-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FZhFeavlVacar9awUN2v76kmhPSrLybKrz8ntviyXwCLZa+NEgVbM+BT52kNgXBr lKR93vFoegXAmI4NWQ40pQ== 0000950116-97-001039.txt : 19970526 0000950116-97-001039.hdr.sgml : 19970526 ACCESSION NUMBER: 0000950116-97-001039 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 14 FILED AS OF DATE: 19970523 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PECO ENERGY CO CENTRAL INDEX KEY: 0000078100 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC & OTHER SERVICES COMBINED [4931] IRS NUMBER: 230970240 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-27721 FILM NUMBER: 97613688 BUSINESS ADDRESS: STREET 1: 2301 MARKET ST STREET 2: P O BOX 8699 CITY: PHILADELPHIA STATE: PA ZIP: 19101 BUSINESS PHONE: 2158414000 FORMER COMPANY: FORMER CONFORMED NAME: PHILADELPHIA ELECTRIC CO DATE OF NAME CHANGE: 19920703 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PECO ENERGY CAPITAL LP CENTRAL INDEX KEY: 0000925910 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC & OTHER SERVICES COMBINED [4931] IRS NUMBER: 51035522 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-27721-01 FILM NUMBER: 97613689 BUSINESS ADDRESS: STREET 1: 2301 MARKET STREET CITY: WILMINGTON STATE: DE ZIP: 19103 BUSINESS PHONE: 3029980592 MAIL ADDRESS: STREET 1: C/O PECO ENERGY CO STREET 2: 2301 MARKET ST CITY: PHILADELPHIA STATE: PA ZIP: 19101 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PECO ENERGY CAPITAL TRUST II CENTRAL INDEX KEY: 0001039896 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC & OTHER SERVICES COMBINED [4931] STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-27721-02 FILM NUMBER: 97613690 BUSINESS ADDRESS: STREET 1: 2301 MARKET ST STREET 2: P O BOX 8699 CITY: PHILADELPHIA STATE: PA ZIP: 19101 BUSINESS PHONE: 2158414000 S-3 1 FORM S-3 As filed with the Securities and Exchange Commission on May 23, 1997 Registration No. 333- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------- FORM S-3 REGISTRATION STATEMENT Under THE SECURITIES ACT OF 1933 -------------------
PECO Energy Company PECO Energy Capital, L.P. PECO Energy Capital Trust II (Exact name of registrant (Exact name of registrant as specified in (Exact name of registrant as specified as specified in its charter) its Certificate of Limited Partnership) in its Certificate of Trust) Pennsylvania Delaware Delaware (State or other jurisdiction of incorporation or organization) 4931 6799 6799 (Primary Standard Industrial Classification Code Number) 23-0970240 51-0355322 (to be applied for) (I.R.S. Employer Identification No.) P.O. Box 8699, 1013 Centre Road, Suite 350F c/o First Union Trust Company, 2301 Market Street Wilmington, DE 19805 National Association Philadelphia, PA 19101 (302) 998-0592 One Rodney Square (215) 841-4000 920 King Street, 1st Floor Wilmington, DE 19801 (302) 888-7500
(Address, including zip code, and telephone number, including area code, of registrants' principal executive offices) J. B. MITCHELL Vice President - Finance and Treasurer P.O. Box 8699, 2301 Market Street Philadelphia, PA 19101 (215) 841-4000 (Name, address, including zip code, and telephone number, including area code, of agent for service for each registrant) JAMES W. DURHAM, ESQ. Senior Vice President and General Counsel P.O. Box 8699, 2301 Market Street, Philadelphia, PA 19101 with copies to: ROBERT C. GERLACH, ESQ. ROBERT M. JONES, JR., ESQ. Ballard Spahr Andrews & Ingersoll Drinker Biddle & Reath LLP 1735 Market Street, 51st Floor 1345 Chestnut Street Philadelphia, PA 19103-7599 Philadelphia, PA 19107-3496 Approximate date of commencement of proposed sale to the public: As soon as practicable after the Registration Statement becomes effective. ----------- If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. / / If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, please check the following box. / / If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering. / / If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. / / The Registrants hereby amend this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrants shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ------------------- CALCULATION OF REGISTRATION FEE - --------------------------------------------------------------------------------
Proposed Proposed Maximum Maximum Aggregate Amount of Title of Each Class of Amount to be Offering Price Offering Registration Securities to be Registered Registered(1) Per Unit(2)(3) Price(2)(3) Fee(4) Trust Receipts issued by PECO Energy Capital Trust II representing PECO Energy Capital, L.P. % Cumulative Monthly Income Preferred Securities, Series C ........................ $ % $ $ PECO Energy Capital, L.P. % Cumulative Monthly Income Preferred Securities, Series C $ % $ $ PECO Energy Company Guarantee with respect to PECO Energy Capital, L.P. % Cumulative Monthly Income Preferred Securities, Series $ % $ $ C(5) . PECO Energy Company, % Deferrable Interest Subordinated Debentures, Series C ............ $ % $ $ Total ....................................... $50,000,000 100% $50,000,000 $15,152
- -------------------------------------------------------------------------------- (1) There are being registered hereunder a presently indeterminate number of Trust Receipts, each representing a % Cumulative Monthly Income Preferred Security, Series C of PECO Energy Capital, L.P., with an aggregate initial offering price not to exceed $50,000,000 and related Guarantee and % Deferrable Interest Subordinated Debentures, Series C of PECO Energy Company for which no separate consideration will be received. (2) Estimated solely for the purpose of determining the registration fee. (3) Exclusive of accrued interest and dividends, if any. (4) Pursuant to Rule 457(n) and (o), the registration fee is calculated on the basis of the proposed maximum offering price of the Trust Receipts. (5) Includes the rights of holders of the Series C Preferred Securities under the Guarantee and certain backup undertakings related thereto as described in the Registration Statement. Information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This prospectus shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any State in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such State. SUBJECT TO COMPLETION, DATED MAY ___, 1997 PROSPECTUS PECO ENERGY CAPITAL TRUST II Trust Receipts each representing a ____% Cumulative Monthly Income Preferred Security, Series C of PECO Energy Capital, L.P. (stated liquidation preference $25 per Preferred Security) guaranteed to the extent PECO Energy Capital, L.P. has funds as set forth herein by PECO ENERGY COMPANY The Trust Receipts (the "Preferred Trust Receipts") offered hereby by PECO Energy Capital Trust II, a statutory business trust created under the laws of the State of Delaware (the "Trust") each represent a ____% Cumulative Monthly Income Preferred Security, Series C (a "Series C Preferred Security") of PECO Energy Capital, L.P., a limited partnership formed under the laws of the State of Delaware ("PECO Energy Capital"). The Trust will use the (continued on next page) See "Risk Factors" commencing on page 5 for certain information relevant to an investment in the Preferred Trust Receipts, including the period during which and circumstances under which Distributions on the Preferred Trust Receipts may be deferred and the related federal income tax consequences. Application has been made to list the Preferred Trust Receipts on the New York Stock Exchange. If approved for listing, trading of the Preferred Trust Receipts is expected to commence within a 30-day period after the initial delivery thereof. ------------------------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. -------------------------
Initial Public Underwriting Proceeds to Offering Price Commission(1) the Trust(2)(3) ---------------- --------------- ---------------- Per Preferred Trust Receipt ...... $25.00 (2) $25.00 Total ........................... $ (2) $
- ------------ (1) PECO Energy and PECO Energy Capital have agreed to indemnify the several Underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended. See "Underwriting." (2) Under the Underwriting Agreement, PECO Energy will pay to the Underwriters $__________ per Preferred Trust Receipt (or $__________ in the aggregate); provided, that such compensation will be $0.50 per Preferred Trust Receipt sold to certain institutions. See "Underwriting." (3) Expenses of the offering, which are payable by PECO Energy, are estimated to be $410,000. ------------------------- The Preferred Trust Receipts offered hereby are offered severally by the Underwriters, as specified herein, subject to receipt and acceptance by them and subject to their right to reject any order in whole or in part. It is expected that delivery of the Preferred Trust Receipts will be made in book-entry-only form through the facilities of The Depository Trust Company on or about _________, 1997. Smith Barney Inc. Lehman Brothers ------------------------- The date of this Prospectus is _______, 1997. (continued from previous page) proceeds from the sale of its Preferred Trust Receipts to purchase the Series C Preferred Securities, which will be the sole assets of the Trust. PECO Energy Capital will lend the proceeds from the sale of its Series C Preferred Securities, plus the capital contribution made by PECO Energy Capital Corp., a Delaware corporation and the sole general partner of PECO Energy Capital (the "General Partner"), to PECO Energy Company, a Pennsylvania corporation ("PECO Energy"), which loan will be evidenced by PECO Energy's ____% Deferrable Interest Subordinated Debentures, Series C, due 2037 (the "Series C Subordinated Debentures"). Whenever the Trust receives any cash distribution representing a monthly distribution on the Series C Preferred Securities (whether or not distributed by PECO Energy Capital on the regular monthly distribution date therefor) or payment under the Payment and Guarantee Agreement (the "Series C Guarantee") issued by PECO Energy for the benefit of the holders of the Series C Preferred Securities (collectively, "Distributions"), the Trust will distribute such amounts to the holders of the Preferred Trust Receipts in proportion to their respective number of Series C Preferred Securities represented by such Preferred Trust Receipts. Under the Indenture dated as of July 1, 1994 between PECO Energy and First Union National Bank, as successor trustee (as supplemented, the "Indenture"), PECO Energy has the right at any time, so long as an Event of Default under the Indenture has not occurred and is continuing, to extend the interest payment period for all Deferrable Interest Subordinated Debentures issued thereunder ("Subordinated Debentures") for up to 60 consecutive months (an "Extension Period"). During any Extension Period, no Distributions will be made on the Series C Preferred Securities represented by the Preferred Trust Receipts. See "Description of the Series C Subordinated Debentures and the Indenture--Option to Extend Interest Payment Period." PECO Energy has, through the Series C Guarantee, the Amended and Restated Trust Agreement relating to the Trust (the "Trust Agreement"), the Indenture and the Series C Subordinated Debentures, taken together, fully, irrevocably and unconditionally guaranteed all of PECO Energy Capital's obligations under the Series C Preferred Securities. Under the Series C Guarantee, PECO Energy guarantees payment of accumulated and unpaid monthly Distributions, amounts payable upon redemption and amounts payable upon liquidation with respect to the Series C Preferred Securities, in each case, only to the extent that PECO Energy Capital has funds on hand legally available therefor and payment does not violate applicable law. If PECO Energy fails to make interest payments on its Series C Subordinated Debentures, PECO Energy Capital will not have sufficient funds to pay Distributions on the Series C Preferred Securities. The Series C Guarantee does not cover payment of Distributions when PECO Energy Capital does not have sufficient funds to pay such Distributions. In such event, the holders of Preferred Trust Receipts representing the Series C Preferred Securities would be required to seek enforcement of PECO Energy Capital's rights against PECO Energy pursuant to the terms of the Indenture as provided under "Description of the Series C Preferred Securities--Voting Rights." The obligations of PECO Energy under the Series C Guarantee are subordinate and junior in right of payment to all general liabilities of PECO Energy and its obligations under the Series C Subordinated Debentures are subordinate and junior in right of payment to all present and future Senior Indebtedness of PECO Energy (as defined herein), which aggregated approximately $4.698 billion at March 31, 1997. The Preferred Trust Receipts are subject to mandatory redemption upon any redemption of Series C Preferred Securities, which are subject to optional redemption after June ___, 2002 and upon the occurrence of certain tax events, and which are subject to mandatory redemption upon payment at maturity or redemption of the Series C Subordinated Debentures and the occurrence of certain events under the Investment Company Act of 1940, as amended. See "Description of the Series C Preferred Securities--Optional Redemption," "--Mandatory Redemption," and "--Special Event Redemptions." In the event of the liquidation of PECO Energy Capital, the Trust will distribute to the holders of Preferred Trust Receipts, after satisfaction of creditors of the Trust as required by law, the amounts received by the Trust from PECO Energy Capital representing the lesser of the Partnership Liquidation Distribution (as defined herein) or the amount of assets of PECO Energy Capital legally available therefor, in either case, in proportion to the respective number of Series C Preferred Securities represented by such Preferred Trust Receipts. Upon any voluntary or involuntary dissolution or winding up of PECO Energy Capital, the holders of Series C Preferred Securities will be entitled to receive out of the assets of PECO Energy Capital, after satisfaction of liabilities to creditors and before distribution of assets is made to holders of its general partner interests, the sum of their $25.00 stated liquidation preference and all accumulated and unpaid Distributions to the date of payment. All assets of PECO Energy Capital remaining after payment of the liquidation distribution to the holders of all Cumulative Monthly Income Preferred Securities of PECO Energy Capital ("Preferred Securities") will be distributed to the general partner of PECO Energy Capital. The Preferred Trust Receipts will be represented by global securities registered in the name of The Depository Trust Company ("DTC") or its nominee. Beneficial interests in the Preferred Trust Receipts will be shown on, and transfers thereof will be effected only through, records maintained by participants in DTC. Preferred Trust Receipts in certificated form will not be issued in exchange for the global securities. See "Description of the Preferred Trust Receipts--Book-Entry-Only Issuance--The Depository Trust Company." CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE PREFERRED TRUST RECEIPTS, INCLUDING ENTERING STABILIZING BIDS, EFFECTING SYNDICATE COVERING TRANSACTIONS AND IMPOSING PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING." 3 AVAILABLE INFORMATION PECO Energy is subject to the information requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and, in accordance therewith, files reports, proxy and information statements and other information with the Securities and Exchange Commission (the "SEC"). Such reports, proxy and information statements and other information filed by PECO Energy may be inspected and copied at the public reference facilities maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, and at certain of its regional offices at Suite 1400, 500 West Madison Street, Chicago, IL 60661-2511 and Suite 1300, 7 World Trade Center, New York, NY 10048. Copies of such material may also be obtained from the Public Reference Section of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. In addition, registration statements and certain other filings made with the SEC through its Electronic Data Gathering, Analysis and Retrieval ("EDGAR") system are publicly available through the SEC's site on the Internet's World Wide Web, located at http://www.sec.gov. The Registration Statement, including all exhibits thereto and amendments thereof, has been filed with the SEC through EDGAR. Securities of PECO Energy are listed on the New York and Philadelphia Stock Exchanges, where reports, proxy and information statements and other information concerning PECO Energy may be inspected. No separate financial statements of PECO Energy Capital or the Trust have been included herein. PECO Energy does not consider that such financial statements would be material to holders of Preferred Trust Receipts offered hereby because PECO Energy Capital and the Trust are special purpose entities, have no independent operations and are not engaged in, and do not propose to engage in, any activity other than as set forth below. See "PECO Energy Capital" and "The Trust." INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents filed with the SEC pursuant to Section 13 of the Exchange Act by PECO Energy (File No. 1-1401) are incorporated herein by reference: 1. PECO Energy's Annual Report on Form 10-K for the year ended December 31, 1996; 2. PECO Energy's Quarterly Report on Form 10-Q for the quarter ended March 31, 1997; and 3. PECO Energy's Current Reports on Form 8-K dated January 23, 1997, January 24, 1997, January 30, 1997, February 21, 1997, February 27, 1997, March 25, 1997, April 1, 1997, April 14, 1997, April 25, 1997, May 8, 1997, May 12, 1997 and May 22, 1997. Each document filed subsequent to the date of this Prospectus pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act and prior to the termination of the offering shall be deemed to be incorporated by reference in this Prospectus and shall be a part hereof from the date of filing of such document. Any statement contained herein or in a document all or a portion of which is incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. This Prospectus incorporates documents by reference which are not presented herein or delivered herewith. PECO Energy undertakes to provide without charge to each person, including any beneficial owner, to whom a Prospectus is delivered, upon written or oral request of such person, a copy of any or all documents described above under "Incorporation of Certain Documents by Reference," other than exhibits to such documents. Such requests should be directed to PECO Energy Company, Financial Division, S21-1, P.O. Box 8699, Philadelphia, PA 19101, (215) 841-5678. 4 RISK FACTORS Prospective purchasers of Preferred Trust Receipts should carefully review the information contained elsewhere in this Prospectus and should particularly consider the following matters: Subordinate Obligations of Series C Guarantee and Series C Subordinated Debentures PECO Energy's obligations under the Series C Guarantee are subordinate and junior in right of payment to all general liabilities of PECO Energy and its obligations under the Series C Subordinated Debentures are subordinate and junior in right of payment to all Senior Indebtedness of PECO Energy (as defined under "Description of the Series C Subordinated Debentures and the Indenture--Subordination"). At March 31, 1997, the Senior Indebtedness of PECO Energy aggregated approximately $4.698 billion. There are no terms in the Series C Subordinated Debentures or the Series C Guarantee that limit PECO Energy's ability to incur additional indebtedness, including indebtedness that ranks senior to the Series C Subordinated Debentures and the Series C Guarantee. The Series C Guarantee guarantees payment of accumulated and unpaid monthly Distributions, amounts payable on redemption, and amounts payable on liquidation with respect to the Series C Preferred Securities, in each case, however, only to the extent that PECO Energy Capital has funds on hand legally available therefor and payment thereof does not otherwise violate applicable law. If PECO Energy were to default on its obligation to pay interest or amounts payable on redemption or maturity of the Series C Subordinated Debentures, PECO Energy Capital would lack legally available funds for the payment of Distributions or amounts payable on redemption of the Series C Preferred Securities or upon liquidation of PECO Energy Capital, and in such event, the holders of the Preferred Trust Receipts representing the Series C Preferred Securities would not be able to rely upon the Series C Guarantee for payment of such amounts. Instead, holders of the Preferred Trust Receipts representing the Series C Preferred Securities would be required to seek enforcement of PECO Energy Capital's rights against PECO Energy pursuant to the terms of the Indenture as provided in "Description of the Series C Preferred Securities--Voting Rights." See "Description of the Series C Guarantee--Status of the Series C Guarantee" and "Description of the Series C Subordinated Debentures and the Indenture--Subordination." Option to Extend Interest Payment Period; Tax Impact of Extension PECO Energy has the right under the Indenture to extend the interest payment period on all Subordinated Debentures for up to 60 consecutive months, and, as a consequence, monthly Distributions on the Series C Preferred Securities may be deferred by PECO Energy Capital during any such Extension Period. Distributions in arrears after the monthly payment date therefor will accumulate additional Distributions thereon at the rate per annum of _____% thereof. In the event PECO Energy exercises its right to extend the interest payment period on the Series C Subordinated Debentures, PECO Energy may not declare dividends on any shares of its capital stock during such Extension Period. See "Description of the Series C Subordinated Debentures and the Indenture--Option to Extend Interest Payment Period." Should an Extension Period occur, a holder of Preferred Trust Receipts will accrue interest income (as original issue discount) on an economic accrual basis in respect of its pro rata share of the Series C Preferred Securities held by the Trust. As a result, a holder of Preferred Trust Receipts will include such interest in gross income for federal income tax purposes in advance of the receipt of cash, and will not receive the cash related to such income from the Trust if the holder disposes of the Preferred Trust Receipts prior to the record date for the payment of Distributions. See "United States Taxation--Taxability of Distributions." PECO Energy has no current intention of exercising its right to defer payments of interest by extending the interest payment period on the Series C Subordinated Debentures. However, should PECO Energy exercise such right in the future, the market price of the Preferred Trust Receipts is likely to be affected. An owner who disposes of Preferred Trust Receipts during an Extension Period might not receive the same return on investment as an owner who continues to hold Preferred Trust Receipts. In addition, as a result of the mere existence of PECO Energy's right to defer interest payments on the Series C Subordinated Debentures, the market price of the Preferred Trust Receipts may be more volatile than other securities that are not subject to such deferrals. Special Event Redemptions Upon the occurrence and continuation of a Tax Event (as defined in "Description of the Series C Preferred Securities--Special Event Redemptions"), the General Partner has the right to redeem the Series C Preferred 5 Securities, in whole or in part, and upon the occurrence of an Investment Company Act Event (as defined in "Description of the Series C Preferred Securities--Special Event Redemptions"), the General Partner must redeem the Series C Preferred Securities in whole but not in part, and in either case, cause a mandatory redemption of the Preferred Trust Receipts at a redemption price equal to the liquidation amount plus accumulated and unpaid Distributions, within 90 days following the occurrence of such Tax Event or Investment Company Event. A holder of Series C Preferred Securities will recognize gain or loss upon such a redemption for federal income tax purposes to the extent that the liquidation amount differs from such holder's adjusted tax basis for the Series C Preferred Securities. Any accumulated and unpaid Distributions also will be taxable to the extent that such holder has not already taken such Distributions into account. See "United States Taxation--Disposition of the Preferred Trust Receipts." Proposed Tax Law Changes In late 1995, President Clinton proposed certain tax law changes that would, among other things, generally deny interest deductions to corporate issuers if the debt instrument has a term exceeding 20 years and is not reflected as indebtedness on such issuer's consolidated balance sheet. Because the term of the Series C Subordinated Debentures exceeds 20 years, this proposal, were it to become effective, would prevent PECO Energy from deducting interest on the Series C Subordinated Debentures. However, on March 29, 1996, the Chairmen of the Senate Finance Committee and the House Ways and Means Committee issued a joint statement to the effect that it was their intention that the effective date of the President's legislative proposals, if adopted, will be no earlier than the date of appropriate Congressional action. The Clinton Administration renewed these proposals as part of its fiscal 1998 budget and would make them effective upon the date of first committee action. The revised proposals as proposed by the Clinton Administration would apply to debt instruments with terms exceeding 15 years. In the opinion of special tax counsel to PECO Energy and PECO Energy Capital, under current law, interest on the Series C Subordinated Debentures is deductible by PECO Energy. There can be no assurance, however, that such proposals, subsequent proposals or final legislation will not affect the ability of PECO Energy to deduct interest on the Series C Subordinated Debentures which in turn could give rise to a Tax Event and, accordingly, the General Partner's optional right to redeem the Series C Preferred Securities, as described under "Description of the Series C Preferred Securities--Special Event Redemptions" and "United States Taxation." Rights Under the Series C Guarantee Under the Series C Guarantee, PECO Energy agrees to pay (i) any accumulated and unpaid Distributions on the Series C Preferred Securities to the extent that PECO Energy Capital has funds on hand legally available therefor, (ii) the redemption price payable with respect to any Series C Preferred Securities called for redemption by PECO Energy Capital to the extent that PECO Energy Capital has funds on hand legally available therefor, and (iii) upon liquidation of PECO Energy Capital, the lesser of (a) the portion of the Partnership Liquidation Distribution (as defined herein) applicable to the Series C Preferred Securities and (b) the amount of assets of PECO Energy Capital legally available for distribution to holders of Series C Preferred Securities in liquidation of PECO Energy Capital. For the purposes hereof "Partnership Liquidation Distribution" shall mean the stated liquidation preference of all Preferred Securities and all accumulated and unpaid Distributions to the date of payment for such series of Preferred Securities. See "Description of the Series C Guarantee--General." If PECO Energy were to default on its obligation to pay amounts payable on the Series C Subordinated Debentures, PECO Energy Capital would lack funds for the payment of Distributions or amounts payable on redemption of the Series C Preferred Securities or upon liquidation of PECO Energy Capital, and, in each such event, holders of Preferred Trust Receipts would not be able to rely upon the Series C Guarantee for payment of such amounts. The holders of Preferred Trust Receipts, together with the holders of Series C Preferred Securities other than the Trust, representing not less than 10% aggregate liquidation preference of the Series C Preferred Securities have the right to direct the time, method and place of conducting any proceeding for any remedy available in respect of the Series C Guarantee, including the right to direct the General Partner or the Special Representative (as defined under "Description of the Series C Preferred Securities--Voting Rights"), as the case may be. If the General Partner or Special Representative fails to enforce the Series C Guarantee, any holder of the Preferred Trust Receipts may institute a legal proceeding directly against PECO Energy to enforce its rights under the Series C Guarantee without first instituting a legal proceeding against PECO Energy Capital or any other person or entity. See "Description of the Series C Guarantee--Status of the Series C Guarantee" and "Description of the Series C Subordinated Debentures and the Indenture--Subordination." 6 Limited Voting Rights Holders of Preferred Trust Receipts have limited voting rights and are only entitled to appoint and authorize a Special Representative to enforce PECO Energy Capital's rights against PECO Energy upon the occurrence of the following: (i) PECO Energy Capital fails to pay Distributions in full on the Preferred Securities for 18 consecutive monthly distribution periods, (ii) an Event of Default (as defined in the Indenture) occurs and is continuing, or (iii) PECO Energy is in default on any of its payment obligations under any Payment and Guarantee Agreement issued by PECO Energy for the benefit of the holders of Preferred Securities (a "Guarantee"). See "Description of the Series C Preferred Securities--Voting Rights." Trading Characteristics of the Preferred Trust Receipts The Preferred Trust Receipts may trade at a price that does not fully reflect the value of accrued but unpaid interest with respect to the Series C Subordinated Debentures. An owner of Preferred Trust Receipts who disposes of Preferred Trust Receipts between record dates for payments of Distributions will nevertheless be required to include accrued but unpaid interest on the Series C Subordinated Debentures through the date of disposition in income as ordinary income and to add such amount to its adjusted tax basis of the Preferred Trust Receipts so disposed. Such owner will recognize a capital loss to the extent the selling price (which may not fully reflect the value of accrued but unpaid interest) is less than its adjusted tax basis (which will include accrued but unpaid interest). Subject to certain limited exceptions, capital losses cannot be applied to offset ordinary income for federal income tax purposes. See "United States Taxation." PECO ENERGY PECO Energy, incorporated in Pennsylvania in 1929, is an operating utility which provides electric and gas service to the public in southeastern Pennsylvania and buys and sells power in the wholesale generation market throughout North America. The total area served by PECO Energy covers 2,107 square miles. Retail electric service is supplied in an area of 1,972 square miles with a population of about 3.6 million, including 1.6 million in the City of Philadelphia. Approximately 94% of the electric service area and 64% of retail kilowatt hour sales are in the suburbs around Philadelphia, and 6% of the service area and 36% of such sales are in the City of Philadelphia. Natural gas service is supplied in a 1,475-square-mile area of southeastern Pennsylvania adjacent to Philadelphia with a population of 1.9 million. PECO ENERGY CAPITAL PECO Energy Capital is a limited partnership formed in 1994 under the laws of the State of Delaware. All of its general partner interests are owned by PECO Energy Capital Corp., a wholly owned subsidiary of PECO Energy, as the General Partner. As a limited partnership, all of the business and affairs of PECO Energy Capital are managed by the General Partner. PECO Energy Capital was created solely for the purpose of issuing the Preferred Securities and lending the proceeds thereof to PECO Energy, and entering into similar financing arrangements. Such loans are evidenced by the Subordinated Debentures issued by PECO Energy in series under the Indenture. The Subordinated Debentures are the only assets of PECO Energy Capital and the only revenues of PECO Energy Capital are interest on the Subordinated Debentures. The General Partner pays all of PECO Energy Capital's operating expenses and has general liability for all of PECO Energy Capital's obligations. THE TRUST PECO Energy Capital Trust II is a statutory business trust recently created under the laws of the State of Delaware. The Trust exists for the sole purpose of issuing the Preferred Trust Receipts representing the Series C Preferred Securities held by the Trust and performing functions directly related thereto. The Series C Preferred Securities are the only assets of the Trust. All expenses and liabilities of the Trust will be paid by the General Partner, provided that if the trustee of the Trust (the "Trustee") incurs fees, charges or expenses for which it is not otherwise liable under the Trust Agreement at the election of a holder of Preferred Trust Receipts or other person, such holder or other person will be liable for such fees, charges and expenses. 7 COVERAGE RATIOS PECO Energy's Ratio of Earnings to Fixed Charges for each of the periods indicated was as follows: Three Months ended Years ended December 31, March 31, - -------------------------------------------------- -------------- 1992 1993 1994 1995 1996 1996 1997 - -------------- ------ ------ ------ ------ ------ ----- 2.43 3.15 2.66 3.41 3.29 3.59 3.24 The Ratio of Earnings to Fixed Charges represents, on a pre-tax basis, the number of times earnings cover fixed charges. Earnings consist of net income to which has been added fixed charges and taxes based on income of PECO Energy. Fixed charges consist of interest on funded indebtedness, other interest, amortization of net gain on reacquired debt and net discount on debt and the interest portion of all rentals charged to income. PECO Energy's Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends for each of the periods indicated was as follows: Three Months ended Years ended December 31, March 31, - -------------------------------------------------- -------------- 1992 1993 1994 1995 1996 1996 1997 - -------------- ------ ------ ------ ------ ------ ----- 2.06 2.67 2.32 3.12 3.04 3.33 2.97 The Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends represents, on a pretax basis, the number of times earnings cover fixed charges and preferred stock dividends. Earnings consist of net income to which has been added fixed charges and taxes based on income of PECO Energy. Combined fixed charges and preferred stock dividends consist of interest on funded indebtedness, other interest, amortization of net gain on reacquired debt and net discount on debt, preferred stock dividends (increased to reflect the pre-tax earnings required to cover such dividend requirements) and the interest portion of all rentals charged to income. USE OF PROCEEDS The net proceeds from the sale of Preferred Trust Receipts will be used by the Trust to purchase the Series C Preferred Securities from PECO Energy Capital. PECO Energy Capital will lend the proceeds from the sale of the Series C Preferred Securities, plus the capital contribution made by the General Partner, to PECO Energy, which loan will be evidenced by the Series C Subordinated Debentures. These funds will be used by PECO Energy in connection with its redemption of $50,000,000 aggregate liquidation value of PECO Energy's outstanding depositary shares each representing a one-fourth interest in a share of $7.96 Cumulative Preferred Stock, after such depositary shares become subject to redemption at the election of PECO Energy on October 1, 1997. DESCRIPTION OF THE PREFERRED TRUST RECEIPTS The following is a summary of certain terms and provisions of the Preferred Trust Receipts and the Trust Agreement. Reference is made to the Trust Agreement which is an exhibit to the Registration Statement of which this Prospectus forms a part. The Preferred Trust Receipts will be issued by the Trust pursuant to the Trust Agreement. Each Preferred Trust Receipt represents a Series C Preferred Security. Each Series C Preferred Security has a stated liquidation preference of $25. The Preferred Trust Receipts will be issued in book-entry form through DTC or such other depository at which PECO Energy may have established an account. Preferred Trust Receipts may be exchanged for the underlying Series C Preferred Securities as described under "--Withdrawal of Series C Preferred Securities." The Trust is a statutory business trust created under the Delaware Business Trust Act. The Trustee will hold the Series C Preferred Securities deposited in the Trust for the benefit of the holders of the Preferred Trust Receipts. The Trust Agreement provides that, to the fullest extent permitted by law, without the need for any 8 other action of any person, including the Trustee and any other holder of Preferred Trust Receipts, each holder of Preferred Trust Receipts shall be entitled to enforce in the name of the Trust the Trust's rights under the Series C Preferred Securities represented by the Preferred Trust Receipts held by such holder. It is anticipated that the assets of the Trust available for distribution to the holders of the Preferred Trust Receipts will be limited to payments from PECO Energy Capital under the Series C Preferred Securities, which payments by PECO Energy Capital will be limited to payments from PECO Energy on the Series C Subordinated Debentures. See "Description of the Series C Subordinated Debentures and the Indenture." If PECO Energy fails to make a payment on the Series C Subordinated Debentures or if PECO Energy Capital fails to make a Distribution on the Series C Preferred Securities, the Trust will not have sufficient funds to make related payments, including Distributions, on the Preferred Trust Receipts. Distributions Whenever the Trust shall receive any cash distribution representing a monthly distribution on the Series C Preferred Securities (whether or not distributed by PECO Energy Capital on the regular monthly distribution date therefor) or payment under the Series C Guarantee in respect thereof, the Trust shall distribute such amounts to the holders of the Preferred Trust Receipts in proportion to the respective number of Series C Preferred Securities represented by such Preferred Trust Receipts. Under the Indenture, PECO Energy shall have the right at any time, so long as an Event of Default under the Indenture has not occurred and is continuing, to extend the interest payment period for all Subordinated Debentures for up to 60 consecutive months; provided that no Extension Period shall extend beyond the stated maturity date or date of redemption of any series of Subordinated Debentures. At the end of the Extension Period, PECO Energy shall pay all interest then accrued and unpaid on such Subordinated Debentures (together with interest thereon to the extent permitted by applicable law at the rate per annum borne by such Subordinated Debentures). During any Extension Period, no Distributions will be made on the Series C Preferred Securities represented by the Preferred Trust Receipts; however, all accrued and unpaid Distributions (together with any applicable Distributions on such Distributions) shall be paid at the end of the Extension Period. See "Description of the Series C Subordinated Debentures and the Indenture--Option to Extend Interest Payment Period." Redemption of Preferred Trust Receipts Whenever PECO Energy Capital shall elect or is required to redeem Series C Preferred Securities in accordance with the Amended and Restated Limited Partnership Agreement of PECO Energy Capital, dated as of July 25, 1994, as amended (the "Partnership Agreement"), PECO Energy Capital shall give the Trustee at least 40 days' prior notice thereof. The Trustee will mail the notice of redemption not less than 30 nor more than 60 days prior to the date fixed for redemption of the Series C Preferred Securities and the Preferred Trust Receipts to the holders of the Preferred Trust Receipts. On the date of redemption of the Series C Preferred Securities, provided that PECO Energy Capital (or PECO Energy pursuant to the Series C Guarantee) shall have deposited with the Trustee the aggregate amount payable upon redemption of all Series C Preferred Securities held by the Trust to be redeemed, the Trustee shall redeem Preferred Trust Receipts representing the same number of such Series C Preferred Securities redeemed by PECO Energy Capital at the same redemption price at which such Series C Preferred Securities are redeemed. In the event that fewer than all the outstanding Preferred Trust Receipts are redeemed, the Preferred Trust Receipts to be redeemed shall be selected by lot or pro rata or other equitable method determined by the Trustee. Under the Trust Agreement, PECO Energy Capital agrees that if a partial redemption of the Series C Preferred Securities would result in a delisting of the Preferred Trust Receipts from any national exchange on which the Preferred Trust Receipts are then listed, PECO Energy Capital will only redeem the Series C Preferred Securities in whole. Payments on Liquidation of PECO Energy Capital Upon receipt by the Trust of any distribution from PECO Energy Capital upon liquidation of PECO Energy Capital (or payment by PECO Energy under the Series C Guarantee in respect thereof), after satisfaction of creditors of the Trust as required by applicable law, the Trustee shall distribute to the holders of the Preferred Trust Receipts such amounts in proportion to the respective number of Series C Preferred Securities represented by such Preferred Trust Receipts. 9 Withdrawal of Series C Preferred Securities Any beneficial owner of Preferred Trust Receipts may withdraw all, but not less than all, of the Series C Preferred Securities represented by such Preferred Trust Receipts by providing a written notice and agreement to be bound by the terms of the Partnership Agreement to the Trustee, with evidence of beneficial ownership in form satisfactory to the Trustee. Within a reasonable period after such request has been made, the Trustee shall instruct DTC to reduce the number of Preferred Trust Receipts represented by the global certificate held by DTC by the amount equal to the number of Preferred Trust Receipts to be so withdrawn by the withdrawing owner, the Trustee shall issue to the withdrawing owner a certificate representing the number of Series C Preferred Securities so withdrawn and the Trustee shall reduce the number of Series C Preferred Securities represented by the global certificate held by the Trustee by a like amount; provided, that the Trustee shall not issue any fractional number of Series C Preferred Securities. The Series C Preferred Securities will only be issued in certificated form. Any holder of Series C Preferred Securities may redeposit withdrawn Series C Preferred Securities by delivery to the Trustee of a certificate or certificates for the Series C Preferred Securities to be deposited, properly endorsed or accompanied, if required by the Trustee, by a properly executed instrument of transfer or endorsement in form satisfactory to the Trustee and in compliance with the terms of the Partnership Agreement, together with all such certifications as may be required by the Trustee in its sole discretion and in accordance with the provisions of the Trust Agreement. Within a reasonable period after such deposit is properly made, the Trustee shall instruct DTC to increase the number of Preferred Trust Receipts represented by the global certificate held by DTC by an amount equal to the Series C Preferred Securities to be deposited. The Preferred Trust Receipts will not be issued in certificated form. Voting Rights If the holders of the Preferred Partner Interests (as defined in the Partnership Agreement), acting as a single class, are entitled to appoint and authorize a Special Representative pursuant to the Partnership Agreement, the Trustee shall notify the holders of the Preferred Trust Receipts of such right, request direction of each holder of a Preferred Trust Receipt as to the appointment of a Special Representative and vote the Series C Preferred Securities represented by such Preferred Trust Receipt in accordance with such direction. If the General Partner fails to convene a general meeting of PECO Energy Capital as required in the Partnership Agreement, the Trustee shall notify the holders of the Preferred Trust Receipts and, if so directed by the holders of the Preferred Trust Receipts representing Preferred Securities constituting at least 10% of the aggregate stated liquidation preference of the outstanding Preferred Partner Interests, shall convene such meeting. Under the Trust Agreement, PECO Energy Capital has agreed that without the consent of the holders of 66 2/3% in liquidation amount of the Preferred Trust Receipts, it may not consolidate, amalgamate, merge with or into, or be replaced by, or convey, transfer or lease its properties and assets substantially as an entirety to any corporation or other entity if, as a result, the Preferred Trust Receipts would be delisted by any national securities exchange or other organization on which the Preferred Trust Receipts are then listed, downgraded by any "nationally recognized statistical rating organization," as that term is defined by the SEC for purposes of Rule 436(g)(2) under the Securities Act of 1933, as amended (the "Securities Act"), or the holders thereof would recognize any gain or loss for federal income tax purposes as a result of such consolidation, amalgamation, merger, conveyance or transfer. Upon receipt of notice of any meeting at which the holders of Series C Preferred Securities are entitled to vote, the Trustee shall, as soon as practicable thereafter, mail to the holders of Preferred Trust Receipts a notice, which shall be provided by the General Partner and which shall contain (i) such information as is contained in such notice of meeting, (ii) a statement that the holders of Preferred Trust Receipts will be entitled, subject to any applicable provision of law, to instruct the Trustee as to the exercise of the voting rights pertaining to the amount of Series C Preferred Securities represented by their respective Preferred Trust Receipts, and (iii) a brief statement as to the manner in which such instructions may be given. Upon the written request of a holder of a Preferred Trust Receipt, the Trustee shall vote or cause to be voted the number of Series C Preferred Securities represented by such Preferred Trust Receipts in accordance with the instructions set forth in such request. 10 Amendment and Termination of Trust Agreement PECO Energy Capital or the General Partner may, and the Trustee shall, at any time and from time to time enter into one or more agreements supplemental to the Trust Agreement without the consent of the holders of the Preferred Trust Receipts: (i) to evidence the succession of another partnership, corporation or other entity to PECO Energy Capital or the General Partner and the assumption by any such successor of the covenants of PECO Energy Capital or the General Partner in the Trust Agreement; (ii) to add to the covenants of PECO Energy Capital or the General Partner for the benefit of the holders of the Preferred Trust Receipts, or to surrender any right or power herein conferred upon PECO Energy Capital or the General Partner; (iii) to correct or supplement any provision in the Trust Agreement which may be defective or inconsistent with any other provision therein or to make any other provisions with respect to matters or questions arising under the Trust Agreement, provided, that any such action shall not materially adversely affect the interests of the holders of Preferred Trust Receipts; or (iv) to cure any ambiguity or correct any mistake. Any other amendment of the Trust Agreement must be approved by the holders of 66 2/3% of the Preferred Trust Receipts. The Trust Agreement shall terminate upon the redemption of the Preferred Trust Receipts or a final distribution in respect of the Series C Preferred Securities and such distribution has been delivered to the holders of the Preferred Trust Receipts. Expenses of the Trust All charges or expenses of the Trust, including the charges and expenses of the Trustee, will be paid by the General Partner, provided that if the Trustee incurs fees, charges or expenses for which it is not otherwise liable under the Trust Agreement, at the election of a holder of Preferred Trust Receipts or other person, such holder or other person will be liable for such fees, charges and expenses. Resignation and Removal of the Trustee The Trust shall at all times have a Trustee which is a bank that has its principal place of business in the State of Delaware having a combined capital and surplus of $50,000,000. If the Trustee ceases to be eligible, it will resign. The Trustee may at any time resign as trustee under the Trust Agreement by notice of its election to do so delivered to PECO Energy Capital and the General Partner, such resignation to take effect upon the appointment of a successor trustee and its acceptance of such appointment as hereinafter provided. The Trustee may at any time be removed by PECO Energy Capital by notice of such removal delivered to the Trustee, such removal to take effect upon the appointment of a successor trustee and its acceptance of such appointment. In case at any time the Trustee shall resign or be removed, PECO Energy Capital shall, within 45 days after the delivery of the notice of resignation or removal, as the case may be, appoint a successor trustee, which shall be a bank or trust company, or an affiliate of a bank or trust company, having its principal office in the State of Delaware and having a combined capital and surplus of at least $50,000,000. Book-Entry-Only Issuance--The Depository Trust Company DTC will initially act as securities depositary for all of the Preferred Trust Receipts. The Preferred Trust Receipts will be issued only as fully-registered securities registered in the name of Cede & Co. (DTC's nominee) as the holder thereof. One or more fully-registered global securities will be issued for the Preferred Trust Receipts and will be deposited with DTC. The Preferred Trust Receipts will not be available in certificated form. DTC is a limited purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code and a "clearing agency" registered pursuant to the provisions of Section 17A of the Exchange Act. DTC holds securities that its participants ("Participants") deposit with DTC. DTC also facilitates the settlement among Participants of securities transactions, such as transfers and pledges, in deposited securities through electronic computerized book-entry changes in Participants' accounts, thereby eliminating the need for physical movement of securities certificates. 11 Direct participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations ("Direct Participants"). DTC is owned by a number of its Direct Participants and by the New York Stock Exchange, the American Stock Exchange, Inc. and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as securities brokers and dealers, banks and trust companies that clear through or maintain custodial relationships with Direct Participants, either directly or indirectly ("Indirect Participants"). The rules applicable to DTC and its Participants are on file with the SEC. Purchases of Preferred Trust Receipts within the DTC system must be made by or through Direct Participants, which will receive a credit for the Preferred Trust Receipts on DTC's records. The ownership interest of each actual purchaser of each Preferred Trust Receipt ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchases, but Beneficial Owners are expected to receive written confirmations providing details of the transactions, as well as periodic statements of their holdings, from the Direct or Indirect Participants through which the Beneficial Owners purchased Preferred Trust Receipts. Transfers of ownership interests in the Preferred Trust Receipts are to be accomplished by entries made on the books of Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Preferred Trust Receipts, except in the event that use of the book-entry system for the Preferred Trust Receipts is discontinued. DTC has no knowledge of the actual Beneficial Owners of the Preferred Trust Receipts; DTC's records reflect only the identity of the Direct Participants to whose accounts such Preferred Trust Receipts are credited, which may or may not be the Beneficial Owners. The Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants and by Direct and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Redemption notices shall be sent to Cede & Co. as the registered holder of the Preferred Trust Receipts. If less than all of the Preferred Trust Receipts are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant to be redeemed. Although voting with respect to the Preferred Trust Receipts is limited to the holders of record of the Preferred Trust Receipts, in those instances in which a vote is required, neither DTC nor Cede & Co. will itself consent or vote with respect to the Preferred Trust Receipts. Under its usual procedures, DTC would mail an omnibus proxy (the "Omnibus Proxy") to the Trustee as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts such Preferred Trust Receipts are credited on the record date (identified in a listing attached to the Omnibus Proxy). Distributions on the Preferred Trust Receipts will be made in immediately available funds by the Trustee on behalf of the Trust to DTC. DTC's practice is to credit Direct Participants' accounts on the relevant payment date in accordance with their respective holdings shown on DTC's records unless DTC has reason to believe that it will not receive payments on such payment date. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices will be the responsibility of such Participant and not of DTC, the Trustee, the Trust or PECO Energy, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of Distributions to DTC is the responsibility of the Trustee on behalf of the Trust, disbursement of such payments to Direct Participants is the responsibility of DTC and disbursements of such payments to the Beneficial Owners is the responsibility of the Direct and Indirect Participants. DTC may discontinue providing its services as securities depositary with respect to the Preferred Trust Receipts at any time by giving reasonable notice to the Trustee and PECO Energy. In the event that a successor securities depositary is not obtained, definitive Preferred Trust Receipt certificates representing such Preferred Trust Receipts are required to be printed and delivered. PECO Energy, at its option, may decide to discontinue use of the system of book-entry transfers through DTC (or a successor depositary) as a result of such discontinuance or as a result of DTC's ineligibility to so act, in which case definitive certificates for such Preferred Trust Receipts will be issued. Upon distribution of definitive Preferred Trust Receipts certificates, owners of such Preferred Trust Receipts will become the registered holders of such Preferred Trust Receipts. 12 The information set forth above concerning DTC and DTC's book-entry system has been obtained from sources that PECO Energy Capital and PECO Energy believe to be accurate, but PECO Energy Capital and PECO Energy assume no responsibility for the accuracy thereof. None of the Trust, PECO Energy Capital nor PECO Energy has any responsibility for the performance by DTC or its Participants of their respective obligations as described herein or under the rules and procedures governing their respective operations. In the event that the book-entry-only system is discontinued, the Trustee shall keep the registration books for such Preferred Trust Receipts at its corporate office. Such Preferred Trust Receipts may be transferred or exchanged for one or more Preferred Trust Receipts upon surrender thereof at the corporate office of the Trustee by the holders or their duly authorized attorneys or legal representatives. Upon surrender of any Preferred Trust Receipts to be transferred or exchanged, the Trustee shall record the transfer or exchange in the registration books and shall deliver new Preferred Trust Receipts appropriately registered. The Trustee shall not be required to register the transfer of any Preferred Trust Receipts that have been called for redemption on or after the liquidation date of PECO Energy Capital. The Trust and the Trustee shall be entitled to treat the holders of the Preferred Trust Receipts, as their names appear in the registration books, as the owners of those Preferred Trust Receipts for all purposes under the Trust Agreement. DESCRIPTION OF THE SERIES C PREFERRED SECURITIES The following is a summary of certain terms and provisions of the Series C Preferred Securities represented by the Preferred Trust Receipts. Reference is made to the Partnership Agreement which is an exhibit to the Registration Statement of which this Prospectus forms a part. General Under the Partnership Agreement, PECO Energy Capital is authorized to issue two classes of partner interests: the Preferred Securities representing limited partner interests, including the Series C Preferred Securities, and general partner interests. All of the general partner interests of PECO Energy Capital are owned by the General Partner, which is a wholly owned subsidiary of PECO Energy. All of the Preferred Securities issued by PECO Energy Capital will be of equal rank in participation in the profits and assets and income of PECO Energy Capital. The Partnership Agreement authorizes the General Partner to establish series of Preferred Securities having such designations, rights, privileges, restrictions and other terms and provisions as the General Partner may determine. Distributions on all series of Preferred Securities must be paid in full before the General Partner may participate in the profits or assets of PECO Energy Capital. Distributions The Series C Preferred Securities will be entitled to Distributions out of funds on hand legally available therefor held by PECO Energy Capital at the annual rate of ____% of the stated liquidation preference of $25, payable monthly in arrears on the last day of each calendar month. Distributions on the Series C Preferred Securities will be cumulative, will accrue from the original date of issuance, and, except as otherwise described below, will be payable monthly in arrears, on the last day of each month of each year, commencing on June 30, 1997. Distributions in arrears after the monthly payment date therefor will accumulate additional Distributions thereon at the rate of ____% per annum. PECO Energy Capital has issued Series A Preferred Securities and Series B Preferred Securities, which have an aggregate stated liquidation preference of $221,250,000 and $78,104,575, respectively. The General Partner may make distributions on the general partner interests of PECO Energy Capital only after payment in full of all Distributions accrued on the Series C Preferred Securities and any other outstanding Preferred Securities of PECO Energy Capital. 13 PECO Energy has the right under the Indenture to extend the interest payment period from time to time on all Subordinated Debentures to a period not exceeding 60 consecutive months; provided that such Extension Period shall not extend beyond the stated maturity date or redemption date of any series of Subordinated Debentures, including the Series C Subordinated Debentures. As a consequence, monthly Distributions on the Series C Preferred Securities would be deferred (but would continue to accumulate with Distributions thereon) by PECO Energy Capital during any such Extension Period. In the event that PECO Energy exercises its right to extend the interest payment period on the Subordinated Debentures, PECO Energy may not declare or pay dividends on, or redeem, purchase or acquire, any of its capital stock during the Extension Period. PECO Energy Capital and PECO Energy currently believe that the extension of an interest payment period is unlikely. Prior to the termination of any such Extension Period, PECO Energy may further extend the interest payment period, provided that such Extension Period together with all such previous and further extensions thereof may not exceed 60 consecutive months. Upon the termination of any Extension Period and the payment of all amounts then due on all series of Subordinated Debentures, PECO Energy may elect to extend the interest payment period again, subject to the above requirements. Following an Extension Period of 18 months or more, the holders of Preferred Securities, including the Series C Preferred Securities, shall have the right to appoint a Special Representative to enforce PECO Energy Capital's rights against PECO Energy under the Subordinated Debentures and the Indenture and the obligations of PECO Energy under the Guarantees. See "--Voting Rights," "Risk Factors," and "Description of the Series C Subordinated Debentures and the Indenture--Option to Extend Interest Payment Period" and "--Interest." Distributions on the Series C Preferred Securities must be paid by PECO Energy Capital in any calendar year or portion thereof to the extent that PECO Energy Capital has funds on hand legally available therefor. It is anticipated that the funds available for distribution by PECO Energy Capital will be limited to payments received by PECO Energy Capital in respect of the Series C Subordinated Debentures. See "Description of the Series C Subordinated Debentures and the Indenture." The amount of Distributions payable for any period will be computed on the basis of twelve 30-day months and a 360-day year and, for any period shorter than a full monthly distribution period, will be computed on the basis of the actual number of days elapsed in such period. Distributions on the Series C Preferred Securities will be made to the holders thereof as they appear on the books and records of PECO Energy Capital on the relevant record dates, which will be the 15th day of each month. If any date on which Distributions are payable on the Series C Preferred Securities is not a business day, then payment of the Distributions payable on such date will be made on the next succeeding day that is a business day (and without any interest or other payment in respect of any such delay) except that, if such business day is in the next succeeding calendar year, such payment shall be made on the immediately preceding business day, in each case with the same force and effect as if made on such date. The term "business day," as used in relation to the Series C Preferred Securities, shall mean any day other than a day on which banking institutions in the City of New York or the State of Delaware are authorized or required by law to close. Certain Restrictions on PECO Energy Capital If distributions have not been paid in full on any series of Preferred Securities of PECO Energy Capital, PECO Energy Capital shall not: (i) pay any distributions on any other series of Preferred Securities, unless the amount of any distributions paid on any Preferred Securities is paid on all Preferred Securities then outstanding on a pro rata basis in proportion to the full distributions to which each series of Preferred Securities would be entitled if paid in full; (ii) pay any distribution on the general partner interests; or (iii) redeem, purchase or otherwise acquire any Preferred Securities or the general partner interests; until, in each case, such time as all accumulated and unpaid distributions on all series of Preferred Securities shall have been paid in full for all prior distribution periods. Optional Redemption The Series C Preferred Securities are subject to redemption, at the option of the General Partner, in whole or in part, from time to time, on or after June ___, 2002, at $25 per Series C Preferred Security, plus accumulated and unpaid Distributions (whether or not declared), if any, to the date fixed for redemption (the "Redemption Price"). 14 Mandatory Redemption If at any time PECO Energy redeems the Series C Subordinated Debentures or pays the Series C Subordinated Debentures at maturity, the Series C Preferred Securities will be subject to mandatory redemption at the Redemption Price. The Series C Preferred Securities will not be entitled to any sinking fund. Special Event Redemptions If a Tax Event (as defined below) shall occur and be continuing, the Series C Preferred Securities will be subject to redemption, at the option of the General Partner, in whole or in part at the Redemption Price within 90 days following the occurrence of such Tax Event. "Tax Event" means that PECO Energy Capital shall have received an opinion of counsel (which may be regular counsel to PECO Energy or an affiliate but not an employee thereof) experienced in such matters to the effect that, as a result of any amendment to, or change (including any announced prospective change) in, the laws (or any regulations thereunder) of the United States or any political subdivision or taxing authority thereof or therein affecting taxation, or as a result of any official administrative pronouncement or judicial decision interpreting or applying such laws or regulations, which amendment or change is effective or such interpretation or pronouncement is announced on or after the date of issuance of the Series C Preferred Securities, there is more than an insubstantial risk that (i) PECO Energy Capital is subject to federal income tax with respect to interest received on the Series C Subordinated Debentures or PECO Energy Capital will otherwise not be taxed as a partnership, (ii) interest payable by PECO Energy on the Series C Subordinated Debentures will not be deductible for federal income tax purposes or (iii) PECO Energy Capital is subject to more than a de minimis amount of other taxes, duties or other governmental charges. If an Investment Company Event (as defined below) shall occur and be continuing, the Series C Preferred Securities will be subject to mandatory redemption in whole at the Redemption Price within 90 days following the occurrence of such Investment Company Event. "Investment Company Event" means the occurrence of a change in law or regulation or a change in official interpretation of law or regulation by any legislative body, court, governmental agency or regulatory authority (a "Change in 1940 Act Law") to the effect that PECO Energy Capital is or will be considered an "Investment Company" which is required to be registered under the Investment Company Act of 1940, as amended (the "1940 Act"), which Change in 1940 Act Law becomes effective on or after the date of the issuance of the Series C Preferred Securities; provided, that no Investment Company Event shall be deemed to have occurred if PECO Energy Capital has received an opinion of counsel (which may be regular counsel to PECO Energy or any affiliate but not an employee thereof) experienced in such matters, to the effect that PECO Energy Capital and/or PECO Energy has taken reasonable measures, in its discretion, to avoid such Change in 1940 Act Law so that notwithstanding such Change in 1940 Act Law, PECO Energy Capital is not required to be registered as an "Investment Company" within the meaning of the 1940 Act. Redemption Procedures PECO Energy Capital may not redeem any Series C Preferred Securities unless all accumulated and unpaid Distributions have been paid on all Series C Preferred Securities for all monthly distribution periods terminating on or prior to the date of redemption. Notice of any redemption of the Series C Preferred Securities will be given by PECO Energy Capital by mail or delivery to each record holder of Series C Preferred Securities to be redeemed not fewer than 30, nor more than 60 days prior to the date fixed for redemption thereof (at least 40 days' prior for notice to the Trust). A notice of redemption shall be deemed to be given on the day such notice is first mailed by first-class mail, postage prepaid, or on the date it was delivered in person, receipt acknowledged to the holders of such Series C Preferred Securities. Notices of redemption shall be addressed to the record holders of the Series C Preferred Securities at the addresses of the holders appearing in the books and records of PECO Energy Capital. If notice of redemption shall have been given and payment shall have been made by PECO Energy Capital to the Trust and any other holder of Series C Preferred Securities, then, upon the date of such payment all rights of owners of the Series C Preferred Securities so called for redemption will cease. In the event that any date fixed for redemption of Series C Preferred Securities is not a business day, then payment of the Redemp- 15 tion Price payable on such date will be made on the next succeeding day which is a business day (and without any interest or other payment in respect of any such delay), except that if such business day falls in the next succeeding calendar year, such payment will be made on the immediately preceding business day (in each case with the same force and effect as if made on such day). Liquidation Distribution In the event of any voluntary or involuntary dissolution and winding up of PECO Energy Capital, the holders of the Preferred Securities will be entitled to receive out of the assets of PECO Energy Capital, after satisfaction of liabilities to creditors as required by Delaware law and before any distribution of assets is made to holders of its general partner interests, the lesser of the Partnership Liquidation Distribution or the amount of assets of PECO Energy Capital legally available for distribution to the holders of Preferred Securities. All assets of PECO Energy Capital remaining after payment thereof will be distributed to the General Partner. If, upon such liquidation, the Partnership Liquidation Distribution can be paid only in part because PECO Energy Capital has insufficient assets available to pay in full the aggregate Partnership Liquidation Distribution on all Preferred Securities, then the amounts payable on each series of Preferred Securities shall be paid on a pro rata basis, in proportion to the full Partnership Liquidation Distribution to which each series of Preferred Securities would be otherwise entitled. Pursuant to the Partnership Agreement, PECO Energy Capital shall be dissolved and its affairs shall be wound up upon the occurrence of any of the following events: (i) upon the expiration of PECO Energy Capital in 2093, (ii) upon the withdrawal, removal or bankruptcy of the General Partner or the occurrence of any other event that under applicable law causes PECO Energy Capital Corp. to cease to be the General Partner, except for a transfer to a permitted successor of the General Partner or as otherwise provided in the Partnership Agreement, (iii) the entry of a decree of judicial dissolution, or (iv) the written consent of the General Partner and all of the holders of the Preferred Securities. Upon such dissolution, PECO Energy is required to redeem all series of Subordinated Debentures to fund the Partnership Liquidation Distribution. The amount per share payable on the Series C Preferred Securities in the event of any voluntary or involuntary liquidation of PECO Energy Capital is $25 plus accumulated and unpaid Distributions. Merger, Consolidation, etc. of PECO Energy Capital PECO Energy Capital may not consolidate, amalgamate, merge with or into, or be replaced by, or convey, transfer or lease its properties and assets substantially as an entirety to any corporation or other entity, except with the approval of the General Partner and the holders of 662/3% in aggregate stated liquidation preference of the outstanding Preferred Securities or as otherwise described below. The General Partner may, without the consent of the holders of the Preferred Securities, cause PECO Energy Capital to consolidate, amalgamate, merge with or into, or be replaced by, or convey, transfer or lease its properties and assets substantially as an entirety to, a corporation, a limited liability company or a limited partnership, a trust or other entity organized as such under the laws of any state of the United States of America or the District of Columbia, provided that (i) such successor entity either (x) expressly assumes all of the obligations of PECO Energy Capital under the Preferred Securities or (y) substitutes for the Preferred Securities other securities having substantially the same terms as the Preferred Securities (the "Successor Securities") so long as the Successor Securities rank, as regards participation in the profits and assets of the successor entity, at least as high as the Preferred Securities rank, as regards participation in the profits and assets of PECO Energy Capital, (ii) PECO Energy confirms its obligations under the Guarantees with regard to the Successor Securities, if any, (iii) such consolidation, amalgamation, merger, replacement, conveyance, transfer or lease does not cause any series of Preferred Securities or Successor Securities to be delisted by any national securities exchange or other organization on which such series of Preferred Securities is then listed, (iv) such consolidation, amalgamation, merger, replacement, conveyance, transfer or lease does not cause the Preferred Securities or Successor Securities to be downgraded by any "nationally recognized statistical rating organization," as that term is defined by the SEC for purposes of Rule 436(g)(2) under the Securities Act, (v) such consolidation, amalgamation, merger, replacement, conveyance, transfer or lease does not adversely affect the powers, preferences and other special rights of holders of Preferred Securities or Successor Securities in any material respect, (vi) such successor entity has a purpose substantially identical to 16 that of PECO Energy Capital and (vii) prior to such consolidation, amalgamation, merger, replacement, conveyance, transfer or lease, PECO Energy has received an opinion of counsel (which may be regular tax or other counsel to PECO Energy or an affiliate, but not an employee thereof) experienced in such matters to the effect that (w) holders of outstanding Preferred Securities will not recognize any gain or loss for federal income tax purposes as a result of the consolidation, amalgamation, merger, replacement, conveyance, transfer or lease, (x) such successor entity will be treated as a partnership for federal income tax purposes, (y) following such consolidation, amalgamation, merger, replacement, conveyance, transfer or lease, PECO Energy and such successor entity will be in compliance with the 1940 Act without registering thereunder as an investment company, and (z) such consolidation, amalgamation, merger, replacement, conveyance, transfer or lease will not adversely affect the limited liability of holders of Preferred Securities or Successor Securities. Voting Rights Except as provided below and under "--Merger, Consolidation, etc. of PECO Energy Capital" and "Description of the Series C Guarantee--Amendments" and as otherwise required by law and the Partnership Agreement, the holders of the Series C Preferred Securities have no voting rights. If (i) PECO Energy Capital fails to pay Distributions in full on the Preferred Securities for 18 consecutive monthly distribution periods, (ii) an Event of Default (as defined in the Indenture) occurs and is continuing, or (iii) PECO Energy is in default on any of its payment obligations under any Guarantee, then the holders of the Preferred Securities, acting as a single class, will be entitled by a vote of the majority of the aggregate stated liquidation preference of the outstanding Preferred Securities to appoint a special representative (the "Special Representative") to enforce PECO Energy Capital's rights against PECO Energy under the Subordinated Debentures and the Indenture and the obligations undertaken by PECO Energy under the Guarantees issued in conjunction with the issuance of the Preferred Securities, including, after failure to pay Distributions for 60 consecutive monthly distribution periods on the Preferred Securities, the payment of Distributions on the Preferred Securities. The Special Representative shall not be admitted as a partner of PECO Energy Capital or otherwise be deemed a partner of PECO Energy Capital and shall have no liability for the debts, obligations or liabilities of PECO Energy Capital. For purposes of determining whether PECO Energy Capital has failed to pay Distributions in full for 18 consecutive monthly distribution periods, Distributions shall be deemed to remain in arrears, notwithstanding any payments in respect thereof, until full cumulative Distributions on all Preferred Securities have been or contemporaneously are paid with respect to all monthly distribution periods terminating on or prior to the date of payment of such full cumulative Distributions. Subject to the requirements of applicable law, not later than 30 days after such right to appoint the Special Representative, the General Partner will convene a general meeting for the above purpose. If the General Partner fails to convene such meeting within such 30-day period, the holders of 10% of the aggregate stated liquidation preference of the Preferred Securities will be entitled to convene such meeting. The provisions of the Partnership Agreement relating to the convening and conduct of the general meetings of security holders will apply with respect to any such meeting. Any Special Representative so appointed shall vacate office immediately if PECO Energy Capital (or PECO Energy pursuant to a Guarantee) shall have paid in full all accumulated and unpaid Distributions on the Preferred Securities or such Event of Default under the Indenture or default under the Guarantee or breach, as the case may be, shall have been cured. Notwithstanding the appointment of any such Special Representative, PECO Energy retains all rights under the Indenture, including the right to extend the interest payment period on the Subordinated Debentures. If any proposed amendment to the Partnership Agreement provides for, or the General Partner otherwise proposes to effect, any action which would materially adversely affect the powers, preferences or special rights attached to any series of Preferred Securities, whether by way of amendment to the Partnership Agreement or otherwise, then the holders of such series of Preferred Securities will be entitled to vote on such amendment or action of the General Partner (but not on any other amendment or action) and, in the case of an amendment or action which would equally adversely affect the rights or preferences of any other Preferred Securities, such Preferred Securities shall vote together as a class on such amendment or action of the General Partner (but not on any other amendment or action), and such amendment or action shall not be effective except with the approval 17 of the holders of not less than 662/3% of the aggregate stated liquidation preference of such series of Preferred Securities. Except in certain circumstances described under "--Liquidation Distribution," PECO Energy Capital will be dissolved and wound up only with the consent of the holders of all Preferred Securities then outstanding as well as the General Partner. The powers, preferences or special rights attached to any Preferred Securities will be deemed not to be adversely affected by the creation or issue of, and no vote will be required for the creation or issue of, any additional series of Preferred Securities or additional general partner interests. Holders of Preferred Securities have no preemptive rights. So long as any series of Subordinated Debentures are held by PECO Energy Capital, the General Partner, unless so directed by the Special Representative, shall not (i) direct the time, method and place of conducting any proceeding for any remedy available to the holder of the Subordinated Debentures or the Trustee under the Indenture (the "Indenture Trustee"), or executing any trust or power conferred on the Indenture Trustee, (ii) waive any past default which is available under the Indenture, (iii) exercise any right to rescind or annul a declaration that the principal of all the Subordinated Debentures shall be due and payable or (iv) consent to any amendment, modification or termination of the Indenture, where such consent shall be required, without, in each case, obtaining the prior approval of the holders of at least 662/3% in aggregate stated liquidation preference of all series of Preferred Securities affected thereby, acting as a single class; provided, however, that where a consent under the Indenture would require the consent of each holder affected thereby, no such consent shall be given by the General Partner without the prior consent of each holder of all series of Preferred Securities affected thereby. The General Partner shall not revoke any action previously authorized or approved by a vote of any series of Preferred Securities. The General Partner shall notify all holders of the Preferred Securities of any notice of default received from the Indenture Trustee with respect to any series of Subordinated Debentures. Any required approval of holders of Preferred Securities may be given at a separate meeting of such holders convened for such purposes, at a meeting of all partners of PECO Energy Capital or pursuant to written consent. PECO Energy Capital will cause a notice of any meeting at which holders of any series of Preferred Securities are entitled to vote, or of any matter upon which action by written consent of such holders is to be taken, to be mailed to each holder of record of such series of Preferred Securities. Each such notice will include a statement setting forth (i) the date of such meeting or the date by which such action is to be taken, (ii) a description of any resolution proposed for adoption at such meeting on which such holders are entitled to vote or of such matter upon which written consent is sought and (iii) instructions for the delivery of proxies or consents. The holders of the Preferred Securities will have no rights to remove or replace the General Partner. Miscellaneous The General Partner is authorized and directed to use its best efforts to manage the affairs of PECO Energy Capital in such a way that PECO Energy Capital would not be deemed to be an "investment company" required to be registered under the 1940 Act or taxed as a corporation for federal income tax purposes and so that all series of Subordinated Debentures will be treated as indebtedness of PECO Energy for federal income tax purposes. In this connection, the General Partner is authorized to take any action not inconsistent with applicable law, the Certificate of Limited Partnership of PECO Energy Capital or the Partnership Agreement, and that does not materially adversely affect the interests of holders of Preferred Securities, that the General Partner determines in its discretion to be necessary or desirable for such purposes. PECO Energy Capital may not borrow money or issue debt or mortgage or pledge any of its assets. DESCRIPTION OF THE SERIES C GUARANTEE The following is a summary of certain provisions of the Series C Guarantee which will be executed and delivered by PECO Energy concurrently with the issuance of the Series C Preferred Securities. Reference is made to the Series C Guarantee, which is filed as an exhibit to the Registration Statement of which this Prospectus forms a part. 18 General Under the Series C Guarantee, PECO Energy will agree to pay (i) any accumulated and unpaid Distributions on the Series C Preferred Securities to the extent that PECO Energy Capital has funds on hand legally available therefor, (ii) the Redemption Price payable with respect to any Series C Preferred Securities called for redemption by PECO Energy Capital to the extent that PECO Energy Capital has funds on hand legally available therefor and (iii) upon a liquidation of PECO Energy Capital, the lesser of (a) the portion of the Partnership Liquidation Distribution applicable to the Series C Preferred Securities and (b) the amount of assets of PECO Energy Capital legally available for distribution to holders of Series C Preferred Securities in liquidation of PECO Energy Capital (collectively, the "Guarantee Payments"). PECO Energy will agree to pay the Guarantee Payments, as and when due (except to the extent paid by PECO Energy Capital), to the fullest extent permitted by law, regardless of any defense, right of setoff or counterclaim which PECO Energy may have or assert against PECO Energy Capital, the General Partner, the Trust or the Trustee. PECO Energy's obligation to make a Guarantee Payment may be satisfied by direct payment of the required amounts by PECO Energy to the holders of Series C Preferred Securities or by causing PECO Energy Capital to pay such amounts to such holders. Status of the Series C Guarantee The Series C Guarantee will constitute an unsecured obligation of PECO Energy and will rank subordinate and junior in right of payment to all general liabilities of PECO Energy. The Series C Guarantee will constitute a guarantee of payment and not of collection. The Series C Guarantee will be held by the General Partner for the benefit of the holders of the Series C Preferred Securities. In the event of the appointment of a Special Representative, the Special Representative may enforce the Series C Guarantee. If no Special Representative has been appointed to enforce the Series C Guarantee, the General Partner has the right to enforce the Series C Guarantee on behalf of the holders of the Series C Preferred Securities. The holders of Preferred Trust Receipts, together with the holders of the Series C Preferred Securities other than the Trust, representing not less than 10% in aggregate stated liquidation preference of the Series C Preferred Securities have the right to direct the time, method and place of conducting any proceeding to enforce any remedy available in respect of the Series C Guarantee, including the giving of directions to the General Partner or the Special Representative, as the case may be. If the General Partner or the Special Representative fails to enforce the Series C Guarantee as above provided, any holder of Preferred Trust Receipts representing Series C Preferred Securities, and any holder of Series C Preferred Securities other than the Trust, may institute a legal proceeding directly against PECO Energy to enforce its rights under the Series C Guarantee without first instituting a legal proceeding against PECO Energy Capital or any other person or entity. The Series C Guarantee will not be discharged except by payment of the Guarantee Payments in full to the extent not paid by PECO Energy Capital and by complete performance of all obligations of PECO Energy contained in the Series C Guarantee. Relationship among Series C Guarantee, Series C Subordinated Debentures and Series C Preferred Securities In addition to the obligations of PECO Energy under the Series C Guarantee, the Indenture provides that PECO Energy shall cause the General Partner to remain the general partner of PECO Energy Capital and timely perform all its duties as such (including the duty to pay Distributions on the Preferred Securities), which include, among other things, the General Partner's duties under the Partnership Agreement to directly pay all costs and expenses of PECO Energy Capital (for the purpose of insuring that payment of principal and interest by PECO Energy on the Subordinated Debentures will be sufficient to allow payment in full to the holders of the Preferred Securities) and the covenant of the General Partner in the Partnership Agreement to at all times maintain a "fair market value net worth" of at least 10% of the total contributions (less redemptions) to PECO Energy Capital. While the assets of the General Partner will not be available for making Distributions on the Preferred Securities, they will be available for payment of the expenses of PECO Energy Capital. Accordingly, the Series C Guarantee and the Indenture, together with the related covenants contained in the Partnership Agreement and PECO Energy's obligations under the Subordinated Debentures, provide for PECO Energy's full and unconditional guarantee of the Series C Preferred Securities as set forth above. 19 Certain Covenants of PECO Energy Under the Series C Guarantee, PECO Energy will covenant that, so long as any Series C Preferred Securities remain outstanding, neither PECO Energy nor any majority-owned subsidiary of PECO Energy shall declare or pay any dividend on, or redeem, purchase, acquire or make a liquidation payment with respect to, any of its capital stock (other than dividends by a wholly owned subsidiary) if at such time PECO Energy shall be in default with respect to its payment obligations under the Series C Guarantee or there shall have occurred any event that, with the giving of notice or the lapse of time or both, would constitute an Event of Default under the Indenture. Amendments Except with respect to any changes which do not materially adversely affect the rights of holders of Series C Preferred Securities (in which case no vote will be required), the Series C Guarantee may be amended only with the prior approval of the holders of Preferred Trust Receipts representing not less than 662/3% of the aggregate stated liquidation preference of the outstanding Series C Preferred Securities. Merger of PECO Energy So long as the Series C Preferred Securities remain outstanding, PECO Energy will maintain its corporate existence; provided that PECO Energy may consolidate with or merge with or into any other person or sell, convey, transfer or lease all or substantially all its properties and assets to any person if the successor person shall be organized and existing under the laws of the United States or any state thereof or the District of Columbia and shall expressly assume the obligations of PECO Energy under the Series C Guarantee. Termination of the Series C Guarantee The Series C Guarantee will terminate and be of no further force and effect upon full payment of the Redemption Price of all Series C Preferred Securities or upon full payment of the amounts payable with respect to the Series C Preferred Securities upon liquidation of PECO Energy Capital. The Series C Guarantee will continue to be effective or will be reinstated, as the case may be, if at any time any holder of Series C Preferred Securities must restore payments of any sums paid under the Series C Preferred Securities or the Series C Guarantee. DESCRIPTION OF THE SERIES C SUBORDINATED DEBENTURES AND THE INDENTURE The following is a summary of certain terms and provisions of the Series C Subordinated Debentures and the Indenture. Reference is made to the Indenture, which is filed as an exhibit to the Registration Statement of which this Prospectus forms a part. General The Series C Subordinated Debentures will be unsecured subordinated obligations of PECO Energy issued under the Indenture. The Series C Subordinated Debentures will be in a principal amount equal to the aggregate stated liquidation preference of the Series C Preferred Securities plus the General Partner's capital contribution in PECO Energy Capital, will bear interest at a rate equal to the Distribution rate on the Series C Preferred Securities payable on the Distribution dates, will have maturity and redemption provisions corresponding to the redemption provisions of the Series C Preferred Securities and will be subject to mandatory redemption upon the dissolution and winding up of PECO Energy Capital. The entire principal amount of the Series C Subordinated Debentures will become due and payable, together with any accrued and unpaid interest thereon, on June ___, 2037. PECO Energy will deliver the Series C Subordinated Debentures to the General Partner to be held on behalf of the holders of the Series C Preferred Securities. The Series C Subordinated Debentures will be delivered by PECO Energy to evidence the loan by PECO Energy Capital to PECO Energy of an amount equal to the proceeds received from the sale of the Series C Preferred Securities, plus the General Partner's concurrent capital contribution in PECO Energy Capital. 20 Redemption Except as provided below, the Series C Subordinated Debentures may not be redeemed prior to June ___, 2002. PECO Energy shall have the right to redeem the Series C Subordinated Debentures, in whole or in part, from time to time, on or after June ___, 2002, upon not less than 30 nor more than 60 days' notice (and not less than 40 days' notice to the Trust), at a redemption price equal to 100% of the aggregate principal amount to be redeemed, plus any accrued and unpaid interest, to the redemption date, including interest accrued during an Extension Period. PECO Energy will also have the right to redeem the Series C Subordinated Debentures at any time upon the occurrence of a Tax Event if certain conditions are met as described under "Description of the Series C Preferred Securities--Special Event Redemptions." The Series C Subordinated Debentures will be subject to mandatory redemption upon the dissolution of PECO Energy Capital or upon redemption of the Series C Preferred Securities. If PECO Energy gives a notice of redemption in respect of Series C Subordinated Debentures, then, on or prior to the redemption date, PECO Energy shall deposit with the paying agent funds sufficient to pay the applicable redemption price and will give irrevocable instructions and authority to pay such redemption price. If notice of redemption shall have been given, if required, then the Series C Subordinated Debentures called for redemption shall become due and payable on the redemption date and upon the redemption date, interest will cease to accrue on the Series C Subordinated Debentures called for redemption and such Series C Subordinated Debentures will no longer be deemed to be outstanding. Interest The Series C Subordinated Debentures will bear interest at an annual rate of ____% plus Additional Interest (as defined herein), if any, from the original date of issuance. Interest will be payable monthly in arrears on the last day of each month of each year, commencing on June 30, 1997, to PECO Energy Capital. PECO Energy will make additional interest payments on any overdue installment of interest on the Series C Subordinated Debentures to PECO Energy Capital at the same rate per annum as the annual rate payable on the Series C Subordinated Debentures. Interest payments on the Subordinated Debentures are eliminated in consolidation from the Consolidated Statements of Income of PECO Energy. Distributions on the Preferred Securities appear as a separate line item under Interest Charges entitled "Company Obligated Manditorily Redeemable Preferred Securities of a Partnership, which holds Solely Subordinated Debentures of the Company" on the Consolidated Statements of Income of PECO Energy. Additional Interest If at any time PECO Energy Capital would be required to pay any taxes, duties or other governmental charges of whatever nature (other than withholding taxes) imposed by the United States, or any other taxing authority, then, in any such case, PECO Energy also will pay as additional interest ("Additional Interest") such amounts as shall be required so that the net amounts received and retained by PECO Energy Capital after paying any such taxes, duties or other governmental charges will not be less than the amounts PECO Energy Capital would have received had no such taxes, duties or other governmental charges been imposed. Option to Extend Interest Payment Period Under the Indenture, PECO Energy shall have the right at any time, so long as an Event of Default under the Indenture has not occurred and is continuing, to extend the interest payment period for all Subordinated Debentures for up to 60 consecutive months; provided that no Extension Period shall extend beyond the stated maturity date or date of redemption of any series of Subordinated Debentures. At the end of the Extension Period, PECO Energy shall pay all interest then accrued and unpaid (together with interest thereon to the extent permitted by applicable law at the rate per annum borne by such Subordinated Debentures). During any such Extension Period, neither PECO Energy nor any majority-owned subsidiary of PECO Energy shall declare or pay any dividend on, or redeem, purchase, acquire or make a liquidation payment with respect to, any of its capital stock (other than dividends by wholly owned subsidiaries). Prior to the termination of any such Exten- 21 sion Period, PECO Energy may shorten or further extend the interest payment period, provided that such Extension Period, together with all such further extensions thereof, may not exceed 60 consecutive months. Upon the termination of any Extension Period and the payment of all amounts then due, PECO Energy may select a new Extension Period subject to the above requirements. PECO Energy shall give the Indenture Trustee notice of its selection of such extended or shortened interest payment period one business day prior to the earlier of (i) the date PECO Energy has selected to make the interest payment or (ii) the date PECO Energy Capital is required to give notice to the New York Stock Exchange or other applicable self-regulatory organization of the record date or the date such Distributions are payable, but in any event not less than two business days prior to such record date. PECO Energy shall cause the Indenture Trustee to give such notice of PECO Energy's selection of such Extension Period to the holders of the Preferred Securities. Subordination The Indenture provides that all payments by PECO Energy in respect of the Subordinated Debentures, including the Series C Subordinated Debentures, shall be subordinated to the prior payment in full of all amounts payable on Senior Indebtedness. The term "Senior Indebtedness" means (i) the principal of and premium, if any, in respect of (A) indebtedness of PECO Energy for money borrowed and (B) indebtedness evidenced by securities, debentures, bonds or other similar instruments issued by PECO Energy; (ii) all capital lease obligations of PECO Energy; (iii) all obligations of PECO Energy issued or assumed as the deferred purchase price of property, all conditional sale obligations of PECO Energy and all obligations of PECO Energy under any title retention agreement (but excluding trade accounts payable arising in the ordinary course of business); (iv) certain obligations of PECO Energy for the reimbursement of any obligor on any letter of credit, banker's acceptance, security purchase facility or similar credit transaction; (v) all obligations of the type referred to in clauses (i) through (iv) of other persons and all dividends of other persons (other than Preferred Securities) for the payment of which, in either case, PECO Energy is responsible or liable as obligor, guarantor or otherwise; and (vi) all obligations of the type referred to in clauses (i) through (v) of other persons secured by any lien on any property or asset of PECO Energy (whether or not such obligation is assumed by PECO Energy), except for any such indebtedness that is by its terms subordinated to or pari passu with the Subordinated Debentures or indebtedness between or among PECO Energy and its affiliates. Upon any payment or distribution of assets or securities of PECO Energy, upon any dissolution or winding up or total or partial liquidation or reorganization of PECO Energy, whether voluntary or involuntary, or in bankruptcy, insolvency, receivership or other proceedings, all amounts payable on Senior Indebtedness (including any interest accruing on such Senior Indebtedness subsequent to the commencement of a bankruptcy, insolvency or similar proceeding) shall first be paid in full before PECO Energy Capital (as holder of the Subordinated Debentures), the Indenture Trustee on behalf of such holder or any Special Representative appointed by the holders of the Preferred Securities shall be entitled to receive from PECO Energy any payment of principal of or interest on or any other amounts in respect of the Subordinated Debentures or distribution of any assets or securities. No direct or indirect payment by or on behalf of PECO Energy of principal of or interest on the Subordinated Debentures, whether pursuant to the terms of the Subordinated Debentures or upon acceleration or otherwise, shall be made if, at the time of such payment, there exists (i) a default in the payment of all or any portion of any Senior Indebtedness or (ii) any other default pursuant to which the maturity of Senior Indebtedness has been accelerated and, in either case, requisite notice has been received by the Indenture Trustee and such default shall not have been cured or waived by or on behalf of the holders of such Senior Indebtedness. If the Indenture Trustee, PECO Energy Capital (as holder of the Subordinated Debentures) or any Special Representative appointed by the holders of the Preferred Securities, shall have received any payment on account of the principal of or interest on the Subordinated Debentures when such payment is prohibited and before all amounts payable on, under or in connection with Senior Indebtedness are paid in full, then such payment shall be received and held in trust for the holders of Senior Indebtedness and shall be paid over or delivered first to the holders of the Senior Indebtedness remaining unpaid to the extent necessary to pay such Senior Indebtedness in full. Nothing in the Indenture shall limit the right of the Indenture Trustee, PECO Energy Capital (as holder of the Subordinated Debentures) or the Special Representative to take any action to accelerate the maturity of the 22 Subordinated Debentures or to pursue any rights or remedies against PECO Energy; provided that all Senior Indebtedness shall be paid before PECO Energy Capital (as holder of the Subordinated Debentures) is entitled to receive any payment from PECO Energy of principal of or interest on the Subordinated Debentures. Upon the payment in full of all Senior Indebtedness, PECO Energy Capital (as holder of the Subordinated Debentures) (and any Special Representative appointed by the holders of the Preferred Securities) shall be subrogated to the rights of the holders of such Senior Indebtedness to receive payments or distributions of assets of PECO Energy made on such Senior Indebtedness until the Subordinated Debentures shall be paid in full. The Indenture does not limit the aggregate amount of Senior Indebtedness which PECO Energy may issue. Certain Covenants of PECO Energy PECO Energy will covenant that it and any majority-owned subsidiary will not declare or pay any dividend on, or redeem, purchase, acquire or make a liquidation payment with respect to, any of its capital stock (other than dividends by wholly owned subsidiaries) (i) during an Extension Period, (ii) if there shall have occurred any event that, with the giving of notice or the lapse of time or both, would constitute an Event of Default under the Indenture or (iii) if PECO Energy shall be in default with respect to its payment obligations under any Guarantee. PECO Energy will also covenant (i) to maintain direct or indirect 100% ownership of the General Partner and will cause the General Partner to maintain 100% ownership of the general partner interests of PECO Energy Capital, (ii) to cause the General Partner to at all times maintain a "fair market net worth" of at least 10% of the total capital contributions (less redemptions) to PECO Energy Capital and to maintain general partner interests representing 3% of all interests in the capital, income, gain, loss, deduction and credit of PECO Energy Capital, (iii) to cause the General Partner to timely perform all of its duties as general partner of PECO Energy Capital (including the duty to pay Distributions on the Series C Preferred Securities), and (iv) to use its reasonable efforts to cause PECO Energy Capital to remain a limited partnership and otherwise continue to be treated as a partnership for federal income tax purposes. PECO Energy Capital may not waive compliance or waive any default in compliance by PECO Energy with any covenant or other term in the Indenture without the approval of the Special Representative or without the direction of the holders of 662/3% of the aggregate stated liquidation preference of the Preferred Securities. Modification of the Indenture The Indenture contains provisions permitting PECO Energy and the Indenture Trustee, without the consent of the Special Representative or PECO Energy Capital, to modify the Indenture or any Supplemental Indenture: (i) to cure any ambiguity, defect or inconsistency; (ii) to comply with the provisions of the Indenture regarding a successor to PECO Energy; (iii) to provide for uncertificated Subordinated Debentures in addition to or in place of certificated Subordinated Debentures; (iv) to make any other change that does not adversely affect the rights of any holder of the Subordinated Debentures; (v) to comply with any requirement for qualification of the Indenture under the Trust Indenture Act of 1939, as amended; and (vi) to set forth the terms and conditions of any series of Subordinated Debentures. The Indenture contains provisions permitting PECO Energy and the Indenture Trustee, with the consent of the Special Representative or PECO Energy Capital at the direction of the holders of not less than 662/3% of the aggregate stated liquidation preference of the Preferred Securities, to modify the Indenture or any supplemental indenture or the rights of the holders of the Subordinated Debentures issued under the Indenture; provided that no such modification, without the consent of each holder of the Subordinated Debentures affected, may, (i) change the stated maturity date of the principal of, or any installment of principal of or interest, if any, on, the Subordinated Debentures, (ii) reduce the principal amount of, or premium or rate of interest, if any, on, the Subordinated Debentures, (iii) reduce the amount of principal of Subordinated Debentures payable upon acceleration of the maturity thereof, (iv) make the Subordinated Debentures payable in money or securities other than as stated in the Subordinated Debentures, (v) impair the right to institute suit for the enforcement of any payment on or with respect to the Subordinated Debentures, (vi) adversely change the redemption provisions of the Subordinated Debentures, (vii) adversely affect the rights of the holders of the Subordinated Debentures with respect to subordination or (viii) reduce the principal amount of the holders of the Subordinated Debentures that must consent to an amendment of the Indenture. 23 Events of Default The following are Events of Default under the Indenture: (i) default for 10 days in payment of any interest on any series of the Subordinated Debentures (other than the payment of interest during an Extension Period); (ii) default in payment of principal of (or premium, if any, on) any Subordinated Debentures; (iii) default for 60 days after notice in the performance of any other covenant or agreement in the Indenture or any series of Subordinated Debentures or (iv) certain events of bankruptcy, insolvency or reorganization of PECO Energy. In case an Event of Default under the Indenture shall occur and be continuing (other than an Event of Default relating to bankruptcy, insolvency or reorganization of PECO Energy, in which case principal and interest on all of the Subordinated Debentures shall become immediately due and payable), the Indenture Trustee, PECO Energy Capital (as holder of the Subordinated Debentures) or the Special Representative may declare the principal of all the Subordinated Debentures to be due and payable. Under certain circumstances, a declaration of acceleration with respect to Subordinated Debentures may be rescinded and past defaults (except, unless theretofore cured, a default in the payment of principal of or interest on the Subordinated Debentures) may be waived only by the Special Representative or by PECO Energy Capital at the direction of the holders of 66 2/3% in aggregate stated liquidation preference of Preferred Securities. PECO Energy is required to furnish to the Indenture Trustee annually a statement as to the performance by PECO Energy of its obligations under the Indenture and as to any default in such performance. Enforcement of Certain Rights of Holders of Preferred Securities The holders of the Preferred Securities will have the rights referred to under "Description of the Series C Preferred Securities--Voting Rights," including the right to appoint a Special Representative authorized to exercise the rights of PECO Energy Capital, as the holder of the Series C Subordinated Debentures, to declare the principal and interest on the Series C Subordinated Debentures due and payable and to enforce the obligations of PECO Energy under the Series C Subordinated Debentures and the Indenture directly against PECO Energy, without first proceeding against PECO Energy Capital or any other person or entity. Consolidation, Merger, Sale or Conveyance The Indenture provides that PECO Energy may not consolidate with or merge with or into, or sell, convey, transfer or lease all or substantially all its assets (either in one transaction or a series of transactions) to, any person, unless, among other things, (i) the successor person shall be organized and existing under the laws of the United States or any state thereof or the District of Columbia, and shall expressly assume by a supplemental indenture all of the obligations of PECO Energy under the Subordinated Debentures and the Indenture and (ii) immediately prior to and after giving effect to such transaction, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have happened and be continuing. Defeasance and Discharge Under the terms of the Indenture, PECO Energy will be deemed to have paid and discharged the entire indebtedness of the Series C Subordinated Debentures if PECO Energy irrevocably deposits with the Indenture Trustee or other paying agent, in trust, (i) cash and/or (ii) United States Government Obligations (as defined in the Indenture), which through the payment of interest thereon and principal thereof in accordance with their terms will provide cash in an amount sufficient to pay all the principal of, premium, if any, and interest on, the Series C Subordinated Debentures then outstanding on the dates such payments are due in accordance with the terms of the Series C Subordinated Debentures. Information Concerning the Indenture Trustee Subject to the provisions of the Indenture relating to its duties, the Indenture Trustee will be under no obligation to exercise any of its rights or powers under the Indenture, unless the Indenture Trustee receives security and indemnity reasonably satisfactory to it. Subject to such provision for indemnification, the holders of a 24 majority in principal amount of the Subordinated Debentures then outstanding thereunder or the Special Representative will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Indenture Trustee thereunder, or exercising any trust or power conferred on the Indenture Trustee. The Indenture contains limitations on the right of the Indenture Trustee, as a creditor of PECO Energy, to obtain payment of claims in certain cases, or to realize on certain property received in respect of any such claim as security or otherwise. In addition, the Indenture Trustee may be deemed to have a conflicting interest and may be required to resign as Indenture Trustee if at the time of default under the Indenture it is a creditor of PECO Energy. First Union National Bank, the Indenture Trustee, has from time to time engaged in transactions with, or performed services for, PECO Energy and its affiliates in the ordinary course of business and is the Trustee under PECO Energy's First and Refunding Mortgage, dated May 1, 1923. UNITED STATES TAXATION In the opinion of Ballard Spahr Andrews & Ingersoll, special tax counsel to PECO Energy, the following are the material federal income tax consequences (and certain Pennsylvania tax considerations) of the ownership and disposition of Preferred Trust Receipts. Unless otherwise stated, this summary deals only with Preferred Trust Receipts held as capital assets by holders. It does not deal with special classes of holders, such as dealers in securities or currencies, life insurance companies, persons holding Preferred Trust Receipts as a hedge against or which are hedged against currency risks or as a part of a straddle, or persons whose functional currency is not the United States dollar. This summary is based on the Internal Revenue Code of 1986, as amended, Treasury Regulations thereunder and administrative and judicial interpretations thereof, as of the date hereof, all of which are subject to change (possibly on a retroactive basis). ALL PROSPECTIVE INVESTORS ARE ADVISED TO CONSULT THEIR TAX ADVISERS REGARDING THE FEDERAL INCOME TAX CONSEQUENCES OF THE OWNERSHIP AND DISPOSITION OF PREFERRED TRUST RECEIPTS IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES, AS WELL AS THE EFFECT OF ANY STATE, LOCAL OR OTHER LAWS. Classification of PECO Energy Capital and the Trust In connection with the issuance of Preferred Trust Receipts, Ballard Spahr Andrews & Ingersoll will render its tax opinion to the effect that, under then current law and assuming full compliance with the terms of the Partnership Agreement and the Trust Agreement, (i) PECO Energy Capital will be classified for United States federal income tax purposes as a partnership and not as a business entity taxable as a corporation and (ii) the Trust will be classified as a grantor trust and not as a business entity taxable as a corporation. As a consequence, each holder of Preferred Trust Receipts (a "Securityholder") will be considered the owner of a pro rata portion of the Series C Preferred Securities held by the Trust. As a further consequence, each Securityholder will be required to include in gross income his pro rata share of the income accrued on the Series C Subordinated Debentures held by PECO Energy Capital and allocated by the Trust. Such income should not exceed Distributions received by the Securityholders on the Preferred Trust Receipts except in limited circumstances described under "--Potential Extension of Payment Period." No portion of such income will be eligible for the dividends received deduction. Taxability of Distributions PECO Energy Capital will be required to include stated interest on the Series C Subordinated Debentures in its gross income as it accrues. Each Securityholder, including a taxpayer who otherwise uses the cash method of accounting, will be required to include his pro rata share of such interest income in his gross income. Actual distributions of stated interest will not be separately reported as taxable income. So long as the interest payment period is not extended, cash Distributions received by an initial Securityholder for any monthly interest period should equal the sum of the daily accruals of income for such interest period. 25 Potential Extension of Payment Period Under the terms of the Indenture, PECO Energy will be permitted to extend the interest payment period on the Series C Subordinated Debentures for up to 60 consecutive months. In the event that PECO Energy exercises this right, PECO Energy may not declare dividends on any of its capital stock during such Extension Period. PECO Energy currently believes that the extension of an interest payment period is unlikely. In the event that the interest payment period is extended, PECO Energy Capital will continue to accrue income, generally equal to the amount of the interest payment due at the end of the Extension Period, over the length of the Extension Period. During an Extension Period, PECO Energy Capital will be required to include original issue discount on the Series C Subordinated Debentures in its gross income as it accrues, in accordance with a constant yield method based on a compounding of interest. Each Securityholder, including a taxpayer who otherwise uses the cash method of accounting, will be required to include his pro rata share of such original issue discount in gross income. Accrued income will be allocated, but not distributed, to Securityholders of record on the 15th day of each calendar month. As a result, during an Extension Period, Securityholders will be required to include interest in gross income in advance of the receipt of cash, and any Securityholders who dispose of Preferred Trust Receipts prior to the record date for the payment of Distributions following such extended interest payment period will include interest in gross income but will not receive any cash related thereto from the Trust. The tax basis of a Series C Preferred Security will be increased by the amount of any interest that is included in income without a corresponding receipt of cash, and will be decreased again when and if such cash is subsequently received from PECO Energy and distributed by PECO Energy Capital and the Trust. The subsequent receipt or distribution of such cash will not be included in gross income. Withdrawal of Series C Preferred Securities The receipt of Series C Preferred Securities by a Securityholder in exchange for Preferred Trust Receipts (and vice versa), at the option of the Securityholder, will not be a taxable event. The Securityholder's tax basis and holding period for the Series C Preferred Securities immediately after the exchange will equal the Securityholder's tax basis and holding period for the Preferred Trust Receipts (or Series C Preferred Securities, as applicable) surrendered in the exchange. Income earned from the Series C Preferred Securities will be reported annually to the Securityholder and to the Internal Revenue Service on Schedule K-1 and not on Form 1099. Disposition of the Preferred Trust Receipts Gain or loss will be recognized on a sale, including for a redemption for cash, of Preferred Trust Receipts in an amount equal to the difference between the amount realized and the Securityholder's tax basis in his pro rata share of Series C Preferred Securities represented by such Preferred Trust Receipts. Gain or loss recognized by a Securityholder on the sale or exchange of Preferred Trust Receipts held for more than one year generally will be taxable as long-term capital gain or loss. Pennsylvania and Philadelphia Personal Property Taxes In the opinion of Ballard Spahr Andrews & Ingersoll, the Preferred Trust Receipts are exempt from existing personal property taxes in Pennsylvania and Philadelphia. United States Alien Holders For purposes of this discussion, a "United States Alien Holder" is any holder or beneficial owner who or which is (i) a nonresident alien individual or (ii) a foreign corporation, partnership, estate or trust, in either case not subject to federal income tax on a net income basis in respect of a Series C Preferred Security. Under present federal income tax law, subject to the discussions below with respect to backup withholding, payments by the Trust or any of its paying agents to any United States Alien Holder will not be subject to the United States withholding tax provided that (i) the beneficial owner of the Preferred Trust Receipt does not actually or constructively own 10% or more of the total combined voting power of all classes of stock of PECO Energy, (ii) the beneficial owner of the Preferred Trust Receipt is not a controlled foreign corporation that is 26 related to PECO Energy through stock ownership, and (iii) either (a) the beneficial owner of the Preferred Trust Receipt certifies to the Trust or its agent, under penalties of perjury, that it is a United States Alien Holder and provides its name and address or (b) the holder of the Preferred Trust Receipt is a securities clearing organization, bank or other financial institution that holds customers' securities in the ordinary course of its trade or business (a "financial institution"), and such holder certifies to the Trust or its agent under penalties of perjury that such statement has been received from the beneficial owner by it or by a financial institution between it and the beneficial owner and furnishes the payor with a copy thereof. Backup Withholding and Information Reporting In general, information reporting requirements will apply to payments to noncorporate United States holders of the proceeds of the sale of the Preferred Trust Receipts within the United States and "backup withholding" at a rate of 31% will apply to such payments if the seller fails to provide a correct taxpayer identification number. Payments of the proceeds from the sale by a United States Alien Holder of Preferred Trust Receipts made to or through a foreign office of a broker will not be subject to information reporting or backup withholding, except that, if the broker is a United States person, a controlled foreign corporation for federal tax purposes or a foreign person 50% or more of whose gross income is effectively connected with a United States trade or business for a specified three-year period, information reporting may apply to such payment. Payments of the proceeds from the sale of Preferred Trust Receipts to or through the United States office of a broker is subject to information reporting and backup withholding unless the holder or beneficial owner certifies as to its non- United States status or otherwise establishes an exemption from information reporting and backup withholding. Proposed Tax Law Changes In late 1995, President Clinton proposed certain tax law changes that would, among other things, generally deny interest deductions to corporate issuers if the debt instrument has a term exceeding 20 years and is not reflected as indebtedness on such issuer's consolidated balance sheet. Because the term of the Series C Subordinated Debentures exceeds 20 years, this proposal, were it to become effective, would prevent PECO Energy from deducting interest on the Series C Subordinated Debentures. However, on March 29, 1996, the Chairmen of the Senate Finance Committee and the House Ways and Means Committee issued a joint statement to the effect that it was their intention that the effective date of the President's legislative proposals, if adopted, will be no earlier than the date of appropriate Congressional action. The Clinton Administration renewed these proposals as part of its fiscal 1998 budget and would make them effective upon the date of first committee action. The revised proposals of the Clinton Administration would apply to debt instruments with terms exceeding 15 years. In the opinion of special tax counsel to PECO Energy and PECO Energy Capital, under current law, interest on the Series C Subordinated Debentures is deductible by PECO Energy. There can be no assurance, however, that such proposals, subsequent proposals or final legislation will not affect the ability of PECO Energy to deduct interest on the Series C Subordinated Debentures which in turn could give rise to a Tax Event and, accordingly, the General Partner's optional right to redeem the Series C Preferred Securities, as described under "Description of the Series C Preferred Securities--Special Event Redemptions." 27 UNDERWRITING Subject to the terms and conditions of the Underwriting Agreement, PECO Energy and PECO Energy Capital have agreed to cause the Trust to sell to each of the Underwriters named below, and each of such Underwriters, for whom Smith Barney Inc. and Lehman Brothers Inc. are acting as Representatives (the "Representatives"), has severally agreed to purchase from the Trust, the respective number of Preferred Trust Receipts set forth opposite its name below: Number of Underwriter Preferred Trust Receipts - ---------------------------- ------------------------- Smith Barney Inc. ......... Lehman Brothers Inc. ...... Total ..................... Under the terms and conditions of the Underwriting Agreement, the Underwriters are committed to take and pay for all of the Preferred Trust Receipts offered hereby, if any are taken. The Underwriters propose to offer the Preferred Trust Receipts in part directly to the public at the initial public offering price set forth on the cover page of this Prospectus, and in part to certain securities dealers at such price less a concession of $____ per Preferred Trust Receipt, except that such concession will be $0.50 per Preferred Trust Receipt sold to certain institutions. The Underwriters may allow, and such dealers may reallow, a concession not in excess of $____ per Preferred Trust Receipt to certain brokers and dealers. After the Preferred Trust Receipts are released for sale to the public, the offering price and other selling terms may from time to time be varied by the Representatives. Under the Underwriting Agreement, PECO Energy has agreed to pay to the Underwriters an underwriting commission of $______ per Preferred Trust Receipt, except that such commission will be $0.50 per Preferred Trust Receipt sold to certain institutions. Prior to this offering, there has been no public market for the Preferred Trust Receipts. Application has been made to list the Preferred Trust Receipts on the New York Stock Exchange. Trading of the Preferred Trust Receipts on the New York Stock Exchange is expected to commence within a 30-day period after the initial delivery thereof. In order to meet one of the requirements for listing the Preferred Trust Receipts on the New York Stock Exchange, the Underwriters will undertake to sell lots of 100 or more Preferred Trust Receipts to a minimum of 400 beneficial owners. The Representatives have advised PECO Energy that they intend to make a market in the Preferred Trust Receipts prior to commencement of trading on the New York Stock Exchange, but are not obligated to do so and may discontinue market making at any time without notice. No assurance can be given as to the liquidity of the trading market for the Preferred Trust Receipts. PECO Energy and the PECO Energy Capital have agreed, during the period beginning from the date of the Underwriting Agreement and continuing to and including the earlier of (i) the date on which the distribution of the Preferred Trust Receipts ceases, as determined by the Representatives, or (ii) 30 days after the closing date, not to offer, sell, contract to sell or otherwise dispose of any Preferred Trust Receipts, Preferred Securities or any preferred stock or any other securities of PECO Energy which are substantially similar to the Preferred Trust Receipts or the Series C Preferred Securities, including any guarantee of such securities, or any securities convertible into or exchangeable for or representing the right to receive any of the foregoing securities, without the prior written consent of the Representatives. 28 PECO Energy and PECO Energy Capital have agreed to indemnify the several Underwriters against certain liabilities, including liabilities under the Securities Act. LEGAL MATTERS Certain matters of Delaware law relating to the validity of the Series C Preferred Securities and the Preferred Trust Receipts will be passed upon for PECO Energy Capital and the Trust by Richards, Layton & Finger, P.A., Wilmington, Delaware, special Delaware counsel to PECO Energy Capital and the Trust. The validity of the Series C Guarantee and the Series C Subordinated Debentures will be passed upon on behalf of PECO Energy by Ballard Spahr Andrews & Ingersoll, Philadelphia, Pennsylvania. Certain legal matters will be passed upon on behalf of the Underwriters by Drinker Biddle & Reath LLP, Philadelphia, Pennsylvania, counsel to the Underwriters. Ballard Spahr Andrews & Ingersoll and Drinker Biddle & Reath LLP will rely on Richards, Layton & Finger, P.A. as to certain matters of Delaware law. ACCOUNTING TREATMENT The financial statements of PECO Energy Capital will be consolidated with PECO Energy's financial statements, with the Series C Preferred Securities shown on PECO Energy's consolidated financial statements as "Company Obligated Manditorily Redeemable Preferred Securities of a Partnership, which holds Solely Subordinated Debentures of the Company." PECO Energy's financial statements will include a footnote that discloses, among other things, that the sole asset of PECO Energy Capital consists of Subordinated Debentures and will specify the principal amount, interest rate and maturity date of each series of Subordinated Debentures. EXPERTS The consolidated financial statements and schedule of PECO Energy incorporated by reference in this Prospectus have been audited by Coopers & Lybrand L.L.P., independent accountants, for the periods indicated in their report thereon which is included in the Annual Report on Form 10-K for the year ended December 31, 1996. The consolidated financial statements and schedule audited by Coopers & Lybrand L.L.P. have been incorporated herein by reference in reliance on their report given on their authority as experts in accounting and auditing. 29 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- No person has been authorized to give any information or to make any representations other than those contained in this Prospectus and, if given or made, such information or representations must not be relied upon as having been authorized. This Prospectus does not constitute an offer to sell or the solicitation of any offer to buy any securities other than the securities described in this Prospectus or an offer to sell or the solicitation of an offer to buy such securities in any circumstances in which such offer or solicitation is unlawful. Neither the delivery or this Prospectus nor any sale made hereunder shall, under any circumstances, create any implication that the information contained herein is correct as of any time subsequent to the date of such information. ----------------------------------- TABLE OF CONTENTS Page ----- Available Information ..................... 4 Incorporation of Certain Documents by Reference ................................. 4 Risk Factors ................................. 5 PECO Energy ................................. 7 PECO Energy Capital ........................ 7 The Trust .................................... 7 Coverage Ratios .............................. 8 Use of Proceeds .............................. 8 Description of the Preferred Trust Receipts . 8 Description of the Series C Preferred Securities ................................. 13 Description of the Series C Guarantee ...... 18 Description of the Series C Subordinated Debentures and the Indenture ............... 20 United States Taxation ..................... 25 Underwriting ................................. 28 Legal Matters .............................. 29 Accounting Treatment ........................ 29 Experts .................................... 29 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ----------------- Trust Receipts PECO Energy Capital Trust II each representing a ------ % Cumulative Monthly Income Preferred Security, Series C of PECO Energy Capital, L.P. guaranteed to the extent PECO Energy Capital, L.P. has funds as set forth herein by PECO ENERGY COMPANY [LOGO] Smith Barney Inc. Lehman Brothers Representatives of the Underwriters - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 14. Other Expenses of Issuance and Distribution.* Expenses in connection with the issuance and distribution of the Securities being registered hereunder other than underwriting commissions and expenses, are estimated below. Filing Fees - Securities and Exchange Commission ...... $ 15,152 Printing ............................................. 75,000 New York Stock Exchange listing fees .................. 30,000 Legal fees and Blue Sky fees ........................... 165,000 Accounting fees ....................................... 60,000 Trustee fees and expenses .............................. 10,000 Rating agencies fees and expenses ..................... 30,000 Miscellaneous .......................................... 24,848 --------- Total ................................................ $410,000 ========= - ------------ *Estimated Item 15. Indemnification of Directors and Officers. PECO Energy's Bylaws provide that PECO Energy is obligated to indemnify directors and officers and other persons designated by the Board of Directors against any liability including any damage, judgment, amount paid in settlement, fine, penalty, cost or expense (including, without limitation, attorneys' fees and disbursements) incurred in connection with any proceeding. The Bylaws provide that no indemnification shall be made where the act or failure to act giving rise to the claim for indemnification is determined by arbitration or otherwise to have constituted willful misconduct or recklessness or attributable to receipt from PECO Energy of a personal benefit to which the recipient it not legally entitled. Section 518 of the Pennsylvania Business Corporation Law of 1988 provides that indemnification pursuant to a bylaw may be granted for any action taken or any failure to take any action, absent a court determination of willful misconduct or recklessness, and may be made whether or not the corporation would have the power to indemnify the person under any other provision of law. Pursuant to the Pennsylvania Business Corporation Law of 1988, PECO Energy's Bylaws provide that directors generally will not be liable for monetary damages in any action whether brought by shareholders directly or in the right of PECO Energy or by third parties unless they fail in the good faith performance of their duties as fiduciaries (the standard of care established by the Pennsylvania Business Corporation Law of 1988), and such failure constitutes self-dealing, willful misconduct or recklessness. PECO Energy has purchased directors' and officers' liability insurance. Pursuant to the Partnership Agreement, to the fullest extent permitted by applicable law, PECO Energy Capital shall indemnify and hold harmless the General Partner or any Special Representative, any affiliate of the General Partner or any Special Representative or any officers, directors, shareholders, partners, employees, representatives or agents of the General Partner or any Special Representative, or any employee or agent of PECO Energy Capital or its affiliates (each, an "Indemnified Person") from and against any loss, damage or claim incurred by such Indemnified Person by reason of any act or omission performed or omitted by such Indemnified Person in good faith on behalf of PECO Energy Capital and in a manner reasonably believed to be within the scope of authority conferred on such Indemnified Person by the Partnership Agreement, except that no Indemnified Person shall be indemnified for any loss, claim or damage incurred by reason of the Indemnified Person's gross negligence, willful misconduct or fraud; provided, however, that any such indemnity shall be provided out of and to the extent of PECO Energy Capital's assets only, and no General Partner or limited partner (collectively, "Partners"), any affiliate of a Partner or any officers, directors, shareholders, partners, employees, representatives or agents of a Partner or its respective affiliates, or any employee or agent of PECO Energy II-1 Capital or its affiliates or any Special Representative shall have any personal liability on account thereof. To the fullest extent permitted by applicable law, expenses (including legal fees) incurred by an Indemnified Person in defending any claim, demand, action, suit or proceeding shall, from time to time, be advanced by PECO Energy Capital prior to the final disposition of such claim, demand, action, suit or proceeding pursuant to an undertaking by or on behalf of the Indemnified Person to repay such amount if it shall be determined that the Indemnified Person is not entitled to be indemnified. The Trust Agreement provides, to the fullest extent permitted by law, that the General Partner will indemnify and defend the Trustee and its directors, officers, employees and agents against, and hold each of them harmless from, any liability, costs and expenses (including reasonable attorneys' fees) that may arise out of or in connection with its acting as the Trustee under the Trust Agreement and the Preferred Trust Receipts, except for any liability arising out of negligence, bad faith or willful misconduct on the part of any such person or persons. Item 16. Exhibits
Exhibit Numbers Exhibit - --------- ----------------------------------------------------------------------------------------------------- 1-1 Form of Underwriting Agreement. 3-1 Amended and Restated Articles of Incorporation of PECO Energy (incorporated by reference to PECO Energy's 1993 Annual Report on Form 10-K, File No. 1-1401). 3-2 Bylaws of PECO Energy, adopted February 26, 1990 and amended January 24, 1994 (incorporated by reference to Exhibit 3-2 of PECO Energy's 1993 Annual Report on Form 10-K, File No. 1-1401). 3-3 Certificate of Limited Partnership of PECO Energy Capital, L.P. (incorporated by reference to Reg- istration Statement Nos. 33-53785 and 33-53785-01). 4-1 Amended and Restated Limited Partnership Agreement of PECO Energy Capital (incorporated by reference to Exhibit 10-7 of PECO Energy's 1994 Annual Report on Form 10-K, File No. 1-1401). 4-2 Amendment No. 1 to Amended and Restated Limited Partnership Agreement of PECO Energy Capi- tal (incorporated by reference to Exhibit 10-8 of PECO Energy's 1995 Annual Report on Form 10-K, File No. 1-1401). 4-3 Amendment No. 2 to Amended and Restated Limited Partnership Agreement of PECO Energy Capi- tal (incorporated by reference to Exhibit 10-9 of PECO Energy's 1995 Annual Report on Form 10-K, File No. 1-1401). 4-4 Form of Action of General Partner creating Series C Preferred Securities. 4-5 Form of Series C Preferred Security Certificate (included in Exhibit 4-1). 4-6 Subordinated Debenture Indenture dated as of July 1, 1994 (incorporated by reference to Exhibit 4-5 of PECO Energy's 1994 Annual Report on Form 10-K, File No. 1-1401). 4-7 Form of Series C Subordinated Debenture (included in Exhibit 4-9). 4-8 First Supplemental Indenture to Subordinated Debenture Indenture, dated as of December 1, 1995 (incorporated by reference to Exhibit 4-7 of PECO Energy's 1995 Annual Report on Form 10-K, File No. 1-1401). 4-9 Form of Second Supplemental Indenture to Subordinated Debenture Indenture. 4-10 Certificate of Trust for the Trust. 4-11 Trust Agreement for the Trust. 4-12 Form of Amended and Restated Trust Agreement for the Trust. 4-13 Form of Payment and Guarantee Agreement.
II-2
Exhibit Numbers Exhibit - --------- ----------------------------------------------------------------------------------------------------- 4-14 Form of Certificate Representing the Preferred Trust Receipts (included in Exhibit 4-12). 5-1 Opinion of Ballard Spahr Andrews & Ingersoll relating to the legality of the Series C Subordinated Debentures and Series C Guarantee, including consent. 5-2 Opinion of Richards, Layton & Finger, P.A. relating to the legality of the Preferred Trust Receipts and the Series C Preferred Securities, including consent. 8 Opinion of Ballard Spahr Andrews & Ingersoll as to tax matters. 12-1 Computations of PECO Energy's Ratio of Earnings to Fixed Charges and Ratio of Earnings to Com- bined Fixed Charges and Preferred Stock Dividend Requirements for the years ended December 31, 1992-1996 and for the three months ended March 31, 1996 and March 31, 1997 (incorporated by reference to Exhibits 12-1 and 12-2, respectively, of PECO Energy's 1996 Annual Report on Form 10-K, File No. 1-1401 and PECO Energy's Quarterly Reports on Form 10-Q for the quarters ended March 31, 1996 and March 31, 1997). 13 PECO Energy's Annual Report on Form 10-K for the fiscal year ended December 31, 1996 and Quarterly Report on Form 10-Q for the quarter ended March 31, 1997 (incorporated by reference, File No. 1-1401). 21 List of Subsidiaries of PECO Energy (incorporated by reference to Exhibit 21 of PECO Energy's 1996 Annual Report on Form 10-K, File No. 1-1401). 23-1 Consent of Independent Accountants. 23-2 Consent of Ballard Spahr Andrews & Ingersoll (included in Exhibit 5-1). 23-3 Consent of Richards, Layton & Finger, P.A. (included in Exhibit 5-2). 24 Powers of Attorney. 25 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of First Union National Bank, as Trustee under the Second Supplemental Indenture.
Item 17. Undertakings (1) The undersigned registrants hereby undertake that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrants' annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (2) The Trust hereby undertakes to provide the underwriter at the closing specified in the underwriting agreement certificates in such dominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser. (3) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrants pursuant to the foregoing provisions, or otherwise, the Registrants have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrants of expenses incurred or paid by a director, officer or controlling person of the Registrants in the successful defense of any action, suit, or proceeding) is asserted by such director, officer of controlling person in connection with the securities being registered, the Registrants will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. II-3 (4) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. (5) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II-4 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant, PECO Energy Company, certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, hereunto duly authorized in the City of Philadelphia, Commonwealth of Pennsylvania, on May 23, 1997. PECO Energy Company /s/ C.A. McNeill, Jr. By: --------------------------- C.A. McNeill, Jr. President and Chief Executive Officer Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the date indicated.
Signature Title Date - --------------------------------- ------------------------------- ------------- /s/ J.F. Paquette, Jr. Chairman of the Board and May 23, 1997 ----------------------------- Director J.F. Paquette, Jr. /s/ C.A. McNeill, Jr. President, Chief Executive May 23, 1997 ----------------------------- Officer and Director C.A. McNeill, Jr. (Principal Executive Officer) /s/ K.G. Lawrence Senior Vice President-Finance May 23, 1997 ----------------------------- and Chief Financial Officer K.G. Lawrence (Principal Financial and Accounting Officer)
This Registration Statement has also been signed by C.A. McNeill, Jr., Attorney-in-Fact, on behalf of the following Directors on the date indicated: Susan W. Catherwood Kinnaird R. McKee M. Walter D'Alessio Joseph J. McLaughlin G. Fred DiBona John M. Palms R. Keith Elliott Ronald Rubin Richard G. Gilmore Robert Subin Richard H. Glanton James A. Hagen /s/ C.A. McNeill, Jr. By: --------------------------- May 23, 1997 C.A. McNEILL, JR., ATTORNEY-IN-FACT SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant, PECO Energy Capital, L.P., certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, hereunto duly authorized in the City of Philadelphia, Commonwealth of Pennsylvania, on May 23, 1997. PECO Energy Capital, L.P. By: PECO Energy Capital Corp., its general partner /s/ J.B. Mitchell By: --------------------------- J.B. Mitchell President Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the date indicated.
Signature Title Date - --------------------------------- ----------------------------- ------------- /s/ J.B. Mitchell President and Director May 23, 1997 ----------------------------- (Principal Executive Officer J.B. Mitchell and Principal Financial and Accounting Officer) /s/ K.G. Lawrence Director May 23, 1997 ----------------------------- K.G. Lawrence /s/ N.E. Descano Director May 23, 1997 ----------------------------- N.E. Descano
SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant, PECO Energy Capital Trust II, certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, hereunto duly authorized in the City of Philadelphia, Commonwealth of Pennsylvania, on May 23, 1997. PECO Energy Capital Trust II By: PECO Energy Capital, L.P., as grantor By: PECO Energy Capital Corp., as general partner /s/ J.B. Mitchell By: --------------------------- J.B. Mitchell President Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
Signature Title Date - --------------------------------- ------------------------------ ------------- /s/ J.B. Mitchell (Principal Executive Officer May 23, 1997 ----------------------------- and Principal Financial and J.B. Mitchell Accounting Officer) /s/ K.G. Lawrence Director May 23, 1997 ----------------------------- K.G. Lawrence /s/ N.E. Descano Director May 23, 1997 ----------------------------- N.E. Descano
EX-1.1 2 UNDERWRITING AGREEMENT Exhibit 1-1 $50,000,000 PECO ENERGY CAPITAL TRUST II PECO ENERGY CAPITAL, L.P. PECO ENERGY COMPANY TRUST RECEIPTS representing an equal number of __% Cumulative Monthly Income Preferred Securities, Series C of PECO Energy Capital, L.P. UNDERWRITING AGREEMENT June , 1997 SMITH BARNEY INC. LEHMAN BROTHERS As Representatives of the Several Underwriters c/o SMITH BARNEY INC. 388 Greenwich Street New York, NY 10013 Dear Sirs: PECO Energy Capital Trust II, a statutory business trust created under the laws of the state of Delaware (the "Trust"), PECO Energy Capital, L.P., a limited partnership organized under the laws of Delaware (the "Company"), and PECO Energy Company, a Pennsylvania corporation, as guarantor and provider of certain undertakings (the "Guarantor"), propose, subject to the terms and conditions stated herein, that the Trust issue and sell to the Underwriters named in Schedule I hereto (the "Underwriters") an aggregate of 2,000,000 Trust Receipts (the "Trust Receipts"), representing an equal number of the Company's ___% Cumulative Monthly Income Preferred Securities, Series C (liquidation preference $25.00 per share) (the "Series C Preferred Securities") guaranteed by the Guarantor on a limited basis as to the payment of accumulated and unpaid monthly distributions for the benefit of the holders of the Series C Preferred Securities, and as to payments on liquidation or redemption and benefiting from certain additional undertakings of the Guarantor pursuant to a certain Payment and Guarantee Agreement entered into by the Guarantor. The Guarantor's guarantee and undertakings are herein referred to collectively as the "Guarantee," and the Guarantee, the Trust Receipts and the Series C Preferred Securities are herein referred to collectively as the "Securities." Concurrently with each issuance of the Series C Preferred Securities to the Trust, the Company will lend the proceeds thereof plus the Guarantor's Capital Contribution to the Company to the Guarantor and to evidence each such loan the Guarantor will issue and deliver to the Company the Guarantor's % Deferrable Interest Subordinated Debentures, Series C due 2037 (the "Subordinated Debentures"). 1. Each of the Company and the Guarantor jointly and severally represents and warrants to, and agrees with, each of the Underwriters that: (a) A registration statement on Form S-3 (File No. 333-____) in respect of the Securities has been filed with the Securities and Exchange Commission (the "Commission"); such registration statement and any post-effective amendment thereto, each in the form heretofore delivered to you, and, excluding exhibits thereto but including all documents incorporated by reference in the prospectus included therein, have been declared effective by the Commission in such form; no other document with respect to such registration statement or document incorporated by reference therein has heretofore been filed with the Commission; and no stop order suspending the effectiveness of such registration statement has been issued and no proceeding for that purpose has been initiated or threatened by the Commission (any preliminary prospectus included in such registration statement or filed with the Commission pursuant to Rule 424(b) of the rules and regulations of the Commission under the Securities Act of 1933, as amended (the "Act"), being hereinafter called a "Preliminary Prospectus"; the various parts of such registration statement, including all exhibits thereto and the documents incorporated by reference in the prospectus contained in the registration statement at the time such part of the registration statement became effective, each as amended at the time such part of the registration statement became effective, being hereinafter called the "Registration Statement"; such final prospectus, in the form first filed pursuant to Rule 424(b) under the Act, being hereinafter called the "Prospectus"; any reference herein to any Preliminary Prospectus or the Prospectus shall be deemed to refer to and include the documents incorporated by reference therein pursuant to Item 12 of Form S-3 under the Act, as of the date of such Preliminary Prospectus or Prospectus, as the case may be; and any reference to any amendment or supplement to the Registration Statement, any Preliminary Prospectus or the Prospectus shall be deemed to refer to and include any documents filed after the effective date of the Registration Statement or the date of such Preliminary Prospectus or Prospectus, as the case may be, under the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), and incorporated by reference in such Registration Statement, Preliminary Prospectus or Prospectus, as the case may be); 2 (b) No order preventing or suspending the use of any Preliminary Prospectus has been issued by the Commission, and each Preliminary Prospectus, at the time of filing thereof, conformed in all material respects to the requirements of the Act and the rules and regulations of the Commission thereunder, and did not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, provided, however, that this representation and warranty shall not apply to any statement or omission made in reliance upon and in conformity with information regarding any Underwriter or the arrangements with respect to the underwriting of the offering of the Securities contemplated hereby furnished in writing to the Trust, the Company or the Guarantor by an Underwriter through you expressly for use therein; (c) The Registration Statement conforms, and the Prospectus and any further amendments or supplements to the Registration Statement or the Prospectus will conform, in all material respects to the requirements of the Act and the rules and regulations of the Commission thereunder; the Registration Statement does not and will not, as of the applicable effective date as to the Registration Statement and any amendment thereto, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; and the Prospectus does not and will not, as of the applicable filing date as to the Prospectus and any amendment or supplement thereto, contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information regarding any Underwriter or the arrangements with respect to the underwriting of the offering of the Securities contemplated hereby furnished in writing to the Trust, the Company or the Guarantor by an Underwriter through you expressly for use therein; (d) The documents incorporated by reference in the Registration Statement and the Prospectus, when they became effective or were filed (or, if an amendment with respect to any such document was filed or became effective, when such amendment was filed or became effective) with the Commission, as the case may be, conformed in all material respects to the requirements of the Exchange Act and the rules and regulations thereunder, and any further documents so filed and incorporated by reference will, when they become effective or are filed with the Commission, as the case may be, conform in all material respects to the requirements of the Exchange Act and the rules and regulations thereunder; none of such documents, when it became effective or was filed (or, if an amendment with respect to any such documents was filed or became 3 effective, when such amendment was filed or became effective) contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; and no such further document, when it becomes effective or is filed, will contain an untrue statement of a material fact or will omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; (e) Coopers & Lybrand L.L.P. are independent certified public accountants as required by the Act and the rules and regulations of the Commission thereunder; (f) The Trust has been duly created and is validly existing in good standing as a business trust under the Delaware Business Trust Act, is and will be treated as a "grantor trust" for Federal income tax purposes under existing law, has the trust power and authority to conduct its business as presently conducted and as described in the Prospectus, and will not be required to be authorized to do business in any other jurisdiction. The Trust has all requisite power and authority to issue the Trust Receipts and purchase the Series C Preferred Securities as described in the Prospectus. (g) The Company is a validly existing limited partnership in good standing under the laws of the State of Delaware. The Company has all requisite power and authority to issue the Series C Preferred Securities to the Trust and lend the proceeds thereof to the Guarantor as described in the Prospectus; (h) The Guarantor is a validly existing and subsisting corporation under the laws of the Commonwealth of Pennsylvania. Each of the Guarantor's subsidiaries ("Subsidiaries") which constitutes a "gas utility company" or an "electric utility company," as defined in the Public Utility Holding Company Act of 1935, as amended (a "Utility Subsidiary"), is a validly existing corporation under the laws of its jurisdiction of incorporation. The Guarantor and each Utility Subsidiary have all requisite power and authority to own and occupy their respective properties and carry on their respective businesses as presently conducted and as described in the Prospectus and are duly qualified as foreign corporations to do business and in good standing in every jurisdiction in which the nature of the business conducted or property owned by them makes such qualification necessary and in which the failure to so qualify would have a materially adverse effect on the Guarantor; 4 (i) The Guarantee has been duly authorized and executed by the Guarantor, and when issued and delivered will constitute a legal, valid and binding obligation of the Guarantor, enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditor's rights and to general equity principles; (j) The Subordinated Debentures have been duly authorized and when issued and delivered to the Company will constitute the legal, valid and binding obligations of the Guarantor, enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditor's rights and to general equity principles; (k) The Trust Receipts have been duly authorized by the Trust and will conform to the description thereof in the Prospectus; and when the Trust Receipts are executed and delivered to the Underwriters and are paid for by the Underwriters in accordance with the terms of this Agreement, the Trust Receipts will be validly issued, fully paid and non-assessable beneficial interests in the Trust, and not subject to any preemptive rights; (l) The Series C Preferred Securities have been duly authorized by the Company and will conform to the description thereof in the Prospectus; and when the Series C Preferred Securities are executed and delivered to the Trust and are paid for by the Trust in accordance with the terms of this Agreement, the Series C Preferred Securities will be duly issued, fully paid and non-assessable, and free of preemptive rights; (m) The issue and sale of the Trust Receipts by the Trust, the issue of the Series C Preferred Securities by the Company to the Trust, the issue of the Subordinated Debentures by the Guarantor to the Company, the compliance by the Company and the Guarantor with all of the provisions of this Agreement, the execution, delivery and performance by the Guarantor of the Guarantee, and the consummation of the transactions herein and therein contemplated will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any trust agreement, indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Trust, the Guarantor, the Company or any other Subsidiary is a party or by which the Trust, the Guarantor, the Company or any other Subsidiary is bound or to which any of the property or assets of the Trust, the Guarantor, the Company or any other Subsidiary is subject, which breach, violation or default would be material to the issue and sale of the Securities or would have a material adverse effect on the general affairs, management, prospectus, financial position, stockholders' equity (or partnership net worth, as applicable) or results of operations of the Trust, the Company 5 or the Guarantor and its Subsidiaries taken as a whole, nor will such action result in any violation of the provisions of the Articles of Incorporation or Bylaws of the Guarantor or the Trust's Certificate of Trust or the Amended and Restated Trust Agreement (the "Trust Agreement") among the Company, as grantor, First Union Trust Company, National Association (the "Trustee") and PECO Energy Capital Corp., the sole general partner of the Company, for the limited purpose stated therein or the Certificate of Limited Partnership or Limited Partnership Agreement of the Company or any statute, order, rule or regulation of any court or governmental agency or body having jurisdiction over the Trust, the Guarantor, the Company or any other Subsidiary or any of their properties; (n) Except (i) for the order of the Commission making the Registration Statement effective, (ii) for the Notice of Registration of a Securities Certificate by the Pennsylvania Public Utility Commission in respect of the issuance of the Trust Receipts, (iii) for permits and similar authorizations required under the securities or "Blue Sky" laws of any jurisdiction, (iv) for an application for the qualification of the Second Supplemental Indenture to the indenture (as supplemented, the "Indenture") between the Guarantor and First Union National Bank, as trustee, under the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), and to the extent, if any, required pursuant to the undertakings set forth under Item 17 of Part II of the Registration Statement, no consent, approval, authorization or other order of any governmental authority is legally required for the execution, delivery and performance of this Agreement by the Trust, the Company and Guarantor and the consummation of the transactions contemplated hereby; (o) This Agreement has been duly authorized, executed and delivered by the Company and by the Guarantor; and (p) All of the issued general partner interests of the Company have been duly and validly authorized and issued and are fully paid and non-assessable and are owned by the Guarantor or a wholly owned subsidiary of the Guarantor and free of preemptive rights. 2. (a) (i) Subject to the terms and conditions herein set forth, the Guarantor and the Company shall cause the Trust to issue and sell to each of the Underwriters, and each of the Underwriters agrees, severally and not jointly, to purchase from the Trust, at a purchase price per Trust Receipt of $25.00, the number of Trust Receipts set forth opposite the name of such Underwriter in Schedule I hereto. (ii) The Guarantor hereby guarantees the timely performance by the Trust of the issue and sale of the Trust Receipts. 6 (b) The Guarantor agrees to execute and deliver to the Company the Guarantee concurrently with the issue and sale of the Trust Receipts. (c) As compensation to the Underwriters for their commitments hereunder, and in light of the fact that the proceeds of the sale of the Trust Receipts will be applied to the purchase of the Series C Preferred Securities and the proceeds of the sale of the Series C Preferred Securities will, in turn, be lent by the Company to the Guarantor, the Guarantor agrees to pay at the Time of Delivery (as defined in Section 4 hereof) to Smith Barney Inc. for the accounts of the several Underwriters, an amount equal to $_______ per Trust Receipt; provided that such compensation will be $0.50 per Trust Receipt sold to certain institutions. 3. Upon the authorization by you of the release of the Trust Receipts, the several Underwriters propose to offer the Trust Receipts for sale upon the terms and conditions set forth in the Prospectus. 4. (a) Certificates, on original issuance, will be issued in the form of one or more global certificates registered in the name of The Depository Trust Company or its nominee for the accounts of the Underwriters representing the Trust Receipts. Such certificates shall be delivered by or on behalf of the Trust to The Depository Trust Company for the account of each Underwriter, against payment by such Underwriter or on its behalf of the purchase price therefor by certified or official bank check or checks, payable to the order of the Trust in Philadelphia Clearing House (next day) funds, all at the office of the Guarantor or, in the case of delivery of the said certificates at such other place or places as shall be agreed upon by the Guarantor and Smith Barney Inc. The time and date of such delivery and payment shall be, with respect to the Trust Receipts, 9:30 a.m., Philadelphia time, on _______, 1997, or at such other time and date as you and the Trust may agree upon in writing. The time and date for the delivery of the Trust Receipts is herein called the "Time of Delivery." Such certificates will be made available for checking and packaging at least twenty-four hours prior to the Time of Delivery at the office of The Depository Trust Company, 55 Water Street, New York, New York 10004. (b) At the Time of Delivery, the Guarantor will pay, or cause to be paid, the commission payable to the Underwriters under Section 2 hereof by certified or official bank check or checks, payable to the order of Smith Barney Inc. in next day funds. 5. Each of the Company and the Guarantor jointly and severally agrees with each of the Underwriters: (a) To complete the Prospectus in a form approved by you and to file the Prospectus pursuant to Rule 424(b) under the Act 7 not later than the Commission's close of business on the second business day following the execution and delivery of this Agreement; to furnish you, without charge, three signed copies of the Registration Statement (or copies thereof), including exhibits, and, during the period mentioned in paragraph (d) below, as many copies of the Prospectus and any supplements and amendments thereto as you may reasonably request. (b) Other than pursuant to filings under the Exchange Act incorporated in the Registration Statement and the Prospectus by reference, before amending or supplementing the Registration Statement or the Prospectus, to furnish to you a copy of each such proposed amendment or supplement and not to file any such proposed amendment or supplement to which you reasonably object in writing. (c) As soon as the Company and the Guarantor are advised thereof, to promptly advise you orally, and (if requested by you) to confirm such advice in writing, (i) when any amendment to the Registration Statement has become effective or any amendment or supplement to the Prospectus has been filed, (ii) when any stop order has been issued under the Act with respect to the Registration Statement or any proceedings therefor have been instituted or are threatened; and to make every reasonable effort to secure the prompt removal of any stop order, if issued, (iii) of the suspension of the Securities for offering or sale in any jurisdiction, and (iv) of the happening of any event during the period mentioned in subparagraph (d) below which in the judgment of the Company and the Guarantor makes any statement made in the Registration Statement or the Prospectus untrue and which requires the making of any changes in the Registration Statement or the Prospectus in order to make the statements therein not misleading. (d) If, during such period after the first date of the public offering of the Securities (not exceeding nine months) as in the opinion of your counsel the Prospectus is required by law to be delivered in connection with sales by an Underwriter or dealer, any event shall occur as a result of which it is necessary to amend or supplement the Prospectus in order to make the statements therein, in the light of the circumstances when the Prospectus is delivered to a purchaser, not misleading, or if it is necessary to amend or supplement the Prospectus to comply with law, forthwith to prepare and duly file with the Commission an appropriate supplement or amendment thereto, and furnish, at its own expense, to you such reasonable number of copies thereof as you shall reasonably request. If any Underwriter is required to deliver a Prospectus after the expiration of the aforesaid period, the Trust, the Company and Guarantor will, if requested by such Underwriter and in each case at the expense of such Underwriter, furnish Prospectuses and supplements and amendments thereto, as aforesaid, or furnish a reasonable quantity of a supplemented prospectus or of supplements to the Prospectus complying with Section 10(a)(3) of the Act. 8 (e) To cooperate with you and counsel for the Underwriters to qualify the Securities for offer and sale under the securities or Blue Sky laws of such jurisdictions as you shall reasonably request, provided that none of the Trust, the Company nor the Guarantor shall be required to qualify as a foreign corporation in any jurisdiction where it is not now so qualified or to take any action which would subject it to general service of process in any jurisdiction where it is not now so subject, and to pay all expenses (including fees and disbursements of counsel) in connection therewith as well as all fees payable in connection with the review (if any) of the offering of the Securities by the National Association of Securities Dealers, Inc. (f) In the case of the Guarantor, to make generally available to the Guarantor's security holders a consolidated earnings statement (which need not be audited) for the first full twelve consecutive months ended after the date deemed to be the effective date of the Registration Statement pursuant to Rule 158 promulgated under the Securities Act, or successor provision of law, rule or regulation, as soon as is reasonably practicable after the end of such period, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act. (g) During the period beginning from the date hereof and continuing to and including the earlier of (i) the date, after the last Time of Delivery, on which the distribution of the Securities ceases, as determined by Smith Barney Inc. or (ii) the date which is 30 days after the last Time of Delivery, not to offer, sell, contract to sell or otherwise dispose of any Securities, any preferred stock or any other securities (including any undertakings relating to any securities substantially similar to the Trust Receipts or Series C Preferred Securities) of the Trust, the Company or the Guarantor which are substantially similar to the Trust Receipts, the Series C Preferred Securities or the Guarantee, any securities convertible into or exchangeable for Trust Receipts, the Series C Preferred Securities, the Guarantee, preferred stock or such substantially similar securities of the Trust, the Company or the Guarantor (other than pursuant to employee stock option plans of the Guarantor existing, or on the conversion of convertible securities outstanding, on the date of this Agreement), without the prior written consent of Smith Barney Inc. (h) During a period of five years from the effective date of the Registration Statement, to furnish to the representatives of the Underwriters copies of all reports or other communications (financial or other) furnished to all stockholders of the Guarantor, and deliver to you (i) as soon as they are available, copies of any reports and financial statements furnished to or filed with the Commission or any national securities exchange on which a class of securities of the Guarantor, the Trust or the Company is listed; and (ii) such additional information concerning the business and financial condition of the Guarantor, the Trust 9 and the Company as you may from time to time reasonably request (such financial statements to be on a consolidated basis to the extent the accounts of the Guarantor and its Subsidiaries are consolidated in reports furnished to its stockholders generally or to the Commission). (i) To use its best efforts to list, subject to notice of issuance, the Trust Receipts on the New York Stock Exchange, subject to the Underwriters making the required distribution of the Trust Receipts. 6. The Company and the Guarantor jointly and severally covenant and agree with the several Underwriters that the Trust, the Company and the Guarantor will pay or cause to be paid the following: (i) the fees, disbursements and expenses of the Trust's, the Company's and the Guarantor's counsel and accountants in connection with the registration of the Securities under the Act and other expenses in connection with the preparation, printing and filing of the Registration Statement, any Preliminary Prospectus and the Prospectus and amendments and supplements thereto and the mailing and delivering of copies thereof to the Underwriters and dealers; (ii) the cost of printing or producing any Agreement among the Underwriters, this Agreement, the Blue Sky and Legal Investment Memoranda, if any, and any other documents in connection with the offering, purchase, sale and delivery of the Securities; (iii) all expenses in connection with the qualification of the Securities for offering and sale under state securities and insurance securities laws as provided in Section 5(e) hereof, including the fees and disbursements of counsel for the Underwriters in connection with such qualification and in connection with the Blue Sky and Legal Investment Memoranda; (iv) any fees charged by securities rating services for rating the Securities; (v) the cost of preparing certificates for the Trust Receipts; (vi) the cost and charges of any transfer agent or registrar; (vii) the cost of qualifying the Trust Receipts and the Series C Preferred Securities with The Depository Trust Company; (viii) listing fees; and (ix) all other costs and expenses incident to the performance of its obligations hereunder which are not otherwise specifically provided for in this Section. It is understood, however, that, except as provided in this Section, Section 8 and Section 11 hereof, the Underwriters will pay all of their own costs and expenses, including the fees of their counsel, transfer taxes on resale of any of the Trust Receipts by them, and any advertising expenses in connection with offers they may make. 7. (a) The several obligations of the Underwriters hereunder, as to Trust Receipts to be delivered at the Time of Delivery, are subject to the following conditions: (i) At the Time of Delivery, there shall be in full force and effect a Notice of Registration of a Securities Certificate of the Guarantor in respect to the issuance of its 10 Subordinated Debentures and the Guarantee in connection with the issuance of the Trust Receipts and the transactions relating thereto substantially in accordance with the terms and conditions herein set forth and containing no provision unacceptable to you, it being understood that the Notice in effect as of the date of this Agreement (a copy of which has been delivered to you) does not contain any such unacceptable provision, and that no subsequent Notice shall be deemed to contain any such unacceptable provision, unless you, within 24 hours after receiving a copy thereof from the Guarantor, shall give notice to the Guarantor to the effect that such Notice contains an unacceptable provision. (ii) At the Time of Delivery: (A) no stop order suspending the effectiveness of the Registration Statement shall be in effect, and no proceedings for that purpose shall be pending before, or threatened by, the Commission; (B) the Indenture shall have become and be qualified under the Trust Indenture Act; (C) subsequent to the date of the most recent financial statements incorporated by reference in the Prospectus as of the date of this Agreement, there shall have been no material adverse change or development which it is reasonable to believe will result in a material adverse change in the financial condition, business or results of operations of the Guarantor and its Subsidiaries, considered as a whole, except as set forth in the Registration Statement and the Prospectus, including the documents incorporated by reference therein, as of the effective date of this Agreement; (D) the Company and the Guarantor shall have performed all agreements contained herein to be performed by them at or prior to such date, including delivery of the Securities; and (E) the representations and warranties of the Company and the Guarantor contained herein shall be true and correct in all material respects. (iii) At the Time of Delivery and simultaneously with each issuance and sale of the Trust Receipts, you shall be furnished with each of the following opinions or letters: (A) a favorable opinion, dated at the Time of Delivery, of Ballard Spahr Andrews & Ingersoll (Special Counsel for the Company and the Guarantor) in form and substance reasonably satisfactory to you; 11 (B) a favorable opinion, dated at the Time of Delivery, of Richards, Layton & Finger, P.A. (Special Delaware Counsel for the Trust and the Company) in form and substance reasonably satisfactory to you; (C) a favorable opinion, dated at the Time of Delivery, of corporate counsel for the Guarantor in form and substance reasonably satisfactory to you; and (D) a favorable opinion, dated at the Time of Delivery, of Drinker Biddle & Reath LLP (Counsel for the Underwriters), in form and substance reasonably satisfactory to you. (iv) At the time that this Agreement is signed and at the Time of Delivery, Coopers & Lybrand L.L.P. shall have furnished to you a letter or letters, dated the respective date of delivery thereof, in form and substance reasonably satisfactory to you. (v) At the Time of Delivery, the Trust Receipts to be delivered at the Time of Delivery shall have been duly approved for listing, subject to notice of issuance, on the New York Stock Exchange. (vi) The Guarantor shall have furnished or caused to be furnished to you at the Time of Delivery certificates of officers of the Guarantor satisfactory to you as to the accuracy of the representations and warranties of the Company and the Guarantor herein at and as of the Time of Delivery, as to the performance by the Trust, the Company and the Guarantor of all of their obligations hereunder to be performed at or prior to the Time of Delivery, as to the matters set forth in this subsection (a) of this Section 7 and as to such other matters as you may reasonably request. (vii) After the execution and delivery of this Agreement and prior to the Time of Delivery (A) trading generally shall not have been suspended or materially limited on or by, as the case may be, the New York Stock Exchange or the National Association of Securities Dealers, Inc., (B) trading of any security issued by the Trust, the Company or the Guarantor shall not have been suspended on any exchange or in any other over-the-counter market, (C) there shall not have occurred any downgrading and no notice shall have been given of "Credit Watch with Negative Implications" in the rating accorded the Trust Receipts by Moody's Investors Services, Inc. or Standard & Poor's Corporation, (D) a general moratorium on commercial banking activities in New York or Pennsylvania shall not have been declared by either Federal or New York State or Pennsylvania authorities, 12 and (E) there shall not have occurred any outbreak or escalation of hostilities or any calamity or crisis of comparable magnitude that, in your judgment, is material and adverse and, in the case of any of the events specified in clauses (A) through (E), singly or together with any other such event makes it, in your reasonable judgment, impracticable or inadvisable to market the Trust Receipts to be delivered at the Time of Delivery on the terms and in the manner contemplated in the Prospectus or to enforce contracts for the resale of the Trust Receipts by the Underwriters. (b) The obligations of the Company and Guarantor to deliver or cause the Trust to deliver the Securities to be delivered at the Time of Delivery are subject to the following conditions: (i) At the Time of Delivery, no stop order suspending the effectiveness of the Registration Statement shall be in effect and no proceedings for that purpose shall be pending before, or threatened by, the Commission. (ii) At the Time of Delivery, there shall be in full force and effect a Notice of Registration of a Securities Certificate of the Guarantor in respect of the issuance of its Subordinated Debentures and the Guarantee in connection with the issuance of the Trust Receipts and the transactions relating thereto substantially in accordance with the terms and conditions herein set forth and containing no provision unacceptable to the Guarantor, it being understood that the Notice in effect as of the date of this Agreement does not contain any such unacceptable provision, and that no subsequent Notice shall be deemed to contain any such unacceptable provision, unless the Guarantor, within 24 hours after receiving a copy thereof, shall have given notice to you to the effect that such Notice contains an unacceptable provision. (iii) At the Time of Delivery, the Trust shall receive payment for the Trust Receipts to be delivered at the Time of Delivery. 8. (a) The Company and the Guarantor agree jointly and severally to indemnify and hold harmless each Underwriter and each person, if any, who controls any Underwriter within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act from and against any and all losses, claims, damages, liabilities and expenses based upon (x) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement (including the Prospectus contained therein and including any amendment or supplement to any thereof) or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading or, (y) to the extent not covered by clause (x), any untrue statement of a material fact contained in any Preliminary 13 Prospectus, the Prospectus or any amendment or supplement thereto or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, all in light of the circumstances under which they were made, except in either case insofar as such losses, claims, damages, liabilities or expenses are caused by (i) any such untrue statement or omission or alleged untrue statement or omission based upon information furnished in writing to the Company or Guarantor by any Underwriter expressly for use therein, or (ii) the failure of any Underwriter to send to any purchaser to whom it had sent a Preliminary Prospectus an amended Prospectus as shall have been furnished by the Company or the Guarantor within the time periods required by the Securities Act and in such quantities as are required by each Underwriter for such purpose (excluding documents incorporated therein by reference), if required by the Securities Act, to the extent that the amended prospectus would have cured the defect in the Preliminary Prospectus giving rise to such losses, claims, damages or liabilities, or (iii) any use of the Prospectus by any Underwriter after the expiration of that period, if any, during which the Underwriter is required by law to deliver a prospectus, unless the Company and Guarantor shall have been advised in writing of such intended use. (b) If any action, suit or proceeding shall be brought against any Underwriter or any person controlling any Underwriter in respect of which indemnity may be sought against the Guarantor or the Company, such Underwriter or such controlling person shall promptly notify the Company and the Guarantor and the Company and the Guarantor shall assume the defense thereof, including the employment of counsel and payment of all fees and expenses. Such Underwriter or any such controlling person shall have the right to employ separate counsel in any such action, suit or proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Underwriter or such controlling person unless (i) the Company and Guarantor have agreed in writing to any such fees and expenses, (ii) the Company and the Guarantor have failed, within ___ days after the Company and the Guarantor have been so notified, to assume the defense and employ counsel, or (iii) the named parties to any such action, suit or proceeding (including any impleaded parties) include both such Underwriter or such controlling person and the Company and the Guarantor and such Underwriter or such controlling person shall have been advised by its counsel that representation of such indemnified party and the Company and the Guarantor by the same counsel would be inappropriate under applicable standards of professional conduct (whether or not such representation by the same counsel has been proposed) due to actual or potential differing interests among them (in which case the Company and the Guarantor shall not have the right to assume the defense of such action, suit or proceeding on behalf of such Underwriter or such controlling person). It is understood, however, that the Company 14 and the Guarantor shall, in connection with any one such action, suit or proceeding or separate but substantially similar or related actions, suits or proceedings in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of only one separate firm of attorneys (in addition to any local counsel) at any time for all such Underwriters and controlling persons not having actual or potential differing interests with you or among themselves, which firm shall be designated in writing by Smith Barney Inc., and that all such fees and expenses shall be reimbursed as they become due. The Company and the Guarantor shall not be liable for any settlement of any such action, suit or proceeding effected without their written consent, but if settled with such written consent, or if there be a final judgment for the plaintiff in any such action, suit or proceeding, the Company and the Guarantor agree to indemnify and hold harmless any Underwriter, to the extent provided in the preceding paragraph, and any such controlling person from and against any loss, claim, damage, liability or expense by reason of such settlement or judgment. (c) Each Underwriter agrees, severally and not jointly, to indemnify and hold harmless the Company, its directors, its officers who sign the Registration Statement, and any person who controls the Company within the meaning of Section 15 of the Act or Section 20 of the Exchange Act, the Trust, the Trustee and its controlling persons and directors and officers, and the Guarantor and its controlling persons, directors and officers to the same extent as the foregoing indemnity from the Company and Guarantor to each Underwriter, but only with respect to information relating to such Underwriter furnished in writing by or on behalf of such Underwriter through you expressly for use in the Registration Statement, the Prospectus or any Preliminary Prospectus, or any amendment or supplement thereto. If any action, suit or proceeding shall be brought against the Company, the Trust or the Guarantor or any of their directors, any such officer, or any such controlling person, based on the Registration Statement, the Prospectus or any Preliminary Prospectus, or any amendment or supplement thereto, and in respect of which indemnity may be sought against any Underwriter pursuant to this paragraph (c), such Underwriter shall have the rights and duties given to the Company and Guarantor by paragraph (b) above (except that if the Company and Guarantor shall have assumed the defense thereof such Underwriter shall not be required to do so, but may employ separate counsel therein and participate in the defense thereof, but the fees and expenses of such counsel shall be at such Underwriter's expense), and the Company and Guarantor, its directors, any such officer, and any such controlling person, shall have the rights and duties given to the Underwriters by paragraph (b) above. The foregoing indemnity agreement shall be in addition to any liability which the Underwriters may otherwise have. The Underwriters shall not be liable for any settlement of any such action, suit or proceeding effected without their written consent, but if settled 15 with such written consent, of if there be a final judgement for the plaintiff in any such action, suit or proceeding, the Underwriters agree to indemnify and hold harmless the Company and the Guarantor to the extent provided in the preceding paragraph, and any such controlling person from and against any loss, claim, damage, liability or expense by reason of such settlement or judgment. (d) If the indemnification provided for in this Section 8 is for any reason held to be unenforceable by an indemnified party although applicable in accordance with its terms (including the terms of subsection (c) of this Section 8), an indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities or expenses in such proportion as is equitable and as shall reflect both the relative benefit received by the Trust, the Company and the Guarantor on the one hand and the Underwriter or Underwriters, as the case may be, on the other hand from the offering of the Securities, and the relative fault, if any, of the Trust, the Company and Guarantor on the one hand and of the Underwriter or Underwriters, as the case may be, on the other hand in connection with the statements or omissions which resulted in such losses, liabilities, claims, damages or expenses, as well as any other relevant equitable considerations. The relative benefit received by the Trust, the Company and Guarantor on the one hand and the Underwriter or Underwriters, as the case may be, on the other hand in connection with the offering of the Securities shall be deemed to be in the same proportion as the total net proceeds from the offering of the Securities (before deducting expenses) received by the Trust, the Company and the Guarantor bear to the total commissions, concessions and discounts received by the Underwriter or Underwriters, as the case may be. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Trust, the Company or the Guarantor on the one hand or the Underwriter or Underwriters, as the case may be, on the other hand and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. (e) The Company, the Guarantor and the Underwriters agree that it would not be just and equitable if contribution pursuant to this Section 8 were determined by a pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to in paragraph (d) above. The amount paid or payable by an indemnified party as a result of the losses, liabilities, claims, damages and expenses referred to in paragraph (d) above shall be deemed to include, subject to the limitations set forth above, any legal or other 16 expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 8, no Underwriter shall be required to contribute any amount in excess of the amount by which the total price of the Trust Receipts underwritten by it and distributed to the public exceeds the amount of any damages which such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters' obligations to contribute pursuant to this Section 8 are several in proportion to the respective principal amounts of Trust Receipts set forth opposite their names in Schedule I hereto and not joint. (f) No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened action, suit or proceeding in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such action, suit or proceeding. (g) Any losses, claims, damages, liabilities or expenses for which an indemnified party is entitled to indemnification or contribution under this Section 8 shall be paid by the indemnifying party to the indemnified party as such losses, claims, damages, liabilities or expenses become due. A successor to any Underwriter or any person controlling any Underwriter, or to the Trust, the Guarantor or the Company, their directors or officers, or any person controlling the Trust, the Guarantor or the Company, shall be entitled to the benefits of the indemnity, contribution and reimbursement agreements contained in this Section 8. 9. If any one or more of the Underwriters shall default in its obligation to purchase the amount of Trust Receipts which it has agreed to purchase hereunder at the Time of Delivery, in accordance with the terms hereof, and the aggregate number of Trust Receipts which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase is not more than one-eleventh of the aggregate number of Trust Receipts to be purchased on such date, the other Underwriters shall be obligated severally in the proportions that the number of Trust Receipts which they have respectively agreed to purchase at the Time of Delivery bears to the aggregate number of Trust Receipts which all such non-defaulting Underwriters have collectively agreed to purchase at the Time of Delivery, or in such other proportions as you may specify, to purchase the Trust Receipts which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase at the Time of Delivery; provided that in no event shall 17 the number of Trust Receipts that any Underwriter has agreed to purchase at a Time of Delivery be increased pursuant to this Section 9 by an amount in excess of one-tenth of such number of Trust Receipts without the written consent of such Underwriter. If any Underwriter or Underwriters shall fail or refuse to purchase any Trust Receipts and the aggregate number of Trust Receipts which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase exceeds one-eleventh of the aggregate number of Trust Receipts to be purchased by all Underwriters hereunder at the Time of Delivery and arrangements satisfactory to you, the Company and Guarantor for the purchase of such Trust Receipts are not made within 48 hours after such default, this Agreement will terminate without liability on the part of any non-defaulting Underwriter or the Company and Guarantor for the purchase or sale of any Trust Receipts under this Agreement. Any action taken under this Section 9 shall not relieve any defaulting Underwriter from liability in respect of any default of such Underwriter under this Agreement. 10. The respective indemnities, agreements, representations, warranties and other statements of the Company, the Guarantor and the several Underwriters, as set forth in this Agreement or made by or on behalf of them, respectively, pursuant to this Agreement, shall remain in full force and effect, regardless of any investigation (or any statement as to the results thereof) made by or on behalf of any Underwriter or any controlling person of any Underwriter, or the Company, the Guarantor or any officer or director or controlling person of the Company or the Guarantor, and shall survive delivery of and payment for the Trust Receipts. 11. If this Agreement shall be terminated pursuant to Section 9 hereof, the Company and the Guarantor shall not then be under any liability to any Underwriter except as provided in Section 6 and Section 8 hereof; but if, for any other reason, any Securities are not delivered by or on behalf of the Trust, the Company or the Guarantor as provided herein, the Company and the Guarantor jointly and severally will reimburse the Underwriters through you for all out-of-pocket expenses approved in writing by you, including fees and disbursements of counsel, reasonably incurred by the Underwriters in making preparations for the purchase, sale and delivery of the Securities not so delivered, but the Company and the Guarantor shall then be under no further liability to any Underwriter except as provided in Section 6 and Section 8 hereof. 12. In all dealings hereunder, you shall act on behalf of each of the Underwriters, and the parties hereto shall be entitled to act and rely upon any statement, request, notice or agreement on behalf of any Underwriter made or given by you on behalf of the Underwriters. All statements, requests, notices and agreements hereunder shall be in writing, and if to the Underwriters shall be delivered 18 or sent by mail, telex or facsimile transmission to the Underwriters in care of Smith Barney Inc., 333 West 34th Street, New York, New York 10001, Attention: Manager, Investment Banking Division; and if to the Trust, the Company or the Guarantor shall be delivered or sent by mail, telex or facsimile transmission to the address of the Guarantor set forth in the Registration Statement, Attention: Secretary. 13. This Agreement shall be binding upon, and inure solely to the benefit of, the Underwriters, the Trust, the Company, the Guarantor and, to the extent provided in Section 8 and Section 10 hereof, the Trustee, the officers and directors of the Company and the Guarantor and each person who controls the Trust, the Trustee, the Company, the Guarantor or any Underwriter, and their respective heirs, executors, administrators, successors and assigns, and no other person shall acquire or have any right under or by virtue of this Agreement. No purchaser of any of the Trust Receipts from any Underwriter shall be deemed a successor or assign by reason merely of such purchase. 14. Time shall be of the essence of this Agreement. As used herein, the term "business day" shall mean any day when the Commission's office in Washington, D.C. is open for business. 15. This Agreement shall be governed by and construed in accordance with the laws of the State of New York. 16. This Agreement may be executed by any one or more of the parties hereto in any number of counterparts, each of which shall be deemed to be an original, but all such respective counterparts shall together constitute one and the same instrument. If the foregoing is in accordance with your understanding, please sign and return to us five counterparts hereof, and upon the acceptance hereof by you, on behalf of each of the Underwriters, this letter and such acceptance hereof shall constitute a binding agreement between each of the Underwriters, on the one hand, and the Company and the Guarantor on the other. It is understood that your acceptance of this letter on behalf of each of the Underwriters is pursuant to the authority set forth in a form of Agreement among Underwriters, the form of which shall be submitted 19 to the Company and the Guarantor for examination upon request, but without warranty on your part as to the authority of the signers thereof. Very truly yours, PECO Energy Capital, L.P., By: PECO Energy Capital Corp., General Partner By:_______________________________ PECO Energy Company By:_______________________________ Accepted, _______, 1997 Smith Barney Inc. Lehman Brothers Inc. By: Smith Barney Inc. By:_____________________ 20 SCHEDULE I Number of Trust Receipts Underwriters To Be Purchased ------------ --------------- SMITH BARNEY INC. LEHMAN BROTHERS INC. TOTAL ============= 21 EX-4 3 EXHIBIT 4.4 Action by the General Partner of PECO Energy Capital, L.P. Creating the ____% Cumulative Monthly Income Preferred Securities, Series C Pursuant to Section 13.01 of the Amended and Restated Limited Partnership Agreement of PECO Energy Capital, L.P. dated as of July 25, 1994 (as amended from time to time, the "Partnership Agreement"), PECO Energy Capital Corp., as general partner (the "General Partner"), of PECO Energy Capital, L.P. (the "Partnership"), desiring to state the designations, rights, privileges, restrictions, preferences, voting rights and other terms and conditions of a new series of Preferred Partner Interests, hereby authorizes and establishes such new series of Preferred Partner Interests according to the following terms and conditions (each capitalized term used but not defined herein shall have the meaning set forth in the Partnership Agreement): (a) Designation. Two million (2,000,000) interests with an aggregate liquidation preference of $50,000,000 of the Preferred Partner Interests of the Partnership, liquidation preference $25 per Preferred Security, are hereby designated as "____% Cumulative Monthly Income Preferred Securities, Series C" (hereinafter the "Series C Preferred Securities"). (b) Distributions. (i) Holders of the Series C Preferred Securities shall be entitled to receive, when, as and if declared by the General Partner out of funds on hand held by the Partnership and legally available therefor, cumulative cash distributions at a rate per annum of ____% of the stated liquidation preference of $25 per Series C Preferred Security. Distributions on the Series C Preferred Securities which accrue from the date of original issue to June ___, 1997 shall be payable commencing on June 30, 1997. (ii) Distributions on the Series C Preferred Securities must be declared by the General Partner in any calendar year or portion thereof to the extent that the General Partner reasonably anticipates that at the time of payment the Partnership will have, and must be paid by the Partnership to the extent that at the time of proposed payment it has, funds legally available therefor sufficient to permit such payments. Distributions on the Series C Preferred Securities will be deferred if and for so long as PECO Energy Company ("PECO Energy") defers payments to the Partnership on the Series C Debentures (as defined below). Accrued and unpaid distributions on the Series C Preferred Securities will accrue additional distributions ("Additional Distributions") in respect thereof, to the extent permitted by law, at the rate of ____% per annum of the stated liquidation preference of $25 per Series C Preferred Securities. Such Additional Distributions shall be payable at the time the related deferred distribution is paid, but in any event by the end of such deferral period. Distributions declared on the Series C Preferred Securities will be payable to the holders of Series C Preferred Securities as they appear on the books and records of the Partnership on the relevant record dates, which will be the 15th day of the month of the relevant payment. (c) Redemption. (i) The Series C Preferred Securities are subject to redemption at the option of the General Partner, in whole or in part, from time to time, on or after June ___, 2002, at the Redemption Price (as defined below). (ii) Upon redemption or payment at maturity of the ____% Deferrable Interest Subordinated Debentures due 2037, Series C (the "Series C Debentures") issued by PECO Energy pursuant to a Second Supplemental Indenture dated as of June 1, 1997 between PECO Energy and First Union National Bank, as trustee (the "Supplemental Indenture") to the Indenture dated as of July 1, 1994 between PECO Energy and First Union National Bank, as successor trustee, as supplemented by a First Supplemental Indenture dated as of December 1, 1995 (as supplemented, the "Indenture"), the proceeds from such redemption or payment of the Series C Debentures shall be applied by the Partnership to redeem the Series C Preferred Securities at the redemption price of $25 per Preferred Security plus accumulated and unpaid distributions (whether or not declared) to the date fixed for redemption, together with any accrued Additional Distributions thereon (the "Redemption Price"). (iii) If a Tax Event shall occur and be continuing, the Series C Preferred Securities will be subject to redemption, at the option of the General Partner, in whole or in part at the Redemption Price within ninety (90) days following the occurrence of such Tax Event. If an Investment Company Act Event shall occur and be continuing, the Series C Preferred Securities will be subject to mandatory redemption in whole at the Redemption Price within ninety (90) days following the occurrence of such Investment Company Act Event. (d) Liquidation Distribution. In the event of any voluntary or involuntary dissolution and winding up of the Partnership, holders of the Series C Preferred Securities at the time outstanding will be entitled to receive out of the assets of the Partnership available for distribution to holders of Preferred Partner Interests, after satisfaction of liabilities to creditors as required by the Delaware Act and before any distribution of assets is made to holders of the general partner interests, but together with holders of every other series of Preferred Partner Interests outstanding, an amount equal to, in 2 the case of holders of Series C Preferred Securities, the aggregate of the stated liquidation preference of $25 per Series C Preferred Security plus accumulated and unpaid distributions and Additional Distributions to the date of payment (the "Liquidation Distribution"). (e) Voting Rights. The holders of the Series C Preferred Securities shall have no voting rights except as provided in the Partnership Agreement. (f) Subordination. The holders of Series C Preferred Securities are deemed, by acceptance of such Securities, to have (i) agreed that the Series C Debentures issued pursuant to the Supplemental Indenture are subordinate and junior in right of payment to all Senior Indebtedness (as defined in the Indenture) of PECO Energy and (ii) agreed that the Guarantee relating to the Series C Preferred Securities is subordinate and junior in right of payment to all general liabilities of PECO Energy. (g) Issuance. The Series C Preferred Securities shall be issued by the Partnership to and initially deposited with First Union Trust Company, National Association, as trustee of PECO Energy Capital Trust II, a statutory business trust created under an Amended and Restated Trust Agreement among the Trustee, the Partnership and, in certain limited respects, the General Partner, in consideration for the transfer to the Partnership of Series C Debentures with an aggregate principal amount equal to the aggregate liquidation preference of the Series C Preferred Securities. The Partnership shall initially be the transfer agent, registrar and paying agent for the Series C Preferred Securities. IN WITNESS WHEREOF, the General Partner has executed this Action effective as of June __, 1997. PECO Energy Capital Corp. By:______________________________ Name: J. Barry Mitchell Title: President 3 EX-4 4 EXHIBIT 4.9 PECO ENERGY COMPANY AND First Union National Bank, as Trustee SECOND SUPPLEMENTAL INDENTURE Dated as of June 1, 1997 to INDENTURE Dated as of July 1, 1994 Providing for the Issuance of ____% Deferrable Interest Subordinated Debentures, Series C TABLE OF CONTENTS Page ---- ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE................. 2 SECTION 1.01 Definitions................................................ 2 ARTICLE 2 THE SERIES C DEBENTURES.................................... 2 SECTION 2.01 Form of the Series C Debentures; Denominations............. 2 ARTICLE 3 REDEMPTION................................................. 3 SECTION 3.01 Redemption; Notice to Trustee.............................. 3 SECTION 3.02 Compliance with Terms of Indenture......................... 3 ARTICLE 4 EXTENSION PERIOD........................................... 4 SECTION 4.01 Limitation on Right of Company to Extend Interest Payment Period................................... 4 ARTICLE 5 CONCERNING THE TRUSTEE SECTION 5.01 Not Responsible for Recitals............................... 4 SECTION 5.02 Qualification Under Trust Indenture Act of 1939................................................... 4 ARTICLE 6 MISCELLANEOUS SECTION 6.01 Trust Indenture Act Controls............................... 4 SECTION 6.02 Severability Clause........................................ 5 SECTION 6.03 Governing Law.............................................. 5 SECTION 6.04 No Recourse Against Others................................. 5 SECTION 6.05 Use of Term "Trustee"...................................... 5 SECTION 6.06 Confirmation of Original Indenture......................... 5 SECTION 6.07 Successors................................................. 6 SECTION 6.08 Multiple Original Copies of this Indenture................. 6 SECTION 6.09 Table of Contents; Headings, Etc........................... 6 SECTION 6.10 Benefits of the Indenture.................................. 6 SECTION 6.11 Date of Indenture.......................................... 6 (i) SECOND SUPPLEMENTAL INDENTURE, dated as of June 1, 1997, by and between PECO Energy Company, a Pennsylvania corporation (the "Company"), and First Union National Bank, a national association, as successor trustee (the "Trustee"), to an Indenture, dated as of July 1, 1994 (the "Original Indenture"), by and between the Company and the Trustee, which was supplemented by a First Supplemental Indenture (the "First Supplemental Indenture") dated as of December 1, 1995 (the Original Indenture, as supplemented, the "Indenture"). WHEREAS, the Company has formed a wholly owned subsidiary, PECO Energy Capital Corp., which is the general partner of PECO Energy Capital, L.P., a Delaware limited partnership ("PECO Energy Capital"), to issue in series from time to time its limited partner interests ("Preferred Securities") and to loan the proceeds thereof, together with the investment by PECO Energy Capital Corp. in PECO Energy Capital, to the Company and to effect other similar arrangements. WHEREAS, the Company has duly executed and delivered to the Trustee the Original Indenture to provide for the issue of one or more series of deferrable interest subordinated debentures (herein sometimes called the "Debentures"), issuable as in the Indenture provided, and authorized and issued the initial series of Debentures which were designated therein as the 9% Deferrable Interest Subordinated Debentures, Series A. WHEREAS, the Company has duly executed and delivered to the Trustee the First Supplemental Indenture authorizing and providing for the issuance of the second series of Debentures which were designated the 8.72% Deferrable Interest Subordinated Debentures, Series B. WHEREAS, the Company desires to authorize and to effect the issuance of a third series of Debentures in an aggregate principal amount of $51,546,392 and to designate such series ____% Deferrable Interest Subordinated Debentures, Series C (the "Series C Debentures") under this Second Supplemental Indenture. WHEREAS, all things necessary to make the Series C Debentures when duly issued and executed by the Company and authenticated and delivered hereunder, the valid obligations of the Company, and to make this Second Supplemental Indenture a valid and binding agreement of the Company, in accordance with its terms, have been done. NOW THEREFORE: Each of the Company and the Trustee, intending to be legally bound hereby, agrees as follows for the benefit of the other party and for the equal and ratable benefit of the Holders of the Series C Debentures: ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE SECTION 1.01 Definitions. "Additional Interest", with respect to the Series C Debentures, means amounts, if any, which PECO Energy Capital would be required to pay as taxes, duties, assessments or governmental charges of whatever nature (other than withholding taxes) imposed by the United States, or any other taxing authority, with respect to the Series C Debentures. "Issue Date" means June ___, 1997. "Series C Debentures" means any of the Company's ____% Deferrable Interest Subordinated Debentures, Series C issued under this Second Supplemental Indenture. "Series C Debentureholder" or "Series C Holder" means a Person in whose name a Series C Debenture is registered on the Registrar's books. "Series C Preferred Securities" means the ____% Cumulative Monthly Income Preferred Securities, Series C, representing limited partner interests of PECO Energy Capital. Unless otherwise defined herein, all other capitalized terms used herein have the meanings set forth in the Original Indenture. ARTICLE 2 THE SERIES C DEBENTURES SECTION 2.01 Form of the Series C Debentures; Denominations. The Series C Debentures and the Trustee's certificate of authentication shall be substantially in the form of Exhibit A attached hereto. The terms and provisions contained in the Series C Debentures, a form of which is annexed hereto as Exhibit A, shall constitute, and are hereby expressly made, a part of this Second Supplemental Indenture. The Company and the Trustee, by their execution and delivery of this Second Supplemental Indenture, expressly agree to such terms and provisions and to be bound thereby. The Trustee shall authenticate and make available for delivery the Series C Debentures for original issue in the aggregate principal amount of $51,546,392 to evidence the Company's obligation with respect to the loan from PECO Energy 2 Capital, upon receipt by the Trustee of a Board of Directors resolution and a written order of the Company signed by two Officers of the Company, but without any further action by the Company. Such order shall specify the amount of the Series C Debentures to be authenticated and the date on which the original issue of Series C Debentures is to be authenticated and delivered to evidence the Company's obligation with respect to the loan from PECO Energy Capital. The aggregate principal amount of Series C Debentures outstanding at any time may not exceed $51,546,392 except as provided in Section 2.09 of the Original Indenture. The Series C Debentures shall be issuable only in registered form without coupons and only in denominations of $25.00 and any integral multiple thereof attached hereto as Exhibit A. ARTICLE 3 REDEMPTION SECTION 3.01 Redemption; Notice to Trustee. (a) The Series C Debentures are subject to redemption prior to maturity as provided in the form thereof attached hereto as Exhibit A. (b) If any or all of the Series C Debentures are to be redeemed pursuant to paragraph (a) above, in addition to the notices required by the Original Indenture, the Company shall give notice by first class mail, postage prepaid, to the Trustee at least 40 days prior to the date of such redemption. Any such notice of redemption shall state the date and price of redemption. SECTION 3.02 Compliance with Terms of Indenture. In case the Company shall desire to exercise such right to redeem all or any part of said Series C Debentures as hereinbefore provided, it shall comply with all the terms and provisions of Article III of the Original Indenture applicable thereto, and such redemption shall be made under and subject to the terms and provisions of said Article III and in the manner and with the effect therein provided, but at the time or times and at the respective redemption rates and upon mailing of notice, all as hereinbefore set forth in Section 3.01 of this Article. 3 ARTICLE 4 EXTENSION PERIOD SECTION 4.01 Limitation on Right of Company to Extend Interest Payment Period. The Company agrees that no extended interest payment period shall extend beyond the stated maturity date or redemption date of the Series C Debentures. ARTICLE 5 CONCERNING THE TRUSTEE The Trustee hereby reaffirms acceptance of the trust herein declared and provided and agrees to perform the same upon the terms and conditions set forth in the Indenture, as supplemented by the First Supplemental Indenture and this Second Supplemental Indenture, and upon the following terms and conditions: SECTION 5.01 Not Responsible for Recitals. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Second Supplemental Indenture or the due execution thereof by the Company or for or in respect of the recitals contained herein, all of which recitals are made solely by the Company. SECTION 5.02 Qualification Under Trust Indenture Act of 1939. The Trustee hereby acknowledges that the Company proposes to qualify this Second Supplemental Indenture under the Trust Indenture Act of 1939, as amended. ARTICLE 6 MISCELLANEOUS SECTION 6.01 Trust Indenture Act Controls. If any provision of this Second Supplemental Indenture limits, qualifies or conflicts with the duties imposed by operation of subsection (c) of Section 318 of the TIA, the imposed duties shall control. The provisions of Sections 310 to 317, inclusive, of the TIA that impose duties on any Person (including provisions automatically deemed included in an indenture unless the indenture provides that such provisions are excluded) as a part of and govern this Second Supplemental Indenture, except as, and to the extent, they are expressly 4 excluded from this Second Supplemental Indenture, as permitted by the TIA. SECTION 6.02 Severability Clause. If any provision in this Second Supplemental Indenture or in the Series C Debentures shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 6.03 Governing Law. This Second Supplemental Indenture and the Series C Debentures shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania as applied to contracts made and performed within the Commonwealth of Pennsylvania, without regard to its principles of conflicts of laws. SECTION 6.04 No Recourse Against Others. No director, officer, employee or stockholder, as such, of the Company shall have any liability for any obligations of the Company under the Series C Debentures or this Second Supplemental Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. By accepting a Series C Debenture, each Series C Debentureholder shall waive and release all such liability. The waiver and release shall be part of the consideration for the issue of the Series C Debentures. SECTION 6.05 Use of Term "Trustee". Unless otherwise clearly required by the context, the term, "Trustee," or any other equivalent term used in this Second Supplemental Indenture shall be held and construed to mean the trustee under the Indenture for the time being whether the original or a successor trustee. SECTION 6.06 Confirmation of Original Indenture. As supplemented by the First Supplemental Indenture and this Second Supplemental Indenture, the Original Indenture, is in all respects ratified and confirmed, and this Second Supplemental Indenture shall be read, taken and construed as a part of the Indenture so that all of the rights, remedies, terms, conditions, covenants and agreements of the Indenture shall apply and remain in full force and effect with respect to this Second Supplemental Indenture and to the Series C Debentures issued hereunder. 5 SECTION 6.07 Successors. All agreements of the Company in this Second Supplemental Indenture and the Series C Debentures shall bind its successors and assigns. All agreements of the Trustee in this Second Supplemental Indenture shall bind its successors and assigns. SECTION 6.08 Multiple Original Copies of this Indenture. The parties may sign any number of copies of this Second Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. Any signed copy shall be sufficient proof of this Second Supplemental Indenture. SECTION 6.09 Table of Contents; Headings, Etc. The Table of Contents, Cross-Reference Table, and headings of the Articles and Sections of this Second Supplemental Indenture have been inserted for convenience of reference only, are not to be considered a part hereof, and shall in no way modify or restrict any of the terms or provisions hereof. SECTION 6.10 Benefits of the Indenture. Except as expressly provided in Article 10 of the Original Indenture, nothing in this Second Supplemental Indenture or in the Series C Debentures, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, the Series C Holders and the Special Representative, any benefit or any legal or equitable right, remedy or claim under this Second Supplemental Indenture. SECTION 6.11 Date of Indenture. This Second Supplemental Indenture is dated as of June 1, 1997, but was actually executed and delivered on June ___, 1997. 6 SIGNATURES IN WITNESS WHEREOF, the undersigned, being duly authorized, have executed this Second Supplemental Indenture on behalf of the respective parties hereto as of the date first above written. PECO ENERGY COMPANY By: _____________________________________ Name: J. Barry Mitchell Title: Vice President - Finance FIRST UNION NATIONAL BANK, as Trustee By: _____________________________________ Name: ___________________________________ Title: __________________________________ PECO Energy Capital, L.P. By its General Partner, PECO Energy Capital Corp. By: __________________________________ Name: J. Barry Mitchell Title: President 7 Exhibit A ____% Deferrable Interest Subordinated Debentures, Series C due 2037 No. ___ PECO Energy Company, a Pennsylvania corporation (the "Company"), which term includes any successor corporation under the Indenture, as defined herein), for value received, hereby promises to pay to PECO Energy Capital, L.P. or registered assigns, the principal sum of _______________________________ __________________________________ Dollars on June ___, 2037, and to pay interest on said principal sum from June ____, 1997 (the "Issue Date") or from the most recent interest payment date (each such date, an "Interest Payment Date") to which interest has been paid or duly provided for, monthly in arrears on the last day of each calendar month of each year commencing June 30, 1997 at the rate of ____% per annum plus Additional Interest, if any, until the principal hereof shall have become due and payable, and on any overdue principal and premium, if any, and (to the extent that payment of such interest is enforceable under applicable law) on any overdue installment of interest at the same rate per annum. If at any time PECO Energy Capital, L.P. ("PECO Energy Capital") would be required to pay any taxes, duties, or other governmental charges (other than withholding taxes) imposed by the United States, or any other taxing authority, then, in any such case, the Company also will pay as Additional Interest such amounts as shall be required so that the net amounts received and retained by PECO Energy Capital after paying any such taxes, duties, or other governmental charges will not be less than the amounts PECO Energy Capital would have received had no such taxes, duties, assessments or other governmental charges been imposed. The amount of interest payable on any Interest Payment Date shall be computed on the basis of a 360-day year of twelve 30-day months. In the event that any date on which interest is payable on the Series C Debentures is not a Business Day, then payment of interest payable on such date will be made on the next succeeding day which is a Business Day (and without any interest or other payment in respect of any such delay), except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such date. The interest installment so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture, be paid to the person in whose name this Debenture is registered at the close of business on the regular record date for such interest installment, which shall be the fifteenth day of the month of, or in the case of an Interest Payment Date which is on the first Business Day of a month, the A-1 fifteenth day of the month next preceding, such Interest Payment Date. Any such interest installment not punctually paid or duly provided for shall forthwith cease to be payable to the registered holders on such regular record date, and may be paid to the person in whose name this Debenture is registered at the close of business on a special record date to be fixed by the Trustee for the payment of such defaulted interest, notice whereof shall be given to the registered holders of this series of Debentures not less than 10 days prior to such special record date, as more fully provided in the Indenture. The principal of (and premium, if any) and the interest on this Debenture shall be payable at the office or agency of the Company maintained for that purpose in Wilmington, Delaware in any coin or currency of the United States of America which at the time of payment is legal tender for payment of public and private debts; provided however, that payment of interest may be made at the option of the Company by check mailed to the registered holder at such address as shall appear in the Debenture Register. Notwithstanding the foregoing, so long as the holder of this Debenture is PECO Energy Capital, the payment of the principal of (and premium) and interest (including Additional Interest, if any) on this Debenture will be made at such place and to such account as may be designated by PECO Energy Capital. The indebtedness evidenced by this Debenture is, to the extent provided in the Indenture, subordinate and subject in right of payment to the prior payment in full of all Senior Indebtedness, and this Debenture is issued subject to the provisions of the Indenture with respect thereto. Each Holder of this Debenture, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Trustee on its behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination so provided and (c) appoints the Trustee its attorney-in-fact for any and all such purposes. Each Holder hereof, by its acceptance hereof, hereby waives all notice of the acceptance of the subordination provisions contained herein and in the Indenture by each holder of Senior Indebtedness, whether now outstanding or hereafter incurred, and waives reliance by each such Holder upon said provisions. This Debenture is one of a duly authorized series of Debentures of the Company (herein sometimes referred to as the "Series C Debentures"), specified in the Indenture, limited in aggregate principal amount as specified in the Indenture, issued under and pursuant to an Indenture dated as of July 1, 1994, as supplemented by a First Supplemental Indenture, dated as of December 1, 1995 and a Second Supplemental Indenture dated as of June 1, 1997 (as supplemented, the "Indenture") executed and delivered between the Company and First Union National Bank, as successor trustee (the "Trustee") to A-2 which reference is made to the Indenture for a description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee, the Company and the holders of the Debentures. By the terms of the Indenture, Debentures are issuable in series which may vary as to amount, date of maturity, rate of interest and in other respects as in the Indenture provided. The Series C Debentures are subject to mandatory redemption prior to maturity at 100% of the principal amount thereof plus accrued interest to the redemption date as follows: (i) in whole upon the dissolution of PECO Energy Capital; and (ii) in whole or in part upon a redemption of the Series C Preferred Securities, but if in part, in an aggregate principal amount equal to the aggregate stated liquidation preference of the Series C Preferred Securities redeemed. At the option of the Company, the Series C Debentures are subject to redemption prior to maturity (i) at any time on or after June ___, 2002, in whole or in part, and (ii) if a Tax Event shall occur and be continuing, in whole or in part, and in each case at 100% of the principal amount thereof plus accrued interest to the redemption date. "Tax Event" shall mean that PECO Energy Capital shall have received an opinion of counsel (which may be regular counsel to the Company or an Affiliate, but not an employee thereof) experienced in such matters to the effect that, as a result of any amendment to, or change (including any announced prospective change) in, the laws (or any regulations thereunder) of the United States or any political subdivision or taxing authority thereof or therein affecting taxation, or as a result of any official administrative pronouncement or judicial decision interpreting or applying such laws or regulations, which amendment or change is effective or such interpretation or pronouncement is announced on or after the date of original issuance of the Series C Preferred Securities, there is more than an insubstantial risk that (i) PECO Energy Capital is subject to United States Federal income tax with respect to interest received on the Debentures or PECO Energy Capital will otherwise not be taxed as a partnership, (ii) interest payable by the Company to PECO Energy Capital on the Series C Debentures will not be deductible for United States Federal income tax purposes or (iii) PECO Energy Capital is subject to more than a de minimis amount of other taxes, duties or other governmental charges. In the event of redemption of this Debenture in part only, a new Debenture or Debentures of this series for the A-3 unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof. In case an Event of Default shall have occurred and be continuing, the principal of all of the Debentures may be declared, and upon such declaration shall become, due and payable, in the manner, with the effect and subject to the conditions provided in the Indenture. The Indenture contains provisions for defeasance at any time of the entire indebtedness of this Debenture upon compliance by the Company with certain conditions set forth therein. Subject to certain exceptions in the Indenture which require the consent of every Holder, (i) the Indenture or the Series C Debentures may be amended with the written consent of the Holders of a majority in aggregate principal amount of the Series C Debentures at the time outstanding, and (ii) certain defaults or noncompliance with certain provisions may be waived by the written consent of the holders of a majority in aggregate principal amount of the Series C Debentures at the time outstanding. Subject to certain exceptions in the Indenture, without the consent of any Debentureholder, the Company and the Trustee may amend the Indenture or the Debentures to cure any ambiguity, defect or inconsistency, to bind a successor to the obligations of the Indenture, to provide for uncertificated Debentures in addition to certificated Debentures, to comply with any requirements of the Debentures or the Securities and Exchange Commission in connection with the qualification of the Indenture under the TIA, or to make any change that does not adversely affect the rights of any Debentureholder. Amendments bind all Holders and subsequent Holders. No reference herein to the Indenture and no provision of this Debenture or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and premium, if any, and interest on this Debenture at the time and place and at the rate and in the money herein prescribed. So long as an Event of Default has not occurred and is continuing, the Company shall have the right at any time during the term of the Series C Debentures, from time to time to extend the interest payment period of such Debentures to up to 60 consecutive months (the "Extended Interest Payment Period"), at the end of which period the Company shall pay all interest then accrued and unpaid (together with interest thereon at the rate specified for the Series C Debentures to the extent that payment of such interest is enforceable under applicable law); provided that, during such Extended Interest Payment Period the Company shall not declare or pay any dividend on, redeem or purchase any of its capital stock. Prior to the termination of any such Extended Interest Payment Period, the Company may further extend A-4 such Extended Interest Payment Period, provided that such Period together with all such further extensions thereof shall not exceed 60 consecutive months. At the termination of any such Extended Interest Payment Period and upon the payment of all accrued and unpaid interest and any additional amounts then due, the Company may select a new Extended Interest Payment period. As provided in the Indenture and subject to certain limitations therein set forth, this Debenture is transferable by the registered holder hereof on the Debenture Register of the Company, upon surrender of this Debenture for registration of transfer at the office or agency of the Registrar accompanied by a written instrument or instruments of transfer in form satisfactory to the Company or the Trustee duly executed by the registered holder hereof or its attorney duly authorized in writing, and thereupon one or more new Debentures of authorized denominations and for the same aggregate principal amount and series will be issued to the designated transferee or transferees. No service charge will be made for any such transfer, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in relation thereto. Prior to presentment for registration of transfer of this Debenture, the Company, the Trustee, any paying agent and any Debenture Registrar may deem and treat the registered holder hereof as the absolute owner hereof (whether or not this Debenture shall be overdue and notwithstanding any notice of ownership or writing hereon made by anyone other than the Debenture Registrar) for the purpose of receiving payment of or on account of the principal hereof and premium, if any, and interest due hereon and for all other purposes, and neither the Company nor the Trustee nor any payment agent nor any Debenture Registrar shall be affected by any notice to the contrary. No recourse shall be had for the payment of the principal of or the interest on this Debenture, or for any claim based hereon, or otherwise in respect hereof, or based on or in respect of the Indenture, against any incorporator, stockholder, officer or director, past, present or future, as such, of the Company or of any predecessor or successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issuance hereof, expressly waived and released. Debentures of this series so issued are issuable only in registered form without coupons in denominations of $25 and any integral multiple thereof. As provided in the Indenture and subject to certain limitations therein set forth, Debentures of this series are exchangeable for a like aggregate principal amount of Debentures of this series of a different authorized denomination, as requested by the Holder surrendering the same. A-5 All capitalized terms used in this Debenture which are defined in the Indenture shall have the meanings assigned to them in the Indenture. This Debenture shall not be valid until an authorized officer of the Trustee manually signs the Trustee's Certificate of Authentication below. IN WITNESS WHEREOF, the Company has caused this Debenture to be signed manually or by facsimile by its duly authorized officers and a facsimile of its corporate seal to be affixed hereto or imprinted hereon. PECO ENERGY COMPANY (Seal) By: __________________________ Name: Title: Attest:_______________________ Dated: June ___, 1997 TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Debentures referred to in the within-mentioned Indenture. FIRST UNION NATIONAL BANK, as Trustee By: ___________________________________ Name: Title: A-6 EX-4 5 EXHIBIT 4.10 CERTIFICATE OF TRUST OF PECO ENERGY CAPITAL TRUST II THIS Certificate of Trust of PECO Energy Capital Trust II (the "Trust"), dated as of May 20, 1997, is being duly executed and filed by First Union Trust Company, National Association, a national association, as trustee, to form a business trust under the Delaware Business Trust Act (12 Del. C. Section 3801, et. seq.). 1. Name. The name of the business trust formed hereby is PECO Energy Capital Trust II. 2. Delaware Trustee. The name and business address of the trustee of the Trust with a principal place of business in the State of Delaware are First Union Trust Company, National Association, 920 King Street, First Floor, Wilmington, Delaware 19801, Attention: Corporate Trust Administration. IN WITNESS WHEREOF, the undersigned, being the sole trustee of the Trust, has executed this Certificate of Trust as of the date first-above written. FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION By: /s/ Edward L. Truitt, Jr. ------------------------------------- Name: Edward L. Truitt, Jr. Title: Assistant Vice President EX-4 6 EXHIBIT 4.11 TRUST AGREEMENT This TRUST AGREEMENT of PECO Energy Capital Trust II (the "Trust"), dated as of May 20, 1997, between PECO Energy Capital, L.P., a Delaware limited partnership (the "Depositor"), First Union Trust Company, National Association, a national association, not in its individual capacity but solely in its capacity as trustee of the Trust (the "Trustee"). The Depositor and the Trustee hereby agree as follows: 1. The trust created hereby shall be known as "PECO Energy Capital Trust II," for which the Trustee, or the Depositor to the extent provided herein, may conduct the business of the Trust, make and execute contracts, and sue and be sued. 2. The Depositor hereby assigns, transfers, conveys and sets over to the Trustee the sum of $10. The Trustee hereby acknowledges receipt of such amount in trust from the Depositor, which amount shall constitute the initial trust estate. The Trustee hereby declares that it will hold the trust estate in trust for the Depositor. It is the intention of the parties hereto that the Trust created hereby constitutes a business trust under Chapter 38 of Title 12 of the Delaware Code, 12 Del. C. Section 3801 et seq. (the "Business Trust Act"), and that this document constitutes the governing instrument of the Trust. The Trustee is hereby authorized and directed to execute and file a certificate of trust with the Delaware Secretary of State in accordance with the provisions of the Business Trust Act. 3. The Depositor and the Trustee will enter into an Amended and Restated Trust Agreement, in form and substance satisfactory to each such party and substantially in the form included as an exhibit to the 1933 Act Registration Statement referred to below, to provide for, among other things, the issuance of the Receipts of the Trust referred to therein. Prior to the execution and delivery of such Amended and Restated Trust Agreement, the Trustee shall not have any duty or obligation hereunder or with respect to the trust estate, except as otherwise required by applicable law, and the Depositor shall take any action as may be necessary to obtain prior to such execution and delivery of any licenses, consents or approval as required by applicable law or otherwise. 4. The Depositor is hereby authorized and directed, as the sponsor of the Trust, (i) to file with the Securities and Exchange Commission (the "Commission") and execute, in each case on behalf of the Trust, (a) the Registration Statement on Form S-3 (the "1933 Act Registration Statement"), including any pre-effective or post-effective amendments to such 1933 Act Registration Statement (including the prospectus and the exhibits contained therein), relating to the registration under the Securities Act of 1933, as amended, of the trust receipts of the Trust and certain other securities and (b) a Registration Statement on Form 8-A (the "1934 Act Registration Statement") (including all pre-effective and post-effective amendments thereto) relating to the registration of the trust receipts of the Trust under the Securities Exchange Act of 1934, as amended; (ii) to file with the New York Stock Exchange or Philadelphia Stock Exchange (each an "Exchange") and execute on behalf of the Trust one or more listing applications and all other applications, statements, certificates, agreements and other instruments as shall be necessary or desirable to cause the trust receipts of the Trust to be listed on any of the Exchanges; (iii) to file and execute on behalf of the Trust such applications, reports, surety bonds, irrevocable consents, appointments of attorney for service of process and other papers and documents as shall be necessary or desirable to register the trust receipts of the Trust under the securities or "Blue Sky" laws of such jurisdictions as the Depositor, on behalf of the Trust, may deem necessary or desirable and (iv) to execute on behalf of the Trust that certain Underwriting Agreement relating to the trust receipts of the Trust, among PECO Energy Company, a Pennsylvania corporation, the Depositor and the several Underwriters named therein, substantially in the form included as an exhibit to the 1933 Act Registration Statement. In the event that any filing referred to in clauses (i), (ii) and (iii) above is required by the rules and regulations of the Commission, the Exchanges or state securities or "Blue Sky" laws, to be executed on behalf of the Trust by the Trustee, then the Trustee, not in its individual capacity, but solely in its capacity as trustee of the Trust, is hereby authorized and directed to join in any such filing and to execute on behalf of the Trust any and all of the foregoing. In connection with all of the foregoing, the Depositor hereby constitutes and appoints J. Barry Mitchell as its true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for the Depositor or in the Depositor's name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to the 1933 Act Registration Statement and the 1934 Act Registration Statement and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as the Depositor might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his respective substitute or substitutes, shall do or cause to be done by virtue hereof. 5. This Trust Agreement may be executed in one or more counterparts. 6. The number of trustees of the Trust initially shall be one (1) and thereafter the number of trustees of the Trust shall be such number as shall be fixed from time to time by a written instrument signed by the Depositor which may increase 2 or decrease the number of trustees; provided, however, that to the extent required by the Business Trust Act, one trustee shall either be a natural person who is a resident of the State of Delaware or, if not a natural person, an entity which has its principal place of business in the State of Delaware and otherwise meets the requirements of applicable Delaware law; and provided, further, that the addition of any co-trustee shall be approved by the Trustee, which approval shall not be unreasonably withheld. Subject to the foregoing, the Depositor is entitled to appoint or remove without cause the Trustee or any co-trustee at any time. The Trustee may resign upon thirty (30) days prior notice to the Depositor. 7. This Trust Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware (without regard to conflict of laws principles). 8. To the fullest extent permitted by law, PECO Energy Capital Corp., the general partner of the Depositor (the "General Partner"), agrees to indemnify and defend the Trustee, the registrar and any paying agent and their directors, officers, employees and agents against, and hold each of them harmless from, any liability, costs and expenses (including reasonable attorneys' fees) that may arise out of or in connection with the trust receipts of the Trust or the Trustee acting as Trustee or as the registrar or paying agent, respectively, under this Trust Agreement, except for any liability arising out of gross negligence, bad faith or willful misconduct on the part of any such person or persons. 9. In the event that the Trustee is uncertain as to application or interpretation of any provision of this Trust Agreement or must choose between alternative courses of action, the Trustee may seek the instructions of the Depositor by written notice requesting instructions. The Trustee shall take and be protected in taking such action as has been directed by the Depositor provided that if the Trustee does not receive instructions within ten (10) days or such shorter time as is set forth in the Trustee notice, the Trustee shall be under no duty to take or refrain from taking such action as it shall deem advisable. The Trustee shall not be liable for any action or any failure to act by it in reliance upon the advice of or information from legal counsel, accountants or any other person believed by it in good faith to be competent to give such advice or information. The Trustee may rely and shall be protected in acting upon any written notice, request, direction or other document believed by it to be genuine and to have been signed or presented by the proper party or parties. 3 IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement to be duly executed as of the day and year first above written. PECO ENERGY CAPITAL, L.P. By: PECO Energy Capital Corp., ----------------------------- its general partner By: /s/ J.B. Mitchell ----------------------------- Name: J.B. Mitchell Title: President FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION, not in its individual capacity, but solely in its capacity as Trustee By: /s/ Edward L. Truitt, Jr. ----------------------------- Name: Edward L. Truitt, Jr. Title: Assistant Vice President The General Partner joins in this Trust Agreement solely for the purposes of obligating itself under Section 8 of this Trust Agreement and not as grantor, trustee or beneficiary. PECO ENERGY CAPITAL CORP. By: /s/ J.B. Mitchell ----------------------------- Name: J.B. Mitchell Title: President 4 EX-4 7 EXHIBIT 4.12 ================================================================================ AMENDED AND RESTATED TRUST AGREEMENT OF PECO ENERGY CAPITAL TRUST II PECO ENERGY CAPITAL, L.P., as Grantor and FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION, as Trustee Dated as of June ___, 1997 ================================================================================ TABLE OF CONTENTS Page ---- ARTICLE I DEFINITIONS ARTICLE II CONTINUATION OF TRUST SECTION 2.01. Continuation of Trust......................................... 4 SECTION 2.02. Trust Account................................................. 5 SECTION 2.03. Title to Trust Property....................................... 5 SECTION 2.04. Situs of Trust................................................ 5 SECTION 2.05. Powers of Trustee Limited..................................... 5 SECTION 2.06. Liability of Holders of Receipts. ........................... 5 ARTICLE III FORM OF RECEIPTS, EXECUTION AND DELIVERY, TRANSFER AND SURRENDER OF RECEIPTS SECTION 3.01. Form and Transferability of Receipts.......................... 5 SECTION 3.02. Issuance of Receipts.......................................... 6 SECTION 3.03. Registration, Transfer and Exchange of Receipts............... 6 SECTION 3.04. Lost or Stolen Receipts, Etc.................................. 8 SECTION 3.05. Cancellation and Destruction of Surrendered Receipts.............................. 8 ARTICLE IV DISTRIBUTIONS AND OTHER RIGHTS OF HOLDERS OF RECEIPTS SECTION 4.01. Distributions of Monthly Distributions on Preferred Securities........................... 10 SECTION 4.02. Redemptions of Preferred Securities........................... 10 SECTION 4.03. Distributions in Liquidation of Grantor....................... 11 SECTION 4.04. Fixing of Record Date for Holders of Receipts................. 12 SECTION 4.05. Payment of Distributions.......................... 12 SECTION 4.06. Special Representative and Voting Rights...................... 12 SECTION 4.07. Changes Affecting Preferred Securities and Reclassifications, Recapitalizations, Etc..... 13 ARTICLE V THE GUARANTEE SECTION 5.01. The Guarantee................................................. 13 i Page ARTICLE VI THE TRUSTEE SECTION 6.01. Eligibility.................................................. 14 SECTION 6.02. Obligations of the Trustee................................... 14 SECTION 6.03. Resignation and Removal of the Trustee; Appointment of Successor Trustee........ 16 SECTION 6.04. Corporate Notices and Reports................................ 17 SECTION 6.05. Status of Trust.................................. 17 SECTION 6.07. Indemnification by the General Partner....................... 18 SECTION 6.08. Fees, Charges and Expenses................................... 18 SECTION 6.09. Appointment of Co-Trustee or Separate Trustee................ 18 ARTICLE VII AMENDMENT AND TERMINATION SECTION 7.01. Supplemental Trust Agreement................................. 20 SECTION 7.02. Termination.................................................. 20 ARTICLE VIII MERGER, CONSOLIDATION, ETC. OF GRANTOR SECTION 8.01. Limitation on Permitted Merger Consolidation, Etc. of Grantor................... 21 ARTICLE IX MISCELLANEOUS SECTION 9.01. Counterparts................................................. 21 SECTION 9.02. Exclusive Benefits of Parties................................ 22 SECTION 9.03. Invalidity of Provisions..................................... 22 SECTION 9.04. Notices...................................................... 22 SECTION 9.05. Trustee's Agents............................................. 23 SECTION 9.06. Holders of Receipts Are Parties.............................. 23 SECTION 9.07. Governing Law................................................ 23 SECTION 9.08. Headings..................................................... 23 SECTION 9.09. Receipts Non-Assessable and Fully Paid....................... 23 SECTION 9.10. No Preemptive Rights......................................... 23 ii AMENDED AND RESTATED TRUST AGREEMENT AMENDED AND RESTATED TRUST AGREEMENT, dated as of June ___, 1997 (as amended from time to time, this "Trust Agreement") is among PECO ENERGY CAPITAL, L.P., a Delaware limited partnership, as grantor (the "Grantor"), FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION, as trustee (the "Trustee"), and joined in by PECO ENERGY CAPITAL CORP., a Delaware corporation and the general partner of the Grantor, not as a grantor, trustee or beneficiary but solely for the purposes stated herein (the "General Partner"). W I T N E S S E T H: WHEREAS, the Trustee and the Grantor established the Trust (as defined below) under the Delaware Business Trust Act (12 Del. C. Section 3801, et seq.) (as amended from time to time, the "Business Trust Act"), pursuant to a Trust Agreement, dated as of May ___, 1997 (the "Original Trust Agreement"), and a Certificate of Trust filed with the Secretary of State of the State of Delaware on May ___, 1997; and WHEREAS, the Trustee and the Grantor hereby desire to continue the Trust and to amend and restate in its entirety the Original Trust Agreement; and WHEREAS, the Trust proposes to issue Receipts each representing a ____% Cumulative Monthly Income Preferred Security, Series C, representing a limited partner interest of the Grantor (the "Preferred Securities"); and WHEREAS, interests in the Trust are to be evidenced by Receipt certificates issued by the Trustee in accordance with this Trust Agreement, which are to be delivered to the Holders; NOW, THEREFORE, in consideration of the premises contained herein and intending to be legally bound hereby, it is agreed by and among the parties hereto to amend and restate in its entirety the Original Trust Agreement as follows: ARTICLE I DEFINITIONS The following definitions shall apply to the respective terms (in the singular and plural forms of such terms) used in this Trust Agreement and the Receipts: "Affiliate" of any specified Person means any other Person controlling or controlled by or under common control with such specified Person. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly whether through the ownership of voting securities, by contract or otherwise, and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Business Day" means any day other than a day on which banking institutions in the City of New York or the State of Delaware are closed for business. "Business Trust Act" shall have the meaning set forth in the recitals to this Trust Agreement. "Commission" shall have the meaning set forth in Section 6.06 of this Trust Agreement. "Corporate Office" means the office of the Trustee at which at any particular time its business in respect of matters governed by this Trust Agreement shall be administered, which at the date of this Trust Agreement is located at 1 Rodney Square, 920 King Street, First Floor, Wilmington, Delaware 19801. "DTC" means the Depositary Trust Company or any successor thereto. "Exchange" shall have the meaning set forth in Section 6.06 to this Trust Agreement. "Exchange Act" shall have the meaning set forth in Section 6.06 to this Trust Agreement. "Exchange Act Reports" shall have the meaning set forth in Section 6.06 to this Trust Agreement. "General Partner" means PECO Energy Capital Corp., a Delaware corporation, as general partner of the Grantor, and any successor thereto pursuant to the terms of the Partnership Agreement. "Grantor" means PECO Energy Capital, L.P., a Delaware limited partnership, and its successors. "Guarantee" means the Payment and Guarantee Agreement dated as of June ___, 1997, as amended from time to time with respect to the Preferred Securities delivered by PECO Energy to the Grantor. "Holder" means the Person in whose name a certificate representing one or more Receipts is registered on the Register maintained by the Registrar for such purposes. 2 "Partnership Agreement" means the Amended and Restated Limited Partnership Agreement of the Grantor dated as of July 25, 1994, as amended from time to time, together with any Action (as defined in the Partnership Agreement) established by the General Partner. "Paying Agent" means the Person from time to time acting as Paying Agent as provided in Section 4.05 of this Trust Agreement. "PECO Energy" means PECO Energy Company, a Pennsylvania corporation. "Person" means any individual, general partnership, limited partnership, corporation, limited liability company, joint venture, trust, business trust, cooperative or association and the heirs, executors, administrators, legal representatives, successors and assigns of such Person where the context so admits. "Preferred Securities" means the ____% Cumulative Monthly Income Preferred Securities, Series C, representing limited partner interests of the Grantor, or any Successor Securities issued to the Trust and held by the Trustee (unless withdrawn under Section 3.06) from time to time under this Trust Agreement for the benefit of the Holders. "Receipt" shall mean a trust receipt issued hereunder representing an interest in the Trust equal to and representing a Preferred Security and evidenced by a certificate issued by the Trustee pursuant to Article III. "Redemption Date" shall have the meaning set forth in Section 4.02 of this Trust Agreement. "Register" shall have the meaning set forth in Section 3.03 of this Trust Agreement. "Registrar" shall mean any bank or trust company appointed to register Receipt certificates and to register transfers thereof as herein provided. "Special Representative" shall have the meaning set forth in Section 13.02(d) of the Partnership Agreement. "Successor Securities" shall have the meaning set forth in Section 13.02(e) of the Partnership Agreement. "Trust" means the trust governed by this Trust Agreement. 3 "Trust Agreement" shall mean this Amended and Restated Trust Agreement, as the same may be amended, modified or supplemented from time to time. "Trust Estate" means all right, title and interest of the Trust in and to the Preferred Securities (including any Successor Securities), and all distributions and payments with respect thereto, including payments by PECO Energy under the Guarantee. "Trust Estate" shall not include any amounts paid or payable to the Trustee pursuant to this Trust Agreement, including, without limitation, fees, expenses and indemnities. "Trustee" shall mean First Union Trust Company, National Association, a Delaware banking corporation, in its capacity as Trustee and not in its individual capacity and any successor as trustee hereunder. "1933 Act Registration Statement" shall have the meaning set forth in Section 6.06 to this Trust Agreement. "1934 Act Registration Statement" shall have the meaning set forth in Section 6.06 to this Trust Agreement. ARTICLE II CONTINUATION OF TRUST SECTION 2.01. Continuation of Trust. (a) The Trust continued hereby shall be known as "PECO Energy Capital Trust II." The Trust exists for the sole purpose of issuing Receipts representing the Preferred Securities held by the Trust and performing functions directly related thereto. The Grantor hereby delivers to the Trustee for deposit in the Trust a certificate representing 2,000,000 Preferred Securities for the benefit of the Holders. Each Holder is intended by the Grantor to be the beneficial owner of the number of Preferred Securities represented by the Receipts held by such Holder, not to hold an undivided interest in all of the Preferred Securities. To the fullest extent permitted by law, without the need for any other action of any Person, including the Trustee and any other Holder, each Holder shall be entitled to enforce in the name of the Trust the Trust's rights under the Preferred Securities represented by the Receipts held by such Holder and any recovery on such an enforcement action shall belong solely to such Holder who brought the action, not to the Trust, Trustee or any other Holder individually or to Holders as a group. Subject to Section 7.02, this Trust shall be irrevocable. (b) The Trustee hereby acknowledges receipt of the Preferred Securities, registered in the name of the Trust, 4 and its acceptance on behalf of the Trust of the Preferred Securities, and declares that it shall hold the Preferred Securities (including any Successor Securities) in the Trust for the benefit of the Holders. SECTION 2.02. Trust Account. The Trustee shall open an account entitled "PECO Energy Capital Trust II - Trust Account." All funds received by the Trustee on behalf of the Trust from the Preferred Securities or pursuant to Article V will be deposited in such account by the Trustee until distributed as provided in Article IV. SECTION 2.03. Title to Trust Property. Legal title to all of the Trust Estate shall be vested at all times in the Trustee. SECTION 2.04. Situs of Trust. The situs of the Trust shall be in Wilmington, Delaware. The Trust's bank account shall be maintained with a bank in the State of Delaware. The Trustee shall cause to be maintained the books and records of the Trust at the Corporate Office. The Trust Estate shall be held in the State of Delaware. Notwithstanding the foregoing, the Trustee may transfer such of the books and records of the Trust to a Co-Trustee appointed pursuant to Section 6.09 or to such agents as it may appoint in accordance with the Section 9.05 hereof, as shall be reasonably necessary (and for so long as may be reasonably necessary) to enable such Co-Trustee or agents to perform the duties and obligations for which such Co-Trustee or agents may be so employed. SECTION 2.05. Powers of Trustee Limited. The Trustee shall have no power to create, assume or incur indebtedness or other liabilities in the name of the Trust. The Trustee shall have full power to conduct the business of the Trust of holding the Preferred Securities for the Holders and taking the other actions provided by this Trust Agreement. SECTION 2.06. Liability of Holders of Receipts. With respect to the Trust, Holders of Receipts shall be entitled to the same limitation of personal liability to which stockholders of private corporations for profit organized under the General Corporation Law of the State of Delaware are extended. ARTICLE III FORM OF RECEIPTS, EXECUTION AND DELIVERY, TRANSFER AND SURRENDER OF RECEIPTS SECTION 3.01. Form and Transferability of Receipts. (a) Except as otherwise required by DTC, Receipts shall be evidenced by certificates engraved or printed or lithographed with steel-engraved borders 5 and underlying tint in substantially the form set forth in Exhibit A annexed to this Trust Agreement, with the appropriate insertions, modifications and omissions, as hereinafter provided. (b) Certificates evidencing Receipts shall be executed by the Trustee by the manual signature of a duly authorized signatory of the Trustee, provided, however, that such signature may be a facsimile if a Registrar (other than the Trustee) shall have countersigned the Receipts by manual signature of a duly authorized signatory of the Registrar. No certificate evidencing one or more Receipts shall be entitled to any benefit under this Trust Agreement or be valid or obligatory for any purpose unless it shall have been executed as provided in the preceding sentence. The Registrar shall record on the Register each Receipt certificate executed as provided above and delivered as hereinafter provided. (c) Certificates evidencing Receipts shall be in denominations of any whole number of Preferred Securities. All Receipt certificates shall be dated the date of their execution or countersignature. (d) Certificates evidencing Receipts may be endorsed with or have incorporated in the text thereof such legends or recitals or changes not inconsistent with the provisions of this Trust Agreement as may be required by the Trustee or required to comply with any applicable law or regulation or with the rules and regulations of any securities exchange upon which the Receipts may be listed or to conform with any usage with respect thereto. (e) Title to any Receipt certificate that is properly endorsed or accompanied by a properly executed instrument of transfer or endorsement shall be transferable by delivery with the same effect as in the case of a negotiable instrument; provided, however, that until the transfer shall be registered on the Register as provided in Section 3.03, the Trust, the Trustee, the Registrar and the Grantor may, notwithstanding any notice to the contrary, treat the Holder thereof at such time as the absolute owner thereof for the purpose of determining the Person entitled to distributions or to any notice provided for in this Trust Agreement and for all other purposes. SECTION 3.02. Issuance of Receipts. Upon receipt by the Trustee on behalf of the Trust of a certificate or certificates for the Preferred Securities, subject to the terms and conditions of this Trust Agreement, the Trustee, on behalf of the Trust, shall execute and deliver to DTC certificates evidencing the Receipts in the name of DTC's nominee, who shall thereupon be the initial Holder of Receipts. SECTION 3.03. Registration, Transfer and Exchange of Receipts. The Trustee shall cause the Register to be kept at the 6 office of the Registrar in which, subject to such reasonable regulations as the Trustee and the Registrar may prescribe, the Trustee shall provide for the registration of Receipt certificates and of transfers and exchanges of Receipt certificates as herein provided. The Grantor hereby appoints First Union Trust Company, National Association as the Registrar. The Registrar shall also act as transfer agent. The Grantor may remove the Registrar and, upon removal or resignation of the Registrar, appoint a successor Registrar. Subject to the terms and conditions of this Trust Agreement, the Registrar shall register the transfers on the Register from time to time of Receipt certificates upon any surrender thereof by the Holder in person or by a duly authorized attorney, properly endorsed or accompanied by a properly executed instrument of transfer or endorsement, together with evidence of the payment of any transfer taxes as may be required by law. Upon such surrender, the Trustee shall execute a new Receipt certificate representing the same number of Preferred Securities in accordance with Section 3.01(b) and deliver the same to or upon the order of the Person entitled thereto. At the option of a Holder, Receipt certificates may be exchanged for other Receipt certificates representing the same number of Preferred Securities. Upon surrender of a Receipt certificate at the office of the Registrar or such other office as the Trustee may designate for the purpose of effecting an exchange of Receipt certificates, subject to the terms and conditions of this Trust Agreement, the Trustee shall execute and deliver a new Receipt certificate representing the same number of Preferred Securities as the Receipt certificate surrendered. As a condition precedent to the registration of the transfer or exchange of any Receipt certificate, the Registrar may require (i) production of proof satisfactory to it as to the identity and genuineness of any signature; and (ii) compliance with such regulations, if any, as the Trustee or the Registrar may establish not inconsistent with the provisions of this Trust Agreement. No service charge shall be made to a Holder of Receipts for any registration of transfer or exchange of Receipt certificates, but the Trustee or the Registrar shall require payment of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any transfer or exchange of Receipt certificates. Neither the Trustee nor the Registrar shall be required (a) to register the transfer of or exchange any Receipt certificate for a period beginning at the opening of business ten days preceding any selection of Receipts to be redeemed and ending at the close of business on the day of the mailing a notice of redemption of Receipts or (b) to register the transfer 7 of or exchange of Receipts called or being called for redemption in whole or in part, except as provided in Section 4.02. SECTION 3.04. Lost or Stolen Receipts, Etc. In case any Receipt certificate shall be mutilated or destroyed or lost or stolen and in the absence of notice to the Trustee that such Receipt has been acquired by a bona fide purchaser, the Trustee shall execute and deliver a Receipt certificate of like form and tenor in exchange and substitution for such mutilated Receipt certificate or in lieu of and in substitution for such destroyed, lost or stolen Receipt certificate, provided, however, that the Holder thereof provides the Trustee with (i) evidence satisfactory to the Trustee of such destruction, loss or theft of such Receipt certificate, of the authenticity thereof and of his ownership thereof, (ii) reasonable indemnification satisfactory to the Trustee and (iii) payment of any expense (including fees, charges and expenses of the Trustee) in connection with such execution and delivery. Any duplicate Receipt certificate issued pursuant to this Section 3.04 shall constitute complete and indefeasible evidence of ownership in the Trust, as if originally issued, whether or not the lost, stolen or destroyed Receipt certificate shall be found at any time. SECTION 3.05. Cancellation and Destruction of Surrendered Receipts. All Receipt certificates surrendered to the Trustee shall be cancelled by the Trustee. Except as prohibited by applicable law or regulation, at any time after six years from the date of surrender of any Receipt certificate, the Trustee may destroy such cancelled Receipt certificates. SECTION 3.06. Surrender of Receipts and Withdrawal of Preferred Securities. Any beneficial owner of Receipts may withdraw all, but not less than all, of the Preferred Securities represented by such Receipts by providing a written notice and an agreement to be bound by the terms of the Partnership Agreement to the Trustee at the Corporate Office or at such other office as the Trustee may designate for such withdrawals, with evidence of beneficial ownership in form satisfactory to the Trustee. Within a reasonable period after such request has been properly made, the Trustee shall instruct DTC to reduce the number of Receipts represented by the global certificate held by DTC by an amount equal to the number of Receipts to be so withdrawn by the withdrawing owner, the Trustee shall issue to the withdrawing owner a certificate representing the number of Preferred Securities so withdrawn and the Trustee shall reduce the number of Preferred Securities represented by the global certificate held by the Trustee by a like amount; provided, that the Trustee shall not issue any fractional number of Preferred Securities. If a withdrawing owner of Receipts withdraws Preferred Securities in accordance with this Section 3.06, such withdrawing owner of Receipts shall cease to be a beneficial owner in the Trust. The Series C Preferred Securities will only be issued in certificated form. 8 A withdrawing owner who wishes to withdraw Series C Preferred Securities in accordance with this Section 3.06 will be required to provide the Grantor with a completed Form W-8 or such other documents or information as are requested by the Grantor for tax reporting purposes and thereafter shall be admitted to the Grantor as a preferred partner of the Grantor upon such withdrawing owner's receipt of a certificate evidencing such Preferred Securities registered in such withdrawing owner's name. The Trustee shall deliver the Preferred Securities represented by the Receipts surrendered to the withdrawing owner in accordance with this Section 3.06 at the Corporate Office, except that, at the request, risk and expense of the withdrawing owner and for the account of the withdrawing owner thereof, such delivery may be made at such other place as may be designated by such withdrawing owner. Notwithstanding anything in this Section 3.06 to the contrary, if the Preferred Securities represented by Receipts have been called for redemption in accordance with the Partnership Agreement, no withdrawing owner of such Receipts may withdraw any or all of the Preferred Securities represented by such Receipts. SECTION 3.07. Redeposit of Preferred Securities. Subject to the terms and conditions of this Trust Agreement, any holder of Preferred Securities may redeposit withdrawn Preferred Securities under this Trust Agreement by delivery to the Trustee of a certificate or certificates for the Preferred Securities to be deposited, properly endorsed or accompanied, if required by the Trustee, by a properly executed instrument of transfer or endorsement in form satisfactory to the Trustee and in compliance with the terms of the Partnership Agreement, together with all such certifications as may be required by the Trustee in its sole discretion and in accordance with the provisions of this Trust Agreement. Within a reasonable period after such deposit is properly made, the Trustee shall instruct DTC to increase the number of Receipts represented by the global certificate held by DTC by an amount equal to the Preferred Securities to be deposited. The Preferred Trust Receipts will not be issued in certificated form. The Trustee will only accept the deposit of such Preferred Securities upon payment by such holder of Preferred Securities to the Trustee of all taxes and other governmental charges and any fees payable in connection with such deposit and the transfer of the deposited Preferred Securities. If required by the Trustee, Preferred Securities presented for deposit at any time shall also be accompanied by an agreement or assignment, or other instrument satisfactory to the Trustee, that will provide for the prompt transfer to the Trustee or its nominee of any distribution or other right that any Person in whose name the Preferred Securities are registered may thereafter receive upon or in respect of such deposited Preferred 9 Securities, or in lieu thereof such agreement of indemnity or other agreement as shall be satisfactory to the Trustee. SECTION 3.08. Filing Proofs, Certificates, and Other Information. Any Person presenting Preferred Securities for redeposit in accordance with Section 3.07 may be required from time to time to file such proof of residence or other information, to execute such Preferred Security certificates and to make such representations and warranties as the Trustee may reasonably deem necessary or proper. The Trustee may withhold or delay the delivery of any Receipt or Receipts, the transfer, redemption or exchange of any Receipt or Receipts or the making of any distribution until such proof or other information is filed, such certificates are executed or such representations and warranties are made. ARTICLE IV DISTRIBUTIONS AND OTHER RIGHTS OF HOLDERS OF RECEIPTS SECTION 4.01. Distributions of Monthly Distributions on Preferred Securities. Whenever the Trustee shall receive any cash distribution representing a monthly distribution on the Preferred Securities (whether or not distributed by the Grantor on the regular monthly distribution date therefor) or payment under the Guarantee in respect thereof pursuant to Article V of this Agreement, the Trustee acting directly or through any Paying Agent shall distribute to Holders of Receipts on the record date fixed pursuant to Section 4.04, such amounts in proportion to the respective numbers of Preferred Securities represented by the Receipts held by such Holders. SECTION 4.02. Redemptions of Preferred Securities. Whenever the Grantor shall elect or is required to redeem Preferred Securities in accordance with the Partnership Agreement, it shall (unless otherwise agreed in writing with the Trustee) give the Trustee not less than 40 days' prior notice thereof. The Trustee shall, as directed by the Grantor, mail, or cause to be mailed, first-class postage prepaid, notice of the redemption of Preferred Securities and the proposed simultaneous redemption of the Receipts to be redeemed in connection herewith, not less than 30 and not more than 60 days prior to the date fixed for redemption (the "Redemption Date") of the Receipts. Such notice shall be mailed to the Holders of the Receipts to be redeemed, at the addresses of such Holders as the same appear on the records of the Registrar. No defect in the notice of redemption or in the mailing or delivery thereof or publication of its contents shall affect the validity of the redemption proceedings. The Grantor shall provide the Trustee with such notice, and each such notice shall state: the Redemption Date; the redemption price at which the Receipts and the Preferred Securities are to be redeemed; that all outstanding Receipts are 10 to be redeemed or, in the case of a redemption of fewer than all outstanding Receipts in connection with a partial redemption of Preferred Securities, the number of such Receipts to be so redeemed; the place or places where Receipts to be redeemed are to be surrendered for redemption; and specifying the CUSIP number assigned to the Receipts. In case fewer than all the outstanding Receipts are to be redeemed, the Receipts to be redeemed shall be selected by lot or pro rata (as nearly as may be practicable without creating fractional shares) or by any other equitable method determined by the Trustee. The Grantor agrees that if a partial redemption of the Preferred Securities would result in a delisting of the Receipts from any national exchange on which the Receipts are then listed, the Grantor will only redeem the Preferred Securities in whole. On the date of any such redemption of Preferred Securities, provided that the Grantor (or PECO Energy pursuant to the Guarantee) shall then have deposited with the Trustee the aggregate amount payable upon redemption of the Preferred Securities to be redeemed, the Trustee shall redeem (using the funds so deposited with it) Receipts representing the same number of Preferred Securities redeemed by the Grantor. Notice having been mailed by the Trustee as aforesaid, from and after the Redemption Date (unless the Grantor shall have failed to redeem the Preferred Securities to be redeemed by it as set forth in the Grantor's notice provided for in this Section 4.02 and PECO Energy shall have failed to pay the redemption price of the Preferred Securities under the Guarantee), the Receipts called for redemption shall be deemed no longer to be outstanding and all rights of the Holders of Receipts (except the right to receive cash upon surrender of Receipts) shall cease and terminate. Upon surrender in accordance with said notice of the Receipts endorsed or assigned for transfer, if the Trustee shall so require, the Holders of such Receipts shall receive for each such Receipt an amount equal to the redemption price for each Preferred Security, in addition to accrued and unpaid distributions thereon to the date fixed for redemption. If fewer than all of the Receipts of any Holder are called for redemption, the Registrar will deliver to the Holder of such Receipts upon surrender of the certificate evidencing such Receipts a new certificate evidencing the number of Receipts not called for redemption. SECTION 4.03. Distributions in Liquidation of Grantor. Upon receipt by the Trust of any distribution from the Grantor upon the liquidation of the Grantor or any payment under the Guarantee in respect thereof pursuant to Article V of this Trust Agreement, after satisfaction of creditors of the Trust as required by applicable law, the Trustee shall distribute to the 11 Holders of Receipts on the record date fixed pursuant to Section 4.04, such amounts in proportion to the respective number of Preferred Securities which were represented by the Receipts held by such Holders. SECTION 4.04. Fixing of Record Date for Holders of Receipts. Whenever any distribution (other than upon any redemption) shall become payable, or whenever the Trustee shall receive notice of any meeting at which holders of Preferred Securities are entitled to vote or of which holders of Preferred Securities are entitled to notice, the Trustee shall in each such instance fix a record date (which shall be the same date as the record date fixed by the General Partner with respect to the Preferred Securities) for the determination of the Holders of Receipts who shall be entitled (i) to receive such distribution, and (ii) to receive notice of, and to give instructions for the exercise of voting rights at, any such meeting. SECTION 4.05. Payment of Distributions. The Grantor shall appoint one or more Paying Agents for the purpose of paying monthly distributions on, the redemption price of, and distributions in liquidation on the Receipts. The Grantor hereby appoints First Union Trust Company, National Association to act as Paying Agent and designates the Wilmington office of the Paying Agent as the place of payment of the redemption price of and of distributions in liquidation on the Receipts. The aforesaid appointment and designation shall remain in effect until changed by the Grantor. Payments of monthly distributions on the Receipts shall be payable by wire transfer into the accounts of or check mailed to the addresses of the Holders thereof on the record date therefor. Payments of the redemption price of Receipts and distributions in liquidation shall be made upon surrender of such Receipts at the office of the Paying Agent. The Trustee is hereby authorized to direct the Grantor to pay monthly distributions on, the redemption price of, and distributions in liquidation on, the Preferred Securities directly to the Paying Agent for distribution in accordance with the terms of this Trust Agreement. SECTION 4.06. Special Representative and Voting Rights. (a) If the holders of the Preferred Partner Interests (as defined in the Partnership Agreement), acting as a single class, are entitled to appoint and authorize a Special Representative pursuant to Section 13.02(d) of the Partnership Agreement, the Trustee shall notify the Holders of the Receipts of such right, request direction of each Holder of a Receipt as to the appointment of a Special Representative and vote the Preferred Securities represented by such Receipt in accordance with such direction. If the General Partner fails to convene a general meeting of the Partnership as required in Section 13.02(d) of the Partnership Agreement, the Trustee shall notify 12 the Holders of the Receipts and, if so directed by the Holders of Receipts representing Preferred Securities constituting at least 10% of the aggregate stated liquidation preference of the outstanding Preferred Partner Interests (as defined in the Partnership Agreement) shall convene such meeting. (b) Upon receipt of notice of any meeting at which the Holders of Preferred Securities are entitled to vote, the Trustee shall, as soon as practicable thereafter, mail to the Holders of Receipts a notice, which shall be provided by the General Partner and which shall contain (i) such information as is contained in such notice of meeting, (ii) a statement that the Holders of Receipts at the close of business on a specified record date fixed pursuant to Section 4.04 will be entitled, subject to any applicable provision of law or of the Partnership Agreement, to instruct the Trustee as to the exercise of the voting rights pertaining to the amount of Preferred Securities represented by their respective Receipts, and (iii) a brief statement as to the manner in which such instructions may be given. Upon the written request of a Holder of a Receipt on such record date, the Trustee shall vote or cause to be voted the number of Preferred Securities represented by the Receipts evidenced by such Receipt in accordance with the instructions set forth in such request. The Grantor hereby agrees to take all reasonable action that may be deemed necessary by the Trustee in order to enable the Trustee to vote such Preferred Securities or cause such Preferred Securities to be voted. In the absence of specific instructions from the Holder of a Receipt, the Trustee will abstain from voting to the extent of the Preferred Securities represented by such Receipt. SECTION 4.07. Changes Affecting Preferred Securities and Reclassifications, Recapitalizations, Etc. Upon any consolidation, amalgamation, merger, replacement or conveyance, transfer or lease by the Partnership of its properties and assets as an entirety in accordance with Section 13.02(e) of the Partnership Agreement, the Trustee shall, upon the instructions of the Grantor, treat any Successor Securities or other property (including cash) that shall be received by the Trustee in exchange for or upon conversion of or in respect of the Preferred Securities as part of the Trust Estate and Receipts then outstanding shall thenceforth represent the proportionate interests of Holders thereof in the new deposited property so received in exchange for or upon conversion or in respect of such Preferred Securities. ARTICLE V THE GUARANTEE SECTION 5.01. The Guarantee. In connection with the issuance of the Preferred Securities, PECO Energy has delivered 13 to the General Partner the Guarantee for the benefit of the holders of the Preferred Securities. If the General Partner or the Grantor receives any payment under the Guarantee, the General Partner or the Grantor, as the case may be, will immediately transfer such payment to the Trustee. All rights to enforce the Guarantee shall remain in the General Partner, except to the extent set forth in Section 2.04 of the Guarantee. ARTICLE VI THE TRUSTEE SECTION 6.01. Eligibility. This Trust Agreement shall at all times have a Trustee which is a bank that has its principal place of business in the State of Delaware and shall have a combined capital and surplus of at least $50,000,000. If such corporation publishes reports of conditions at least annually, pursuant to law or to the requirements of Federal, State, Territorial or District of Columbia supervising or examining authority, then for the purposes of this Section 6.01, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of conditions so published. In case at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section 6.01, the Trustee shall resign immediately in the manner and with the effect specified in Section 6.03. The Trustee shall make available for inspection by Holders of Receipts at the Corporate Office and at such other places as it may from time to time deem advisable during normal business hours any reports and communications received from the Grantor, the General Partner or PECO Energy by the Trustee as the holder of Preferred Securities. Promptly upon request from time to time by the Grantor, the Trustee shall cause the Registrar to furnish to it a list, at the sole expense of the General Partner, as of a recent date, of the names, addresses and holdings of all Persons in whose names Receipts are registered on the Register. SECTION 6.02. Obligations of the Trustee. The Trustee does not assume any obligation nor shall it be subject to any liability under this Trust Agreement or any Receipt to Holders of Receipts other than that it agrees to use good faith in the performance of such duties as are specifically assigned to the Trustee in this Trust Agreement. The Trustee shall not be under any obligation to appear in, prosecute or defend any action, suit or other proceeding with respect to Preferred Securities or Receipts that in its opinion 14 may involve it in expense or liability, unless indemnity satisfactory to it against all expense and liability be furnished as often as may be required. In the event that the Trustee is uncertain as to application or interpretation of any provision of this Trust Agreement or must choose between alternative courses of action, the Trustee may seek the instructions of the Grantor (or the Special Representative if one has been appointed) by written notice requesting instructions. The Trustee shall take and be protected in taking such action as has been directed by the Grantor (or the Special Representative if one has been approved) provided that if the Trustee does not receive instructions within 10 days or such shorter time as is set forth in the Trustee notice, the Trustee shall be under no duty to take or refrain from taking such action not inconsistent with this Trust Agreement as it shall deem advisable and in the interest of the Holders. The Trustee shall not be liable for any action or any failure to act by it in reliance upon the advice of or information from legal counsel, accountants, any Holder of a Receipt or any other Person believed by it in good faith to be competent to give such advice or information. The Trustee may rely and shall be protected in acting upon any written notice, request, direction or other document believed by it to be genuine and to have been signed or presented by the proper party or parties. The Trustee, its parent, Affiliates or subsidiaries may own, buy, sell or deal in any class of securities of the Grantor, the General Partner or PECO Energy and its Affiliates and in Receipts or become pecuniarily interested in any transaction in which the Grantor, the General Partner or PECO Energy or its Affiliates may be interested or contract with or lend money to or otherwise act as fully or as freely as if it were not the Trustee hereunder. The Trustee may also act as transfer agent or registrar of any of the securities of the Grantor, the General Partner or PECO Energy and its Affiliates or act in any other capacity for PECO Energy or its Affiliates. The Trustee (and its officers, directors, employees and agents) makes no representation nor shall it have any responsibility with respect to the issuance of Receipts or as to the validity of the registration statement pursuant to which the Receipts are registered under the Securities Act, the Preferred Securities, the Guarantee or the Receipts (except for its counter-signatures thereon) or any instruments referred to therein or herein, or as to the correctness of any statement made therein or herein; provided, however, that the Trustee is responsible for its representations in this Trust Agreement. 15 The Trustee assumes no responsibility for the correctness of the description that appears in the Receipts, which can be taken as a statement of the Grantor summarizing certain provisions of this Trust Agreement. Notwithstanding any other provision herein or in the Receipts, the Trustee makes no warranties or representations as to the validity, genuineness or sufficiency of any Preferred Securities or the Guarantee or of the Receipts, as to the validity or sufficiency of this Trust Agreement, as to the value of the Receipts or as to any right, title or interest of the Holders of Receipts, except that the Trustee hereby represents and warrants as follows: (i) the Trustee has been duly organized and is validly existing and in good standing under federal law, with full power, authority and legal right under such laws to execute, deliver and carry out the terms of this Trust Agreement; (ii) this Trust Agreement has been duly authorized, executed and delivered by the Trustee; and (iii) this Trust Agreement constitutes a valid and binding obligation of the Trustee enforceable against the Trustee in accordance with its terms subject to equitable principles and laws affecting the enforcement of creditors' rights generally. SECTION 6.03. Resignation and Removal of the Trustee; Appointment of Successor Trustee. The Trustee may at any time resign as Trustee hereunder by notice of its election to do so delivered to the Grantor and the General Partner, such resignation to take effect upon the appointment of a successor trustee and its acceptance of such appointment as hereinafter provided. The Trustee may at any time be removed by the Grantor by notice of such removal delivered to the Trustee, such removal to take effect upon the appointment of a successor trustee and its acceptance of such appointment as hereinafter provided. In case at any time the Trustee acting hereunder shall resign or be removed, the Grantor shall, within 45 days after the delivery of the notice of resignation or removal, as the case may be, appoint a successor trustee, which shall be a bank or trust company, or an Affiliate of a bank or trust company, having its principal office in the State of Delaware and having a combined capital and surplus of at least $50,000,000. If a successor Trustee shall not have been appointed in 45 days, the resigning Trustee may petition a court of competent jurisdiction to appoint a successor trustee. Every successor trustee shall execute and deliver to its predecessor and to the Grantor and the General Partner an instrument in writing accepting its appointment hereunder, and thereupon such successor trustee, without any further act or deed, shall become fully vested with all the rights, powers, duties and obligations of its predecessor and for all purposes shall be the Trustee under this Trust Agreement, and such predecessor, upon payment of all sums due it and on the written request of the Grantor, shall promptly execute and 16 deliver an instrument transferring to such successor all rights and powers of such predecessor hereunder, shall duly assign, transfer and deliver all rights, title and interest in the Preferred Securities and any moneys or property held hereunder to such successor and shall deliver to such successor a list of the Holders of all outstanding Receipts. Any successor Trustee shall promptly mail notice of its appointment to the Holders of Receipts. Any Person into or with which the Trustee may be merged, consolidated or converted, or any Person succeeding to the corporate trust business of the Trustee, shall be the successor of such Trustee without the execution or filing of any document or any further act, provided such Person shall be eligible under the provisions of the immediately preceding paragraph. SECTION 6.04. Corporate Notices and Reports. The General Partner agrees that it will give timely notice to the Trustee and any Paying Agent of any record date for the Preferred Securities and that it will deliver to the Trustee, and the Trustee will, promptly after receipt thereof, transmit to the Holders of Receipts, in each case at the address recorded on the Register, copies of all notices and reports (including financial statements) required by law, by the rules of any national securities exchange upon which the Receipts are listed or by the Partnership Agreement to be furnished to holders of Preferred Securities. Such transmission will be at the expense of the General Partner and the General Partner will provide the Trustee with such number of copies of such documents as the Trustee may reasonably request. In addition, the Trustee will transmit to the Holders of Receipts at the Grantor's expense such other documents as may be requested by the Grantor. SECTION 6.05. Status of Trust. It is intended that the Trust shall not be an "investment company" under the Investment Company Act of 1940, as amended. While it is expressly understood and agreed that the Trustee is acting only in a ministerial capacity hereunder, the Securities and Exchange Commission (the "Commission") has determined that as of the date hereof, the Trust is an issuer under the Federal securities laws and is thus required to sign any registration statement filed or to be filed in connection with the Receipts. SECTION 6.06. Appointment of Grantor to File on Behalf of Trust. The Grantor and the Trustee hereby authorize and direct the Grantor, as the sponsor of the Trust (i) to file with the Commission and execute, in each case on behalf of the Trust, (a) the Registration Statement on Form S-3 (the "1933 Act Registration Statement"), including any pre-effective or post-effective amendments to such 1933 Act Registration Statement (including the prospectus and the exhibits contained therein), relating to the registration under the Securities Act of 1933, as 17 amended, of the Receipts of the Trust and certain other securities; (b) a Registration Statement on Form 8-A (the "1934 Act Registration Statement"), including all pre-effective and post-effective amendments thereto relating to the registration of the Receipts under Section 12(b) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"); and (c) any reports or other papers or documents required to be filed by, or desirable to be filed with, the Commission, under the Exchange Act ("Exchange Act Reports"); (ii) to file with the New York Stock Exchange or Philadelphia Stock Exchange (each an "Exchange") and execute on behalf of the Trust one or more listing applications and all other applications, statements, certificates, agreements and other instruments as shall be necessary or desirable to cause the Receipts to be listed on any of the Exchanges; and (iii) to file and execute on behalf of the Trust such applications, reports, surety bonds, irrevocable consents, appointments of attorney for service of process and other papers and documents as shall be necessary or desirable to register the Receipts under the securities or "Blue Sky" laws of such jurisdictions as the Grantor, on behalf of the Trust, may deem necessary or desirable. SECTION 6.07. Indemnification by the General Partner. To the fullest extent permitted by law, the General Partner agrees to indemnify and defend the Trustee, the Registrar and any Paying Agent and their directors, officers, employees and agents against, and hold each of them harmless from, any liability, costs and expenses (including reasonable attorneys' fees) that may arise out of or in connection with its acting as the Trustee or the Registrar or Paying Agent, respectively, under this Trust Agreement and the Receipts, except for any liability arising out of negligence, bad faith or willful misconduct on the part of any such Person or Persons. SECTION 6.08. Fees, Charges and Expenses. No fees, charges or expenses of the Trustee or any Trustee's agent hereunder or of any Registrar shall be payable by any Person other than the General Partner, provided that if the Trustee incurs fees, charges or expenses for which it is not otherwise liable under this Trust Agreement due to any action taken at the election of a Holder of Receipts or other Person, such Holder or other Person will be liable for such fees, charges and expenses. SECTION 6.09. Appointment of Co-Trustee or Separate Trustee. (a) Notwithstanding any other provisions of this Trust Agreement, at any time, for the purpose of meeting any legal requirements of any jurisdiction in which any party of the Trust 18 must at the time be located, the Trustee shall have the power and may execute and deliver all instruments to appoint one or more Persons to act as co-trustee or co-trustees, or separate trustee or separate trustees, of all or any part of the Trust, and to vest in such Person or Persons, in such capacity and for the benefit of the Holders, such title to the Trust, or any part thereof, and, subject to the other provisions of this Section 6.09, such powers, duties, obligations, rights and trusts as the Trustee may consider necessary or desirable. No co-trustee or separate trustee hereunder shall be required to meet the terms of eligibility as successor trustee under Section 6.03 and no notice to the Holders of the appointment of any co-trustee or separate trustee shall be required. (b) Every separate trustee and co-trustee shall, to the extent permitted by law, be appointed and act subject to the following provisions and conditions: (i) all rights, powers, duties and obligations conferred or imposed upon and exercised or performed by the Trustee and such separate trustee or co-trustee jointly (it being understood that such separate trustee or co-trustee is not authorized to act separately without the Trustee joining in such act), except to the extent that under any laws of any jurisdiction in which any particular act or acts are to be performed, the Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations (including the holding of title to the Trust or any portion thereof in any such jurisdiction) shall be exercised and performed singly by such separate trustee or co-trustee, but solely at the direction of the Trustee; (ii) no Trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder; and (iii) the Trustee may at any time accept the resignation of or remove any separate trustee or co-trustee. (c) Any notice, request or other writing given to the Trustee shall be deemed to have been given to each of the then separate trustees and co-trustees, as effectively as if given to each of them. Every instrument appointing any separate trustee or co-trustee shall refer to this Trust Agreement. Each separate trustee and co-trustee, upon its acceptance of the trusts conferred, shall be vested with the estates or property specified in its instrument of appointment, either jointly with the Trustee or separately, as may be provided therein, subject to all the provisions of this Trust Agreement, specifically including every provision of this Trust Agreement relating to the conduct of, affecting the liability of, or affording protection to, the 19 Trustee. Every such instrument shall be filed with the Trustee and a copy thereof given to the Grantor. (d) Any separate trustee or co-trustee may at any time constitute the Trustee as its agent or attorney-in-fact with full power and authority, to the extent not prohibited by law, to do any lawful act under or in respect to this Trust Agreement on its behalf and in its name. If any separate trustee or co-trustee shall die, become incapable of acting, resign or be removed, all of its estates, properties, rights, remedies and trusts shall vest in and be exercised by the Trustee, to the extent permitted by law, without the appointment of a new or successor trustee. ARTICLE VII AMENDMENT AND TERMINATION SECTION 7.01. Supplemental Trust Agreement. The Grantor or the General Partner may, and the Trustee shall, at any time and from time to time, without the consent of the Holders, enter into one or more agreements supplemental hereto, in form satisfactory to the Trustee, for any of the following purposes: (a) to evidence the succession of another partnership, corporation or other entity to the Grantor or the General Partner and the assumption by any such successor of the covenants of the Grantor or the General Partner herein contained; or (b) to add to the covenants of the Grantor or the General Partner for the benefit of the Holders, or to surrender any right or power herein conferred upon the Grantor or the General Partner; or (c) (i) to correct or supplement any provision herein which may be defective or inconsistent with any other provision herein or (ii) to make any other provisions with respect to matters or questions arising under this Trust Agreement, provided that any such action taken under subsection (c)(ii) hereof shall not materially adversely affect the interests of the Holders; or (d) to cure any ambiguity or correct any mistake. Any other amendment or agreement supplemental hereto must be in writing and approved by Holders of 66-2/3% of the then outstanding Receipts. SECTION 7.02. Termination. The Trust Agreement shall terminate on the date that all outstanding Receipts have been redeemed or there has been a final distribution in respect of the Preferred Securities in connection with any liquidation, 20 dissolution or winding up of the Grantor and such distribution has been made to the Holders of the Receipts. Except as provided in Section 6.07 and Section 6.08, upon termination of this Trust Agreement and the Trust in accordance with the foregoing, the respective obligations and responsibilities of the Trustee, the Grantor and the General Partner created hereby shall terminate. ARTICLE VIII MERGER, CONSOLIDATION, ETC. OF GRANTOR SECTION 8.01. Limitation on Permitted Merger Consolidation, Etc. of Grantor. The Grantor agrees that it will not consolidate, amalgamate, merge with or into, or be replaced by, or convey, transfer or lease its properties and assets substantially in their entirety to any corporation or other entity without the consent of the Holders of 66-2/3% of the Receipts unless permitted by Section 13.02(e) of the Partnership Agreement and (i) such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease does not cause the Receipts to be delisted by any national securities exchange or other organization on which the Receipts are then listed, (ii) such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease does not cause the Receipts to be downgraded by any "nationally recognized statistical rating organization," as that term is defined by the Commission for purposes of Rule 436(g)(2) under the Securities Act of 1933, as amended, and (iii) prior to such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease, PECO Energy has received an opinion of counsel (which may be regular counsel to PECO Energy or an Affiliate, but not an employee thereof) experienced in such matters to the effect that Holders of outstanding Receipts will not recognize any gain or loss for Federal income tax purposes as a result of the merger, consolidation, amalgamation, replacement, conveyance, transfer or lease. ARTICLE IX MISCELLANEOUS SECTION 9.01. Counterparts. This Trust Agreement may be executed by the Grantor, the Trustee and the General Partner in separate counterparts, each of which counterparts, when so executed and delivered shall be deemed an original, but all such counterparts taken together shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this Trust Agreement by telecopier shall be effective as delivery of a manually executed counterpart of this Trust Agreement. Copies of this Trust Agreement shall be filed with the Trustee and the Trustee's agents and shall be open to 21 inspection during business hours at the Corporate Office and the respective offices of the Trustee's agents, if any, by any Holder of a Receipt. SECTION 9.02. Exclusive Benefits of Parties. This Trust Agreement is for the exclusive benefit of the parties hereto and the Holders of the Receipts and the Preferred Securities, and their respective successors hereunder, and shall not be deemed to give any legal or equitable right, remedy or claim to any other Person whatsoever. SECTION 9.03. Invalidity of Provisions. In case any one or more of the provisions contained in this Trust Agreement or in the Receipts should be or become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein or therein shall in no way be affected, prejudiced or disturbed thereby. SECTION 9.04. Notices. Any notices to be given to the Grantor or the General Partner hereunder shall be in writing and shall be deemed to have been duly given if personally delivered or sent by mail, or by telegram or telex or telecopier confirmed by letter, addressed to the General Partner at 1013 Centre Road, Suite 350F, Wilmington, Delaware 19805, Attention: President, or at any other place to which the General Partner may have transferred its principal executive office. Any notices to be given to the Trustee hereunder or under the Receipts shall be in writing and shall be deemed to have been duly given if personally delivered or sent by mail, or by telegram or telex or telecopier confirmed by letter, addressed to the Trustee at the Corporate Office. Any notices given to any Holder of a Receipt hereunder or under the Receipts shall be in writing and shall be deemed to have been duly given if personally delivered or sent by mail, or by telegram or telex or telecopier confirmed by letter, addressed to such Holder at the address of such Holder as it appears on the books of the Trustee or, if such Holder shall have timely filed with the Trustee a written request that notices intended for such Holder be mailed to some other address, at the address designated in such request. Delivery of a notice sent by mail, or by telegram or telex or telecopier shall be deemed to be effected at the time when a duly addressed letter containing the same (or a duly addressed letter confirming an earlier notice in the case of a telegram or telex or telecopier message) is deposited, postage prepaid, in a post office letter box. The Trustee may, however, act upon any telegram or telex or telecopier message received by it from the other or from any Holder of a Receipt, 22 notwithstanding that such telegram or telex or telecopier message shall not subsequently be confirmed by letter as aforesaid. SECTION 9.05. Trustee's Agents. The Trustee may from time to time appoint agents to act in any respect for the Trustee for the purposes of this Trust Agreement. The Trustee shall have no liability for the acts or omissions of agents selected by it with due care. The Trustee will notify the General Partner prior to any such action. SECTION 9.06. Holders of Receipts Are Parties. Notwithstanding that Holders of Receipts have not executed and delivered this Trust Agreement or any counterpart thereof, the Holders of Receipts from time to time shall be bound by all of the terms and conditions hereof and of the Receipts by acceptance of delivery of Receipts. SECTION 9.07. Governing Law. This Trust Agreement and the Receipts and all rights hereunder and thereunder and provisions hereof and thereof shall be governed by, and construed in accordance with, the law of the State of Delaware without giving effect to principles of conflict of laws. SECTION 9.08. Headings. The headings of articles and sections of this Trust Agreement and in the form of the Receipt set forth in Exhibit A hereto have been inserted for convenience only and are not to be regarded as part of this Trust Agreement or to have any bearing upon the meaning or interpretation of any provision contained herein or in the Receipts. SECTION 9.09. Receipts Non-Assessable and Fully Paid. The Holders of the Receipts shall not be personally liable for obligations of the Trust, the interests in the Trust represented by the Receipts shall be non-assessable for any losses or expenses of the Trust or for any reason whatsoever, and the Receipts upon delivery thereof by the Trustee pursuant to this Trust Agreement are and shall be deemed fully paid. SECTION 9.10. No Preemptive Rights. No Holder shall be entitled as a matter of right to subscribe for or purchase, or have any preemptive right with respect to, any part of any new or additional interest in the Trust, whether now or hereafter authorized and whether issued for cash or other consideration or by way of distribution. 23 IN WITNESS WHEREOF, the Grantor and the Trustee and the General Partner have duly executed this Trust Agreement as of the day and year first above set forth. PECO ENERGY CAPITAL, L.P. By: PECO ENERGY CAPITAL CORP., its general partner By: __________________________________ Name: J. Barry Mitchell Title: President FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION By: __________________________________ Name: Title: The General Partner joins in this Trust Agreement solely for the purposes of obligating itself under Sections 6.04, 6.07 and 6.08 of this Trust Agreement and not as grantor, trustee or beneficiary. PECO ENERGY CAPITAL CORP. By: __________________________________ Name: J. Barry Mitchell Title: President 24 EXHIBIT A TRUST RECEIPTS OF PECO ENERGY CAPITAL TRUST II, a Delaware Business Trust, each Representing an ____% Cumulative Monthly Income Preferred Security, Series C of PECO Energy Capital, L.P. (a Delaware limited partnership) No. _________ ___________ Receipts First Union Trust Company, National Association, not in its individual capacity, but solely as Trustee (the "Trustee"), hereby certifies that ______________ is the registered owner of __________ Receipts (the "Receipts"), each representing a ____% Cumulative Monthly Income Preferred Security, Series C (the "Preferred Securities") of PECO Energy Capital, L.P., a Delaware limited partnership (the "Grantor"), deposited in trust by the Grantor with the Trustee pursuant to an Amended and Restated Trust Agreement of PECO Energy Capital Trust II dated as of June ___, 1997 (as amended or supplemented from time to time, the "Trust Agreement") among the Grantor, the Trustee and PECO Energy Capital Corp., the general partner of the Grantor (the "General Partner"). Subject to the terms of the Trust Agreement, the registered Holder hereof is entitled to a full interest in the same number of Preferred Securities held by the Trustee under the Trust Agreement, as are represented by the Receipts including the distribution, voting, liquidation and other rights of the Preferred Securities specified in the Amended and Restated Limited Partnership Agreement of the Grantor, as amended, a copy of which is on file at the Corporate Office. 1. The Trust Agreement. The Receipts are issued upon the terms and conditions set forth in the Trust Agreement. The Trust Agreement (a copy of which is on file at the Corporate Office of the Trustee) sets forth the rights of Holders of Receipts and the rights and duties of the Trustee, the Grantor and the General Partner. The statements made herein are summaries of certain provisions of the Trust Agreement and are subject to the detailed provisions thereof, to which reference is hereby made. In the event of any conflict or discrepancy between the provisions hereof and the provisions of the Trust Agreement, the provisions of the Trust Agreement will govern. Unless otherwise expressly herein provided, all defined terms used herein shall have the meanings ascribed thereto in the Trust Agreement. 2. Enforcement of Rights; Withdrawal of Preferred Securities. To the fullest extent permitted by law, without the need for any other action of any Person, including the Trustee and any other Holder, each Holder shall be entitled to enforce in the name of the Trust the Trust's rights under the Preferred A-1 Securities represented by the Receipts held by such Holder and any recovery on such an enforcement action shall belong solely to such Holder who brought the action, not to the Trust, Trustee or any other Holder individually or to Holders as a group. Any beneficial owner of Receipts may withdraw all, but not less than all, of the Preferred Securities represented by such Receipts by providing a written notice and an agreement to be bound by the terms of the Partnership Agreement to the Trustee at the Corporate Office, with evidence of beneficial ownership in form satisfactory to the Trustee; provided, however, that the Trustee shall not issue any fractional number of Preferred Securities. 3. Distributions of Monthly Distributions on Preferred Securities. Whenever the Trustee shall receive any cash distribution representing a monthly distribution on the Preferred Securities (whether or not distributed by the Grantor on the regular monthly distribution date therefor) or payment by PECO Energy Company ("PECO Energy") under the Payment and Guarantee Agreement dated as of June ___, 1997 (the "Guarantee") in respect thereof, the Trustee acting directly or through any Paying Agent shall distribute to Holders of Receipts on the record date therefor, such amounts in proportion to the respective numbers of Preferred Securities represented by the Receipts held by such Holders. 4. Redemptions of Preferred Securities. Whenever the Grantor shall elect or is required to redeem Preferred Securities in accordance with the Partnership Agreement, it shall (unless otherwise agreed in writing with the Trustee) give the Trustee not less than 40 days' prior notice thereof. The Trustee shall, as directed by the Grantor, mail, first-class postage prepaid, notice of the redemption of Preferred Securities and the proposed simultaneous redemption of the Receipts to be redeemed, not less than 30 and not more than 60 days prior to the date fixed for redemption of such Preferred Securities and Receipts. Such notice shall be mailed to the Holders of the Receipts, at the addresses of such Holders as the same appear on the records of the Trustee. No defect in the notice of redemption or in the mailing or delivery thereof or publication of its contents shall affect the validity of the redemption proceedings. In case fewer than all the outstanding Receipts are to be redeemed, the Receipts to be redeemed shall be selected by lot or pro rata (as nearly as may be practicable without creating fractional shares) or by any other equitable method determined by the Grantor. On the date of any such redemption of Preferred Securities, provided that the Grantor (or PECO Energy pursuant to the Guarantee) shall then have deposited with the Trustee the aggregate amount payable upon redemption of the Preferred Securities to be redeemed, the Trustee shall redeem (using the funds so deposited with it) Receipts representing the same number of Preferred Securities to be redeemed by the Grantor. A-2 5. Distributions in Liquidation. Upon receipt by the Trustee of any distribution from the Grantor upon the liquidation of the Grantor or any payment under the Guarantee in respect thereof, after satisfaction of creditors of the Trust required by applicable law, the Trustee shall distribute to Holders of Receipts on the record date therefor, such amounts in proportion to the respective number of Preferred Securities which were represented by the Receipts held by such Holders. 6. Fixing of Record Date for Holders of Receipts. Whenever any distribution (other than upon any redemption) shall become payable, or whenever the Trustee shall receive notice of any meeting at which holders of Preferred Securities are entitled to vote or of which holders of Preferred Securities are entitled to notice, the Trustee shall in each such instance fix a record date (which shall be the same date as the record date fixed by the General Partner with respect to the Preferred Securities) for the determination of the Holders of Receipts who shall be entitled (i) to receive such distribution or (ii) to receive notice of, and to give instructions for the exercise of voting rights at, any such meeting. 7. Payment of Distributions. Payments of monthly distributions on the Receipts shall be payable by wire transfer into the accounts of or check mailed to the addresses of the Holders thereof on the record date therefor. Payments of the redemption price of Receipts and distributions in liquidation shall be made against surrender of such Receipts at the office of First Union Trust Company, National Association, as the Paying Agent. 8. Special Representative; Voting Rights. (a) If the holders of the Preferred Partner Interests (as defined in the Partnership Agreement), acting as a single class, are entitled to appoint and authorize a Special Representative pursuant to Section 13.02(d) of the Partnership Agreement, the Trustee shall notify the Holders of the Receipts of such right, request direction of each Holder of a Receipt and vote the Preferred Securities represented by such Receipt in accordance with such direction. If the General Partner fails to convene a general meeting of the Partnership as required in Section 13.02(d) of the Partnership Agreement, the Trustee shall notify the Holders of the Receipts and, if so directed by the Holders of Receipts representing Preferred Securities constituting at least 10% of the aggregated stated liquidation preference of the outstanding Preferred Partner Interests (as defined in the Partnership Agreement) shall convene such meeting. (b) Upon receipt of notice of any meeting at which the holders of Preferred Securities are entitled to vote, the Trustee shall, as soon as practicable thereafter, mail to the Holders of Receipts a notice, which shall be provided by the Grantor and which shall contain (i) such information as is A-3 contained in such notice of meeting, (ii) a statement that the Holders of Receipts at the close of business on a specified record date therefor will be entitled, subject to any applicable provision of law or of the Partnership Agreement, to instruct the Trustee as to the exercise of the voting rights pertaining to the amount of Preferred Securities represented by their respective Receipts, and (iii) a brief statement as to the manner in which such instructions may be given. Upon the written request of a Holder of a Receipt on such record date, the Trustee shall vote or cause to be voted the number of Preferred Securities represented by the Receipts in accordance with the instructions set forth in such request. In the absence of specific instructions from the Holder of a Receipt, the Trustee will abstain from voting to the extent of the Preferred Securities represented by such Receipt. 9. Changes Affecting Preferred Securities and Reclassifications, Recapitalizations, Etc. Upon any consolidation, amalgamation, merger, replacement or conveyance, transfer or lease by the Grantor of its properties and assets substantially in their entirety in accordance with Section 13.02(e) of the Partnership Agreement, the Trustee shall, upon the instructions of the Grantor, treat any Successor Securities or other property that shall be received by the Trustee in exchange for or upon conversion of or in respect of the Preferred Securities as part of the Trust Estate, and Receipts then outstanding shall thenceforth represent the proportionate interests of Holders thereof in the new deposited property so received in exchange for or upon conversion or in respect of such Preferred Securities. 10. Transfer and Exchange of Receipts. Subject to the terms and conditions of the Trust Agreement, the Trustee shall register the transfer on its books from time to time of Receipt certificates upon any surrender thereof by the Holder in person or by a duly authorized attorney, properly endorsed or accompanied by a properly executed instrument of transfer or endorsement, together with evidence of the payment of any transfer taxes as may be required by law. Upon such surrender, the Trustee shall execute a new Receipt representing the same aggregate number of the Receipts surrendered in accordance with the Trust Agreement and deliver the same to or upon the order of the Person entitled thereto. Upon surrender of a Receipt at the Corporate Office or such other office as the Trustee may designate for the purpose of effecting an exchange of Receipt certificates, subject to the terms and conditions of the Trust Agreement, the Trustee shall execute and deliver a new Receipt certificate representing the same number of Preferred Securities as the Receipt certificate surrendered. A-4 As a condition precedent to the registration of transfer or exchange of any Receipt certificate, the Registrar, may require (i) the production of proof satisfactory to it as to the identity and genuineness of any signature; and (ii) compliance with such regulations, if any, as the Trustee or the Registrar may establish not inconsistent with the provisions of the Trust Agreement. Neither the Trustee nor the Registrar shall be required (a) to register the transfer or exchange of any Receipt certificate for a period beginning at the opening of business ten days next preceding any selection of Receipts to be redeemed and ending at the close of business on the day of the mailing a notice of redemption of Receipts or (b) to transfer or exchange Receipts called or being called for redemption in whole or in part. 11. Title to Receipts. It is a condition of the Receipt, and every successive Holder hereof by accepting or holding the same consents and agrees, that title to this Receipt certificate, when properly endorsed or accompanied by a properly executed instrument of transfer or endorsement, is transferable by delivery with the same effect as in the case of a negotiable instrument; provided, however, that until the transfer of this Receipt certificate shall be registered on the books of the Trustee, the Trustee may, notwithstanding any notice to the contrary, treat the Holder hereof at such time as the absolute owner hereof for the purpose of determining the Person entitled to distributions or to any notice provided for in the Trust Agreement and for all other purposes. 12. Reports, Inspection of Transfer Books. The Trustee shall make available for inspection by Holders of Receipts at the Corporate Office and at such other places as it may from time to time deem advisable during normal business hours any reports and communications received by the Trustee as the record holder of Preferred Securities. The Registrar shall keep books at the corporate office for the registration of transfer of Receipts, which books at all reasonable times will be open for inspection by the Holders of Receipts as and to the extent provided by applicable law. 13. Supplemental Trust Agreement. The Grantor or the General Partner may, and the Trustee shall, at any time and from time to time, without the consent of the Holders, enter into one or more agreements supplemental hereto, in form satisfactory to the Trustee, for any of the following purposes: (a) to evidence the succession of another partnership, corporation or other entity to the Grantor or the General Partner and the assumption by any such successor of the covenants of the Grantor or the General Partner herein contained; or (b) to add to the covenants of the Grantor or the General Partner for the benefit of the Holders, or to surrender any right or power herein conferred upon A-5 the Grantor or the General Partner; or (c)(i) to correct or supplement any provision herein which may be defective or inconsistent with any other provision herein or (ii) to make any other provisions with respect to matters or questions arising under this Trust Agreement, provided that any such action taken under subsection (ii) hereof shall not materially adversely affect the interests of the Holders; or (d) to cure any ambiguity or correct any mistake. Any other amendment or agreement supplemental hereto must be in writing and approved by Holders of 66-2/3% of the then outstanding Receipts. 14. Governing Law. The Trust Agreement and this Receipt and all rights thereunder and hereunder and provisions thereof and hereof shall be governed by, and construed in accordance with, the law of the State of Delaware without giving effect to principles of conflict of laws. 15. Receipt Non-Assessable and Fully Paid. Holders of Receipts shall not be personally liable for obligations of the Trust, the interest in the Trust represented by the Receipts shall be non-assessable for any losses or expenses of the Trust or for any reason whatsoever and the Receipts upon delivery thereof by the Trustee pursuant to the Trust Agreement are and shall be deemed fully paid. 16. Liability of Holders of Receipts. Holders of Receipts shall be entitled to the same limitation of personal liability extended to stockholders of private corporations for profit organized under the General Corporation Law of the State of Delaware. 17. No Preemptive Rights. No Holder shall be entitled as a matter of right to subscribe for or purchase, or have any preemptive right with respect to, any part of any new or additional interest in the Trust, whether now or hereafter authorized and whether issued for cash or other consideration or by way of distribution. This Receipt certificate shall not be entitled to any benefits under the Trust Agreement or be valid or obligatory for any purpose unless this Receipt certificate shall have been executed manually or, if a Registrar for the Receipts (other than the Trustee) shall have been appointed, by facsimile signature of a duly authorized signatory of the Trustee and, if executed by facsimile signature of the Trustee, shall have been countersigned manually by such Registrar by the signature of a duly authorized signatory. THE TRUSTEE IS NOT RESPONSIBLE FOR THE VALIDITY OF ANY PREFERRED SECURITIES. THE TRUSTEE ASSUMES NO RESPONSIBILITY FOR THE CORRECTNESS OF THE FOREGOING DESCRIPTION WHICH CAN BE TAKEN AS A STATEMENT OF THE GRANTOR SUMMARIZING CERTAIN PROVISIONS OF THE TRUST AGREEMENT. THE TRUSTEE MAKES NO WARRANTIES OR A-6 REPRESENTATIONS AS TO THE VALIDITY, GENUINENESS OR SUFFICIENCY OF PREFERRED SECURITIES OR OF RECEIPTS; AS TO THE VALIDITY OR SUFFICIENCY OF THE TRUST AGREEMENT; AS TO THE VALUE OF RECEIPTS OR AS TO ANY RIGHT, TITLE OR INTEREST OF THE HOLDERS OF RECEIPTS IN AND TO RECEIPTS. Dated: June ___, 1997 First Union Trust Company, National Association, as Trustee, By: ___________________________________ Name: Title: A-7 [FORM OF ASSIGNMENT] FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers unto ____________________ the within Receipt and all rights and interests represented by the Receipts evidenced thereby, and hereby irrevocably constitutes and appoints ____________________ attorney, to transfer the same on the books of the within-named Trustee, with full power of substitution in the premises. Dated:_________________ Signature:________________________ NOTE: The signature to this assignment must correspond with the name as written upon the face of the Receipt in every particular, without alteration or enlargement, or any change whatever. Signature Guarantee: ______________________________ A-8 EX-4 8 EXHIBIT 4.13 PAYMENT AND GUARANTEE AGREEMENT THIS PAYMENT AND GUARANTEE AGREEMENT ("Guarantee Agreement"), dated as of June ___, 1997, is executed and delivered by PECO Energy Company, a Pennsylvania corporation (the "Guarantor"), for the benefit of the Holders (as defined below) of the Series C Preferred Securities (as defined below) of PECO Energy Capital, L.P., a Delaware limited partnership ("PECO Energy Capital"), the general partner of which is PECO Energy Capital Corp. (the "General Partner"), a Delaware corporation and a wholly owned subsidiary of the Guarantor. WHEREAS, PECO Energy Capital is issuing on the date hereof $50,000,000 aggregate stated liquidation preference of limited partner interests of a series designated the ____% Cumulative Monthly Income Preferred Securities, Series C (the "Series C Preferred Securities"), and the Guarantor desires to enter into this Guarantee Agreement for the benefit of the Holders, as provided herein; WHEREAS, the Guarantor will issue Series C Subordinated Debentures (as defined below) in accordance with the Indenture (as defined below) to PECO Energy Capital in an amount equal to the aggregate stated liquidation preference of the Series C Preferred Securities and the capital contribution of the General Partner to PECO Energy Capital (the "G.P. Capital Contribution"); and WHEREAS, the Guarantor desires to irrevocably and unconditionally agree to the extent set forth herein to pay to the Holders the Guarantee Payments (as defined below) and to make certain other undertakings on the terms and conditions set forth herein. NOW, THEREFORE, in consideration of the premises and other consideration, receipt of which is hereby acknowledged, the Guarantor, intending to be legally bound hereby, agrees as follows: ARTICLE I As used in this Guarantee Agreement, each term set forth below, unless the context otherwise requires, shall have the following meaning. Each capitalized term used but not otherwise defined herein shall have the meaning assigned to such term in the Amended and Restated Limited Partnership Agreement of PECO Energy Capital dated as of July 25, 1994 (as amended from time to time, the "Limited Partnership Agreement"). "Guarantee Payments" shall mean the following payments, without duplication, to the extent not paid by PECO Energy Capital: (i) any accumulated and unpaid monthly distributions on the Series C Preferred Securities out of moneys legally available therefor held by PECO Energy Capital, (ii) the Redemption Price (as defined below) payable with respect to any Series C Preferred Securities called for redemption by PECO Energy Capital out of moneys legally available therefor held by PECO Energy Capital, and (iii) upon liquidation of PECO Energy Capital, the lesser of (a) the Liquidation Distribution (as defined below) and (b) the amount of assets of PECO Energy Capital available for distribution to the Holders in liquidation of PECO Energy Capital. "Holders" shall mean the persons or entities in whose name any Series C Preferred Securities are registered on the registration books maintained by PECO Energy Capital; provided, however, that in determining whether the Holders of the requisite percentage of Series C Preferred Securities have given any request, notice, consent or waiver hereunder, "Holder" shall not include the Guarantor or any entity owned more than 50% by the Guarantor, either directly or indirectly. "Indenture" shall mean the Indenture, dated as of July 1, 1994 (the "Original Indenture"), as supplemented by the First Supplemental Indenture, dated as of December 1, 1995, between the Guarantor and First Union National Bank, as successor trustee, and the Second Supplemental Indenture, dated as of June 1, 1997, between the Guarantor and First Union National Bank, as trustee, pursuant to which the Guarantor has issued and will issue its Deferrable Interest Subordinated Debentures in series. "Liquidation Distribution" shall mean the aggregate of the stated liquidation preference of $25 per Series C Preferred Security and all accumulated and unpaid distributions to the date of payment. "Preferred Trust Receipts" shall mean the trust receipts issued by the Trust each representing a Series C Preferred Security. "Redemption Price" shall mean the aggregate of $25 per Series C Preferred Security and all accumulated and unpaid distributions to the date fixed for redemption. "Special Representative" shall mean any representative of the Holders appointed pursuant to Section 13.02(d) of the Limited Partnership Agreement. 2 "Supplemental Indenture" shall mean the Second Supplemental Indenture, dated as of June 1, 1997, between the Guarantor and First Union National Bank, as trustee, pursuant to which the Guarantor has issued its ____% Deferrable Interest Subordinated Debentures, Series C (the "Series C Subordinated Debentures") in an amount equal to the aggregate stated liquidation preference of the Series C Preferred Securities and the G.P. Capital Contribution. "Trust" shall mean PECO Energy Capital Trust II, a Delaware business trust. "Trust Agreement" shall mean the Amended and Restated Trust Agreement of PECO Energy Capital Trust II, as amended from time to time, among PECO Energy Capital, L.P., as Grantor, First Union National Bank, as trustee, and the General Partner, for the limited purpose stated therein, dated as of June ___, 1997. "Trustee" shall mean First Union National Bank or a successor trustee under the Trust Agreement. ARTICLE II SECTION 2.01. The Guarantor hereby irrevocably and unconditionally agrees to pay in full to the Holders the Guarantee Payments, as and when due (except to the extent paid by PECO Energy Capital), to the fullest extent permitted by law, regardless of any defense, right of set-off or counterclaim which the Guarantor may have or assert against PECO Energy Capital, the General Partner, the Trust or the Trustee. The Guarantor's obligation to make a Guarantee Payment may be satisfied by direct payment by the Guarantor to the Holders or by payment of such amounts by PECO Energy Capital to the Holders. Notwithstanding anything to the contrary herein, the Guarantor retains all of its rights under Section 4.01(b) of the Indenture to extend the interest payment period on the Series C Subordinated Debentures and the Guarantor shall not be obligated hereunder to pay during an Extension Period any monthly distributions on the Series C Preferred Securities which are not paid by PECO Energy Capital during such Extension Period. SECTION 2.02. The Guarantor hereby waives notice of acceptance of this Guarantee Agreement and of any liability to which it applies or may apply, presentment, demand for payment, protest, notice of nonpayment, notice of dishonor, notice of redemption and all other notices and demands. SECTION 2.03. Except as otherwise set forth herein, the obligations, covenants, agreements and duties of the Guarantor under this Guarantee Agreement shall in no way be 3 affected or impaired by reason of the happening from time to time of any of the following: (a) the release or waiver, by operation of law or otherwise, of the performance or observance by PECO Energy Capital of any express or implied agreement, covenant, term or condition relating to the Series C Preferred Securities to be performed or observed by PECO Energy Capital; (b) the extension of time for the payment by PECO Energy Capital of all or any portion of the distributions, Redemption Price, Liquidation Distribution or any other sums payable under the terms of the Series C Preferred Securities or the extension of time for the performance of any other obligation under, arising out of, or in connection with, the Series C Preferred Securities; (c) any failure, omission, delay or lack of diligence on the part of the Holders or the Special Representative to enforce, assert or exercise any right, privilege, power or remedy conferred on the Holders or the Special Representative pursuant to the terms of the Series C Preferred Securities, or any action on the part of PECO Energy Capital granting indulgence or extension of any kind; (d) the voluntary or involuntary liquidation, dissolution, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of debt of, or other similar proceedings affecting, PECO Energy Capital or any of the assets of PECO Energy Capital; (e) any invalidity of, or defect or deficiency in, any of the Series C Preferred Securities; or (f) the settlement or compromise of any obligation guaranteed hereby or hereby incurred. There shall be no obligation to the Holders to give notice to, or obtain the consent of, the Guarantor with respect to the occurrence of any of the foregoing. SECTION 2.04. The Guarantor expressly acknowledges that (i) this Guarantee Agreement will be deposited with the General Partner to be held for the benefit of the Holders; (ii) in the event of the appointment of a Special Representative, the Special Representative may enforce this Guarantee Agreement for such purpose; (iii) if no Special Representative has been appointed, the General Partner has the right to enforce this Guarantee Agreement on behalf of the Holders; (iv) the holders of Preferred Trust Receipts, together with the holders of the Series 4 C Preferred Securities other than the Trust, representing not less than 10% in aggregate stated liquidation preference of the Series C Preferred Securities have the right to direct the time, method and place of conducting any proceeding for any remedy available in respect of this Guarantee Agreement including the giving of directions to the General Partner or the Special Representative as the case may be; and (v) if the General Partner or the Special Representative fails to enforce this Guarantee Agreement as above provided, any holder of Preferred Trust Receipts representing Series C Preferred Securities may institute a legal proceeding directly against the Guarantor to enforce its rights under this Guarantee Agreement, without first instituting a legal proceeding against PECO Energy Capital or any other person or entity. SECTION 2.05. This is a guarantee of payment and not of collection. The General Partner or Special Representative may enforce this Guarantee Agreement directly against the Guarantor, and the Guarantor will waive any right or remedy to require that any action be brought against PECO Energy Capital or any other person or entity before proceeding against the Guarantor. The Guarantor agrees that this Guarantee Agreement shall not be discharged except by payment of the Guarantee Payments in full (to the extent not paid by PECO Energy Capital) and by complete performance of all obligations of the Guarantor contained in this Guarantee Agreement. SECTION 2.06. The Guarantor will be subrogated to all rights of the Holders against PECO Energy Capital in respect of any amounts paid to the Holders by the Guarantor under this Guarantee Agreement and shall have the right to waive payment by PECO Energy Capital pursuant to Section 2.01; provided, however, that the Guarantor shall not (except to the extent required by mandatory provisions of law) exercise any rights which it may acquire by way of subrogation or any indemnity, reimbursement or other agreement, in all cases as a result of a payment under this Guarantee Agreement, if, at the time of any such payment, any amounts remain due and unpaid under this Guarantee Agreement. If any amount shall be paid to the Guarantor in violation of the preceding sentence, the Guarantor agrees to pay over such amount to the Holders. SECTION 2.07. The Guarantor acknowledges that its obligations hereunder are independent of the obligations of PECO Energy Capital with respect to the Series C Preferred Securities and that the Guarantor shall be liable as principal and sole debtor hereunder to make Guarantee Payments pursuant to the terms of this Guarantee Agreement notwithstanding the occurrence of any event referred to in subsections (a) through (f), inclusive, of Section 2.03 hereof. 5 ARTICLE III SECTION 3.01. So long as any Series C Preferred Securities remain outstanding, neither the Guarantor nor any majority-owned subsidiary of the Guarantor shall declare or pay any dividend on, or redeem, purchase, acquire or make a liquidation payment with respect to, any of its capital stock (other than dividends by a wholly owned subsidiary) if at such time the Guarantor shall be in default with respect to its payment or other obligations hereunder or there shall have occurred any event that, with the giving of notice or the lapse of time or both, would constitute an Event of Default under the Indenture. The Guarantor shall take all actions necessary to ensure the compliance of its subsidiaries with this Section 3.01. SECTION 3.02. So long as any Series C Preferred Securities are outstanding, the Guarantor agrees to maintain its corporate existence; provided that the Guarantor may consolidate with or merge with or into, or sell, convey, transfer or lease all or substantially all of its assets (either in one transaction or a series of transactions) to, any person, corporation, partnership, limited liability company, joint venture association, joint stock company, trust or unincorporated association if such entity formed by or surviving such consolidation or merger or to which such sale, conveyance, transfer or lease shall have been made, if other than the Guarantor, (i) is organized and existing under the laws of the United States of America or any state thereof or the District of Columbia, and (ii) shall expressly assume all the obligations of the Guarantor under this Guarantee Agreement. SECTION 3.03. This Guarantee Agreement will constitute an unsecured obligation of the Guarantor and will rank subordinate and junior in right of payment to all general liabilities of the Guarantor. ARTICLE IV This Guarantee Agreement shall terminate and be of no further force and effect upon full payment of the Redemption Price of all Series C Preferred Securities or upon full payment of the amounts payable to the Holders upon liquidation of PECO Energy Capital; provided, however, that this Guarantee Agreement shall continue to be effective or shall be reinstated, as the case may be, if at any time the Holders must restore payments of any sums paid under the Series C Preferred Securities or under this Guarantee Agreement for any reason whatsoever. 6 ARTICLE V SECTION 5.01. All guarantees and agreements contained in this Guarantee Agreement shall bind the successors, assigns, receivers, trustees and representatives of the Guarantor and shall inure to the benefit of the Holders. Except as provided in Section 3.02, the Guarantor may not assign its obligations hereunder without the prior approval of the Holders of not less than 662/3% of the aggregate stated liquidation preference of all Series C Preferred Securities then outstanding. SECTION 5.02. This Guarantee Agreement may only be amended by a written instrument executed by the Guarantor; provided that, so long as any of the Series C Preferred Securities remain outstanding, any amendment that materially adversely affects the Holders, any termination of this Guarantee Agreement and any waiver of compliance with any covenant hereunder shall be effected only with the prior approval of the holders of Preferred Trust Receipts together with the holders of Series C Preferred Securities other than the Trust, representing not less than 662/3% of the aggregate liquidation preference of all Series C Preferred Securities then outstanding. SECTION 5.03. All notices, requests or other communications required or permitted to be given hereunder to the Guarantor shall be deemed given if in writing and delivered personally or by recognized overnight courier or express mail service or by facsimile transmission (confirmed in writing) or by registered or certified mail (return receipt requested), addressed to the Guarantor at the following address (or at such other address as shall be specified by like notice to the Holders): PECO Energy Company 2301 Market Street P.O. Box 8699 Philadelphia, Pennsylvania 19101 Facsimile No.: (215) 557-9885 Attention: Treasurer All notices, requests or other communications required or permitted to be given hereunder to the Holders shall be deemed given if in writing and delivered by the Guarantor in the same manner as notices sent by PECO Energy Capital to the Holders. SECTION 5.04. This Guarantee Agreement is solely for the benefit of the Holders and is not separately transferable from the Series C Preferred Securities. 7 SECTION 5.05. This Guarantee Agreement shall be governed by and construed and interpreted in accordance with the laws of the Commonwealth of Pennsylvania without giving effect to the conflict of law principles thereof. THIS GUARANTEE AGREEMENT is executed as of the day and year first above written. PECO ENERGY COMPANY By: _____________________________________ Name: J. Barry Mitchell Title: Vice President-Finance 8 EX-5 9 EXHIBIT 5.1 [LETTERHEAD OF BALLARD SPAHR ANDREWS & INGERSOLL] May 23, 1997 PECO Energy Company 2301 Market Street Philadelphia, PA 19103 Re: Preferred Trust Receipts of PECO Energy Capital Trust II, Representing Cumulative Monthly Income Preferred Securities, Series C of PECO Energy Capital, L.P. --------------------------------------------- Ladies and Gentlemen: We have acted as special counsel to you (the "Company") in connection with the proposed issuance by PECO Energy Capital Trust II (the "Trust") of its Preferred Trust Receipts (the "Preferred Trust Receipts"), each representing a Cumulative Monthly Income Preferred Security, Series C (collectively, the "Preferred Securities") of PECO Energy Capital, L.P. ("PECO Energy Capital") and, in connection therewith, the execution and delivery by the Company of the Payment and Guarantee Agreement (the "Guarantee") for the benefit of the holders of the Preferred Securities and the issuance by the Company of its Deferrable Interest Subordinated Debentures, Series C (the "Subordinated Debentures"), and the registration of the Preferred Trust Receipts, the Preferred Securities, the Guarantee and the Subordinated Debentures under the Securities Act of 1933, as amended. The Subordinated Debentures will be issued under an Indenture between the Company and First Union National Bank, as trustee (the "Indenture"), as supplemented by a Second Supplemental Indenture (the "Supplemental Indenture") between the Company and First Union National Bank, as trustee. The opinions expressed below are based on the following assumptions: (a) The Registration Statement on Form S-3 filed by the Trust, PECO Energy Capital and the Company with the Securities and Exchange Commission with respect to the Preferred PECO Energy Company May 23, 1997 Page 2 Trust Receipts, the Preferred Securities, the Guarantee and the Subordinated Debentures (the "Registration Statement") will become effective; (b) The proposed transactions are carried out on the basis set forth in the Registration Statement and in conformity with the authorizations, approvals, consents or exemptions under the securities laws of various states and other jurisdictions of the United States; (c) Prior to issuance of the Preferred Trust Receipts: (i) the general partner of PECO Energy Capital will authorize the issuance of, and determine the terms of, the Preferred Securities, which will be purchased by the Trust with the proceeds from the issuance of the Preferred Trust Receipts; (ii) the Supplemental Indenture will have been executed and delivered by the Company, and the Board of Directors of the Company or a committee thereof will have authorized the issuance of, and established the terms of, the Subordinated Debentures; (iii) the Guarantee will be executed and delivered by the Company in accordance with appropriate resolutions of the Board of Directors of the Company or a committee thereof; (iv) the Amendment and Restated Trust Agreement relating to the Trust will have been executed and delivered by First Union Trust Company, National Association, as trustee, and PECO Energy Capital Corp., on its own behalf for the limited purpose stated therein and on behalf of PECO Energy Capital, the grantor of the Trust; and (d) The Indenture is and the Supplemental Indenture will be qualified in accordance with the provisions of the Trust Indenture Act of 1939, as amended. Based on the foregoing, we are of the opinion that: 1. When properly executed, authenticated, delivered and paid for, as provided in the Indenture and the Supplemental PECO Energy Company May 23, 1997 Page 3 Indenture, the Subordinated Debentures will be legally issued, valid and binding obligations of the Company. 2. When executed and delivered by the Company, the Guarantee will be a valid and binding obligation of the Company. We consent to the filing of this opinion as an Exhibit to the Registration Statement and to the references to this firm under the headings "Legal Matters" and "United States Taxation" in the Prospectus included in the Registration Statement. Very truly yours, /s/ Ballard Spahr Andrews & Ingersoll ------------------------------------- EX-5 10 EXHIBIT 5.2 PECO Energy Capital, L.P. PECO Energy Capital Trust II May 23, 1997 Page 1 [Letterhead of Richards, Layton & Finger] May 23, 1997 PECO Energy Capital, L.P. 1013 Centre Road, Suite 350F Wilmington, DE 19805 PECO Energy Capital Trust II c/o First Union Trust Company, National Association One Rodney Square 920 King Street, First Floor Wilmington, DE 19801 Re: PECO Energy Capital, L.P. and PECO Energy Capital Trust II -------------------------------- Ladies and Gentlemen: We have acted as special Delaware counsel for PECO Energy Capital, L.P., a Delaware limited partnership (the "Partnership"), and PECO Energy Capital Trust II, a Delaware business trust (the "Trust"), in connection with the matters set forth herein. At your request, this opinion is being furnished to you. For purposes of giving the opinions hereinafter set forth, our examination of documents has been limited to the examination of originals or copies of the following: PECO Energy Capital, L.P. PECO Energy Capital Trust II May 23, 1997 Page 2 (a) The Certificate of Limited Partnership of the Partnership, dated as of May 23, 1994 (the "Partnership Certificate"), as filed in the office of the Secretary of State of the State of Delaware (the "Secretary of State") on May 23, 1994; (b) The Agreement of Limited Partnership of the Partnership, dated as of May 23, 1994; (c) The Amended and Restated Limited Partnership Agreement of the Partnership, dated as of July 25, 1994, including the Action of PECO Energy Capital Corp., a Delaware corporation and the general partner of the Partnership (the "General Partner"), dated as of July 25, 1994, relating to the 9% Cumulative Monthly Income Preferred Securities, Series A, of the Partnership, and the Action of the General Partner, dated as of December 19, 1995, relating to the 8.72% Cumulative Monthly Income Preferred Securities, Series B, of the Partnership (the "Amended Agreement"); (d) Amendment No. 1 to the Amended Agreement, dated as of October 20, 1995 (the "First Partnership Amendment"); (e) Amendment No. 2 to the Amended Agreement, dated as of March 1, 1996 (the "Second Partnership Agreement") (the Amended Agreement as amended by the First Partnership Amendment and the Second Partnership Agreement being hereinafter referred to as the "Partnership Agreement"); (f) A form of Action of the General Partner, relating to the Preferred Partner Interests (as defined below) (the "Action"); (g) The Certificate of Trust of the Trust, dated as of May 20, 1997 (the "Trust Certificate"), as filed in the office of the Secretary of State on May 20, 1997; (h) The Trust Agreement of the Trust, dated as of May 20, 1997, among the Partnership, First Union Trust Company, National Association, as trustee of the Trust (the "Trustee"), and, for limited purposes, the General Partner; (i) A form of Amended and Restated Trust Agreement of the Trust (the "Trust Agreement"), to be entered into among the Partnership, the Trustee and, for limited purposes, the General Partner, attached as an exhibit to the Registration Statement (as defined below); (j) The Registration Statement (the "Registration Statement") on Form S-3, including a related prospectus (the "Prospectus"), relating to the ___% Cumulative Monthly Income Preferred Securities, Series C, of the Partnership (each, a "Preferred Partner Interest" and collectively, the "Preferred Partner Interests") and to the trust receipts of the Trust (each, a "Trust Receipt" and collectively, the "Trust Receipts"), as proposed to PECO Energy Capital, L.P. PECO Energy Capital Trust II May 23, 1997 Page 3 be filed by PECO Energy Company, a Pennsylvania corporation, the Partnership and the Trust with the Securities and Exchange Commission on or about May 23, 1997; (k) A Certificate of Good Standing for the Partnership, dated May 23, 1997, obtained from the Secretary of State; and (l) A Certificate of Good Standing for the Trust, dated May 23, 1997, obtained from the Secretary of State. The Partnership Agreement as amended and supplemented by the Action is hereinafter referred to as the "LP Agreement." Initially capitalized terms used herein and not otherwise defined are used as defined in the LP Agreement. For purposes of this opinion, we have not reviewed any documents other than the documents listed in paragraphs (a) through (l) above. In particular, we have not reviewed any document (other than the documents listed in paragraphs (a) through (l) above) that is referred to in or incorporated by reference into the documents reviewed by us. We have assumed that there exists no provision in any document that we have not reviewed that is inconsistent with the opinions stated herein. We have conducted no independent factual investigation of our own, but rather have relied solely upon the foregoing documents, the statements and information set forth therein and the additional matters recited or assumed herein, all of which we have assumed to be true, complete and accurate in all material respects. With respect to all documents examined by us, we have assumed (i) the authenticity of all documents submitted to us as authentic originals, (ii) the conformity with the originals of all documents submitted to us as copies or forms, and (iii) the genuineness of all signatures. For purposes of this opinion, we have assumed (i) that the LP Agreement constitutes the entire agreement among the parties thereto with respect to the subject matter thereof, including with respect to the admission of partners to, and the creation, operation and termination of, the Partnership, and that the LP Agreement and the Partnership Certificate are in full force and effect and have not been amended, (ii) that the Trust Agreement constitutes the entire agreement among the parties thereto with respect to the subject matter thereof, including with respect to the creation, operation and termination of the Trust, and that the Trust Agreement and the Trust Certificate are in full force and effect and have not been amended, (iii) except to the extent provided in paragraphs 1 and 4 below, the due creation or the due organization or due formation, as the case may be, and PECO Energy Capital, L.P. PECO Energy Capital Trust II May 23, 1997 Page 4 valid existence in good standing of each party to the documents examined by us under the laws of the jurisdiction governing its creation or organization or formation, (iv) the legal capacity of natural persons who are signatories to the documents examined by us, (v) that each of the parties to the documents examined by us has the power and authority to execute and deliver, and to perform its obligations under, such documents, (vi) the due authorization, execution and delivery by all parties thereto of all documents examined by us, (vii) the receipt by each Person to whom a Preferred Partner Interest is to be issued by the Partnership (each, a "Preferred Partner" and collectively, the "Preferred Partners") of a Certificate and the payment for the Preferred Partner Interests acquired by it, in accordance with the LP Agreement and the Registration Statement, (viii) the receipt by each Person to whom a Trust Receipt is to be issued by the Trust (collectively, the "Holders") of a certificate substantially in the form of the trust certificate attached to the Trust Agreement as Exhibit A and the payment for the Trust Receipt acquired by it, in accordance with the Trust Agreement and the Registration Statement, (ix) that the books and records of the Partnership set forth all information required by the LP Agreement and the Delaware Revised Uniform Limited Partnership Act (6 Del. C. ss. 17-101, et seq.) (the "Partnership Act"), including all information with respect to all Persons to be admitted as Partners and their contributions to the Partnership, (x) that the Preferred Partner Interests are issued and sold to the Preferred Partners in accordance with the Registration Statement and the LP Agreement, and (xi) that the Trust Receipts are issued and sold to the Holders in accordance with the Registration Statement and the Trust Agreement. We have not participated in the preparation of the Registration Statement and assume no responsibility for its contents. This opinion is limited to the laws of the State of Delaware (excluding the securities laws of the State of Delaware), and we have not considered and express no opinion on the laws of any other jurisdiction, including federal laws and rules and regulations relating thereto. Our opinions are rendered only with respect to Delaware laws and rules, regulations and orders thereunder which are currently in effect. Based upon the foregoing, and upon our examination of such questions of law and statutes of the State of Delaware as we have considered necessary or appropriate, and subject to the assumptions, qualifications, limitations and exceptions set forth herein, we are of the opinion that: 1. The Partnership has been duly formed and is validly existing in good standing as a limited partnership under the Partnership Act. PECO Energy Capital, L.P. PECO Energy Capital Trust II May 23, 1997 Page 5 2. Assuming that the Preferred Partners, as limited partners of the Partnership, do not participate in the control of the business of the Partnership, upon issuance and payment as contemplated by the LP Agreement, the Preferred Partner Interests will represent valid and, subject to the qualifications set forth herein, will be fully paid and nonassessable limited partner interests in the Partnership, as to which the Preferred Partners, as limited partners of the Partnership, will have no liability in excess of their obligations to make payments provided for in the LP Agreement and their share of the Partnership's assets and undistributed profits (subject to the obligation of a Preferred Partner to repay any funds wrongfully distributed to it). 3. There are no provisions in the LP Agreement the inclusion of which, subject to the terms and conditions therein, or, assuming that the Preferred Partners, as limited partners of the Partnership, take no action other than actions permitted by the LP Agreement, the exercise of which, in accordance with the terms and conditions therein, would cause the Preferred Partners, as limited partners of the Partnership, to be deemed to be participating in the control of the business of the Partnership. 4. The Trust has been duly created and is validly existing in good standing as a business trust under the Delaware Business Trust Act (12 Del. C. ss. 3801, et seq.). 5. The Trust Receipts will represent valid and, subject to the qualifications set forth in paragraph 6 below, fully paid and nonassessable interests in the Trust. 6. The Holders, in their capacity as such, will be entitled to the same limitation of personal liability extended to stockholders of private corporations for profit organized under the General Corporation Law of the State of Delaware. We note that the Holders may be obligated to make payments as set forth in the Trust Agreement. We consent to the filing of this opinion with the Securities and Exchange Commission as an exhibit to the Registration Statement. We also consent to Ballard Spahr Andrews & Ingersoll's relying as to matters of Delaware law upon this opinion in connection with an opinion to be rendered by it in connection with the Registration Statement. In addition, we hereby consent to the use of our name under the heading "Legal Matters" in the Prospectus. In giving the foregoing consents, we do not thereby admit that we come within the category of Persons whose consent is required under Section 7 of the Securities Act of 1933, as amended, or the rules and regulations of the Securities and Exchange Commission thereunder. Except as stated above, without our prior written PECO Energy Capital, L.P. PECO Energy Capital Trust II May 23, 1997 Page 6 consent, this opinion may not be furnished or quoted to, or relied upon by, any other Person for any purpose. Very truly yours, /s/ Richards, Layton & Finger PMA/BJK/jj EX-8 11 EXHIBIT 8 [LETTERHEAD OF BALLARD SPAHR ANDREWS & INGERSOLL] May 23, 1997 PECO Energy Company 2301 Market Street Philadelphia, PA 19103 Ladies and Gentlemen: We have acted as special counsel to you (the "Company") in connection with the registration of Preferred Trust Receipts to be issued by PECO Energy Capital Trust II, representing Cumulative Monthly Income Preferred Securities, Series C of PECO Energy Capital, L.P. and the registration of the related Payment and Guarantee Agreement and Deferrable Interest Subordinated Debentures, Series C of the Company and hereby confirm to you our opinion as set forth under the heading "United States Taxation" in the Prospectus included in the Registration Statement filed on Form S-3. Very truly yours, /s/ Ballard Spahr Andrews & Ingersoll ------------------------------------- EX-23.1 12 EXHIBIT 23.1 [LETTERHEAD OF COOPERS & LYBRAND L.L.P.] CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the inclusion in this registration statement on Form S-3 of our report dated February 3, 1997, on our audits of the consolidated financial statements and financial statement schedule of PECO Energy Company and Subsidiary Companies. We also consent to the reference to our firm under the caption "EXPERTS". /s/ COOPERS & LYBRAND L.L.P. Philadelphia, Pennsylvania May 23, 1997 EX-24 13 EXHIBIT 24 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS that I, Susan W. Catherwood of Bryn Mawr, PA do hereby appoint J. F. PAQUETTE, JR. and C.A. MC NEILL, JR., or either of them, attorney for me and in my name and on my behalf to sign the Registration Statement and any amendments thereto of PECO Energy Company, to be filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended, in connection with the registration of the securities of the Company, and generally to do and perform all things necessary to be done in the premises as fully and effectually in all respects as I could do if personally present. /s/ Susan W. Catherwood ----------------------- Date: May 23, 1997 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS that I, M. Walter D'Alessio of Philadelphia, PA do hereby appoint J. F. PAQUETTE, JR. and C.A. MC NEILL, JR., or either of them, attorney for me and in my name and on my behalf to sign the Registration Statement and any amendments thereto of PECO Energy Company, to be filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended, in connection with the registration of the securities of the Company, and generally to do and perform all things necessary to be done in the premises as fully and effectually in all respects as I could do if personally present. /s/ M. Walter D'Alessio ----------------------- Date: May 23, 1997 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS that I, G. Fred DiBona of Bryn Mawr, PA do hereby appoint J. F. PAQUETTE, JR. and C.A. MC NEILL, JR., or either of them, attorney for me and in my name and on my behalf to sign the Registration Statement and any amendments thereto of PECO Energy Company, to be filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended, in connection with the registration of the securities of the Company, and generally to do and perform all things necessary to be done in the premises as fully and effectually in all respects as I could do if personally present. /s/ G. Fred DiBona ------------------ Date: May 23, 1997 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS that I, R. Keith Elliott of Bryn Mawr, PA do hereby appoint J. F. PAQUETTE, JR. and C.A. MC NEILL, JR., or either of them, attorney for me and in my name and on my behalf to sign the Registration Statement and any amendments thereto of PECO Energy Company, to be filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended, in connection with the registration of the securities of the Company, and generally to do and perform all things necessary to be done in the premises as fully and effectually in all respects as I could do if personally present. /s/ R. Keith Elliott -------------------- Date: May 23, 1997 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS that I, Richard G. Gilmore of Sarasota, FL do hereby appoint J. F. PAQUETTE, JR. and C.A. MC NEILL, JR., or either of them, attorney for me and in my name and on my behalf to sign the Registration Statement and any amendments thereto of PECO Energy Company, to be filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended, in connection with the registration of the securities of the Company, and generally to do and perform all things necessary to be done in the premises as fully and effectually in all respects as I could do if personally present. /s/ Richard G. Gilmore ---------------------- Date: May 23, 1997 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS that I, Richard H. Glanton of Philadelphia, PA do hereby appoint J. F. PAQUETTE, JR. and C.A. MC NEILL, JR., or either of them, attorney for me and in my name and on my behalf to sign the Registration Statement and any amendments thereto of PECO Energy Company, to be filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended, in connection with the registration of the securities of the Company, and generally to do and perform all things necessary to be done in the premises as fully and effectually in all respects as I could do if personally present. /s/ Richard H. Glanton ---------------------- Date: May 23, 1997 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS that I, James A. Hagen of Villanova, PA do hereby appoint J. F. PAQUETTE, JR. and C.A. MC NEILL, JR., or either of them, attorney for me and in my name and on my behalf to sign the Registration Statement and any amendments thereto of PECO Energy Company, to be filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended, in connection with the registration of the securities of the Company, and generally to do and perform all things necessary to be done in the premises as fully and effectually in all respects as I could do if personally present. /s/ James A. Hagen ------------------ Date: May 23, 1997 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS that I, Kinnaird R. McKee of Oxford, MD do hereby appoint J. F. PAQUETTE, JR. and C.A. MC NEILL, JR., or either of them, attorney for me and in my name and on my behalf to sign the Registration Statement and any amendments thereto of PECO Energy Company, to be filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended, in connection with the registration of the securities of the Company, and generally to do and perform all things necessary to be done in the premises as fully and effectually in all respects as I could do if personally present. /s/ Kinnaird R. McKee --------------------- Date: May 23, 1997 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS that I, Joseph J. McLaughlin of Rosemont, PA do hereby appoint J. F. PAQUETTE, JR. and C.A. MC NEILL, JR., or either of them, attorney for me and in my name and on my behalf to sign the Registration Statement and any amendments thereto of PECO Energy Company, to be filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended, in connection with the registration of the securities of the Company, and generally to do and perform all things necessary to be done in the premises as fully and effectually in all respects as I could do if personally present. /s/ Joseph J. McLaughlin ------------------------ Date: May 23, 1997 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS that I, John M. Palms of Columbia, SC do hereby appoint J. F. PAQUETTE, JR. and C.A. MC NEILL, JR., or either of them, attorney for me and in my name and on my behalf to sign the Registration Statement and any amendments thereto of PECO Energy Company, to be filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended, in connection with the registration of the securities of the Company, and generally to do and perform all things necessary to be done in the premises as fully and effectually in all respects as I could do if personally present. /s/ John M. Palms ----------------- Date: May 23, 1997 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS that I, Ronald Rubin of Narberth, PA do hereby appoint J. F. PAQUETTE, JR. and C.A. MC NEILL, JR., or either of them, attorney for me and in my name and on my behalf to sign the Registration Statement and any amendments thereto of PECO Energy Company, to be filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended, in connection with the registration of the securities of the Company, and generally to do and perform all things necessary to be done in the premises as fully and effectually in all respects as I could do if personally present. /s/ Ronald Rubin ---------------- Date: May 23, 1997 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS that I, Robert Subin of Blue Bell, PA do hereby appoint J. F. PAQUETTE, JR. and C.A. MC NEILL, JR., or either of them, attorney for me and in my name and on my behalf to sign the Registration Statement and any amendments thereto of PECO Energy Company, to be filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended, in connection with the registration of the securities of the Company, and generally to do and perform all things necessary to be done in the premises as fully and effectually in all respects as I could do if personally present. /s/ Robert Subin ---------------- Date: May 23, 1997 EX-25.1 14 FORM T-1 EXHIBIT 25 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) FIRST UNION NATIONAL BANK (Name of Trustee) 22-1147033 (I.R.S. Employer Identification No.) 102 PENNSYLVANIA AVENUE, AVONDALE, PENNSYLVANIA (Address of Principal Executive Offices) 19311 (Zip Code) PECO ENERGY COMPANY (Exact name of registrants as specified in their charters) PENNSYLVANIA (State of Incorporation) 23-0970240 (I.R.S. Employer Identification No.) P.O. BOX 8699, 2301 MARKET STREET PHILADELPHIA, PA. 19101 (215-841-4000) (Address of Principal Executive Offices) % DEFERRABLE INTEREST SUBORDINATED DEBENTURES, SERIES C (Title of Indenture Securities) 1. General information. Furnish the following information as to the trustee: (a) Name and address of each examining or supervisory authority to which it is subject: Comptroller of the Currency United States Department of the Treasury Washington, D.C. 20219 Federal Reserve Bank (3rd District) Philadelphia, Pennsylvania 19106 Federal Deposit Insurance Corporation Washington, D.C. 20429 (b) Whether it is authorized to exercise corporate trust powers. The trustee is authorized to execise corporate trust powers. 2. Affiliations with obligor. If the obligor is an affiliate of the trustee, describe each such affiliation. The obligor is not an affiliate of the trustee (or any of its affiliates). 3. Voting securities of the trustee. Furnish the following information as to each class of voting securities of the trustee: Not applicable - see answer to item 13. 4. Trusteeships under other indentures. If the trustee is a trustee under another indenture under which any other securities, or certificates of interest or participation in any other securities, of the obligor are outstanding, furnish the following information: Not applicable - see answer to item 13. 5. Interlocking directorates and similar relationships with the obligor or underwriters. 2 If the trustee or any of the directors or executive officers of the trustee is a director, officer, partner, employee, appointee, or representative of the obligor or of any underwriter for the obligor, identify each such person having any such connection and state the nature of each such connection. Not applicable - see answer to item 13. 6. Voting securities of the trustee owned by the obligor or its officials. Furnish the following information as to the voting securities of the trustee owned beneficially by the obligor and each director, partner, and executive officer of the obligor: Not applicable - see answer to item 13. 7. Voting securities of the trustee owned by underwriters or their officials. Furnish the following information as to the voting securities of the trustee owned beneficially by each underwriter for the obligor and each director, partner, and executive officer of each such underwriter: Not applicable - see answer to item 13. 8. Securities of the obligor owned or held by the trustee. Furnish the following information as to securities of the obligor owned beneficially or held as collateral security for obligations in default by the trustee: Not applicable - see answer to item 13. 9. Securities of underwriters owned or held by the trustee. If the trustee owns beneficially or holds as collateral security for obligations in default any securities of an underwriter for the obligor, furnish the following information as to each class of securities of such underwriter any of which are so owned or held by the trustee: Not applicable - see answer to item 13. 10. Ownership or holdings by the trustee of voting securities of certain affiliates or security holders of the obligor. If the trustee owns beneficially or holds as collateral security for obligations in default voting securities of a person who, to the knowledge of the trustee (1) owns 10 percent or more of the voting stock of the obligor or (2) is an affiliate, other than a subsidiary, of the obligor, furnish the following information as to the voting securities of such person: 3 Not applicable - see answer to item 13. 11. Ownership or holdings by the trustee of any securities of a person owning 50 percent or more of the voting securities of the obligor. If the trustee owns beneficially or holds as collateral security for obligations in default any securities of a person who, to the knowledge of the trustee, owns 50 percent or more of the voting securities of the obligor, furnish the following information as to each class of securities of such person any of which are so owned or held by the trustee: Not applicable - see answer to item 13. 12. Indebtedness of the obligor to the trustee. Except as noted in the instructions, if the obligor is indebted to the trustee, furnish the following information: Not applicable - see answer to item 13. 13. Defaults by the obligor. (a) State whether there is or has been a default with respect to the securities under this indenture. Explain the nature of any such default. There is not nor has there been a default with respect to the securities under this indenture. (See Note on page 6.) (b) If the trustee is a trustee under another indenture under which any other securities, or certificates of interest or participation in any other securities, of the obligor are outstanding, or is trustee for more than one outstanding series of securities under the indenture, state whether there has been a default under any such indenture or series, identify the indenture or series affected, and explain the nature of any such default. There has not been a default under another indenture under which any other securities or certificates of interest or participation in any other securities of the Obligor are outstanding and there has not been a default under any outstanding securities under this indenture. (See Note on page 6.) 14. Affiliations with the underwriters. If any underwriter is an affiliate of the trustee, describe each such affiliation. Not applicable - see answer to item 13. 4 15. Foreign trustee. Identify the order or rule pursuant to which the trustee is authorized to act as sole trustee under indentures qualified or to be qualified under the Act. Not applicable - trustee is a national banking association organized under the laws of the United States. 16. List of Exhibits. List below all exhibits filed as part of this statement of eligibility. 1. Copy of Articles of Association of the trustee as now in - ---- effect.** 2. Copy of the Certificate of the Comptroller of the Currency - ---- dated January 11, 1994, evidencing the authority of the trustee to transact business.* 3. Copy of the authorization of the trustee to exercise fiduciary - ---- powers.* 4. Copy of existing by-laws of the trustee.** - ---- 5. Copy of each indenture referred to in Item 4, if the obligor - ---- is in default, not applicable. X 6. Consent of the trustee required by Section 321(b) of the Act. - ---- 7. Copy of report of condition of the trustee at the close of - ---- business on March 31, 1997, published pursuant to the requirements of its supervising authority.** 8. Copy of any order pursuant to which the foreign trustee is - ---- authorized to act as sole trustee under indentures qualified or to be qualified under the Act, not applicable. 9. Consent to service of process required of foreign trustees - ---- pursuant to Rule 10a-4 under the Act, not applicable. - ------------------------------------------------------------------------------- *Previously filed with the Securities and Exchange Commission on February 11, 1994 as an exhibit to Form T-1 in connection with Registration Statement No. 22-73340 and ** previously filed with the the Securities and Exchange Commission on May 5, 1997 as an exhibit to Form T-1 in connection with Registration Statement No. 333-23791 and incorporated herein by reference. 5 NOTE Inasmuch as this Form T-1 is filed prior to the ascertainment by the Trustee of all facts on which to base responsive answers to Items 5, 6, 7, 8, 9, 10, 11, 13, and 14, the answers to said Items are based on incomplete information. Items 5, 6, 7, 8, 9, 10, 11, 13, and 14 may, however, be considered correct unless amended by an amendment to this Form T-1. In answering any items in this Statement of Eligibility that related to matters peculiarly within the knowledge of the Obligor, or its directors or officers, or an Underwriter for the Obligor (Items 5, 6, 7, 8, 9, 10, 11, and 13 particularly), the Trustee has relied upon information furnished to it by the Obligor and such Underwriter and the Trustee disclaims responsibility for the accuracy or completeness of such information. SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, the trustee, First Union National Bank, a national banking association organized and existing under the laws of the United States of America, has duly caused this Statement of Eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Philadelphia and Commonwealth of Pennsylvania, on the 22th day of May, 1997. FIRST UNION NATIONAL BANK By: /s/ George J. Rayzis ---------------------------- George J. Rayzis Vice President 6 CONSENT OF TRUSTEE Pursuant to the requirements of Section 321(b) of the Trust Indenture Act of 1939, and in connection with the proposed issue of PECO Energy Company we hereby consent that reports of examinations by Federal, State, Territorial or District authorities may be furnished by such authorities to the Securities and Exchange Commission upon request therefor. FIRST UNION NATIONAL BANK By: /s/ George J. Rayzis -------------------------- George J. Rayzis Vice President Philadelphia, PA May 22, 1997 -----END PRIVACY-ENHANCED MESSAGE-----