series for registration of
transfer at the office or agency of the Company in any
<PAGE>
-8-
place where the principal of and any premium and interest on this
Senior Note of ____ Series are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly
executed by, the Holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Senior Notes of ____ Series
and of like tenor, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated
transferee or transferees.
The Senior Notes of ____ Series are issuable only in
registered form without coupons in denominations of $ ______ and
any integral multiple thereof. As provided in the Indenture and
subject to certain limitations therein set forth, the Senior Notes
of ____ Series are exchangeable for a like aggregate principal
amount of the Senior Notes of ____ Series and of like tenor of a
different authorized denomination, as requested by the Holder
surrendering the same.
No service charge shall be made for any such registration
of transfer or exchange, but the Company may require payment of a
sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
Prior to due presentment of this Senior Note of ____
Series for registration of transfer, the Company, the Trustee and
any agent of the Company or the Trustee may treat the Person in
whose name this Senior Note of ____ Series is registered as the
owner hereof for all purposes, whether or not this Senior Note of
____ Series be overdue, and neither the Company, the Trustee nor
any such agent shall be affected by notice to the contrary.
No recourse shall be had for the payment of the principal
of, or the interest on, this Senior Note of ____ Series, or for any
claim based hereon or otherwise in respect hereof or of the
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, either directly or through the Company or
any such predecessor or successor corporation, whether for amounts
unpaid on stock subscriptions or by virtue of any constitution,
statute or rule of law, or by the enforcement of any assessment or
penalty or otherwise, all such liability, whether at common law, in
equity, by any constitution, statute or otherwise, of
incorporators, stockholders, directors or officers being released
by every owner hereof by the acceptance of this Senior Note of ____
Series and as part of the consideration for the issue hereof, and
being likewise released by the terms of the Indenture.
This Senior Note and the Indenture are governed by and
shall be construed in accordance with the laws of the State of New
York, without regard to the conflicts of law provisions thereof.
All terms used in this Senior Note of ___ Series that are
defined in the Indenture shall have the meanings assigned to them
in the Indenture.
<PAGE>
-9-
PART II.
ISSUE OF SENIOR NOTES.
Section 1. Senior Notes of____ Series, in the aggregate
principal amount permitted by Section 2 of Part I, may at any time
and from time to time subsequent to the execution hereof be
executed by the Company and delivered to the Trustee and, upon
compliance by the Company with the terms of the Indenture, shall be
authenticated by the Trustee and delivered in accordance with the
terms of the Indenture.
[Section 2. Until Senior Notes of____ Series in definitive
form are ready for delivery, the Company may execute, and upon a
Company Order the Trustee shall authenticate and deliver, in lieu
thereof, Senior Notes of ____ Series in temporary form, as provided
in Section 304 of the Indenture.]
PART III.
REDEMPTION AND CANCELLATION OF SENIOR NOTES
[Section 1. The Senior Notes of ___ Series are not redeemable
prior to __________. The Company shall, in accordance with the
terms of Article XI of the Indenture, have the right to redeem the
Senior Notes of _____ Series, in whole, at any time, or in part,
from time to time, on or after ______________, at the redemption
price applicable to the respective periods set forth in the form of
Senior Note of ___ Series contained in Section 9 of Part I hereof,
together, in each case, with all accrued and unpaid interest
thereon to the redemption date.]
Section 2. All Senior Notes of ___ Series delivered to or
redeemed by the Trustee pursuant to the provisions of this Part III
shall forthwith be cancelled.
PART IV.
MISCELLANEOUS
Section 1. Capitalized terms not otherwise defined herein
shall have the meanings ascribed to such terms in the Indenture.
Section 2. In case any one or more of the provisions
contained in this Supplemental Indenture or in the Senior Notes of
____ Series issued hereunder should be invalid, illegal, or
unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and
therein shall not in any way be affected, impaired, prejudiced or
disturbed thereby.
Section 3. The recitals contained herein are made by the
Company solely and not by the Trustee, and the Trustee assumes no
responsibility for the correctness thereof. The Trustee makes no
representation as to the validity or
<PAGE>
-10-
sufficiency of this Supplemental Indenture or the due execution
hereof by the Company.
Section 4. This Supplemental Indenture may be executed in any
number of counterparts, each of which when so executed shall be
deemed to be an original, but all such counterparts shall together
constitute but one and the same instrument.
IN WITNESS WHEREOF, said Potomac Electric Power Company
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 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
acceptance 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 Supplemental Indenture to
be attested by one of its Assistant Vice Presidents, all as of the
___ day of _______, One thousand nine hundred and ninety-___.
POTOMAC ELECTRIC POWER COMPANY
By: ____________________________
Name:
Title:
Attest:
____________________
Secretary
THE BANK OF NEW YORK, as Trustee
By: _____________________________
Name:
Title:
Attest:
___________________________
Exhibit 5
October 26, 1998
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 $270,000,000 aggregate principal amount of Senior 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 Senior 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 Senior Notes and of their issuance and
sale in the manner and upon the terms set forth in the Registration
Statement and in the form of Prospectus contained therein or issued
supplemental thereto, (b) the Registration Statement becoming
effective under the 1933 Act, (c) the qualification under the 1939
Act of an indenture governing the issuance of the Senior Notes (the
"Indenture"), (d) the execution of the Senior Notes by the Company,
the filing with the Trustee under the Indenture of the appropriate
<PAGE>
Potomac Electric Power Company
Page 2
October 26, 1998
certificates, instruments and opinions called for thereby, and the
authentication of the Senior Notes by the Trustee, if required, all
in accordance with the provisions of the Indenture, and (e) 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 Prospectus which constitutes a part of said
Registration Statement.
Very truly yours,
/s/ WILLIAM T. TORGERSON
William T. Torgerson
Exhibit 15
October 26, 1998
Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549
Ladies and Gentlemen:
We are aware that Potomac Electric Power Company has incorporated
by reference our reports dated May 13, 1998 and August 11, 1998
(issued pursuant to the provisions of Statement on Auditing
Standards Number 71) in the Prospectus constituting part of its
Registration Statement on Form S-3 to be filed on or about October
26, 1998. We are also aware of our responsibilities under the
Securities Act of 1933.
Yours very truly,
/s/ PRICEWATERHOUSECOOPERS LLP
Exhibit 23.1
Consent of Independent Accountants
----------------------------------
We hereby consent to the incorporation by reference in the
Prospectus constituting part of this Registration Statement on Form
S-3 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 Financial Statement Schedule, which
appears on page 49 of such annual report on Form 10-K. We also
consent to the references to us under the heading "Experts" in such
Prospectus. However, it should be noted that
PricewaterhouseCoopers, LLP, has not prepared or certified such
"Selected Financial Data".
/s/ PRICEWATERHOUSECOOPERS LLP
Washington, D.C.
October 26, 1998
Exhibit 23.3
October 26, 1998
We hereby consent to the reference to this Firm under the
heading "Legal Opinions" in the Prospectus constituting part of the
Registration Statement on Form S-3 of Potomac Electric Power
Company, as filed the date hereof, relating to $270,000,000 of Debt
Securities.
/s/ Covington & Burling
COVINGTON & BURLING
Exhibit 24
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-3 to be filed
under the Act for the public offering and sale of up to
$270,000,000 in debt securities, and any Registration Statement for
the public offering and sale of up to an additional 20% thereof
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 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, JR.
Principal Executive Officer: JOHN M. DERRICK, JR.
President, Chief Executive
Officer and Director
Principal Financial Officer and /S/ DENNIS R. WRAASE
Principal Accounting Officer: DENNIS R. WRAASE
Senior Vice President,
Chief Financial Officer
and Director
<PAGE>
/S/ ROGER R. BLUNT, SR.
Director _________________________
ROGER R. BLUNT, SR.
/S/ EDMUND B. CRONIN, JR.
Director _________________________
EDMUND B. CRONIN, JR.
/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/ EDWARD F. MITCHELL
Director _________________________
EDWARD F. MITCHELL
/S/ PETER F. O'MALLEY
Director _________________________
PETER F. O'MALLEY
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.)
One 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)
______________________
First Mortgage Bonds
(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 2 Rector Street, New York,
of 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 affiliation.
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.)
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. 33-44051.)
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.
2
<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 ____ day of _______, 199_.
THE BANK OF NEW YORK
By:
Name: ROBERT A. MASSIMILLO
Title: ASSISTANT VICE PRESIDENT
3
<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, 1998, 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 ................. $ 6,397,993
Interest-bearing balances .......... 1,138,362
Securities:
Held-to-maturity securities ........ 1,062,074
Available-for-sale securities ...... 4,167,240
Federal funds sold and Securities pur-
chased under agreements to resell... 391,650
Loans and lease financing
receivables:
Loans and leases, net of unearned
income ........................... 36,538,242
LESS: Allowance for loan and
lease losses ..................... 631,725
LESS: Allocated transfer risk
reserve........................... 0
Loans and leases, net of unearned
income, allowance, and reserve.... 35,906,517
Assets held in trading accounts ...... 2,145,149
Premises and fixed assets (including
capitalized leases) ................ 663,928
Other real estate owned .............. 10,895
Investments in unconsolidated
subsidiaries and associated
companies .......................... 237,991
Customers' liability to this bank on
acceptances outstanding ............ 992,747
Intangible assets .................... 1,072,517
Other assets ......................... 1,643,173
-----------
Total assets ......................... $55,830,236
===========
LIABILITIES
Deposits:
In domestic offices ................ $24,849,054
Noninterest-bearing ................ 10,011,422
Interest-bearing ................... 14,837,632
In foreign offices, Edge and
Agreement subsidiaries, and IBFs ... 15,319,002
Noninterest-bearing ................ 707,820
Interest-bearing ................... 14,611,182
Federal funds purchased and Securities
sold under agreements to repurchase. 1,906,066
Demand notes issued to the U.S.
Treasury ........................... 215,985
Trading liabilities .................. 1,591,288
Other borrowed money:
With remaining maturity of one year
or less .......................... 1,991,119
With remaining maturity of more than
one year through three years...... 0
<PAGE>
With remaining maturity of more than
three years ...................... 25,574
Bank's liability on acceptances exe-
cuted and outstanding .............. 998,145
Subordinated notes and debentures .... 1,314,000
Other liabilities .................... 2,421,281
----------
Total liabilities .................... 50,631,514
----------
EQUITY CAPITAL
Common stock ......................... 1,135,284
Surplus .............................. 731,319
Undivided profits and capital
reserves ........................... 3,328,050
Net unrealized holding gains
(losses) on available-for-sale
securities ......................... 40,198
Cumulative foreign currency transla-
tion adjustments ................... ( 36,129)
------------
Total equity capital ................. 5,198,722
------------
Total liabilities and equity
capital ............................ $55,830,236
===========
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.
)
Thomas A. Renyi )
Alan R. Griffith ) Directors
J. Carter Bacot )
)
2
<PAGE>
=================================================================
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.)
One 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)
______________________
Senior Notes
(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 2 Rector Street, New York,
of 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 affiliation.
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.)
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. 33-44051.)
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.
2
<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 ____ day of _______, 199_.
THE BANK OF NEW YORK
By:
Name: ROBERT A. MASSIMILLO
Title: ASSISTANT VICE PRESIDENT
3
<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, 1998, 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 ................. $ 6,397,993
Interest-bearing balances .......... 1,138,362
Securities:
Held-to-maturity securities ........ 1,062,074
Available-for-sale securities ...... 4,167,240
Federal funds sold and Securities pur-
chased under agreements to resell... 391,650
Loans and lease financing
receivables:
Loans and leases, net of unearned
income ........................... 36,538,242
LESS: Allowance for loan and
lease losses ..................... 631,725
LESS: Allocated transfer risk
reserve........................... 0
Loans and leases, net of unearned
income, allowance, and reserve.... 35,906,517
Assets held in trading accounts ...... 2,145,149
Premises and fixed assets (including
capitalized leases) ................ 663,928
Other real estate owned .............. 10,895
Investments in unconsolidated
subsidiaries and associated
companies .......................... 237,991
Customers' liability to this bank on
acceptances outstanding ............ 992,747
Intangible assets .................... 1,072,517
Other assets ......................... 1,643,173
-----------
Total assets ......................... $55,830,236
===========
LIABILITIES
Deposits:
In domestic offices ................ $24,849,054
Noninterest-bearing ................ 10,011,422
Interest-bearing ................... 14,837,632
In foreign offices, Edge and
Agreement subsidiaries, and IBFs ... 15,319,002
Noninterest-bearing ................ 707,820
Interest-bearing ................... 14,611,182
Federal funds purchased and Securities
sold under agreements to repurchase. 1,906,066
Demand notes issued to the U.S.
Treasury ........................... 215,985
Trading liabilities .................. 1,591,288
Other borrowed money:
With remaining maturity of one year
or less .......................... 1,991,119
With remaining maturity of more than
one year through three years...... 0
<PAGE>
With remaining maturity of more than
three years ...................... 25,574
Bank's liability on acceptances exe-
cuted and outstanding .............. 998,145
Subordinated notes and debentures .... 1,314,000
Other liabilities .................... 2,421,281
----------
Total liabilities .................... 50,631,514
----------
EQUITY CAPITAL
Common stock ......................... 1,135,284
Surplus .............................. 731,319
Undivided profits and capital
reserves ........................... 3,328,050
Net unrealized holding gains
(losses) on available-for-sale
securities ......................... 40,198
Cumulative foreign currency transla-
tion adjustments ................... ( 36,129)
------------
Total equity capital ................. 5,198,722
------------
Total liabilities and equity
capital ............................ $55,830,236
===========
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.
)
Thomas A. Renyi )
Alan R. Griffith ) Directors
J. Carter Bacot )
)
2
<PAGE>
