-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, Ngw+Ku3CYai/hDAbVJmXd5DG8XWmoO9uA7+xxbQOdbPRwsgHu6odbnGBuv+glQUN n0z8OZH9Ev6uhTT9uGANKg== 0000950154-94-000043.txt : 19940624 0000950154-94-000043.hdr.sgml : 19940624 ACCESSION NUMBER: 0000950154-94-000043 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 13 FILED AS OF DATE: 19940525 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PECO ENERGY CO CENTRAL INDEX KEY: 0000078100 STANDARD INDUSTRIAL CLASSIFICATION: 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: 033-53785-01 FILM NUMBER: 94530187 BUSINESS ADDRESS: STREET 1: 2301 MARKET ST STREET 2: P O BOX 8699 CITY: PHILADELPHIA STATE: PA ZIP: 19103 BUSINESS PHONE: 2158414000 FORMER COMPANY: FORMER CONFORMED NAME: PHILADELPHIA ELECTRIC CO DATE OF NAME CHANGE: 19920703 S-3 1 As filed with the Securities and Exchange Commission on May 25, 1994 Registration No. ============================================================================== 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. (Exact name of registrant (Exact name of registrant as specified as specified in charter) in Limited Partnership Agreement) Pennsylvania Delaware (State or other jurisdiction of incorporation or organization) 23-0970240 51-0355322 (I.R.S. Employer Identification No.) P.O. Box 8699 1013 Centre Road 2301 Market Street Suite 350F Philadelphia, PA 19101 Wilmington, DE 19805 (215) 841-4000 (302) 998-0592 (Address, including zip code, and telephone number, including area code, of registrants' principal executive offices) M. W. Rimerman M. W. Rimerman Vice President-Finance and Treasurer Director P.O. Box 8699 P.O. Box 8699 2301 Market Street 2301 Market Street Philadelphia, PA 19101 Philadelphia, PA 19101 (215) 841-4000 (215) 841-4000 (Name, address, including zip code, and telephone number, including area code, of agents for service) with copies to: James W. Durham, Esq. Senior Vice President and General Counsel P.O. Box 8699 2301 Market Street, Philadelphia, PA 19101 Robert C. Gerlach, Esq. Robert M. Jones, Jr., Esq. Ballard Spahr Andrews & Ingersoll Drinker Biddle & Reath 1735 Market Street 1100 Philadelphia National Bank Bldg. Philadelphia, PA 19103-7599 Philadelphia, PA 19107 APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: After the Registration Statement becomes effective, as determined by market conditions and other factors. --------------- If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. / / If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, please check the following box. / X / --------------- CALCULATION OF REGISTRATION FEE ============================================================================== PROPOSED MAXIMUM PROPOSED TITLE OF OFFERING MAXIMUM EACH CLASS OF PRICE AGGREGATE AMOUNT OF CLASS OF SECURITIES AMOUNT TO BE PER UNIT OFFERING REGISTRATION TO BE REGISTERED REGISTERED (1) (2)(3) PRICE (2)(3) FEE (4) ------------------- -------------- -------- ------------ ------------ - - - - ------------------------------------------------------------------------------ PECO Energy Capital, L.P. Cumulative Monthly Income Preferred Securities ............ - - - - ------------------------------------------------------------------------------ PECO Energy Company Guarantees with respect to PECO Energy Capital, L.P. Preferred Securities ............ - - - - ------------------------------------------------------------------------------ PECO Energy Company Subordinated Debentures - - - - ------------------------------------------------------------------------------ Total ................... $350,000,000 100% $350,000,000 $120,689.65 ============================================================================== (1) There are being registered hereunder a presently indeterminate number of Preferred Securities of PECO Energy Capital, L.P. with an aggregate initial offering price not to exceed $350,000,000 and related Guarantees and Subordinated Debentures 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 Preferred Securities. --------------- 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. ============================================================================== SUBJECT TO COMPLETION, DATED MAY , 1994 PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED , 1994 PREFERRED SECURITIES PECO ENERGY CAPITAL % CUMULATIVE MONTHLY INCOME PREFERRED SECURITIES (MIPS*), SERIES A (LIQUIDATION PREFERENCE $25 PER PREFERRED SECURITY) GUARANTEED TO THE EXTENT SET FORTH HEREIN BY PECO ENERGY COMPANY --------------- The % Cumulative Monthly Income Preferred Securities, Series A (the "Series A Preferred Securities"), representing the limited partner interests offered hereby, are being issued by PECO Energy Capital, L.P., a limited partnership formed under the laws of the State of Delaware ("PECO Energy Capital"). The general partner of PECO Energy Capital is PECO Energy Capital Corp. (the "General Partner"), which is a wholly owned subsidiary of PECO Energy Company ("PECO Energy"). PECO Energy Capital exists for the sole purpose of issuing partner interests and lending the proceeds thereof to PECO Energy. The limited partner interests represented by the Series A Preferred Securities will have a preference with respect to cash distributions and amounts payable on liquidation over the General Partner's interest in PECO Energy Capital. Holders of the Series A Preferred Securities will be entitled to receive cumulative preferential cash distributions("Dividends"), at an annual rate of % of the stated liquidation preference of $25 per Series A Preferred Security, accruing from the date of original issuance and payable monthly in arrears on the last day of each calendar month of each year, commencing _______, 1994. The payment of Dividends and payments in liquidation or redemption with respect to the Series A Preferred Securities, in each case out of funds legally available therefor held by PECO Energy Capital, are guaranteed by PECO Energy to the extent described herein and in the accompanying Prospectus. See "Description of the Guarantee" in the accompanying Prospectus. If PECO Energy fails to make interest payments on its __% Subordinated Debentures, Series A purchased by PECO Energy Capital with the proceeds of the Series A Preferred Securities, PECO Energy Capital will not have sufficient funds to pay Dividends on the Series A Preferred Securities. The Guarantee does not cover payment of Dividends when PECO Energy Capital does not have sufficient funds to pay such Dividends. In such event, the remedy of a holder of Series A Preferred Securities is to enforce the rights of PECO Energy Capital under the Series A Subordinated Debentures. See "Certain Terms of the Series A Subordinated Debentures" herein and "Description of the Subordinated Debentures" in the accompanying Prospectus. The Series A Preferred Securities are subject to optional redemption in whole or in part, from time to time, on or after June 30, 1999, at $25 per Series A Preferred Security plus accumulated and unpaid Dividends to the date fixed for redemption (the "Redemption Price"), and will be redeemed at such price from the proceeds of any redemption or payment at maturity of the Series A Subordinated Debentures. See "Certain Terms of the Series A Preferred Securities_Optional Redemption" and "_Mandatory Redemption." In addition, the Series A Preferred Securities will be subject to redemption upon the occurrence of certain events described under "Certain Terms of the Series A Preferred Securities_Optional Redemption" and "_Special Event Redemptions" herein. In the event of the liquidation of PECO Energy Capital, holders of Series A Preferred Securities will be entitled to receive for each Series A Preferred Security, a liquidation preference of $25 plus accumulated and unpaid Dividends to the date of payment. See "Description of the Preferred Securities -- Liquidation Distribution" in the accompanying Prospectus. See "Certain Investment Considerations" for certain information relevant to an investment in the Series A Preferred Securities, including circumstances under which payment of Dividends on the Series A Preferred Securities may be deferred. Application has been made to list the Series A Preferred Securities on the New York Stock Exchange. --------------------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. INITIAL PUBLIC UNDERWRITING PROCEEDS TO PECO OFFERING PRICE COMMISSION(1) ENERGY CAPITAL(2)(3) -------------- ------------- -------------------- Per Series A Preferred Security ....$ (2) $ Total ...................$ (2) $ - - - - ---------- (1) PECO Energy Capital and PECO Energy have agreed to indemnify the several Underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended. See "Underwriting." (2) As the proceeds of the sale of the Series A Preferred Securities will be loaned to PECO Energy, under the Underwriting Agreement PECO Energy has agreed to pay to the Underwriters $ per Series A Preferred Security (or $ in the aggregate); provided that such compensation will be $ per Series A Preferred Security sold to certain institutions. Therefore, to the extent that Series A Preferred Securities are sold to such institutions, the actual amount of Underwriters' compensation will be less than the amount specified above. See "Underwriting." (3) Expenses of the offering, excluding underwriting commissions which are payable by PECO Energy, are estimated to be $ . -------------------- The Series A Preferred Securities offered hereby are offered severally by the Underwriters, as specified herein, subject to receipt and acceptance by them and subject to their right to reject any order in whole or in part. It is expected that delivery of the Series A Preferred Securities will be made only in book-entry form through the facilities of The Depository Trust Company on or about , 1994. - - - - --------------- *An application has been filed by Goldman, Sachs & Co. with the United States Patent and Trademark Office for the registration of the MIPS servicemark. GOLDMAN, SACHS & CO. SMITH BARNEY SHEARSON INC. DEAN WITTER REYNOLDS INC. A. G. EDWARDS & SONS, INC. KIDDER, PEABODY & CO. INCORPORATED PAINEWEBBER INCORPORATED PRUDENTIAL SECURITIES INCORPORATED --------------- The date of this Prospectus Supplement is , 1994. 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 supplement 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. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES A PREFERRED SECURITIES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. S-2 The following information supplements and should be read in conjunction with the information contained in the accompanying Prospectus. Each of the capitalized terms used in this Prospectus Supplement has the meaning set forth in this Prospectus Supplement or in the accompanying Prospectus. CERTAIN INVESTMENT CONSIDERATIONS Prospective purchasers of the Series A Preferred Securities should carefully review the information contained elsewhere in this Prospectus Supplement and in the accompanying Prospectus and should particularly consider the following matters: SUBORDINATE OBLIGATIONS UNDER THE GUARANTEE AND THE SERIES A SUBORDINATED DEBENTURES PECO Energy's obligations under the Guarantee are subordinate and junior in right of payment to all general liabilities of PECO Energy and its obligations under the Series A Subordinated Debentures are subordinate and junior in right of payment to all Senior Indebtedness (as defined in the accompanying Prospectus) of PECO Energy. At March 31, 1994, the Senior Indebtedness of PECO Energy aggregated $5,402,096,000. There are no terms in the Series A Preferred Securities, the Series A Subordinated Debentures or the Guarantee that limit PECO Energy's ability to incur additional indebtedness, including indebtedness that ranks senior to the Series A Subordinated Debentures and the Guarantee. The Guarantee guarantees payment to the holders of the Series A Preferred Securities of accumulated and unpaid monthly dividends, amounts payable on redemption, and amounts payable on liquidation of PECO Energy Capital, 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 in its obligation to pay interest or amounts payable on redemption or maturity of the % Subordinated Debentures, Series A (the "Series A Subordinated Debentures") PECO Energy Capital would lack legally available funds for the payment of dividends or amounts payable on redemption of the Series A Preferred Securities, and in such event holders of the Series A Preferred Securities would not be able to rely upon the Guarantee for payment of such amounts. Instead, holders of the Series A Preferred Securities would be required to seek enforcement of PECO Energy Capital's rights against PECO Energy pursuant to the terms of the Indenture. See "Description of the Guarantee - - - - -- Status of the Guarantee" and "Description of the Subordinated Debentures - - - - -- Subordination" in the accompanying Prospectus. OPTION TO EXTEND INTEREST PAYMENT PERIOD PECO Energy has the right under the Indenture to extend interest payment periods on the Series A Subordinated Debentures to up to 60 consecutive months, and, as a consequence, monthly Dividends on the Series A Preferred Securities can be deferred by PECO Energy Capital during any such extended interest payment period. Dividends in arrears after the monthly payment date therefor will accumulate additional distributions thereon at the rate per annum of % thereof. The term "Dividends" as used herein includes, as applicable, monthly distributions, distributions on monthly distributions in arrears and Additional Amounts (as defined below). In the event PECO Energy exercises its right to extend the interest payment periods on the Series A Subordinated Debentures, PECO Energy may not declare dividends on any shares of its capital stock during such extension period. PECO Energy Capital and PECO Energy currently believe that the extension of an interest payment period is unlikely. See "Description of the Subordinated Debentures -- Option to Extend Interest Payment Period" in the accompanying Prospectus. Should an extended interest payment period occur, PECO Energy Capital will continue to accrue income for United States federal income tax purposes which will be allocated, but not distributed, to owners of the Series A Preferred Securities. As a result, the owner will include such interest in gross income for United States federal income tax purposes in advance of the receipt of cash, and will not receive the cash related to such income if the owner disposes of the Series A Preferred Securities prior to the record date for payment of Dividends. See "United States Taxation -- Potential Extension of Interest Payment Period." PECO ENERGY CAPITAL PECO Energy Capital is a limited partnership formed under the laws of the State of Delaware. All of its general partner interests are owned by the General Partner, which is a wholly owned special purpose subsidiary of PECO Energy. As a limited partnership, all of the business and affairs of PECO Energy Capital will be managed by the General Partner. PECO Energy Capital has been created solely for the purpose of issuing partner interests, including the Preferred Securities, and lending the proceeds thereof to PECO Energy. Such S-3 loans will be evidenced by the Subordinated Debentures issued by PECO Energy under an Indenture dated as of , 1994 (the "Indenture") between PECO Energy and Meridian Trust Company, as trustee (the "Trustee"), including the Series A Subordinated Debentures to be issued concurrently with the issuance of the Series A Preferred Securities. The Subordinated Debentures will be the only assets of PECO Energy Capital and the only revenues of PECO Energy Capital will be the interest on the Subordinated Debentures. 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. Two subsidiaries own, and a third subsidiary operates, the Conowingo Hydro-Electric Project ("Conowingo Project"), and one distribution subsidiary provides electric service to the public in certain areas of northeastern Maryland adjacent to the Conowingo Project. PECO Energy and its subsidiaries had 9,391 employees at December 31, 1993. The total area served by PECO Energy and its subsidiaries covers 2,475 square miles. Electric service is supplied in an area of 2,340 square miles with a population of about 3,700,000, including 1,600,000 in the City of Philadelphia. Approximately 95% of the electric service area and 64% of retail kilowatthour sales are in the suburbs around Philadelphia and in northeastern Maryland, and 5% of the service area and 36% of such sales are in the City of Philadelphia. In 1993, approximately 60% of PECO Energy's electric output was generated from nuclear sources. PECO Energy estimates for 1994 that 59% of its electric output will come from nuclear sources. Natural gas service is supplied in a 1,475-square-mile area of southeastern Pennsylvania adjacent to Philadelphia with a population of 1,900,000. PECO Energy and its subsidiaries hold franchises to the extent necessary to operate in the areas served. CERTAIN TERMS OF THE SERIES A PREFERRED SECURITIES DIVIDENDS The Series A Preferred Securities will be entitled to Dividends 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. The General Partner may make distributions on the general partner interests of PECO Energy Capital only after payment in full of all Dividends accrued on the Series A Preferred Securities and any other outstanding Preferred Securities of PECO Energy Capital. The first Dividend payment date for the Series A Preferred Securities will be , 1994, and such Dividends will be cumulative from the date of original issue. The Series A Preferred Securities will rank pari passu with all other series of Preferred Securities which may be issued by PECO Energy Capital. No other series of Preferred Securities have been issued by PECO Energy Capital. PECO Energy has the right under the Indenture to extend the interest payment period from time to time on the Series A Subordinated Debentures to a period not exceeding 60 consecutive months; provided that such extended interest period shall not extend beyond the stated maturity date or redemption date of the Series A Subordinated Debentures. As a consequence, monthly Dividends on the Series A Preferred Securities would be deferred (but would continue to accumulate with Dividends thereon) by PECO Energy Capital during any such extended interest payment period. In the event that PECO Energy exercises its right to extend the interest payment period on the Series A 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 the Series A Subordinated Debentures, PECO Energy may elect to extend the interest payment period again, subject to the above requirements. See "Description of the Subordinated Debentures -- Option to Extend Interest Payment Period" in the accompanying Prospectus. Payments received by PECO Energy Capital with respect to the Series A Subordinated Debentures and other series of PECO Energy's Subordinated Debentures will not be segregated by PECO Energy Capital for the benefit of the holders of the Series A Preferred Securities or holders of any other particular series of Preferred Securities. S-4 OPTIONAL REDEMPTION The Series A 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 , 1999, at $25 per Series A Preferred Security, plus accumulated and unpaid Dividends, if any, to the date fixed for redemption (the "Redemption Price"). If at any time after the issuance of the Series A Preferred Securities, PECO Energy Capital is or would be required to pay Additional Amounts as described below or PECO Energy is or would be required to pay Additional Interest on the Series A Subordinated Debentures, as described under "Description of the Subordinated Debentures -- Additional Interest" in the accompanying Prospectus, then the Series A Preferred Securities will be subject to redemption, at the option of the General Partner, in whole or, if such requirement relates only to certain of the Series A Preferred Securities, in part as to that portion of the Series A Preferred Securities subject to such requirement, in each case at any time thereafter at the Redemption Price. MANDATORY REDEMPTION If at any time PECO Energy redeems the Series A Subordinated Debentures or pays the Series A Subordinated Debentures at maturity as described under "Description of the Subordinated Debentures" in the accompanying Prospectus, the Series A Preferred Securities will be subject to mandatory redemption at the Redemption Price. The Series A 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 A 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 A 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 Series A Subordinated Debentures, (ii) interest payable by PECO Energy on the Series A Subordinated Debentures will not be deductible for United States federal income tax purposes or the Partnership will otherwise not be taxed as a partnership 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 Act Event (as defined below) shall occur and be continuing, the Series A Preferred Securities will be subject to mandatory redemption in whole at the Redemption Price within 90 days following the occurrence of such Investment Company Act Event. "Investment Company Act 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 issuance of the Series A Preferred Securities; provided, that no Investment Company Act 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. ADDITIONAL AMOUNTS If, as a result of (i) the Series A Subordinated Debentures not being treated as indebtedness for United S-5 States federal income tax purposes or (ii) PECO Energy Capital not being treated as a partnership for United States federal income tax purposes, PECO Energy Capital is required to withhold or deduct from payments on the Series A Preferred Securities for or on account of any present or future taxes imposed by the United States which would not otherwise be required to be withheld or deducted, PECO Energy Capital will pay such additional amounts as may be necessary in order that the net amounts received by the holders of the Series A Preferred Securities after such withholding or deduction will equal the amounts which would have been received in respect of such Series A Preferred Securities in the absence of such withholding or deduction ("Additional Amounts"), except that no such Additional Amounts will be payable to a holder of Series A Preferred Securities (or a third party on such holder's behalf) with respect to Series A Preferred Securities if: (a) such holder is liable for such taxes by reason of such holder having a connection with the United States, other than being a holder of Series A Preferred Securities; or (b) PECO Energy Capital has notified such holder of the obligation to withhold or deduct taxes and requested but not received from such holder a valid declaration of non-residence, a valid taxpayer identification number or other claim for exemption in such form or content as may be required by the United States Internal Revenue Service (the "IRS") and such withholding or deduction would not have been required had such declaration, taxpayer identification number or claim been received. LIQUIDATION VALUE The amount per share payable on the Series A Preferred Securities in the event of any voluntary or involuntary liquidation of PECO Energy Capital is $25 plus accumulated and unpaid Dividends. CERTAIN TERMS OF THE SERIES A SUBORDINATED DEBENTURES In exchange for, and to evidence the loan of, the proceeds of the sale of the Series A Preferred Securities and the General Partner's related investment in PECO Energy Capital, PECO Energy will issue the Series A Subordinated Debentures to PECO Energy Capital in the principal amount of $ and with interest payment and redemption and maturity provisions which correspond to the distribution and redemption provisions of the Series A Preferred Securities. In addition, the Series A Subordinated Debentures will be subject to mandatory redemption upon the dissolution of PECO Energy Capital. The Series A Subordinated Debentures will mature on , 2043. The Series A Subordinated Debentures will rank junior and be subordinate in right of payment to all Senior Indebtedness of PECO Energy. See "Description of the Subordinated Debentures -- Subordination" in the accompanying Prospectus. UNITED STATES TAXATION GENERAL This section is a summary of certain United States federal income tax considerations that may be relevant to prospective purchasers of Series A Preferred Securities and represents the opinion of Ballard Spahr Andrews & Ingersoll, counsel to PECO Energy and PECO Energy Capital, insofar as it relates to matters of law and legal conclusions. This section is based upon current provisions of the Internal Revenue Code of 1986, as amended (the "Code"), existing and proposed regulations thereunder and current administrative rulings and court decisions, all of which are subject to change. Subsequent changes may cause tax consequences to vary substantially from the consequences described below. No attempt has been made in the following discussion to comment on all United States federal income tax matters affecting purchasers of Series A Preferred Securities. Moreover, the discussion focuses on holders of Series A Preferred Securities who are individual citizens or residents of the United States who are owners of Series A Preferred Securities for United States federal tax purposes and has only limited application to corporations, estates, trusts or non-resident aliens. Accordingly, each prospective purchaser of Series A Preferred Securities should consult, and should depend on, his or her own tax adviser in analyzing the federal, state, local and foreign tax consequences of the purchase, ownership or disposition of Series A Preferred Securities. In April 1994, the IRS issued certain notices generally addressing the characteristics which distinguish debt from equity for various purposes under United States federal income tax laws. In these notices, the IRS S-6 indicated that transactions involving securities that, like the Series A Preferred Securities, have both debt and equity characteristics would be reviewed with scrutiny to determine how they would be treated for tax purposes. Based upon the advice of its tax counsel, PECO Energy believes that interest on the Series A Subordinated Debentures will be deductible under the tests referred to in these notices. If, however, the IRS should subsequently issue a further official pronouncement, or should there be a judicial decision, pursuant to which interest on the Series A Subordinated Debentures would not be deductible, the Series A Preferred Securities would be subject to redemption at the option of PECO Energy Capital, as described herein. INCOME FROM SERIES A PREFERRED SECURITIES In the opinion of Ballard Spahr Andrews & Ingersoll, PECO Energy Capital will be treated as a partnership for United States federal income tax purposes. Accordingly, each owner of Series A Preferred Securities will be required to include in gross income such owner's distributive share of the net income of PECO Energy Capital. Such income should not exceed distributions received on such Series A Preferred Securities, except in limited circumstances as described below under "Potential Extension of Interest Payment Period." No portion of such income will be eligible for the dividends received deduction. DISPOSITION OF SERIES A PREFERRED SECURITIES Gain or loss will be recognized on a sale, including a redemption for cash, of Series A Preferred Securities in an amount equal to the difference between the amount realized and the tax basis of the owner of the Series A Preferred Security for the Series A Preferred Securities sold. Gain or loss recognized by an owner of the Series A Preferred Security on the sale or exchange of a Series A Preferred Security held for more than one year will generally be taxable as long-term capital gain or loss except that ordinary income may be recognized to the extent of such owner's pro rata share of accrued but unallocated income of PECO Energy Capital. PECO ENERGY CAPITAL INFORMATION RETURNS AND AUDIT PROCEDURES The General Partner will furnish each owner of a Series A Preferred Security with a schedule K-1 each year setting forth such owner's allocable share of income for the prior calendar year. The General Partner is required to furnish such schedules as soon as practicable following the end of the year, but in any event prior to March 31. Any person who holds Series A Preferred Securities as a nominee for another person is required to furnish to PECO Energy Capital (a) the name, address and taxpayer identification number of the beneficial owner and the nominee; (b) information as to whether the beneficial owner is (i) a person that is not a United States person, (ii) a foreign government, an international organization or any wholly owned agency or instrumentality of either of the foregoing, or (iii) a tax-exempt entity; (c) the amount and description of Series A Preferred Securities held, acquired or transferred for the beneficial owner; and (d) certain information including the dates of acquisitions and transfers, means of acquisitions and transfers, and acquisition cost for purchases, as well as the amount of net proceeds from sales. Brokers and financial institutions are required to furnish additional information, including whether they are United States persons, and certain information on Series A Preferred Securities they acquire, hold or transfer for their own accounts. A penalty of $50 per failure (up to a maximum of $100,000 per calendar year) is imposed by the Code for failure to report such information to PECO Energy Capital. The nominee is required to supply the beneficial owners of the Series A Preferred Securities with the information furnished to PECO Energy Capital. POTENTIAL EXTENSION OF INTEREST PAYMENT PERIOD Under the terms of the Indenture, PECO Energy will be permitted to extend the interest payment period on the Series A Subordinated Debentures 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 extended interest period. PECO Energy Capital and PECO Energy currently believe 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 extended interest payment period, over the length of the extended interest payment period. Accrued income will be allocated, but not distributed, to holders of record on the Business Day preceding S-7 the last day of each calendar month. As a result, owners of Series A Preferred Securities during an extended interest payment period will be required to include interest in gross income in advance of the receipt of cash, and any such persons who dispose of Series A Preferred Securities prior to the record date for the payment of Dividends following such extended interest payment period will include interest in gross income but will not receive any cash related thereto. The tax basis of a Series A Preferred Security will be increased by the amount of any interest that is included in income without a receipt of cash, and will be decreased again when and if such cash is subsequently received from PECO Energy Capital. The subsequent receipt of such cash will not be included in gross income. 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 or estate or trust, in either case not subject to United States federal income tax on a net income basis in respect of a Series A Preferred Security. Under present United States federal income tax law, subject to the discussion below with respect to backup withholding, and assuming satisfaction by PECO Energy Capital of its withholding tax obligations, if any: (i) Payments by PECO Energy Capital or any of its paying agents to any United States Alien Holder will not be subject to United States federal withholding tax provided that (a) the beneficial owner of the Series A Preferred Security does not actually or constructively own 10% or more of the total combined voting power of all classes of stock of PECO Energy, (b) the beneficial owner of the Series A Preferred Security is not a controlled foreign corporation that is related to PECO Energy through stock ownership, and (c) either (A) the beneficial owner of the Series A Preferred Security certifies to PECO Energy Capital 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 Series A Preferred Security 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 PECO Energy Capital 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; and (ii) a United States Alien Holder of a Series A Preferred Security will generally not be subject to United States federal income or withholding tax on any gain realized on the sale or exchange of a Series A Preferred Security unless such person is present in the United States for 183 days or more in the taxable year of sale and such person has a "tax home" in the United States or certain other requirements are met. 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 Series A Preferred Securities 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 Series A Preferred Securities 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 United States 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 payments. Payments of the proceeds from the sale of Series A Preferred Securities 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. S-8 UNDERWRITING Subject to the terms and conditions of the Underwriting Agreement among PECO Energy Capital, PECO Energy and the underwriters named below (the "Underwriters"), for whom Goldman, Sachs & Co., Smith Barney Shearson Inc., Dean Witter Reynolds Inc., A. G. Edwards & Sons, Inc., Kidder, Peabody & Co. Incorporated, PaineWebber Incorporated and Prudential Securities Incorporated are acting as Representatives, PECO En ergy Capital has agreed to sell to each of the Underwriters and each of the Underwriters has severally agreed to purchase from PECO Energy Capital the respective number of Series A Preferred Securities set forth opposite its name below: NUMBER OF SERIES A UNDERWRITER PREFERRED SECURITIES --------------- ------------------------ Goldman, Sachs & Co. Smith Barney Shearson Inc. Dean Witter Reynolds Inc. A. G. Edwards & Sons, Inc. Kidder, Peabody & Co. Incorporated PaineWebber Incorporated Prudential Securities Incorporated ---------- Total ========== Under the terms and conditions of the Underwriting Agreement, the Underwriters are committed to take and pay for all such Series A Preferred Securities offered hereby, if any are taken. The Underwriters propose to offer the Series A Preferred Securities in part directly to the public at the initial public offering price set forth on the cover page of this Prospectus Supplement, and in part to certain securities dealers at such price less a concession of $ per Series A Preferred Security. The Underwriters may allow, and such dealers may reallow, a concession not in excess of $ per Series A Preferred Security to certain brokers and dealers. After the Series A Preferred Securities are released for sale to the public, the offering price and other selling terms may from time to time be varied by the Representatives. In view of the fact that the proceeds from the sale of the Series A Preferred Securities will be loaned to PECO Energy under the Underwriting Agreement, PECO Energy has agreed to pay to the Underwriters $ per Series A Preferred Security ($ per Series A Preferred Security sold to certain institutions) for the accounts of the several Underwriters. Prior to this offering, there has been no public market for the Series A Preferred Securities. In order to meet one of the requirements for listing the Series A Preferred Securities on the New York Stock Exchange, the Underwriters have undertaken to sell the Series A Preferred Securities to a minimum of 400 beneficial holders. 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. PECO Energy and PECO Energy Capital have agreed, during the period beginning on the date of the Underwriting Agreement and continuing to and including the earlier of (i) the date, after the closing date, on which the distribution of the Series A Preferred Securities ceases, as determined by Goldman, Sachs & Co., or (ii) 30 days after the closing date, not to offer, sell, contract to sell, or otherwise dispose of any Series A Preferred Securities, any limited partner interests of PECO Energy Capital, or any preferred stock or any other securities of PECO Energy Capital or PECO Energy which are substantially similar to the Series A Preferred Securities, including the related Guarantee, or any securities convertible into or exchangeable for Series A Preferred Securities, limited partner interests, preferred stock or other substantially similar securities of either PECO Energy Capital or PECO Energy, without the prior written consent of Goldman, Sachs & Co. S-9 SUBJECT TO COMPLETION, DATED , 1994 PROSPECTUS PECO ENERGY CAPITAL CUMULATIVE MONTHLY INCOME PREFERRED SECURITIES (MIPS*) GUARANTEED TO THE EXTENT SET FORTH HEREIN BY PECO ENERGY COMPANY --------------- PECO Energy Capital, L.P. ("PECO Energy Capital"), a Delaware special purpose limited partnership in which a subsidiary of PECO Energy Company ("PECO Energy") is the general partner, may offer from time to time, in one or more series, its monthly income preferred securities representing limited partner interests ("Preferred Securities"). The payment of periodic cash distributions ("Dividends") with respect to the Preferred Securities of each series and payments on liquidation or redemption with respect to such Preferred Securities, in each case out of funds on hand legally available therefor held by PECO Energy Capital, are guaranteed by PECO Energy to the extent described herein (the "Guarantee"). The obligations of PECO Energy under the Guarantee will be subordinate and junior in right of payment to all general liabilities of PECO Energy. Concurrently with the issuance of each series of Preferred Securities, PECO Energy Capital will loan the proceeds thereof to PECO Energy and to evidence such loan PECO Energy will issue and deliver to PECO Energy Capital a series of PECO Energy's subordinated debentures (the "Subordinated Debentures") with terms corresponding to that series of Preferred Securities. The Subordinated Debentures will be unsecured and subordinate and junior in right of payment to Senior Indebtedness (as defined herein) of PECO Energy. The Subordinated Debentures will be the sole asset of PECO Energy Capital and the interest on the Subordinated Debentures will be the only revenue of PECO Energy Capital. The Preferred Securities may be offered in amounts, at prices and on terms to be determined at the time of offering, provided, however, that the aggregate initial public offering price of all Preferred Securities issued under the Registration Statement of which this Prospectus forms a part shall not exceed $350,000,000. Certain specific terms of the particular series of Preferred Securities in respect of which this Prospectus is being delivered will be set forth in an accompanying Prospectus Supplement (the "Prospectus Supplement"), including where applicable and to the extent not set forth herein, the specific title, the aggregate amount, Dividend rate (or the method for determining the rate), the stated liquidation preference, redemption provisions, other rights, the initial public offering price, and any other special terms, as well as any planned listing of the Preferred Securities on a securities exchange. The Preferred Securities may be sold for public offering to or through underwriters or dealers designated from time to time. See "Plan of Distribution." The names of any such underwriters or dealers involved in the sale of the Preferred Securities of the particular series in respect of which this Prospectus is being delivered, the number of Preferred Securities to be purchased by any such underwriters or dealers and any applicable commissions or discounts will be set forth in the Prospectus Supplement. The net proceeds to PECO Energy Capital will also be set forth in the Prospectus Supplement. The Prospectus Supplement will contain information concerning United States federal income tax considerations, if applicable, and the Preferred Securities offered. - - - - --------------- *An application has been filed by Goldman, Sachs & Co. with the United States Patent and Trademark Office for the registration of the MIPS servicemark. --------------- 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. --------------- The date of this Prospectus is , 1994. 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 supplement 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. STATEMENT OF 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 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. Securities of PECO Energy are listed on the New York and Philadelphia Stock Exchanges, where reports, proxy material and other information concerning PECO Energy may be inspected. No separate financial statements of PECO Energy Capital have been included herein. PECO Energy and PECO Energy Capital do not consider that such financial statements would be material to holders of Preferred Securities offered hereby because PECO Energy Capital is a newly formed special purpose entity, has no operating history and no independent operations and is not engaged in, and does not propose to engage in, any activity other than as set forth below. See "PECO Energy Capital." --------------- 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, 1993; 2. PECO Energy's Quarterly Report on Form 10-Q for the quarter ended March 31, 1994; and 3. PECO Energy's Current Reports on Form 8-K dated March 18, 1994 and April 14, 1994. 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 or in a Prospectus Supplement modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. 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) 841-5741. PECO ENERGY CAPITAL PECO Energy Capital is a limited partnership formed under the laws of the State of Delaware. All of its general partner interests are owned by PECO Energy Capital Corp., a Delaware corporation (the "General Partner"), which is a wholly owned subsidiary of PECO Energy. As a limited partnership, all of the business and affairs of PECO Energy Capital will be managed by the General Partner. PECO Energy Capital has been created solely for the purpose of issuing partner interests, including the Preferred Securities, and lending the proceeds thereof to PECO Energy. Such loans will be evidenced by the Subordinated Debentures issued by PECO Energy under an Indenture dated as of , 1994 (the "Indenture") between PECO Energy and Meridian Trust Company, as trustee (the "Trustee"). The Subordinated Debentures will be the only assets of PECO Energy Capital and the only revenues of PECO Energy Capital will be the interest on the Subordinated 2 Debentures. The General Partner will pay all of PECO Energy Capital's operating expenses and will have general liability for all of PECO Energy Capital's obligations. PECO Energy Capital has been advised by its special Delaware counsel that, assuming a holder of Preferred Securities acts in conformity with the Amended and Restated Limited Partnership Agreement of PECO Energy Capital (the "Limited Partnership Agreement"), such holder (other than the General Partner) will not be liable for the debts, obligations and liabilities of PECO Energy Capital, whether arising in contract, tort or otherwise, solely by reason of being a limited partner of PECO Energy Capital, subject to the obligation of a limited partner to repay any funds wrongfully distributed to it. The place of business of PECO Energy Capital is the principal executive offices of the General Partner at 1013 Centre Road, Suite 350F, Wilmington, DE 19805 and its telephone number is (302) 998-0592. 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. Two subsidiaries own, and a third subsidiary operates, the Conowingo Hydro-Electric Project ("Conowingo Project"), and one distribution subsidiary provides electric service to the public in certain areas of northeastern Maryland adjacent to the Conowingo Project. PECO Energy and its subsidiaries had 9,391 employees at December 31, 1993. The total area served by PECO Energy and its subsidiaries covers 2,475 square miles. Electric service is supplied in an area of 2,340 square miles with a population of about 3,700,000, including 1,600,000 in the City of Philadelphia. Approximately 95% of the electric service area and 64% of retail kilowatthour sales are in the suburbs around Philadelphia and in northeastern Maryland, and 5% of the service area and 36% of such sales are in the City of Philadelphia. In 1993, approximately 60% of PECO Energy's electric output was generated from nuclear sources. PECO Energy estimates for 1994 that 59% of its electric output will come from nuclear sources. Natural gas service is supplied in a 1,475-square-mile area of southeastern Pennsylvania adjacent to Philadelphia with a population of 1,900,000. PECO Energy and its subsidiaries hold franchises to the extent necessary to operate in the areas served. The principal executive offices of PECO Energy are located at 2301 Market Street, Philadelphia, PA 19103. Its mailing address is P.O. Box 8699, Philadelphia, PA 19101 and its telephone number is (215) 841-4000. COVERAGE RATIOS PECO Energy's Ratio of Earnings to Fixed Charges for each of the periods indicated was as follows: YEARS ENDED DECEMBER 31, 3 MONTHS ENDED MARCH 31, ------------------------------------ ------------------------ 1989 1990 1991 1992 1993 1993 1994 ---- ---- ---- ---- ---- ---- ---- 2.08 1.31* 2.55 2.43 3.15 3.16 3.58 The Ratio of Earnings to Fixed Charges represents, on a pre-tax basis, the number of times earnings cover fixed charges. Earnings consist of net income to which has been added fixed charges and taxes based on income of PECO Energy. Fixed charges consist of interest on funded indebtedness, other interest, amortization of net gain on reacquired debt and net discount on debt and the interest portion of all rentals charged to income. PECO Energy's Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends for each of the periods indicated was as follows: YEARS ENDED DECEMBER 31, 3 MONTHS ENDED MARCH 31, ------------------------------------ ------------------------ 1989 1990 1991 1992 1993 1993 1994 ---- ---- ---- ---- ---- ---- ---- 1.77 1.04* 2.14 2.06 2.67 2.75 3.05 - - - - --------------- *Reflects the one-time, after-tax charge against income of approximately $250 million associated with various disallowances made by the Pennsylvania Public Utility Commission in the Limerick Unit No. 2 rate order and the one-time, after-tax charge against income of approximately $150 million associated with PECO Energy's 1990 early retirement plan. 3 The Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends represents, on a pre-tax basis, the number of times earnings cover fixed charges and preferred stock dividends. Earnings consist of net income to which has been added fixed charges and taxes based on income of PECO Energy. Combined fixed charges and preferred stock dividends consist of interest on funded indebtedness, other interest, amortization of net gain on reacquired debt and net discount on debt, preferred stock dividends (increased to reflect the pre-tax earnings required to cover such dividend requirements) and the interest portion of all rentals charged to income. USE OF PROCEEDS The proceeds to be received by PECO Energy Capital from the sale of the Preferred Securities offered hereby will be loaned to PECO Energy and will be applied by PECO Energy to the redemption or payment at maturity of outstanding securities. DESCRIPTION OF THE PREFERRED SECURITIES The following is a summary of certain terms and provisions of the Preferred Securities and the Limited Partnership Agreement. The summary is subject to, and qualified in its entirety by reference to, the Limited Partnership Agreement and the Delaware Revised Uniform Limited Partnership Act. The Limited Partnership Agreement is filed as an exhibit to the Registration Statement of which this Prospectus forms a part. GENERAL Under the Limited Partnership Agreement, PECO Energy Capital is authorized to issue two classes of partner interests, the Preferred Securities representing limited partner interests, including the Preferred Securities offered hereby, 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 will be of equal rank in participation in the profits and assets and income of PECO Energy Capital. The Limited 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. Dividends 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. DIVIDENDS Dividends on each series of Preferred Securities will be cumulative, will accrue from the date of issuance and will be payable monthly in arrears on the last day of each calendar month of each year, except as otherwise described below. The Dividends payable on a series of Preferred Securities offered hereby will be specified in a Prospectus Supplement related thereto. The amount of Dividends 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. PECO Energy has the right under the Indenture to extend the interest payment period from time to time on the Subordinated Debentures to a period not exceeding 60 consecutive months; provided that such extended interest period shall not extend beyond the stated maturity date or redemption date of any series of Subordinated Debentures (an "Extension Period"). As a consequence, monthly Dividends on the Preferred Securities would be deferred by PECO Energy Capital during any Extension Period. Dividends in arrears after the monthly payment date therefor will accumulate additional distributions thereon at the rate per annum of % thereof. The term "Dividends" as used herein includes, as applicable, monthly distributions, distributions on monthly distributions in arrears and Additional Amounts (as defined below). In the event that PECO Energy exercises this right, neither PECO Energy nor any majority-owned subsidiary of PECO Energy may declare or pay dividends on or redeem, purchase or acquire, any of its capital stock (other than dividends by a wholly owned subsidiary) during any Extension Period. 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, PECO Energy may elect to extend the interest payment period again, subject to the above requirements. See "Description of the Subordinated Debentures -- Option to Extend Interest Payment Period." 4 Dividends on the Preferred Securities must be paid by PECO Energy Capital in any calendar year or portion thereof to the extent PECO Energy Capital has funds on hand legally available therefor. It is anticipated that PECO Energy Capital's earnings will be limited to interest payments on the Subordinated Debentures issued by PECO Energy to PECO Energy Capital. See "Description of the Subordinated Debentures." Dividends on the Preferred Securities will be payable to the holders thereof as they appear on the books and records of PECO Energy Capital on the relevant record dates, which will be one Business Day prior to the relevant payment dates. Subject to any applicable laws and regulations and the provisions of the Limited Partnership Agreement, each such payment will be made as described under "Book-Entry-Only Issuance -- The Depository Trust Company" below. In the event that any date on which Dividends are payable on the Preferred Securities is not a Business Day, then payment of the Dividend 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. A "Business Day" shall mean any day other than a day on which banking institutions in The City of New York or Delaware are authorized or required by law to close. CERTAIN RESTRICTIONS ON PECO ENERGY CAPITAL If dividends have not been paid in full on any series of Preferred Securities, PECO Energy Capital shall not: (i) pay any Dividends on any other series of Preferred Securities, unless the amount of any Dividends paid on any Preferred Securities is paid on all Preferred Securities then outstanding on a pro rata basis in proportion to the full Dividends 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 Dividends on all series of Preferred Securities shall have been paid in full for all prior distribution periods. As of the date of this Prospectus, there are no Preferred Securities outstanding. REDEMPTION PROVISIONS The redemption provisions with respect to each series of the Preferred Securities offered hereby will be set forth in the Prospectus Supplement related thereto. PECO Energy Capital may not redeem any Preferred Securities unless all accumulated and unpaid Dividends have been paid on all Preferred Securities for all monthly distribution periods terminating on or prior to the date of redemption. If a partial redemption would result in a delisting of such series of Preferred Securities from any national securities exchange on which such series of Preferred Securities is then listed, PECO Energy Capital may only redeem such series of Preferred Securities in whole. Notice of any redemption of the Preferred Securities will be given not less than 30 days nor more than 60 days prior to the redemption date to the record owners thereof. So long as The Depository Trust Company ("DTC") or its nominee is the sole record holder of the Preferred Securities of any series, any failure on the part of DTC or a participant in the book entry system to notify a beneficial owner of such Preferred Securities of such redemption shall not affect the validity of the redemption. See "Book-Entry-Only Issuance -- The Depository Trust Company" below. If notice of redemption shall have been given and payment shall have been made by PECO Energy Capital to DTC, then, upon the date of such payment all rights of beneficial owners of the Preferred Securities so called for redemption will cease. In the event that any date fixed for redemption of Preferred Securities is not a Business Day, then payment of the Redemption Price payable on such date will be made on the next succeeding day which is a Business Day (and without any interest or other payment in respect of any such delay), except that if such Business Day falls in the next succeeding calendar year, such payment will be made on the immediately preceding Business Day (in each case with the same force and effect as if made on such day). 5 Subject to applicable law and except as provided under "Description of the Subordinated Debentures-Certain Covenants of PECO Energy," PECO Energy or its subsidiaries may at any time and from time to time purchase outstanding Preferred Securities by tender, in the open market or by private agreement. LIQUIDATION DISTRIBUTION In the event of any voluntary or involuntary dissolution and winding up of PECO Energy Capital, the holders of the Preferred Securities at the time outstanding 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 aggregate of the stated liquidation preference and all accumulated and unpaid Dividends to the date of payment (the "Liquidation Distribution"). All assets of PECO Energy Capital remaining after payment of the Liquidation Distribution will be distributed to the General Partner. If, upon such liquidation, the Liquidation Distribution can be paid only in part because PECO Energy Capital has insufficient assets available to pay in full the aggregate 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 Liquidation Distribution to which each series of Preferred Securities would be entitled. Pursuant to the Limited 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 the term of PECO Energy Capital, which is 99 years, (ii) upon the retirement, resignation, expulsion, bankruptcy or dissolution 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 as set forth in the Limited 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 the Subordinated Debentures to fund the Liquidation Distribution. MERGER, CONSOLIDATION, ETC. OF PECO ENERGY CAPITAL PECO Energy Capital may not consolidate, amalgamate, merge with or into, or be replaced by, or convey, transfer or lease its properties and assets substantially as an entirety to any corporation or other entity, except with the approval of the General Partner and the holders of 66-2/3% in aggregate stated liquidation preference of the outstanding Preferred Securities or as otherwise described below. The General Partner may, without the consent of the holders of the Preferred Securities, cause PECO Energy Capital to consolidate, amalgamate, merge with or into, or be replaced by, or convey, transfer or lease its properties and assets substantially as an entirety to, a corporation, a limited liability company or a limited partnership, a trust or other entity organized as such under the laws of any state of the United States of America or the District of Columbia, provided that (i) such successor entity either (x) expressly assumes all of the obligations of PECO Energy Capital under the Preferred Securities or (y) substitutes for the Preferred Securities other securities having substantially the same terms as the Preferred Securities (the "Successor Securities") so long as the Successor Securities rank, as regards 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 Guarantee with regard to the Successors 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 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 of 1933, (v) such consolidation, amalgamation, merger, replacement, conveyance, transfer or lease does not adversely affect the powers, preferences and other special rights of holders of Preferred Securities or Successor Securities in any material respect, (vi) such successor entity has a purpose substantially identical to that of PECO Energy Capital, (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) to the 6 effect that (w) holders of outstanding Preferred Securities will not recognize any gain or loss for United States 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 United States 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 Investment Company Act of 1940 (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 "Description of the Guarantee -- Amendments" and "Merger, Consolidation, etc. of PECO Energy Capital", and as otherwise required by law and the Limited Partnership Agreement, the holders of the Preferred Securities will have no voting rights. If (i) PECO Energy Capital fails to pay Dividends 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 the 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 Guarantee, including, after failure to pay Dividends for 60 consecutive monthly distribution periods on the Preferred Securities, the payment of Dividends 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 Dividends in full for 18 consecutive monthly distribution periods, Dividends shall be deemed to remain in arrears, notwithstanding any payments in respect thereof, until full cumulative Dividends 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 Dividends. 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 Limited 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 the Guarantee) shall have paid in full all accumulated and unpaid Dividends on the Preferred Securities or such default 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 as provided under "Description of the Subordinated Debentures -- Option to Extend Interest Payment Period." If any proposed amendment to the Limited 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 Limited Partnership Agreement or otherwise, then the holders of such series of Preferred Securities will be entitled to vote on such amendment or action of the General Partner (but not on any other amendment or action) and, in the case of an amendment or action which would equally adversely affect the rights or preferences of any other Preferred Securities, such Preferred Securities shall vote together as a class on such amendment or action of the General Partner (but not on any other amendment or action), and such amendment or action shall not be effective except with the approval of the holders of not less than 66-2/3% 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. 7 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 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 holders of the Subordinated Debentures or the Trustee under the Indenture, or executing any trust or power conferred on the 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 66-2/3% in aggregate stated liquidation preference of all series of Preferred Securities affected thereby, acting as a single class; provided, however, that where a consent under the Indenture would require the consent of each holder affected thereby, no such consent shall be given by the General Partner without the prior consent of each holder of all series of Preferred Securities affected thereby. The General Partner shall not revoke any action previously authorized or approved by a vote of any series of Preferred Securities. The General Partner shall notify all holders of the Preferred Securities of any notice of default received from the Trustee with respect to the 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. No vote or consent of the holders of the Preferred Securities will be required for PECO Energy Capital to redeem and cancel Preferred Securities in accordance with the Limited Partnership Agreement. Notwithstanding that holders of Preferred Securities are entitled to vote or consent under any of the circumstances described above, any of the Preferred Securities that are owned by PECO Energy or any entity owned more than 50% by PECO Energy, either directly or indirectly, shall not be entitled to vote or consent and shall, for the purposes of such vote or consent, be treated as if they were not outstanding. The holders of the Preferred Securities will have no rights to remove or replace the General Partner. BOOK-ENTRY-ONLY ISSUANCE -- THE DEPOSITORY TRUST COMPANY The Depository Trust Company will act as securities depository for the Preferred Securities offered hereby. Each series of Preferred Securities offered hereby will be issued only as fully registered securities registered in the name of Cede & Co. (DTC's nominee). One or more fully registered global Preferred Security certificates will be issued, representing in the aggregate the total number of Preferred Securities of each series, and will be deposited with DTC. DTC is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Exchange Act. DTC holds securities that its participants ("Participants") deposit with DTC. DTC also facilitates the settlement among Participants of securities transactions, such as transfers and pledges, in deposited securities through electronic computerized book-entry changes in Participants' accounts, thereby eliminating the need for physical movement of securities certificates. Direct Participants include securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations ("Direct Participants"). DTC is owned by a number of its Direct Participants and by the 8 New York Stock Exchange, Inc., the American Stock Exchange, Inc., and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as securities brokers and dealers, banks and trust companies that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). The rules applicable to DTC and its Participants are on file with the SEC. Purchases of Preferred Securities under the DTC system must be made by or through Direct Participants, which will receive a credit for the Preferred Securities on DTC's records. The ownership interest of each actual purchaser of each Preferred Security ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchases, but Beneficial Owners are expected to receive written confirmations providing details of the transactions, as well as periodic statements, of their holdings, from the Direct or Indirect Participants through which the Beneficial Owners purchased Preferred Securities. Transfers of ownership interests in the Preferred Securities are to be accomplished by entries made on the books of Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Preferred Securities, except in the event that use of the book-entry system for the Preferred Securities is discontinued. DTC has no knowledge of the actual Beneficial Owners of the Preferred Securities. DTC's records reflect only the identity of the Direct Participants to whose accounts such Preferred Securities are credited, which may or may not be the Beneficial Owners. The Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial 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. If less than all of a series of Preferred Securities are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such series to be redeemed. Although voting with respect to the Preferred Securities is limited, in those cases where a vote is required, neither DTC nor Cede & Co. will consent or vote with respect to Preferred Securities. Under its usual procedure, DTC would mail an Omnibus Proxy to PECO Energy Capital as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Preferred Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy). Payments on the Preferred Securities will be made 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 customer practices and will be the responsibility of such Participant and not of DTC, PECO Energy Capital, the General Partner 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 PECO Energy Capital, disbursement of such payments to Direct Participants is the responsibility of DTC, and disbursement of such payments to the Beneficial Owners is the responsibility of Direct and Indirect Participants. The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that PECO Energy and PECO Energy Capital believe to be reliable, but neither PECO Energy nor PECO Energy Capital takes responsibility for the accuracy thereof. DTC may discontinue providing its services as securities depository with respect to any series of the Preferred Securities at any time by giving reasonable notice to PECO Energy Capital. Under such circumstances, in the event that a successor securities depository is not obtained, Preferred Security certificates are required to be printed and delivered. Additionally, the General Partner may decide to discontinue use of the system of book-entry transfers through DTC (or a successor depository), including for the purpose of effectuating a partial redemption of a series of Preferred Securities in which only the Preferred Securities of certain holders will be redeemed. 9 In the event that the book entry only system is discontinued, the General Partner will appoint a registrar, transfer agent and paying agent for the Preferred Securities. Registration of transfers of Preferred Securities will be effected without charge by or on behalf of PECO Energy Capital, but upon payment of any tax or other governmental charges which may be imposed in relation to it. PECO Energy Capital will not be required to register or cause to be registered the transfer of Preferred Securities after such Preferred Securities have been called for redemption. 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 United States federal income tax purposes and so that the 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 Limited 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 GUARANTEE The following is a summary of certain provisions of the Guarantee which will be executed and delivered by PECO Energy concurrently with the issuance of each series of Preferred Securities offered hereby for the benefit of the holders from time to time of that series of the Preferred Securities. The summary is subject to, and qualified by reference to the Payment and Guarantee Agreement, which is filed as an exhibit to the Registration Statement of which this Prospectus forms a part. Reference in the summary to Preferred Securities means the series of the Preferred Securities to which a Guarantee relates. GENERAL PECO Energy will irrevocably and unconditionally agree, to the extent set forth herein, to pay in full, to the holders of the Preferred Securities, the Guarantee Payments (as defined below) (except to the extent paid by PECO Energy Capital), as and when due, regardless of any defense, right of set-off or counterclaim which PECO Energy Capital may have or assert. The following payments, to the extent not paid by PECO Energy Capital (the "Guarantee Payments"), will be subject to the Guarantee (without duplication): (i) any accumulated and unpaid Dividends on the Preferred Securities to the extent that PECO Energy Capital has funds on hand legally available therefor, (ii) the redemption price with respect to any Preferred Securities called for redemption to the extent that PECO Energy Capital has funds on hand legally available therefor, (iii) upon a liquidation of PECO Energy Capital, the lesser of (a) the Liquidation Distribution and (b) the amount of assets of PECO Energy Capital legally available for distribution to holders of Preferred Securities and (iv) any additional amounts payable with respect to a particular series of Preferred Securities. 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 Preferred Securities or by causing PECO Energy Capital to pay such amounts to such holders. STATUS OF THE GUARANTEE The 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 Limited Partnership Agreement provides that each holder of Preferred Securities by acceptance thereof agrees to the subordination provisions and other terms of the Guarantee. The Guarantee will constitute a guarantee of payment and not of collection. The Guarantee will be held for the benefit of the holders of the Preferred Securities. In the event of the appointment of a Special Representative, the Special Representative may enforce the Guarantee. If no Special Representative has been appointed to enforce the Guarantee, the General Partner has the right to enforce the Guarantee on behalf of the holders of the Preferred Securities. The holders of not less than 10% in aggregate stated liquidation preference of the Preferred Securities have the right to direct the time, method and place of conducting any 10 proceeding to enforce the 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 Guarantee as above provided, any holder of Preferred Securities may institute a legal proceeding directly against PECO Energy to enforce its rights under the Guarantee without first instituting a legal proceeding against PECO Energy Capital or any other person or entity. The Guarantee will not be discharged except by payment of the Guarantee Payments in full to the extent not paid by PECO Energy Capital. CERTAIN COVENANTS OF PECO ENERGY Under the Guarantee, PECO Energy will covenant that, so long as any 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 Guarantee or there shall have occurred any event that, with 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 Preferred Securities (in which case no vote will be required), the Guarantee may be changed only with the prior approval of the holders of not less than 66-2/3% of the aggregate stated liquidation preference of the outstanding Preferred Securities. The manner of obtaining any such approval of holders of the Preferred Securities will be as set forth under "Description of the Preferred Securities -- Voting Rights." MERGER OF PECO ENERGY So long as any 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 its properties and assets substantially as an entirety 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 Guarantee. TERMINATION OF THE GUARANTEE The Guarantee will terminate and be of no further force and effect upon full payment of the redemption price of the Preferred Securities or upon full payment of the amounts payable upon liquidation of PECO Energy Capital. The Guarantee will continue to be effective or will be reinstated, as the case may be, if at any time any holder of Preferred Securities must restore payment of any sums paid under the Preferred Securities or the Guarantee. DESCRIPTION OF THE SUBORDINATED DEBENTURES The following is a summary of certain terms and provisions of the Subordinated Debentures and the Indenture. The summary is subject to, and is qualified by reference to the Indenture, which is filed as an exhibit to the Registration Statement of which this Prospectus forms a part. GENERAL Concurrently with the issuance of each series of the Preferred Securities, PECO Energy Capital will loan the proceeds thereof and the General Partner's concurrent investment in PECO Energy Capital to PECO Energy. The loan will be evidenced by a separate series of Subordinated Debentures issued by PECO Energy to PECO Energy Capital. The Subordinated Debentures will be unsecured subordinated obligations of PECO Energy issued under the Indenture. Each series of Subordinated Debentures will be in the principal amount equal to the aggregate stated liquidation preference of the related series of Preferred Securities plus the General Partner's concurrent investment in PECO Energy Capital, will bear interest at a rate equal to the Dividend rate on such series of Preferred Securities payable on the Dividend dates, will have maturity and redemption provisions corresponding to the redemption provisions of such series of Preferred Securities and will be subject to mandatory redemption upon the dissolution and winding up of PECO Energy Capital. 11 OPTION TO EXTEND INTEREST PAYMENT PERIOD Under the Indenture, PECO Energy shall have the right at any time so long as PECO Energy is not in default in the payment of interest on any series of Subordinated Debentures, 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 mandatory 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 compounded daily to the extent permitted by applicable law). During any such Extension Period, neither PECO Energy nor any majority-owned subsidiary of PECO Energy shall declare or pay any dividend on, or redeem, purchase, acquire or make a liquidation payment with respect to, any of its capital stock (other than dividends by wholly owned subsidiaries). Prior to the termination of any such Extension Period, PECO Energy may 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 PECO Energy Capital notice of its selection of such extended interest payment period one Business Day prior to the earlier of (i) the date the Dividends on the Preferred Securities are payable or (ii) the date PECO Energy Capital is required to give notice to any national securities exchange on which any series of the Preferred Securities is listed or other applicable self-regulatory organization or to holders of the Preferred Securities of the record date or the date such Dividend is payable, but in any event not less than two Business Days prior to such record date. PECO Energy shall cause PECO Energy Capital to give such notice of PECO Energy's selection of such extended interest payment period to the holders of the Preferred Securities. ADDITIONAL INTEREST If any time PECO Energy Capital shall be required to pay any Additional Amounts in respect of the Preferred Securities pursuant to the terms thereof, then PECO Energy will pay as interest ("Additional Interest") an amount equal to such Additional Amounts on the Subordinated Debentures. In addition, if PECO Energy Capital would be required to pay any taxes, duties, assessments or 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 such amounts as shall be required so that the net amounts received and retained by PECO Energy Capital after paying any such taxes, duties, assessments or governmental charges will not be less than the amounts PECO Energy Capital would have received had no such taxes, duties, assessments or governmental charges been imposed. SUBORDINATION The Indenture provides that all payments by PECO Energy in respect of the 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 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 entered into in the ordinary course of business of PECO Energy; (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. 12 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 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. 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 given to PECO Energy and the Trustee and such default shall not have been cured or waived by or on behalf of the holders of such Senior Indebtedness. If the 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 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 PECO Energy Capital or the Special Representative to take any action to accelerate the maturity of the Subordinated Debentures or to pursue any rights or remedies against PECO Energy; provided that all Senior Indebtedness shall first be paid before PECO Energy Capital 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 (and any Special Representative appointed by such holders) shall be subrogated to the rights of the holders of such Senior Indebtedness to receive payments or dividends of assets of PECO Energy made on such Senior Indebtedness until all accrued interest on and principal of 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 the 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 at least 10% of the total value of PECO Energy Capital and at least 3% of all interests in the capital, income, gain, loss, deduction and credit of PECO Energy Capital to be represented by general partner interests, (iii) to timely cause the General Partner to perform all of its duties as general partner of PECO Energy Capital (including the duty to pay Dividends on the 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 United States federal income tax purposes. PECO Energy Capital may not waive compliance or waive any default in compliance by PECO Energy with any covenant or other term in the Indenture without the approval of the Special Representative or without the direction of the holders of 66-2/3% of the aggregate stated liquidation preference of the Preferred Securities. 13 MODIFICATION OF THE INDENTURE The Indenture contains provisions permitting PECO Energy and the Trustee, with the consent of the Special Representative or PECO Energy Capital at the direction of the holders of not less than 66-2/3% of the aggregated stated liquidation preference of the Preferred Securities related to the Subordinated Debentures which are affected by the modification, 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 may, (a) change the stated maturity date of the principal of, or any installment of principal of or interest, if any, on, any Subordinated Debenture, (b) reduce the principal amount of, or premium or rate of interest, if any, on, any Subordinated Debenture, (c) reduce the amount of principal of an original issue discount Subordinated Debenture payable upon acceleration of the maturity thereof, (d) change the place or currency of payment of principal of, or premium or interest, if any, on, any Subordinated Debenture or (e) impair the right to institute suit for the enforcement of any payment on or with respect to any Subordinated Debenture, or change the amendment provisions of the Indenture. EVENTS OF DEFAULT The following are Events of Default under the Indenture: (i) default for 10 days in payment of any interest (including Additional Interest) on 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) the Subordinated Debentures; (iii) default for 60 days after notice in the performance of any other covenant in the Indenture 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 of PECO Energy, in which case principal and interest on all of the Subordinated Debentures shall become immediately due and payable, the Trustee or the Special Representative may declare the principal of all the Subordinated Debentures to be due and payable. Under certain circumstances, any 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 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. CONSOLIDATION, MERGER, SALE OR CONVEYANCE The Indenture provides that PECO Energy may not consolidate with or merge with or into any other person or sell, convey, transfer or lease its properties and assets substantially as an entirety to any person, unless (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 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 discharged from any and all obligations in respect of the Subordinated Debentures of any series if PECO Energy deposits with the Trustee, in trust, (i) money and/or (ii) United States Government Securities (as defined in the Indenture), which through the payment of interest thereon and principal thereof in accordance with their terms will provide money in an amount sufficient to pay all the principal of, and interest on, the Subordinated Debentures of such series on the dates such payments are due in accordance with the terms of such Subordinated Debentures. 14 INFORMATION CONCERNING THE TRUSTEE Subject to the provisions of the Indenture relating to its duties, the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request, order or direction of any of the holders thereunder, unless such holders shall have offered to the Trustee reasonable indemnity. Subject to such provision for indemnification, the holders of a 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 Trustee thereunder, or exercising any trust or power conferred on the Trustee. The Indenture contains limitations on the right of the 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 Trustee may be deemed to have a conflicting interest and may be required to resign as Trustee if at the time of default under the Indenture it is a creditor of PECO Energy. An affiliate of Meridian Trust Company, the Trustee under the Indenture, has from time to time engaged in transactions with, or performed services for, PECO Energy and its affiliates in the ordinary course of business. Mr. Joseph F. Paquette, Jr. is Chairman of the Board and a Director of PECO Energy and a Director of Meridian Bancorp, Inc., the parent corporation of the Trustee. PLAN OF DISTRIBUTION PECO Energy Capital may offer or sell Preferred Securities offered hereby to one or more underwriters for public offering and sale by them. PECO Energy Capital may sell Preferred Securities as soon as practicable after effectiveness of the Registration Statement. Any such underwriter involved in the offer and sale of the Preferred Securities will be named in an applicable Prospectus Supplement. Underwriters may offer and sell the Preferred Securities at a fixed price or prices, which may be changed, or from time to time at market prices prevailing at the time of sale, at prices related to such prevailing market prices or at negotiated prices. In connection with the sale of Preferred Securities, underwriters may be deemed to have received compensation from PECO Energy and/or PECO Energy Capital in the form of underwriting discounts or commissions and may also receive commissions. Underwriters may sell Preferred Securities to or through dealers, and such dealers may receive compensation in the form of discounts, concessions or commissions from the underwriters. Any underwriting compensation paid by PECO Energy and/or PECO Energy Capital to underwriters in connection with the offering of Preferred Securities, and any discounts, concessions or commissions allowed by underwriters to participating dealers, will be set forth in an applicable Prospectus Supplement. Underwriters and dealers participating in the distribution of the Preferred Securities may be deemed to be underwriters, and any discounts and commissions received by them and any profit realized by them on resale of the Preferred Securities may be deemed to be underwriting discounts and commissions, under the Securities Act. Underwriters and dealers may be entitled, under agreement with PECO Energy and PECO Energy Capital, to indemnification against and contribution toward certain civil liabilities, including liabilities under the Securities Act, and to reimbursement by PECO Energy for certain expenses. Underwriters and dealers may engage in transactions with, or perform services for, PECO Energy and/or PECO Energy Capital and/or any of their affiliates in the ordinary course of business. Each series of Preferred Securities will be a new issue of securities and will have no established trading market. Any underwriters to whom Preferred Securities are sold by PECO Energy Capital for public offering and sale may make a market in such Preferred Securities, but such underwriters will not be obligated to do so and may discontinue any market making at any time without notice. The Preferred Securities may or may not be listed on a national securities exchange. No assurance can be given as to the liquidity of or the trading markets for any Preferred Securities. 15 LEGAL MATTERS Certain matters of Delaware law relating to the validity of the Preferred Securities, the validity of the Limited Partnership Agreement and the formation of PECO Energy Capital are being passed upon by Richards, Layton & Finger, P.A., special Delaware counsel to PECO Energy Capital. The validity of the Guarantee and the Subordinated Debentures will be passed upon on behalf of PECO Energy by Ballard Spahr Andrews & Ingersoll. Certain legal matters will be passed upon on behalf of the Underwriters by Drinker Biddle & Reath, counsel to the Underwriters. Ballard Spahr Andrews & Ingersoll and Drinker Biddle & Reath will rely on Richards, Layton & Finger, P.A. as to certain matters of Delaware law. EXPERTS The consolidated financial statements and schedules of PECO Energy incorporated by reference in this Prospectus have been audited by Coopers & Lybrand, 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, 1993. The consolidated financial statements and schedules audited by Coopers & Lybrand have been incorporated herein by reference in reliance on their report given on their authority as experts in accounting and auditing. 16 ====================================== ======================================= No person has been authorized to give any information or to make any PREFERRED SECURITIES representations other than those contained in this Prospectus PECO ENERGY CAPITAL Supplement or the Prospectus and, if given or made, such information or representations must not be % CUMULATIVE relied upon as having been MONTHLY INCOME PREFERRED authorized. This Prospectus SECURITIES, SERIES A Supplement and the Prospectus do not constitute an offer to sell or the solicitation of any offer to GUARANTEED TO THE EXTENT SET FORTH buy any securities other than the HEREIN BY securities described in this Prospectus Supplement and the Prospectus or an offer to sell or PECO ENERGY COMPANY the solicitation of an offer to buy such securities in any circumstances in which such offer or solicitation is unlawful. Neither the delivery of this Prospectus Supplement or the Prospectus nor any sale made hereunder or thereunder shall, under any circumstances, create any implication that the information contained herein or therein is correct as of any time subsequent to the date of such information. ---------- ---------- TABLE OF CONTENTS PROSPECTUS SUPPLEMENT PROSPECTUS SUPPLEMENT ---------- PAGE ---- Certain Investment Considerations ............. S-3 PECO Energy Capital .......... S-3 PECO Energy .................. S-4 Certain Terms of the Series A Preferred Securities ................. S-4 Certain Terms of the Series A Subordinated Debentures ................. S-6 United States Taxation ....... S-6 GOLDMAN, SACHS & CO. Underwriting ................. S-9 SMITH BARNEY SHEARSON INC. PROSPECTUS DEAN WITTER REYNOLDS INC. Statement of Available Information ................ 2 A.G. EDWARDS & SONS, INC. Incorporation of Certain Documents by Reference ..... 2 KIDDER, PEABODY & CO. PECO Energy Capital .......... 2 INCORPORATED PECO Energy .................. 3 Coverage Ratios .............. 3 PAINEWEBBER INCORPORATED Use of Proceeds ............. 4 Description of the Preferred PRUDENTIAL SECURITIES Securities ................. 4 INCORPORATED Description of the Guarantee.. 10 Description of the REPRESENTATIVES OF THE UNDERWRITERS Subordinated Debentures .... 11 Plan of Distribution ......... 15 Legal Matters ................ 16 Experts ...................... 16 ====================================== ======================================= PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.* Filing fees - Securities and Exchange Commission ...... $120,690 Printing and engraving ................................ 50,000 New York Stock Exchange listing fee ................... 75,000 Legal fees and Blue Sky fees and expenses ............. 200,000 Accounting fees ....................................... 50,000 Indenture Trustee fees and expenses ................... 25,000 Rating agencies fees and expenses ..................... 125,000 Miscellaneous ......................................... 10,310 -------- Total ............................................. $656,000 ======== *Estimated ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. PECO Energy's Bylaws provide that PECO Energy is obligated to indemnify directors and officers and other persons designated by the Board of Directors against any liability including any damage, judgment, amount paid in settlement, fine, penalty, cost or expense (including, without limitation, attorneys' fees and disbursements) incurred in connection with any proceeding. The Bylaws provide that no indemnification shall be made where the act or failure to act giving rise to the claim for indemnification is determined by arbitration or otherwise to have constituted willful misconduct or recklessness or attributable to receipt from PECO Energy of a personal benefit to which the recipient is not legally entitled. Section 518 of the Pennsylvania Business Corporation Law of 1988 provides that indemnification pursuant to a bylaw may be granted for any action taken or any failure to take any action, absent a court determination of willful misconduct or recklessness, and may be made whether or not the corporation would have the power to indemnify the person under any other provision of law. Pursuant to the Pennsylvania Business Corporation Law of 1988, the Company'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. Pursuant to the Limited 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 Limited Partnership Agreement, except that no Indemnified Person shall be entitled to be indemnified in respect of any loss, damage or claim incurred by such Indemnified Person by reason of gross negligence, willful misconduct or fraud with respect to such acts or omissions; provided, however, that any such indemnity shall be provided out of and to the extent of PECO Energy Capital's assets only, and no General Partner or limited partner (collectively, "Partners"), any affiliate of a Partner or any officers, directors, shareholders, partners, employees, representatives or agents of a Partner or its respective affiliates, or any employee or agent of PECO Energy Capital or its affiliates or any Special Representative shall have any personal liability on account thereof. To the fullest extent permitted by applicable law, expenses (including legal fees) incurred by an Indemnified Person in defending any claim, demand, action, suit or proceeding shall, from time to time, be advanced by PECO Energy Capital II-1 prior to the final disposition of such claim, demand, action, suit or proceeding shall, from time to time, be advanced by PECO Energy Capital of 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 Underwriting Agreement provides for the Underwriters to indemnify the directors and officers of PECO Energy and PECO Energy Capital against certain liabilities as set forth in Section 8 of the Underwriting Agreement (see Exhibit 1-1). PECO Energy has purchased directors' and officers' liability insurance. ITEM 16. EXHIBITS EXHIBIT NUMBERS - - - - ------- 1-1 Form of Underwriting Agreement. 4-1 Certificate of Limited Partnership of PECO Energy Capital, L.P. 4-2 Form of Amended and Restated Limited Partnership Agreement of PECO Energy Capital, L.P. 4-3 Form of Action of General Partner creating Series A Preferred Securities. 4-4 Form of Preferred Security Certificate (included in Exhibit 4-2 above). 4-5 Form of Subordinated Debenture Indenture. 4-6 Form of Subordinated Debenture (included in Exhibit 4-5 above). 4-7 Form of Payment and Guarantee Agreement. 5-1 Opinion of Ballard Spahr Andrews & Ingersoll relating to the legality of the Subordinated Debentures and Guarantees, including consent. 5-2 Opinion of Richards, Layton & Finger, P.A., relating to the legality of the 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 Combined Fixed Charges and Preferred Stock Dividend Requirements for the years ended December 31, 1989-1993 and for the three-months ended March 31, 1993 and March 31, 1994 (incorporated by reference to Exhibits 12-1 and 12-2, respectively, of PECO Energy's 1993 Form 10-K, File No. 1-1401 and PECO Energy's Quarterly Reports on Form 10-Q for the quarters ended March 31, 1993 and March 31, 1994). 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 of a Corporation designated to act as Trustee. ITEM 17. UNDERTAKINGS A. TO UPDATE ANNUALLY The Registrants hereby undertake (1) to file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement; (iii) to II-2 include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by PECO Energy pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement; (2) that for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; and (3) to remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. B. INCORPORATION BY REFERENCE The Registrants hereby undertake that, for purposes of determining any liability under the Securities Act of 1933, each filing of PECO Energy's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. C. INDEMNIFICATION Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrants, the Registrants have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act of 1933 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 or 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 Securities Act of 1933 and will be governed by the final adjudication of such issue. II-3 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant, PECO Energy Company, certifies that it has reasonable grounds to believe it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Philadelphia, Commonwealth of Pennsylvania, on the 25th day of May, 1994. PECO Energy Company /s/ J. F. Paquette, Jr. By ----------------------- J. F. PAQUETTE, JR. Chairman of the Board 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 Director May 25, 1994 - - - - ------------------------ (Principal Executive Officer) J. F. PAQUETTE, JR. /s/ C. A. McNeill, Jr. President and Director May 25, 1994 - - - - ------------------------ (Principal Operating Officer) C. A. MCNEILL, JR. /s/ K. G. Lawrence Senior Vice President--Finance May 25, 1994 - - - - ------------------------ (Principal Financial and K. G. LAWRENCE Accounting Officer) This registration statement has also been signed by K.G. Lawrence, Attorney-in-Fact, on behalf of the following Directors on the date indicated: Susan W. Catherwood Joseph C. Ladd M. Walter D'Alessio Edithe J. Levit Richard G. Gilmore Kinnaird R. McKee Richard H. Glanton Joseph J. McLaughlin James A. Hagen John M. Palms Nelson G. Harris Ronald Rubin /s/ K. G. Lawrence By ---------------------------- May 25, 1994 K. G. LAWRENCE II-4 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 it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Philadelphia, Pennsylvania, on the 25th day of May, 1994. 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 25, 1994 - - - - ------------------------ (Principal Executive Officer and J. B. MITCHELL Principal Financial and Accounting Officer) /s/ M. W. Rimerman Director May 25, 1994 - - - - ------------------------ M. W. RIMERMAN /s/ K. G. Lawrence Director May 25, 1994 - - - - ------------------------ K. G. LAWRENCE II-5 EXHIBIT INDEX EXHIBIT NO. DESCRIPTION PAGE ------- ----------- ---- 1-1 Form of Underwriting Agreement. 4-1 Certificate of Limited Partnership of PECO Energy Capital, L.P. 4-2 Form of Amended and Restated Limited Partnership Agreement of PECO Energy Capital, L.P. 4-3 Form of Action of General Partner creating Series A Preferred Securities. 4-4 Form of Preferred Security Certificate (included in Exhibit 4-2 above). 4-5 Form of Subordinated Debenture Indenture. 4-6 Form of Subordinated Debenture (included in Exhibit 4-5 above). 4-7 Form of Payment and Guarantee Agreement. 5-1 Opinion of Ballard Spahr Andrews & Ingersoll relating to the legality of the Subordinated Debentures and Guarantees, including consent. 5-2 Opinion of Richards, Layton & Finger, P.A., relating to the legality of the 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 Combined Fixed Charges and Preferred Stock Dividend Requirements for the years ended December 31, 1989-1993 and for the three-months ended March 31, 1993 and March 31, 1994 (incorporated by reference to Exhibits 12-1 and 12-2, respectively, of PECO Energy's 1993 Form 10-K, File No. 1-1401 and PECO Energy's Quarterly Reports on Form 10-Q for the quarters ended March 31, 1993 and March 31, 1994). 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 of a Corporation designated to act as Trustee. EX-1.1 2 EXHIBIT 1-1 PECO ENERGY CAPITAL, L.P. PECO ENERGY COMPANY UNDERWRITING AGREEMENT May __, 1994 Goldman, Sachs & Co. Smith Barney Shearson Inc. Dean Witter Reynolds Inc. A.G. Edwards & Sons, Inc. Kidder, Peabody & Co. Incorporated PaineWebber Incorporated Prudential Securities Incorporated As Representatives of the Several Underwriters Named in Schedule I c/o Goldman, Sachs & Co. 85 Broad Street, 22nd Floor New York, NY 10004 Dear Sirs: 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 Company issue and sell to the Underwriters named in Schedule I hereto (the "Underwriters") an aggregate of _______ of the Company's ___% Cumulative Monthly Income Preferred Securities, Series A (liquidation preference $25 per share) (the "Series A Preferred Securities"), guaranteed by the Guarantor on a limited basis as to the payment of accumulated and unpaid monthly distributions and as to payments on liquidation or redemption and benefiting from certain additional undertakings of the Guarantor pursuant to a certain Payment and Guaranty Agreement entered into by the Guarantor dated ___ 1994. Such guarantee and undertakings are herein referred to collectively as the "Guarantee"; the Guarantee and Series A Preferred Securities are herein referred to collectively as the "Securities". Concurrently with the issuance of the Series A Preferred Securities, the Company will loan the proceeds thereof to the Guarantor and to evidence such loan the Guarantor will issue and deliver to the Company the Guarantor's ___% Subordinated Debentures, Series A due 2043 (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. 33- ____) 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, to you for each of the other Underwriters, 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); (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 2 regarding any Underwriter or the arrangements with respect to the underwriting of the offering of the Securities contemplated hereby furnished in writing to 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 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 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; 3 (e) Coopers & Lybrand are independent certified public accountants as required by the Act and the rules and regulations of the Commission thereunder; (f) 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 A Preferred Securities and lend the proceeds thereof to the Guarantor as described in the Prospectus; (g) The Company has no subsidiaries; (h) The Guarantor is a validly existing corporation in good standing 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; (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 Series A Preferred Securities have been duly authorized by the Company and will conform to the description thereof in the Prospectus; and when the Series A Preferred Securities are executed and delivered to the Underwriters and are paid for by the Underwriters in accordance with the terms of this 4 Agreement, the Series A Preferred Securities will be duly issued, fully paid and non-assessable, and free of preemptive rights; (l) The issue and sale of the Securities by the Company, the issue of the Subordinated Debentures by the Guarantor, 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 indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Guarantor, the Company or any other Subsidiary is a party or by which the Guarantor, the Company or any other Subsidiary is bound or to which any of the property or assets of 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 Company or the Guarantor and its Subsidiaries taken as a whole, nor will such action result in any violation of the provisions of the Articles of Incorporation or Bylaws of the Guarantor or the 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 Guarantor, the Company or any other Subsidiary or any of their properties; (m) Except (i) for the orders of the Commission making the Registration Statement effective, (ii) for the Notice of Registration of a Securities Certificate issued by the Guarantor in respect of the issuance of its Subordinated Debentures and Guarantee in connection with the issuance of an aggregate principal amount of up to $350,000,000 (liquidation value) of preferred interests by a special purpose subsidiary of the Guarantor permitting the Company to issue the Series A Preferred Securities as contemplated by this Agreement, (iii) for permits and similar authorizations required under the securities or "Blue Sky" laws of any jurisdiction, (iv) for an application filed with the Pennsylvania Public Utilities Commission under Section 1102(a)(4) (the "Section 1102 Application") of the Pennsylvania Public Utility Code, as amended, for authorization to acquire an interest in PECO Energy Capital Corp., the general partner of the Company, and/or the Company, (v) for an application for the qualification of an indenture (the "Indenture") between the Guarantor and Meridian Trust Company, as trustee, under the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), and (vi) 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 5 legally required for the execution, delivery and performance of this Agreement by the Company and Guarantor and the consummation of the transactions contemplated hereby; (n) This Agreement has been duly authorized, executed and delivered by the Company and by the Guarantor; and (o) All of the issued partnership 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) Subject to the terms and conditions herein set forth, the Company agrees to issue and sell to each of the Underwriters, and each of the Underwriters agrees, severally and not jointly, to purchase from the Company, at a purchase price per Series A Preferred Security of $25.00, the number of Series A Preferred Securities set forth opposite the name of such Underwriter in Schedule I hereto. The Guarantor hereby guarantees the timely performance by the Company of its obligation to issue and sell the Series A Preferred Securities as aforesaid. (b) The Guarantor agrees to execute and deliver to the Company the Guarantee concurrently with the issue and sale of the Series A Preferred Securities as contemplated herein. (c) As compensation to the Underwriters for their commitments hereunder, and in light of the fact that the proceeds of the sale of the Series A Preferred Securities will be loaned by the Company to the Guarantor, the Guarantor, has agreed to pay at the Time of Delivery (as defined in Section 4 hereof) to Goldman, Sachs & Co., for the accounts of the several Underwriters, an amount equal to $___ per Series A Preferred Security; provided, however, that such compensation will be an amount equal to $.__ per Series A Preferred Security for Series A Preferred Securities sold to certain institutions. The Underwriters shall inform the Guarantor in writing at the Time of Delivery of the number of Series A Preferred Securities sold to such institutions. 3. Upon the authorization by you of the release of the Series A Preferred Securities, the several Underwriters propose to offer the Series A Preferred Securities for sale upon the terms and conditions set forth in the Prospectus. 4. (a) Certificates, on original issuance, will be issued in the form of a typewritten certificate or certificates representing the Series A Preferred Securities to be purchased by each Underwriter hereunder, and in such denominations and registered in such names as Goldman, Sachs & Co. may request upon at least forty-eight hours prior notice to the Company. Such 6 certificates shall be delivered by or on behalf of the Company to you for the account of such 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 Company 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 Goldman, Sachs & Co. The time and date of such delivery and payment shall be 9:30 a.m., Philadelphia time, on ________, 1994, or at such other time and date as you and the Company may agree upon in writing. Such time and date for delivery of the Series A Preferred Securities is herein called (the "Time of Delivery") and the date thereof is herein called (the "Closing Date"). 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 Goldman, Sachs & Co. in New York Clearing House (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 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 7 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 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. (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 neither 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 8 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 Time of Delivery, on which the distribution of the Securities ceases, as determined by Goldman, Sachs & Co. or (ii) the date which is 30 days after the 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 Series A Preferred Securities) of the Company or the Guarantor which are substantially similar to the Series A Preferred Securities or the Guarantee, any securities convertible into or exchangeable for Series A Preferred Securities, the Guarantee, preferred stock or such substantially similar securities of either 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 Goldman, Sachs & Co. (h) To furnish to the holders of the Series A Preferred Securities as soon as practicable after the end of each fiscal year an annual report (including a balance sheet and statements of income, stockholders' equity and cash flows of the Guarantor and its consolidated Subsidiaries certified by independent public accounts) and, as soon as practicable after the end of each of the first three quarters of each fiscal year (beginning with the fiscal quarter ending after the effective date of the Registration Statement), consolidated summary financial information of the Guarantor and its Subsidiaries for such quarter in reasonable detail. (i) 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 Company or 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 any class of securities of the Guarantor or the Company is listed; and (ii) such additional information concerning the business and financial condition of the Guarantor 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). 9 (j) To use its best efforts to list, subject to notice of issuance, the Series A Preferred Securities on the New York Stock Exchange. 6. The Company and the Guarantor jointly and severally covenant and agree with the several Underwriters that the Company and the Guarantor will pay or cause to be paid the following: (i) the fees, disbursements and expenses of 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 definitive certificates for the Series A Preferred Securities; (vi) the cost and charges of any transfer agent or registrar; (vii) the cost of qualifying the 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 Series A Preferred Securities by them, and any advertising expenses in connection with offers they may make. 7. (a) The several obligations of the Underwriters hereunder 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 Subordinated Debentures and Guarantee(s) in connection with the issuance of an aggregate principal amount of up to $350,000,000 (liquidation value) of preferred interests by a special purpose subsidiary of the Guarantor permitting the issuance of the Series A Preferred Securities and the transactions relating thereto substantially in accordance with the terms and conditions herein set forth and containing no provision unacceptable to you, it being 10 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, approval shall have been given by the Pennsylvania Public Utilities Commission of the Section 1102 Application, and such approval shall be in full force and effect. (iii) 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 prospective material adverse change in the financial condition, business or results of operations of the Company or 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. (iv) At the Time of Delivery and simultaneously with the issuance and sale of the Series A Preferred Securities, you shall be furnished with each of the following opinions or letters: (A) a favorable opinion, dated the Closing Date, of Ballard Spahr Andrews & Ingersoll (Counsel for the Company and the Guarantor) in form and substance reasonably satisfactory to you; 11 (B) a favorable opinion, dated the Closing Date, of Richards, Layton & Finger (Delaware Counsel for the Company and the Guarantor) in form and substance reasonably satisfactory to you; (C) a favorable opinion, dated the Closing Date, of corporate counsel for the Guarantor in form and substance reasonably satisfactory to you; and (D) a favorable opinion, dated the Closing Date, of Drinker Biddle & Reath (Counsel for the Underwriters), in form and substance reasonably satisfactory to you. (v) At the time that this Agreement is signed and at the Closing Date, Coopers & Lybrand shall have furnished to you a letter or letters, dated the respective date of delivery thereof, in form and substance reasonably satisfactory to you. (vi) At the Time of Delivery, the Series A Preferred Securities shall have been duly approved for listing, subject to notice of issuance, on the New York Stock Exchange; (vii) 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 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; and (viii) 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 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 Series A Preferred Securities by Moody's Investors Services, Inc. or Standard & Poor's Corporation, (D) a general moratorium on commercial banking activities in New York or Pennsylvania shall not have been declared by either Federal or New York State or Pennsylvania authorities, and (E) there shall not have occurred any outbreak or escalation of hostilities or any calamity or crisis of comparable magnitude that, in your judgment, is material and adverse and, in the case of any of the events specified in clauses (A) through (E), singly or together with any other such event makes it, in your reasonable judgment, impracticable or inadvisable to market the Series A Preferred 12 Securities on the terms and in the manner contemplated in the Prospectus. (b) The obligations of the Company and Guarantor to deliver the Securities 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 Guarantee(s) in connection with the issuance of an aggregate principal amount of up to $350,000,000 (liquidation value) of preferred interests by a special purpose subsidiary of the Guarantor permitting the issuance of the Series A Preferred Securities and the transactions relating thereto substantially in accordance with the terms and conditions herein set forth and containing no provision unacceptable to the Guarantor, it being understood that the Notice in effect as of the date of this Agreement does not contain any such unacceptable provision, and that no subsequent Notice shall be deemed to contain any such unacceptable provision, unless the Guarantor, within 24 hours after receiving a copy thereof, shall have given notice to you to the effect that such Notice contains an unacceptable provision; (iii) At the Time of Delivery, approval shall have been given by the Pennsylvania Public Utilities Commission of the Section 1102 Application, and such approval shall be in full force and effect; and (iv) At the Time of Delivery, the Company shall receive payment for the Series A Preferred Securities. 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 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 13 misleading or, (y) to the extent not covered by clause (x), any untrue statement of a material fact contained in any Preliminary Prospectus, the Prospectus or any amendment or supplement thereto or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading all in light of the circumstances under which they were made, except in either case insofar as such losses, claims, damages, liabilities or expenses are caused by (i) any such untrue statement or omission or alleged untrue statement or omission based upon information furnished in writing to the Company or Guarantor by any Underwriter expressly for use therein, or (ii) the failure of any Underwriter to send to any purchaser to whom it had sent a Preliminary Prospectus an amended prospectus as shall have been furnished by the Company or the Guarantor for such purpose (excluding documents incorporated therein by reference), if required by the 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) Each Underwriter agrees to indemnify and hold harmless the Company and its controlling persons and partners 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 any untrue statement or omission or alleged untrue statement or omission based upon information furnished in writing to the Company or the Guarantor by such Underwriter expressly for use in such Registration Statement or Preliminary Prospectus or Prospectus. In case any action shall be brought against the Company or Guarantor or any such controlling person, partner, director or officer in respect of which he or it may seek indemnity or reimbursement from any Underwriter on account of the agreement of such Underwriter contained in this subsection (b), the Underwriter shall have the rights and duties given to the Company and Guarantor, and the Company and Guarantor and any such controlling person, partner, director, or officer shall have the rights and duties given to the Underwriter, by subsection (c) below. (c) Each Underwriter agrees that, promptly upon the receipt of notice of the commencement of any action or proceeding (including any governmental action) against such Underwriter or against any person so controlling such Underwriter in respect of which indemnity or reimbursement may be sought from the Company or Guarantor on account of its agreement in the next preceding subsection (a), timely notice will be given to the Company and the Guarantor of the commencement thereof. Thereupon the Company and the Guarantor shall be entitled to participate in (and, to the 14 extent that it shall desire, including the selection of counsel reasonably satisfactory to such Underwriter or controlling person, to direct) the defense thereof and shall in any event be liable to pay all fees and expenses thereof. Any Underwriter or any such controlling person shall have the right to employ separate counsel, but if the Company or Guarantor has selected counsel in any such case, such employment by an Underwriter or controlling person shall be at its expense unless (i) the employment of such separate counsel has been authorized in writing by the Company and Guarantor and the Company and Guarantor shall have agreed to pay such expense or (ii) the Underwriter or controlling person shall have been advised by its counsel that there may be one or more legal defenses available to it which are different from or additional to those available to the Company or the Guarantor and in the reasonable judgment of such counsel it is advisable for such indemnified party to employ separate counsel. It is understood that the Company and Guarantor shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to any local counsel) for all Underwriters and controlling persons, and that all such fees and expenses shall be reimbursed as they are incurred. Such counsel shall be designated in writing by Goldman, Sachs & Co. and consented to by the Company and Guarantor, which consent shall not be unreasonably withheld. The Company and Guarantor shall not be liable for any settlement of any such action or proceeding effected without its written consent, but if settled with its written consent, or if there be a final judgment for the plaintiff in any such action or proceeding, the Company and Guarantor agree jointly and severally to indemnify and hold harmless each Underwriter and each such controlling person, if any, from and against any loss or liability by reason of such settlement or judgment. The Company and Guarantor shall not, without the prior written consent of any such Underwriter or controlling person, effect any settlement of any pending or threatened proceeding in respect of which any such Underwriter or controlling person is or could have been a party and indemnity could have been sought hereunder by any such Underwriter or controlling person, unless such settlement includes an unconditional release of any such Underwriter or controlling person from all liability on claims that are the subject matter of such proceeding. (d) In order to provide for just and equitable contribution in circumstances in which any indemnity provision provided for in this Section 8 is for any reason held to be unenforceable by the indemnified parties although applicable in accordance with its terms (including the requirements of subsection (c) of this Section 8), each indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of the losses, liabilities, claims, damages and expenses of the nature contemplated in said indemnity provision in such proportion as is 15 equitable and as shall reflect both the relative benefit received by 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 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 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 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 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. The Company, the Guarantor and the Underwriters agree that it would not be just and equitable if contribution pursuant to this subsection (d) were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to hereinabove. The amount paid or payable by an indemnified party as a result of the losses, liabilities, claims, damages and expenses referred to hereinabove shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. No Underwriter or person controlling such Underwriter shall be obligated to make contribution hereunder which in the aggregate exceeds the total public offering price of the Securities purchased by such Underwriter under this Agreement, less the aggregate amount of any damages which such Underwriter and its controlling persons have otherwise been required to pay in respect of the same claim or any substantially similar claim. The Underwriters' obligations to contribute are several in proportion to their respective purchasing obligations and not joint. 9. If any one or more of the Underwriters shall default in its obligation to purchase the amount of Series A Preferred Securities set forth opposite its name in Schedule I, in accordance 16 with the terms hereof, and the aggregate number of Series A Preferred Securities which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase is not more than one-eleventh of the aggregate number of Series A Preferred Securities to be purchased on such date, the other Underwriters shall be obligated severally in the proportions that the number of Series A Preferred Securities set forth opposite their respective names in Schedule I bears to the aggregate number of Series A Preferred Securities set forth opposite the names of all such non-defaulting Underwriters, or in such other proportions as you may specify, to purchase the Series A Preferred Securities which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase on such date; provided that in no event shall the number of Series A Preferred Securities that any Underwriter has agreed to purchase as set forth in Schedule I be increased pursuant to this Section 9 by an amount in excess of one-tenth of such number of Series A Preferred Securities without the written consent of such Underwriter. If any Underwriter or Underwriters shall fail or refuse to purchase any Series A Preferred Securities and the aggregate number of Series A Preferred Securities which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase exceeds one-eleventh of the aggregate number of Series A Preferred Securities to be purchased by all Underwriters hereunder and arrangements satisfactory to you, the Company and Guarantor for the purchase of such Series A Preferred Securities are not made within 48 hours after such default, this Agreement will terminate without liability on the part of any non-defaulting Underwriter or the Company and Guarantor for the purchase or sale of any Series A Preferred Securities under this Agreement. Any action taken under this Section 9 shall not relieve any defaulting Underwriter from liability in respect of any default of such Underwriter under this Agreement. 10. The respective indemnities, agreements, representations, warranties and other statements of the Company, the Guarantor and the several Underwriters, as set forth in this Agreement or made by or on behalf of them, respectively, pursuant to this Agreement, shall remain in full force and effect, regardless of any investigation (or any statement as to the results thereof) made by or on behalf of any Underwriter or any controlling person of any Underwriter, or the Company, the Guarantor or any officer or director or controlling person of the Company or the Guarantor, and shall survive delivery of and payment for the Series A Preferred Securities. 11. If this Agreement shall be terminated pursuant to Section 9 hereof, the Company and the Guarantor shall not then be under any liability to any Underwriter except as provided in Section 6 and Section 8 hereof; but if, for any other reason, any Securities are not delivered by or on behalf of the Company or the Guarantor as provided herein, the Company and the Guarantor jointly and 17 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 jointly or by Goldman, Sachs & Co. on behalf of you as the Underwriters. All statements requests, notices and agreements hereunder shall be in writing, and if to the Underwriters shall be delivered or sent by mail, telex or facsimile transmission to the Underwriters in care of Goldman, Sachs & Co., at 85 Broad Street, New York, New York 10004, Attention: Registration Department: and if to 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; provided, however, that any notice to an Underwriter pursuant to Section 8(c) hereof shall be delivered or sent by mail, telex or facsimile transmission to such Underwriter at its address set forth in its Underwriters' Questionnaire, or telex constituting such Questionnaire, which address will be supplied to the Company or the Guarantor by you upon request. Any such statements, requests, notices or agreements shall take effect upon receipt thereof. 13. This Agreement shall be binding upon, and inure solely to the benefit of, the Underwriters, the Company, the Guarantor and, to the extent provided in Section 8 and Section 10 hereof, the officers and directors of the Company and the Guarantor and each person who controls 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 Series A Preferred Securities from any Underwriter shall be deemed a successor or assign by reason merely of such purchase. 14. Time shall be of the essence of this Agreement. As used herein, the term "business day" shall mean any day when the Commission's office in Washington, D.C. is open for business. 15. This Agreement shall be governed by and construed in accordance with the laws of the State of New York. 16. This Agreement may be executed by any one or more of the parties hereto in any number of counterparts, each of which shall be deemed to be an original, but all such respective counterparts shall together constitute one and the same instrument. 18 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 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, May ___, 1994 Goldman, Sachs & Co. Smith Barney Shearson Inc. Dean Witter Reynolds Inc. A.G. Edwards & Sons, Inc. Kidder, Peabody & Co. Incorporated PaineWebber Incorporated Prudential Securities Incorporated Acting severally on behalf of themselves. By Goldman, Sachs & Co. By: -------------------------------------- 19 SCHEDULE I Number of Series A Preferred Securities Underwriters To Be Purchased ------------ --------------- Goldman, Sachs & Co. . . . . . . . . . . ________ Smith Barney Shearson Inc. . . . . . . . ________ Dean Witter Reynolds Inc.. . . . . . . . ________ A.G. Edwards & Sons, Inc.. . . . . . . . ________ Kidder, Peabody & Co. Incorporated . . . ________ PaineWebber Incorporated.. . . . . . . . ________ Prudential Securities Incorporated.. . . ________ Total. . . . . . . . . . . . . . . . 20 EX-4.1 3 EXHIBIT 4-1 CERTIFICATE OF LIMITED PARTNERSHIP OF PECO ENERGY CAPITAL, L.P. This Certificate of Limited Partnership of PECO Energy Capital, L.P. (the "Partnership") is being duly executed and filed by the undersigned general partner of the Partnership for the purpose of forming a limited partnership pursuant to the Delaware Revised Uniform Limited Partnership Act. 1. The name of the Partnership is PECO Energy Capital, L.P. 2. The address of the registered office of the Partnership in the State of Delaware is 1013 Center Road, Wilmington, County of New Castle, Delaware, 19805. The Partnership's registered agent at that address is The Corporation Service Company. 3. The name and mailing address of the sole general partner is: NAME ADDRESS ---- ------- PECO Energy 1013 Center Road, Suite 350F Capital Corp. Wilmington, DE 19805 IN WITNESS WHEREOF, the undersigned, constituting the sole general partner of the Partnership, has caused this Certificate of Limited Partnership to be duly executed as of the 23rd day of May, 1994. PECO ENERGY CAPITAL CORP., as General Partner By: /s/ J. Barry Mitchell -------------------------------- J. Barry Mitchell President EX-4.2 4 EXHIBIT 4-2 AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT OF PECO ENERGY CAPITAL, L.P. ---------------------------- This AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT, dated as of __________, 1994, of PECO Energy Capital, L.P., a Delaware limited partnership (the "Partnership"), is made by and among PECO Energy Capital Corp., as General Partner, PECO Energy Company, as Class A Limited Partner and the Persons (as defined below) who become limited partners of the Partnership in accordance with the provisions hereof. WHEREAS, PECO Energy Capital Corp. and PECO Energy Company have heretofore formed a limited partnership pursuant to the Delaware Act, by filing a Certificate of Limited Partnership (as defined below) with the Secretary of State of the State of Delaware on May ___, 1994, and entering into a Limited Partnership Agreement of the Partnership dated as of May ___, 1994 (the "Limited Partnership Agreement"); WHEREAS, the parties hereto desire to continue the Partnership as a limited partnership under the Delaware Act and to amend and restate the Limited Partnership Agreement in its entirety. NOW, THEREFORE, the parties hereto, intending to be legally bound hereby, agree to amend and restate the Limited Partnership Agreement in its entirety as follows: ARTICLE I - DEFINITIONS ----------------------- For purposes of this Agreement, each of the following terms shall have the meaning set forth below (such meaning to be equally applicable to both singular and plural forms of the terms so defined). "ACTION" shall have the meaning set forth in Section 13.01.(b). "ADDITIONAL AMOUNTS" shall have the meaning set forth in 13.01(b)(ix). "AFFILIATE" shall mean, with respect to the Person to which it refers, a Person that directly or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, such subject Person. "AGREEMENT" shall mean this Amended and Restated Limited Partnership Agreement, as amended, modified, supplemented or restated from time to time, including, without limitation, by any Action establishing a series of Preferred Partner Interests. "BOOK ENTRY INTERESTS" shall mean a beneficial interest in the Certificates, ownership and transfers of which shall be made through book entries by a Clearing Agency as described in Section 14.04. "BUSINESS DAY" 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. "CAPITAL ACCOUNT" shall have the meaning set forth in Section 4.01. "CERTIFICATE" shall mean a certificate substantially in the form attached hereto as Exhibit A, evidencing a Preferred Partner Interest. "CERTIFICATE OF LIMITED PARTNERSHIP" shall mean the Certificate of Limited Partnership of the Partnership and any and all amendments thereto and restatements thereof filed with the Secretary of State of the State of Delaware. "CLASS A LIMITED PARTNER" shall mean PECO, in its capacity as a limited partner of the Partnership. "CLEARING AGENCY" shall mean an organization registered as a "Clearing Agency" pursuant to Section 17A of the Exchange Act. "CLEARING AGENCY PARTICIPANT" shall mean a broker dealer, bank, other financial institution or other Person for whom from time to time a Clearing Agency effects book entry transfers and pledges of securities deposited with the Clearing Agency. "CODE" shall mean the United States Internal Revenue Code of 1986 and (unless the context requires otherwise) the rules and regulations promulgated thereunder, as amended from time to time. "COMMISSION" shall mean the Securities and Exchange Commission. "COVERED PERSON" shall mean any Partner or the Special Representative, any Affiliate thereof or any officers, directors, shareholders, partners, members, employees, representatives or agents of a Partner, the Special Representative or their 2 respective Affiliates, or any employee or agent of the Partnership or its Affiliates. "DEFINITIVE CERTIFICATE" shall have the meaning set forth in Section 14.04. "DELAWARE ACT" shall mean the Delaware Revised Uniform Limited Partnership Act, 6 Del.C. Section 17-101, et seq. as amended from time to time or any successor statute thereto. "ECONOMIC RISK OF LOSS" shall mean the "economic risk of loss" that any Partner is treated as bearing under Treasury Regulation Section 1.752-2 with respect to any Partnership liability. "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended. "FISCAL YEAR" shall have the meaning set forth in Section 7.01. "GENERAL PARTNER" shall mean PECO Capital, in its capacity as general partner of the Partnership, together with any successor thereto that becomes a general partner of the Partnership pursuant to the terms of this Agreement. "GUARANTEE" shall mean the Payment and Guarantee Agreement dated as of ______, 1994, as amended or supplemented from time to time, of PECO and any additional Payment and Guarantee Agreements entered into by PECO for the benefit of the Partners. "INDEMNIFIED PERSON" shall mean the General Partner or the Special Representative, any Affiliate thereof or any officers, directors, shareholders, partners, members, employees, representatives or agents thereof, or any employee or agent of the Partnership or its Affiliates. "INDENTURE" shall mean the Indenture dated as of ____________, 1994, as amended or supplemented from time to time, between PECO and Meridian Trust Company, as Trustee and any additional Indentures entered into by PECO pursuant to which Subordinated Debentures of PECO are to be issued. "INTEREST" shall mean the entire partnership interest of a Partner in the Partnership at any particular time, including the right of such Partner to any and all benefits to which a Partner may be entitled as provided in this Agreement, together with the obligations of such Partner to comply with all of the terms and provisions of this Agreement. 3 "INVESTMENT COMPANY ACT EVENT" shall mean 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 40 Act Law") to the effect that the Partnership 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 40 Act Law becomes effective on or after the date of issuance of any series of Preferred Partner Interests; provided, that no Investment Company Act Event shall be deemed to have occurred if the Partnership has received an opinion of counsel (which may be regular counsel to PECO or an Affiliate, but not an employee thereof) experienced in such matters, to the effect that PECO and/or the Partnership has taken reasonable measures, in its discretion, to avoid such Change in 40 Act Law so that notwithstanding such Change in 40 Act Law, the Partnership is not required to be registered as an "investment company" within the meaning of the 1940 Act. "LIMITED PARTNERS" shall mean the Class A Limited Partner, if any, and the Preferred Partners. "LIQUIDATING DISTRIBUTIONS" shall mean distributions of Partnership property made upon a liquidation and dissolution of the Partnership as provided in Article XII. "LIQUIDATING TRUSTEE" shall have the meaning set forth in Section 12.01. "LIQUIDATION DISTRIBUTION" shall mean the liquidation preference of each series of Preferred Partner Interests as set forth in the Action for such series. "LOSS ITEMS" shall mean, with respect to any fiscal period, items of gross Partnership loss, deduction or expense for such period. "NET INCOME" or "NET LOSS" shall mean, with respect to any Fiscal Year, the sum of the Partnership's (a) net gain or loss from the sale or exchange of the Partnership's capital assets during such Fiscal Year, and (b) all other items of income, gain, loss, deduction and expense for such Fiscal Year that are not included in (a). Net Income or Net Loss shall be determined in accordance with Federal tax accounting principles rather than generally accepted accounting principles, except that a distribution in kind of Partnership property shall be treated as a taxable disposition of such property for its fair market value (taking into account Section 7701(g) of the Code) on the date of distribution. For purposes of determining the Capital Accounts as set forth in Article IV, "Net Income" and "Net Loss" shall be computed in the same manner as the Partnership computes 4 its income for Federal income tax purposes, except that adjustments shall be made in accordance with Treasury Regulation Section 1.704-1(b)(2)(iv), which adjustments shall include any income which is exempt from United States Federal income tax, all Partnership losses and all expenses properly chargeable to the Partnership, whether deductible or non-deductible and whether described in Section 705(a)(2)(B) of the Code, treated as so described pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(i), or otherwise. "1940 ACT" shall mean the Investment Company Act of 1940, as amended. "PARTNERS" shall mean the General Partner and the Limited Partners. "PARTNERSHIP" shall mean PECO Energy Capital, L.P., a limited partnership formed under the laws of the State of Delaware. "PECO" shall mean PECO Energy Company and its successors. "PECO CAPITAL" shall mean PECO Energy Capital Corp. and its successors. "PERSON" shall mean 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 PARTNER" shall mean a limited partner of the Partnership who holds one or more Preferred Partner Interests. "PREFERRED PARTNER INTEREST OWNER" shall mean, with respect to a Book Entry Interest, a Person who is the beneficial owner of such Book Entry Interest, as reflected on the books of the Clearing Agency, or on the books of a Person maintaining an account with such Clearing Agency (directly as a Clearing Agency Participant or as an indirect participant, in each case in accordance with the rules of such Clearing Agency). "PREFERRED PARTNER INTERESTS" shall mean the Interests described in Article XIII. "PURCHASE PRICE" shall mean the amount paid for each Preferred Partner Interest. 5 "REDEMPTION PRICE" shall have the meaning set forth in Section 13.01(b)(v). "SECURITIES ACT" shall mean the Securities Act of 1933, as amended. "SPECIAL EVENT" shall mean a Tax Event or an Investment Company Act Event. "SPECIAL REPRESENTATIVE" shall have the meaning set forth in Section 13.02(d). "SUBORDINATED DEBENTURES" shall mean the Subordinated Debentures of PECO issued under the Indenture. "TAX EVENT" shall mean that the Partnership shall have received an opinion of counsel (which may be regular counsel to PECO 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 any series of Preferred Partner Interests, there is more than an insubstantial risk that (i) the Partnership is subject to United States Federal income tax with respect to interest received on the related Subordinated Debentures or the Partnership will otherwise not be taxed as a Partnership or (ii) interest payable by PECO to the Partnership on the related Subordinated Debentures will not be deductible for United States Federal income tax purposes or (iii) the Partnership is subject to more than a de minimis amount of other taxes, duties or other governmental charges. "TAX MATTERS PARTNER" shall have the meaning set forth in Section 7.05. "TRANSFER" shall mean any transfer, sale, assignment, gift, pledge, hypothecation or other disposition or encumbrance of an interest in the Partnership. "TREASURY REGULATIONS" shall mean the final and temporary income tax regulations, as well as the procedural and administrative regulations, promulgated by the United States Department of the Treasury under the Code, as amended from time to time. 6 "TRUSTEE" shall mean the Meridian Trust Company or any other trustee under the Indenture. "UNDERWRITING AGREEMENT" shall mean the Underwriting Agreement entered into on _____________, 1994 among the Partnership, PECO and the underwriters named therein with regard to the sale of Preferred Partner Interests and related securities and any additional Underwriting Agreements entered into by the Partnership and PECO with regard to the sale of additional Preferred Partner Interests and related securities. ARTICLE II - CONTINUATION; NAME; PURPOSES; TERM; DEFINITIONS ------------------------------------------------------------ SECTION 2.01. FORMATION. The parties hereto hereby join together to continue a limited partnership which shall exist under and be governed by the Delaware Act. The Partnership shall make any and all filings or disclosures required under the laws of Delaware or otherwise with respect to its continuation as a limited partnership, its use of a fictitious name or otherwise as may be required. The Partnership shall be a limited partnership among the Partners solely for the purposes specified in Section 2.03 hereof, and this Agreement shall not be deemed to create a partnership among the Partners with respect to any activities whatsoever other than the activities within the business purposes of the Partnership as specified in Section 2.03. No Partner shall have any power to bind any other Partner with respect to any matter except as specifically provided in this Agreement. No Partner shall be responsible or liable for any indebtedness or obligation of any other Partner incurred either before or after the execution of this Agreement. The assets of the Partnership shall be owned by the Partnership as an entity, and no Partner individually shall own any direct interest in the assets of the Partnership. SECTION 2.02. NAME AND PLACE OF BUSINESS. The name of the Partnership is "PECO Energy Capital, L.P." The Partnership may operate under the name of "PECO Energy Capital" and such name shall be used for no purposes other than those set forth herein. The principal place of business of the Partnership shall be ________________________________________________, or at such other place as may be selected by the General Partner in its sole discretion. SECTION 2.03. PURPOSES. The sole purposes of the Partnership are to issue and sell Interests in the Partnership, including, without limitation, Preferred Partner Interests, and to use the proceeds of all sales of Interests in the Partnership to purchase Subordinated Debentures issued by PECO pursuant to the Indenture and to effect other similar arrangements permitted by this Agreement, and to engage in any and all activities 7 necessary, convenient, advisable or incidental thereto. The Partnership shall not borrow money or issue debt or mortgage or pledge any of its assets. SECTION 2.04. TERM. The Partnership was formed on May 23, 1994 and shall continue without dissolution through April 30, 2093, unless sooner dissolved as provided in Article XI hereof. SECTION 2.05. QUALIFICATION IN OTHER JURISDICTIONS. The General Partner shall cause the Partnership to be qualified, formed or registered under assumed or fictitious name statutes or similar laws in any jurisdiction in which the Partnership transacts business. The General Partner shall execute, deliver and file any certificates (and any amendments and/or restatements thereof) necessary for the Partnership to qualify to do business in any jurisdiction in which the Partnership may wish to conduct business. SECTION 2.06. ADMISSION OF PREFERRED PARTNERS. Without execution of this Agreement, upon receipt by a Person of a Certificate and payment for the Preferred Partner Interest being acquired by such Person, which shall be deemed to constitute a request by such Person that the books and records of the Partnership reflect its admission as a Preferred Partner, such Person shall be admitted to the Partnership as a Preferred Partner and shall become bound by this Agreement. SECTION 2.07. RECORDS. The name and mailing address of each Partner and the amount contributed to the capital of the Partnership shall be listed on the books and records of the Partnership. The Partnership shall keep such other records as are required by Section 17-305 of the Delaware Act. The General Partner shall update the books and records from time to time as necessary to accurately reflect the information therein. SECTION 2.08. WITHDRAWAL OF CLASS A LIMITED PARTNER. Upon the admission of at least one Preferred Partner as a limited partner of the Partnership, the Class A Limited Partner shall be deemed to have withdrawn from the Partnership as a limited partner of the Partnership, and upon such withdrawal, the Class A Limited Partner shall have its capital contribution returned to it without any interest or deduction and shall have no further interest in the Partnership. ARTICLE III - CAPITAL CONTRIBUTIONS ----------------------------------- SECTION 3.01. CAPITAL CONTRIBUTIONS. As of the date of this Agreement, the General Partner has contributed the amount of $___________ to the capital of the Partnership and shall make 8 any further contributions required to satisfy its obligations under Section 3.04. Each Preferred Partner, or its predecessor in interest, will contribute to the capital of the Partnership the amount of the Purchase Price for the Preferred Partner Interests held by it. SECTION 3.02. ADDITIONAL CAPITAL CONTRIBUTIONS. No Partner shall be required to make any additional contributions or advances to the Partnership except as provided in Section 3.04. or by law. The General Partner may make additional capital contributions in excess of the amounts required under this Agreement at any time. SECTION 3.03. NO INTEREST OR WITHDRAWALS. No interest shall accrue on any capital contribution made by a Partner, and no Partner shall have the right to withdraw or to be repaid any portions of its capital contributions so made, except as specifically provided in this Agreement. SECTION 3.04. MINIMUM CAPITAL CONTRIBUTION OF GENERAL PARTNER. Whenever any Limited Partner makes a capital contribution, the General Partner shall immediately make the capital contribution sufficient to cause the aggregate capital contribution of the General Partner to equal 3% of the aggregate capital contributed by all Partners. Any such additional contributions shall constitute additional capital contributions made by the General Partner. SECTION 3.05. PARTNERSHIP INTERESTS. Unless otherwise provided herein, the percentage interests of the Partners shall be as determined in proportion to the capital contributions of the Partners. SECTION 3.06. INTERESTS. Each Partner's respective Preferred Partner Interests shall be set forth on the books and records of the Partnership. Each Partner hereby agrees that its Interests shall for all purposes be personal property. No Partner has an interest in specific Partnership property. The Partnership shall not issue any additional interest in the Partnership after the date hereof other than General Partner Interests or Preferred Partner Interests. ARTICLE IV - CAPITAL ACCOUNTS ----------------------------- SECTION 4.01. CAPITAL ACCOUNTS. There shall be established on the books of the Partnership a capital account ("Capital Account") for each Partner that shall consist of the initial capital contribution to the Partnership made by such Partner (or such Partner's predecessor in interest), increased by: (a) any additional capital contributions made by such 9 Partner, (b) the agreed value of any property subsequently contributed to the capital of the Partnership by such Partner; and (c) Net Income allocated to any Partner (or predecessor thereof). A Partner's Capital Account shall be decreased by: (a) Net Loss allocated to any Partner (or predecessor thereof); and (b) any distributions made to such Partner. In addition to and notwithstanding the foregoing, Capital Accounts shall be otherwise adjusted in accordance with the tax accounting principles set forth in Treasury Regulation Section 1.704-1(b)(2)(iv). SECTION 4.02. COMPLIANCE WITH TREASURY REGULATIONS. The foregoing provisions and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Section 704(b) of the Code and Treasury Regulation Section 1.704-1(b) and shall be interpreted and applied in a manner consistent with such regulations. In the event that the General Partner shall determine that it is prudent to modify the manner in which the Capital Accounts, or any debits or credits thereto, are determined in order to comply with such regulations, the General Partner may make such modification. ARTICLE V - ALLOCATIONS ----------------------- SECTION 5.01. PROFITS AND LOSSES. Each fiscal period, the Net Income of the Partnership shall be allocated (i) first, to the Preferred Partners, pro rata in proportion to the number of Preferred Partner Interests held by each Preferred Partner and at the distribution rate specified in the Action for each series of Preferred Partner Interests, in an amount equal to the excess of (a) the distributions accrued on such Preferred Partner Interests since their date of issuance through and including the close of the current fiscal period (whether or not paid) over (b) the amount of profits allocated to the Preferred Partners pursuant to this Section 5.01(i) in all prior fiscal periods; and (ii) thereafter, to the General Partner. The Net Losses of the Partnership shall be allocated each year to the General Partner. SECTION 5.02. ALLOCATION RULES. For purposes of determining the profits, losses or any other items allocable to any period, profits, losses and any such other items shall be determined on a daily, monthly or other basis, as determined by the General Partner in its sole and absolute discretion using any method that is permissible under Section 706 of the Code and the Treasury Regulations thereunder. The Partners are aware of the income tax consequences of the allocations made by this Article V and hereby agree to be bound by the provisions of this Article V in reporting their shares of Partnership income and loss for income tax purposes. 10 SECTION 5.03. ADJUSTMENTS TO REFLECT CHANGES IN INTERESTS. Notwithstanding the foregoing, with respect to any Fiscal Year during which any Partner's percentage interest in the Partnership changes, whether by reason of the admission of a Partner, the withdrawal of a Partner, a non-pro rata contribution of capital to the Partnership or any other event described in Section 706(d)(1) of the Code and the Treasury Regulations issued thereunder, allocations of the items of income, gain, loss and deduction of the Partnership shall be adjusted appropriately to take into account the varying interests of the Partners during such Fiscal Year. The General Partner shall consult with the Partnership's accountants and other tax advisors and shall select the method of making such adjustments, which method shall be used consistently thereafter. SECTION 5.04. TAX ALLOCATIONS. For Federal, state and local income tax purposes, Partnership income, gain, loss, deduction or credit (or any item thereof) for each Fiscal Year shall be allocated to and among the Partners in order to reflect the allocations made pursuant to the provisions of this Article V for such Fiscal Year (other than allocations of items which are not deductible or are excluded from taxable income), taking into account any variation between the adjusted tax basis and book value of Partnership property in accordance with the principles of Section 704(c) of the Code. SECTION 5.05. QUALIFIED INCOME OFFSET. Notwithstanding any other provision hereof, if any Partner unexpectedly receives an adjustment, allocation or distribution described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5), and (6) which creates or increases a deficit in the Capital Account of such Partner (and, for this purpose, the existence of a deficit shall be determined by reducing the Partner's Capital Account by the items described in Treasury Regulation Section 1.704- 1(b)(2)(ii)(d)(4), (5), and (6)), the next available gross income of the Partnership shall be allocated to the Partners having such deficit balances, in proportion to the deficit balances, until such deficit balances are eliminated as quickly as possible. The provisions of this Section 5.05 are intended to constitute a "qualified income offset" within the meaning of Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and shall be interpreted and implemented as therein provided. SECTION 5.06. TAXPAYER INFORMATION. Any Person who holds Preferred Partner Interests as a nominee for another Person is required to furnish to the Partnership (a) the name, address and taxpayer identification number of the beneficial owner and the nominee; (b) information as to whether the beneficial owner is (i) a Person that is not a United States Person, (ii) a foreign government, an international organization or any wholly owned agency or instrumentality of either of the foregoing, or 11 (ii) a tax-exempt entity; (c) the amount and description of Preferred Partner Interests held, acquired or transferred for the beneficial owner; and (d) certain information including the dates of acquisitions and transfers, means of acquisitions and transfers, and acquisitions cost for purchases, as well as the amount of net proceeds from sales. ARTICLE VI - DISTRIBUTIONS -------------------------- SECTION 6.01. DISTRIBUTIONS. Preferred Partners shall receive periodic distributions, if any, in accordance with the applicable terms of the Preferred Partner Interests, as and when declared by the General Partner. Subject to the rights of the holders of the Preferred Partner Interests, the General Partner shall receive such distributions, if any, as may be declared from time to time by the General Partner. SECTION 6.02. CERTAIN DISTRIBUTIONS PROHIBITED. Notwithstanding anything in this Agreement to the contrary, all Partnership distributions shall be subject to the following limitations: (a) No distribution shall be made to any Partner if, and to the extent that, such distribution would not be permitted under Section 17-607 of the Delaware Act or other applicable law. (b) No distribution shall be made to any Partner to the extent that such distribution, if made, would create or increase a deficit balance in the Capital Account of such Partner. (c) Other than Liquidating Distributions, no distribution of Partnership property shall be made in kind. Notwithstanding anything in the Delaware Act or this Agreement to the contrary, in the event of a Liquidating Distribution, a Partner may be compelled in accordance with Section 12.01 to accept a distribution of cash or any other asset in kind from the Partnership even if the percentage of the asset distributed to it exceeds a percentage of that asset which is equal to the percentage in which such Partner shares in distributions from the Partnership. ARTICLE VII - ACCOUNTING MATTERS; BANKING ----------------------------------------- SECTION 7.01. FISCAL YEAR. The fiscal year ("Fiscal Year") of the Partnership shall be the calendar year, or such other year as is required by the Code. 12 SECTION 7.02. CERTAIN ACCOUNTING MATTERS. (a) At all times during the existence of the Partnership, the General Partner shall keep, or cause to be kept, full books of account, records and supporting documents, which shall reflect in reasonable detail, each transaction of the Partnership. The books of account shall be maintained on the accrual method of accounting, in accordance with generally accepted accounting principles, consistently applied. The Partnership shall use the accrual method of accounting for United States Federal income tax purposes. The books of account and the records of the Partnership shall be examined by and reported upon as of the end of each Fiscal Year by a firm of independent certified public accountants selected by the General Partner. (b) The General Partner shall cause to be prepared and delivered to each of the Partners, within 90 days after the end of each Fiscal Year of the Partnership, annual financial statements of the Partnership, including a balance sheet of the Partnership as of the end of such Fiscal Year and the related statements of income or loss and a statement indicating such Partner's share of each item of Partnership income, gain, loss, deduction or credit for such Fiscal Year for income tax purposes. (c) Notwithstanding anything in this Agreement to the contrary, the General Partner may, to the maximum extent permitted by applicable law, keep confidential from the Partners for such period of time as the General Partner deems reasonable any information which the General Partner reasonably believes to be in the nature of trade secrets or other information the disclosure of which the General Partner in good faith believes is not in the best interest of the Partnership or could damage the Partnership or which the Partnership or a third party is required by law or by an agreement to keep confidential. (d) The General Partner may make, or revoke, in its sole and absolute discretion, any elections for the Partnership that are permitted under tax or other applicable laws, including elections under Section 704(c) of the Code, provided that the General Partner shall not make any elections pursuant to Section 754 of the Code. SECTION 7.03. BANKING. The Partnership shall maintain one or more bank accounts in the name and for the sole benefit of the Partnership. The sole signatories for such accounts shall be designated by the General Partner. Reserve cash, cash held pending the expenditure of funds for the business of the Partnership or cash held pending a distribution to one or more of the Partners may be invested in any manner at the sole and absolute discretion of the General Partner. 13 SECTION 7.04. RIGHT TO RELY ON AUTHORITY OF GENERAL PARTNER. No Person that is not a Partner, in dealing with the General Partner, shall be required to determine such General Partner's authority to make any commitment or engage in any undertaking on behalf of the Partnership, or to determine any fact or circumstance bearing upon the existence of the authority of the General Partner. SECTION 7.05. TAX MATTERS PARTNER. The "tax matters partner," as defined in Section 6231 of the Code, of the Partnership shall be the General Partner (the "Tax Matters Partner"). The Tax Matters Partner shall receive no compensation from the Partnership for its services in that capacity. The Tax Matters Partner is authorized to employ such accountants, attorneys and agents as it, in its sole and absolute discretion deems necessary or appropriate. Any Person who serves as Tax Matters Partner shall not be liable to the Partnership or to any Partner for any action it takes or fails to take as Tax Matters Partner with respect to any administrative or judicial proceeding involving "partnership items" (as defined in Section 6231 of the Code) of the Partnership. ARTICLE VIII - MANAGEMENT ------------------------- SECTION 8.01. MANAGEMENT. (a) The General Partner shall have full and exclusive authority with respect to all matters concerning the conduct of the business and affairs of the Partnership, including (without limitation) the power, without the consent of the Limited Partners, to make all decisions it deems necessary, advisable, convenient or appropriate to accomplish the purposes of the Partnership. The acts of the General Partner acting alone shall serve to bind the Partnership and shall constitute the acts of the Partners. (b) The Limited Partners in their capacity as such shall not take part in the management, operation or control of the business of the Partnership or transact any business in the name of the Partnership. In addition, the Limited Partners, in their capacity as such, shall not be agents of the Partnership and shall not have the power to sign or bind the Partnership to any agreement or document. The Limited Partners shall have the right to vote only with respect to those matters specifically provided for in this Agreement. Notwithstanding anything herein to the contrary, the Preferred Partners may exercise all rights provided to them, if any, under the Indenture and the Guarantee. (c) The General Partner is authorized and directed to use its best efforts to conduct the affairs of, and to operate, the Partnership in such a way that the Partnership would not be deemed to be an "investment company" required to be registered 14 under the 1940 Act or taxed as a corporation for Federal income tax purposes and so that the Subordinated Debentures will be treated as indebtedness of PECO 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 or this Agreement that does not materially adversely affect the interests of holders of Preferred Partner Interests that the General Partner determines in its sole and absolute discretion to be necessary, advisable or desirable for such purposes. SECTION 8.02 FIDUCIARY DUTY. (a) To the extent that, at law or in equity, an Indemnified Person has duties (including fiduciary duties) and liabilities relating thereto to the Partnership or to any other Covered Person, an Indemnified Person acting under this Agreement shall not be liable to the Partnership or to any other Covered Person for its good faith reliance on the provisions of this Agreement or the advice of counsel selected by the Indemnified Person in good faith. The provisions of this Agreement, to the extent that they restrict the duties and liabilities of an Indemnified Person otherwise existing at law or in equity, are agreed by the parties hereto to replace such other duties and liabilities of such Indemnified Person. (b) Unless otherwise expressly provided herein, (i) whenever a conflict of interest exists or arises between Covered Persons, or (ii) whenever this Agreement or any other agreement contemplated herein or therein provides that an Indemnified Person shall act in a manner that is, or provides terms that are, fair and reasonable to the Partnership or any Partner, the Indemnified Person shall resolve such conflict of interest, taking such action or providing such terms, considering in each case the relative interest of each party (including its own interest) to such conflict, agreement, transaction or situation and the benefits and burdens relating to such interests, any customary or accepted industry practices, the advice of counsel selected by the Indemnified Person in good faith, and any applicable generally accepted accounting practices or principles. In the absence of bad faith by the Indemnified Person, the resolution, action or term so made, taken or provided by the Indemnified Person shall not constitute a breach of this Agreement or any other agreement contemplated herein or of any duty or obligation of the Indemnified Person at law or in equity or otherwise. (c) Whenever in this Agreement an Indemnified Person is permitted or required to make a decision (i) in its "discretion" or under a grant of similar authority or latitude, the Indemnified Person shall be entitled to consider only such interests and factors as it desires, including its own interests, 15 and shall have no duty or obligation to give any consideration to any interest of or factors affecting the Partnership or any other Person, or (ii) in its "good faith" or under another express standard, the Indemnified Person shall act under such express standard and shall not be subject to any other or different standard imposed by this Agreement or other applicable law. SECTION 8.03. SPECIFIC OBLIGATIONS OF THE GENERAL PARTNER. The General Partner hereby undertakes: (a) to devote to the affairs of the Partnership so much of its time as shall be necessary to carry on properly the Partnership's business and its responsibilities hereunder; (b) to cause the Partnership to do or refrain from doing such acts as shall be required by Delaware law in order to preserve the valid existence of the Partnership as a Delaware limited partnership and to preserve the limited liability of the Limited Partners; and (c) to pay directly all, and the Partnership shall not be obligated to pay, directly or indirectly, any, of the costs and expenses of the Partnership (including, without limitation, costs and expenses relating to the organization of, and offering of limited partner interests in, the Partnership and costs and expenses relating to the operation of the Partnership, including without limitation, costs and expenses of accountants, attorneys, statistical or bookkeeping services and computing or accounting equipment, paying agent(s), registrar(s), transfer agent(s), duplicating, travel and telephone and costs and expenses incurred in connection with the acquisition, financing, and disposition of Partnership assets). SECTION 8.04. POWERS OF THE GENERAL PARTNER. The General Partner shall have the right, power and authority, in the management of the business and affairs of the Partnership, to do or cause to be done any and all acts deemed by the General Partner to be necessary or appropriate to effectuate the business, purposes and objectives of the Partnership. Without limiting the generality of the foregoing, the General Partner shall have the power and authority without any further act, approval or vote of any Partner to: (a) issue Interests, including Preferred Partner Interests, and classes and series thereof, in accordance with this Agreement; (b) act as, or appoint another Person to act as, registrar and transfer agent for the Preferred Partner Interests; 16 (c) establish a record date with respect to all actions to be taken hereunder that require a record date to be established, including with respect to allocations, distributions and voting rights and declare distributions and make all other required payments on General Partner, Class A Limited Partner and Preferred Partner Interests as the Partnership's paying agent; (d) enter into and perform one or more Indentures and one or more Underwriting Agreements and use the proceeds from the issuance of the Interests to purchase the Subordinated Debentures, in each case on behalf of the Partnership; (e) bring and defend on behalf of the Partnership actions and proceedings at law or in equity before any court or governmental, administrative or other regulatory agency, body or commission or otherwise; (f) employ or otherwise engage employees and agents (who may be designated as officers with titles) and managers, contractors, advisors and consultants and pay reasonable compensation for such services; (g) redeem each series of Preferred Partner Interests (which shall constitute a return of capital and not a distribution of income) in accordance with its terms and/or to the extent that the related series of Subordinated Debentures is redeemed or reaches maturity; and (h) execute all documents or instruments, perform all duties and powers and do all things for and on behalf of the Partnership in all matters necessary, convenient, advisable or incidental to the foregoing. The expression of any power or authority of the General Partner in this Agreement shall not in any way limit or exclude any other power or authority which is not specifically or expressly set forth in, or precluded by, this Agreement. SECTION 8.05. INDEPENDENT AFFAIRS. Any Partner or any Affiliate thereof may engage in or possess an interest in any other business venture of whatever nature and description, independently or with others, wherever located and whether or not comparable to or in competition with the Partnership or the General Partner, or any Affiliate thereof, and neither the Partnership nor any of the Partners shall, by virtue of this Agreement, have any rights with respect to, or interests in, such independent ventures or the income, profits or losses derived therefrom. No Partner or Affiliate thereof shall be obligated to present any particular investment opportunity to the Partnership even if such opportunity is of a character that, if presented to the Partnership, could be taken by the Partnership, and any 17 Partner or Affiliate thereof shall have the right to take for its own account (individually or as a partner or fiduciary) or to recommend to others any such particular investment opportunity. SECTION 8.06. MEETINGS OF THE PARTNERS. Meetings of the Partners of any class or series or of all classes or series of the Partnership's Interests may be called at any time by the Partners holding 10% in liquidation preference of such class of series of Interests, or of all classes or series of Interests, as the case may be, or as provided in any Action establishing a series of Preferred Partner Interests. Except to the extent otherwise provided in any such Action, the following provisions shall apply to meetings of Partners. (a) Notice of any meeting shall be given to all Partners not less than ten (10) business days nor more than sixty (60) days prior to the date of such meeting. Partners may vote in person or by proxy at such meeting. Whenever a vote, consent or approval of Partners is permitted or required under this Agreement, such vote, consent or approval may be given at a meeting of Partners or by written consent. (b) Each Partner may authorize any Person to act for it by proxy on all matters in which a Partner is entitled to participate, including waiving notice of any meeting, or voting or participating at a meeting. Every proxy must be signed by the Partner or its attorney-in-fact. No proxy shall be valid after the expiration of eleven (11) months from the date thereof unless otherwise provided in the proxy. Every proxy shall be revocable at the pleasure of the Partner executing it. (c) Each meeting of Partners shall be conducted by the General Partner or by such other Person that the General Partner may designate. (d) Subject to the provisions of this Section 8.06, the General Partner, in its sole and absolute discretion, shall establish all other provisions relating to meetings of Partners, including notice of the time, place or purpose of any meeting at which any matter is to be voted on by any Partners, waiver of any such notice, action by consent without a meeting, the establishment of a record date, quorum requirements, voting in person or by proxy or any other matter with respect to the exercise of any such right to vote; provided, however, that unless the General Partner has established a lower percentage, a majority of the Partners entitled to vote thereat shall constitute a quorum at all meetings of the Partners. SECTION 8.07. NET WORTH OF THE GENERAL PARTNER. By execution of this Agreement, the General Partner represents and covenants that (a) as of the date hereof and at all times during 18 the existence of the Partnership it will maintain a fair market value net worth of at least ten percent (10%) of the total contributions less redemptions to the Partnership, throughout the life of the Partnership, in accordance with Rev. Proc. 89-12, 1989-1 C.B. 798, or such other amount as may be required from time to time pursuant to any amendment, modification or successor to Rev. Proc. 89-12 (such net worth being computed excluding any interest in, or receivable due from, the Partnership and including any income tax liabilities that would become due by the General Partner upon disposition by the General Partner of all assets included in determining such net worth), and (b) it will not make any voluntary dispositions of assets which would reduce the net worth below the amount described in (a). SECTION 8.08. RESTRICTIONS ON GENERAL PARTNER. So long as any series of Subordinated Debentures are held by the Partnership, 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 Trustee, or executing any trust or power conferred on the Trustee with respect to such series, (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 of a series of 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 not less than 66 2/3% of the aggregate stated liquidation preference of all series of Preferred Partner Interests 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 Partner Interests affected thereby. The General Partner shall not revoke any action previously authorized or approved by a vote of any series of Preferred Partner Interests. The General Partner shall notify all holders of such Preferred Partner Interests of any notice of default received from the Trustee with respect to such series of Subordinated Debentures. ARTICLE IX - LIABILITY AND INDEMNIFICATION ------------------------------------------ SECTION 9.01. PARTNERSHIP EXPENSES AND LIABILITIES. (a) Except as provided in the Delaware Act, the General Partner shall have the liabilities of a partner in a partnership without limited partners to Persons other than the Partnership and the other Partners. 19 (b) Except as otherwise expressly required by law, a Limited Partner, in its capacity as such, shall have no liability in excess of (i) the amount of its capital contributions to the Partnership, (ii) its share of any assets and undistributed profits of the Partnership, and (iii) the amount of any distributions wrongfully distributed to it. SECTION 9.02. NO LIABILITY. Except as otherwise expressly provided in Section 9.01(a) or by the Delaware Act, no Covered Person shall be liable to the Partnership or to any other Partner for any act or omission performed or omitted pursuant to the authority granted to it hereunder or by law, or from a loss resulting from any mistake or error in judgment on its part or from the negligence, dishonesty, fraud or bad faith of any employee, independent contractor, broker or other agent of the Partnership, provided that such act or omission, such mistake or error in judgment or the selection of such employee, independent contractor, broker or other agent, as the case may be, did not result from the willful misconduct, gross negligence or fraud of such Covered Person. Any Covered Person shall be fully protected in relying in good faith upon the records of the Partnership and upon such information, opinions, reports or statements presented to the Partnership by any Person as to matters the Covered Person reasonably believes are within such other Person's professional or expert competence and who has been selected with reasonable care by or on behalf of the Partnership, including information, opinions, reports or statements as to the value and amount of the assets, liabilities, profits, losses, or any other facts pertinent to the existence and amount of assets from which distributions to Partners might properly be paid. SECTION 9.03. INDEMNIFICATION. To the fullest extent permitted by applicable law, except as set forth in Section 8.03(c), an Indemnified Person shall be entitled to indemnification from the Partnership for 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 the Partnership and in a manner reasonably believed to be within the scope of authority conferred on such Indemnified Person by this Agreement, except that no Indemnified Person shall be entitled to be indemnified in respect of any loss, damage or claim incurred by such Indemnified Person by reason of willful misconduct, gross negligence or fraud with respect to such acts or omissions; provided, however, that any indemnity under this Section 9.03 shall be provided out of and to the extent of Partnership assets only, and except as otherwise provided by the Delaware Act, no Covered Person 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 20 by the Partnership prior to the final disposition of such claim, demand, action, suit or proceeding upon receipt by the Partnership of 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 as authorized in this Section 9.03. ARTICLE X - WITHDRAWAL; TRANSFER RESTRICTIONS --------------------------------------------- SECTION 10.01. TRANSFER BY GENERAL PARTNER; ADMISSION OF SUBSTITUTED GENERAL PARTNER. The General Partner may not Transfer its Interest (in whole or in part) to any Person without the consent of all other Partners, provided that the General Partner may, without the consent of any Partner, Transfer its Interest to PECO or any direct or indirect wholly owned subsidiary of PECO. Notwithstanding anything else herein, the General Partner may merge with or into another Person, may permit another Person to merge with or into the General Partner and may Transfer all or substantially all of its assets to another Person if the General Partner is the survivor of such merger or the Person into which the General Partner is merged or to which the General Partner's assets are transferred is a Person organized under the laws of the United States or any state thereof or the District of Columbia and the General Partner shall have the right to admit the assignee or transferee of its Interest which is permitted hereunder as a substituted or additional general partner of the Partnership, without the consent of the Limited Partners. Any such assignee or transferee of all or a part of the Interest of a General Partner shall be deemed admitted to the Partnership as a general partner of the Partnership immediately prior to the effective date of such Transfer, and such additional or successor General Partner is hereby authorized to and shall continue the business of the Partnership without dissolution. SECTION 10.02. WITHDRAWAL OF LIMITED PARTNERS. A Preferred Partner may not withdraw from the Partnership prior to the dissolution and winding up of the Partnership except upon the assignment of its Preferred Partner Interests (including any redemption, repurchase, exchange or other acquisition by the Partnership), as the case may be, in accordance with the provisions of this Agreement. Any Person who has been assigned one or more Interests shall provide the Partnership with a completed Form W-8 or such other documents or information as are requested by the Partnership for tax reporting purposes. A withdrawing Preferred Partner shall not be entitled to receive any distribution and shall not otherwise be entitled to receive the fair value of its Preferred Partner Interest except as otherwise expressly provided in this Agreement. 21 ARTICLE XI - DISSOLUTION OF THE PARTNERSHIP ------------------------------------------- SECTION 11.01. NO DISSOLUTION. The Partnership shall not be dissolved by the admission of Partners in accordance with the terms of this Agreement. The death, withdrawal, incompetency, bankruptcy, dissolution or other cessation to exist as a legal entity of a Limited Partner, or the occurrence of any other event that terminates the Interest of a Limited Partner in the Partnership, shall not in and of itself cause the Partnership to be dissolved and its affairs wound up. To the fullest extent permitted by applicable law, upon the occurrence of any such event, the General Partner, subject to the terms of this Agreement, may, without any further act, vote or approval of any Partner, admit any Person to the Partnership as an additional or substitute Limited Partner, which admission shall be effective as of the date of the occurrence of such event, and the business of the Partnership shall be continued without dissolution. SECTION 11.02. EVENTS CAUSING DISSOLUTION. The Partnership shall be dissolved and its affairs shall be wound up upon the occurrence of any of the following events: (a) The expiration of the term of the Partnership, as provided in Section 2.04 hereof; (b) The withdrawal, removal or bankruptcy of the General Partner or Transfer (other than a grant of a security interest) by the General Partner of its entire Interest in the Partnership when the assignee is not admitted to the Partnership as an additional or successor General Partner in accordance with Section 10.01 hereof, or the occurrence of any other event that results in the General Partner ceasing to be a general partner of the Partnership under the Delaware Act, provided, the Partnership shall not be dissolved and required to be wound up in connection with any of the events specified in this clause (b) if (i) at the time of the occurrence of such event there is at least one remaining general partner of the Partnership who is hereby authorized to, agrees to and does carry on the business of the Partnership, or (ii) within ninety (90) days after the occurrence of such event, a majority in Interest of the remaining Partners (or such greater percentage in Interest as is required by the Delaware Act) agree in writing to continue the business of the Partnership and to the appointment, effective as of the date of such event, if required, of one or more additional general partners of the Partnership; (c) The entry of a decree of judicial dissolution under the Delaware Act; or (d) the written consent of the General Partner and all of the Preferred Partners. 22 SECTION 11.03. NOTICE OF DISSOLUTION. Upon the dissolution of the Partnership, the General Partner shall promptly notify the Partners of such dissolution. ARTICLE XII - LIQUIDATION OF PARTNERSHIP INTERESTS -------------------------------------------------- SECTION 12.01. LIQUIDATION. Upon dissolution of the Partnership, the General Partner, or, in the event that the dissolution is caused by an event described in Section 11.02(b) and there is no other General Partner, a Person or Persons who may be approved by Preferred Partners holding not less than a majority in liquidation preference of the Preferred Partner Interests as liquidating trustee the "Liquidating Trustee", shall immediately commence to wind up the Partnership's affairs; provided, however, that a reasonable time shall be allowed for the orderly liquidation of the assets of the Partnership and the satisfaction of liabilities to creditors so as to enable the Partners to minimize the normal losses attendant upon a liquidation. The Preferred Partners shall continue to share profits and losses during liquidation in the same proportions, as specified in Articles V and VI hereof, as before liquidation. The proceeds of liquidation shall be distributed, as realized, in the following order and priority: (a) to creditors of the Partnership, including Preferred Partners who are creditors, to the extent otherwise permitted by law, in satisfaction of the liabilities of the Partnership (whether by payment or the making of reasonable provision for payment thereof), other than liabilities for which reasonable provision for payment has been made and liabilities for distributions to Partners; (b) to the holders of Preferred Partner Interests of each series then outstanding in accordance with the terms of the Action or Actions for such Series; and (c) to all Partners in accordance with their respective positive Capital Account balances, after giving effect to all contributions, distributions and allocations for all periods. SECTION 12.02. TERMINATION. The Partnership shall terminate when all of the assets of the Partnership have been distributed in the manner provided for in this Article XII, and the Certificate of Limited Partnership shall have been cancelled in the manner required by the Delaware Act. SECTION 12.03. DUTY OF CARE. The General Partner or the Liquidating Trustee, as the case may be, shall not be liable to the Partnership or any Partner for any loss attributable to 23 any act or omission of the General Partner taken in good faith in connection with the liquidation of the Partnership and distribution of its assets in belief that such course of conduct was in the best interest of the Partnership. The General Partner or the Liquidating Trustee, as the case may be, may consult with counsel and accountants with respect to liquidating the Partnership and distributing its assets and shall be justified in acting or omitting to act in accordance with the written opinion of such counsel or accountants, provided they shall have been selected with reasonable care. SECTION 12.04. NO LIABILITY FOR RETURN OF CAPITAL. The General Partner and its respective officers, directors, members, shareholders, employees, representatives, agents, partners and Affiliates shall not be personally liable for the return of the contributions of any Partner to the Partnership. No Partner shall be obligated to restore to the Partnership any amount with respect to a negative Capital Account. ARTICLE XIII - PREFERRED PARTNER INTERESTS ------------------------------------------ SECTION 13.01. PREFERRED PARTNER INTERESTS. (a) The aggregate number of Preferred Partner Interests which the Partnership shall have authority to issue is unlimited. Each series of Preferred Partner Interests shall rank equally and all Preferred Partner Interests shall rank senior to all other Interests in respect of the right to receive distributions and the right to receive payments out of the assets of the Partnership upon voluntary or involuntary dissolution and winding up of the Partnership. The issuance of any Interests ranking senior to the Preferred Partner Interests shall be deemed to materially adversely affect the rights of the Preferred Partner Interests under this Agreement. (b) The General Partner on behalf of the Partnership is authorized to issue Preferred Partner Interests, in one or more series, having such designations, rights, privileges, restrictions, and other terms and provisions, whether in regard to distributions, return of capital or otherwise, as may from time to time be established in a written action or actions (each, an "Action") of the General Partner providing for the issue of such series. In connection with the foregoing, the General Partner is expressly authorized, prior to issuance, to set forth in an Action or Actions providing for the issue of such series, the following: (i) The distinctive designation of such series which shall distinguish it from other series; 24 (ii) The number of Preferred Partner Interests included in such series, which number may be increased or decreased from time to time unless otherwise provided by the General Partner in creating the series; (iii) The distribution rate (or method of determining such rate) for Preferred Partner Interests of such series and the first date upon which such distribution shall be payable; (iv) The amount or amounts which shall be paid out of the assets of the Partnership to the holders of such series of Preferred Partner Interests upon voluntary or involuntary dissolution and winding up of the Partnership; (v) The price or prices at which (the "Redemption Price"), the period or periods within which and the terms and conditions upon which the Preferred Partner Interests of such series may be redeemed or purchased, in whole or in part, at the option of the Partnership; (vi) The obligation of the Partnership to purchase or redeem Preferred Partner Interests of such series pursuant to a sinking fund or otherwise and the price or prices at which, the period or periods within which and the terms and conditions upon which the Preferred Partner Interests of such series shall be redeemed, in whole or in part, pursuant to such obligation; (vii) The period or periods within which and the terms and conditions, if any, including the price or prices or the rate or rates of conversion or exchange and the terms and conditions of any adjustments thereof, upon which the Preferred Partner Interests of such series shall be convertible or exchangeable at the option of the Preferred Partner, or the Partnership, into any other Interests or securities or other property or cash or into any other series of Preferred Partner Interests; (viii) The voting rights, if any, of the Preferred Partner Interests of such series in addition to those required by law or set forth herein, and any requirement for the approval by the Preferred Partner Interest, or of the Preferred Partner Interests of one or more series, or of both, as a condition to specified Action or amendments to this Agreement; (ix) The additional amounts, if any, which the Partnership will pay as a distribution as necessary in order that the net amounts received by the Preferred Partners who hold such series of Preferred Partner Interests after 25 withholding or deduction on account of certain taxes, duties, assessments or governmental charges will equal the amount which would have been receivable in respect of such Preferred Partner Interests in the absence of such withholding or deduction ("Additional Amounts"); and (x) Any other relative rights, powers, preferences or limitations of the Preferred Partner Interests of the series not inconsistent with this Agreement or with applicable law. In connection with the foregoing and without limiting the generality thereof, the General Partner is hereby expressly authorized, without the vote or approval of any other Partner, to take any Action to create under the provisions of this Agreement a series of Preferred Partner Interests that was not previously outstanding. Without the vote or approval of any other Partner, the General Partner may execute, swear to, acknowledge, deliver, file and record whatever documents may be required in connection with the issue from time to time of Preferred Partner Interests in one or more series as shall be necessary, convenient or desirable to reflect the issue of such series. The General Partner shall do all things it deems to be appropriate or necessary to comply with the Delaware Act and is authorized and directed to do all things it deems to be necessary or permissible in connection with any future issuance, including compliance with any statute, rule, regulation or guideline of any Federal, state or other governmental agency or any securities exchange. Any Action or Actions taken by the General Partner pursuant to the provisions of this paragraph (b) shall be deemed an amendment and supplement to and part of this Agreement. (c) Except as otherwise provided in this Agreement or in any Action in respect of any series of the Preferred Partner Interests and as otherwise required by law, all rights to the management and control of the Partnership shall be vested exclusively in the General Partner. (d) No holder of Interests 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 issue of Interests of any class or series whatsoever, or of securities convertible into any Interests of any class or series whatsoever, whether now or hereafter authorized and whether issued for cash or other consideration or by way of distribution. Any Person acquiring Preferred Partner Interests shall be admitted to the Partnership as a Preferred Partner upon compliance with Section 2.06. 26 SECTION 13.02. TERMS OF ALL PREFERRED PARTNER INTERESTS. Notwithstanding anything else in any Action to the contrary, all Preferred Partner Interests of the Partnership shall have the following voting rights, preferences, participating, optional and other special rights and the qualifications, limitations or restrictions of, and other matters relating to, the Preferred Partner Interests as set forth below in this Section 13.02. (a) Distributions. (i) The Preferred Partners shall be entitled to receive, when, as and if declared by the General Partner out of funds held by the Partnership to the extent that the Partnership has cash on hand sufficient to permit such payments and funds legally available therefor, cumulative cash distributions at a rate per annum established by the General Partner, calculated on the basis of a 360-day year consisting of twelve (12) months of thirty (30) days each, and for any period shorter than a full monthly distribution period, distributions will be computed on the basis of the actual number of days elapsed in such period, and payable in United States dollars monthly in arrears on the last day of each calendar month of each year. In the event that any date on which distributions are payable on the Preferred Partner Interests is not a Business Day, then payment of the distribution 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. Such distributions will accrue and be cumulative from the original date of issue whether or not they have been declared and whether or not there are profits, surplus or other funds of the Partnership legally available for the payment of distributions, or whether they are deferred. (ii) If distributions have not been paid in full on any series of Preferred Partner Interests, the Partnership may not: (A) pay any distributions on any other series of Preferred Partner Interests, unless the amount of any distributions paid on any Preferred Partner Interests is paid on all Preferred Partner Interests then outstanding on a pro rata basis, on the date such distributions are paid, so that 27 (1) (x) the aggregate amount of distributions paid on such series of Preferred Partner Interests bears to (y) the aggregate amount of distributions paid on all such Preferred Partner Interests outstanding the same ratio as (2) (x) the aggregate of all accumulated arrears of unpaid distributions in respect of such series of Preferred Partner Interests bears to (y) the aggregate of all accumulated arrears of unpaid distributions in respect of such Preferred Partner Interests outstanding; (B) pay any distribution on any general partner Interest; or (C) redeem, purchase or otherwise acquire any other Preferred Partner Interests or any general partner Interest; until, in each case, such time as all accumulated and unpaid distributions on all series of Preferred Partner Interests shall have been paid in full for all distribution periods terminating on or prior to, in the case of clauses (A) and (B), such payment and, in the case of clause (C), the date of such redemption, purchase or acquisition. (b) Redemption Procedures. (i) Notice of any redemption (a "Notice of Redemption") of the Preferred Partner Interests will be given by the Partnership by mail or delivery to each record holder of Preferred Partner Interests to be redeemed not fewer than thirty (30) nor more than sixty (60) days prior to the date fixed for redemption thereof. For purposes of the calculation of the date of redemption and the dates on which notices are given pursuant to this paragraph (b)(i), 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 Preferred Partner Interests. Each Notice of Redemption shall be addressed to the record holders of the Preferred Partner Interests at the address of the holder appearing in the books and records of the Partnership. No defect 28 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. (ii) The Partnership may not redeem any Preferred Partner Interests unless all accumulated and unpaid distributions have been paid on all Preferred Partner Interests for all monthly distribution periods terminating on or prior to the date of redemption. In the case of a partial redemption resulting from a requirement that the Partnership pay Additional Amounts or withhold or deduct certain amounts, the Partnership will (A) cause the global certificates representing all of such series of Preferred Partner Interests to be withdrawn from The Depository Trust Company or its successor securities depository, (B) issue certificates in definitive form representing such series of Preferred Partner Interests, and (C) redeem the series or portion of the series of Preferred Partner Interests subject to such requirement to withhold or deduct Additional Amounts. Subject to applicable law, PECO or its subsidiaries may at any time and from time to time purchase outstanding Preferred Partner Interests by tender, in the open market or by private agreement. If a partial redemption of outstanding Preferred Partner Interests would result in a delisting of a series of Preferred Partner Interests from any national securities exchange on which the series of Preferred Partner Interests is then listed, the Partnership may then only redeem the series of Preferred Partner Interests in whole. (iii) If Notice of Redemption shall have been given and payment shall have been made by the Partnership to the record holders of the Preferred Partner Interests, then upon the date of such payment, all rights of the Preferred Partner Interest Owners or holders of such Preferred Partner Interests so called for redemption will cease, except the right of the holders of such securities to receive the Redemption Price, but without interest. In the event that any date fixed for redemption of Preferred Partner Interests is not a Business Day, then payment of the Redemption Price payable on such date will be made on the next succeeding day which is a Business Day (and without any interest or other 29 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). In the event that payment of the Redemption Price in respect of Preferred Partner Interests is not made either by the Partnership or by PECO pursuant to the Guarantee, distributions on such Preferred Partner Interests will continue to accrue at the then applicable rate, from the original redemption date to the date of payment, in which case the actual payment date will be considered the date fixed for redemption for purposes of calculating the Redemption Price. (c) Liquidation Distribution. If, upon any liquidation, the Liquidation Distribution on any series of Preferred Partner Interests can be paid only in part because the Partnership has insufficient assets available to pay in full the aggregate Liquidation Distribution on all Preferred Partner Interests, then the amounts payable directly by the Partnership on such series of Preferred Partner Interests and on all other series of Preferred Partner Interests shall be paid on a pro rata basis, so that (i) (1) the aggregate amount paid in respect of the Liquidation Distribution bears to (2) the aggregate amount paid as liquidation distributions on all other Preferred Partner Interests the same ratio as (ii) (1) the aggregate Liquidation Distribution bears to (2) the aggregate maximum liquidation distributions on all other Preferred Partner Interests. (d) Voting Rights. The Limited Partners shall not have any right to vote on matters concerning the Partnership except as specifically set forth in this Agreement, in the Guarantee or as otherwise required by law. If (i) the Partnership fails to pay distributions in full on any series of Preferred Partner Interests for eighteen (18) consecutive months; (ii) a default under the Indenture occurs and is continuing; or (iii) PECO is in default on any of its payment or other obligations under the Guarantee, then the holders of the Preferred Partner Interests, acting as a single class, will be entitled, by a vote of the majority of the aggregate stated liquidation preference of outstanding Preferred Partner Interests, to appoint and authorize a special representative (the 30 "Special Representative") to enforce the Partnership's creditor rights under the Subordinated Debentures and the Indenture against PECO and enforce the obligations undertaken by PECO under the Guarantee, including, after failure to pay distributions for 60 consecutive monthly distribution periods, to declare and pay distributions on such series of Preferred Partner Interests, the General Partner agreeing to execute and deliver such documents as may be necessary, appropriate or convenient for the Special Representative to enforce such rights and obligations. Notwithstanding anything else herein, the Special Representative shall not be admitted as a partner of the Partnership and shall have no liability for the debts, obligations or liabilities of the Partnership. In furtherance of the foregoing, and without limiting the powers of any Special Representative so appointed and for the avoidance of any doubt concerning the powers of the Special Representative, any Special Representative, in its own name and as trustee of an express trust, may institute a proceeding, including, without limitation, any suit in equity, an action at law or other judicial or administrative proceeding, to enforce the Partnership's creditor rights directly against PECO or any other obligor in connection with such obligations to the same extent as the Partnership and on behalf of the Partnership, and may pursue such proceeding to judgment or final decree, and enforce the same against PECO or any other obligor in connection with such obligations and collect, out of the property, wherever situated, of PECO or any such other obligor upon such obligations, the monies adjudged or decreed to be payable in the manner provided by law. For purposes of determining whether the Partnership has failed to pay distributions in full for eighteen (18) consecutive monthly distribution periods, distributions shall be deemed to remain in arrears, notwithstanding any payments in respect thereof, until full cumulative distributions have been or contemporaneously are declared and 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 thirty (30) days after such right to appoint a Special Representative arises, 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 Preferred Partners who hold 10% of the aggregate stated liquidation preference of the outstanding Preferred Partner Interests will be entitled to convene such meeting. The provisions of this Agreement relating to the convening and conduct of meetings of Partners will apply with respect to any such meeting. Any Special Representative so appointed shall cease to act in such capacity immediately if the Partnership (or PECO pursuant to the Guarantee) shall have paid 31 in full all accumulated and unpaid distributions on the Preferred Partner Interests or such default or breach by PECO, as the case may be, shall have been cured. Notwithstanding the appointment of any such Special Representative, PECO retains all rights under the Indenture, including the right to extend the interest payment period on the Subordinated Debentures. If any proposed amendment of this Agreement provides for, or the General Partner otherwise proposes to effect (pursuant to an Action or otherwise), any action which would materially adversely affect the powers, preferences or special rights of any series of Preferred Partner Interests, then holders of such series of outstanding Preferred Partner Interests 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 which would equally adversely affect the powers, preferences or special rights of any other series of Preferred Partner Interests, all holders of such series of Preferred Partner Interests, shall vote together as a class on such amendment or action of the General Partner (but not on any other amendment or action), and such amendment or action shall not be effective except with the approval of Preferred Partners holding not less than 66 2/3% of the aggregate stated liquidation preference of such outstanding series of Preferred Partner Interests. Except as otherwise provided under Section 11.02 or the Delaware Act, the Partnership will be dissolved and wound up only with the consent of the holders of all outstanding Preferred Partner Interests. The powers, preferences or special rights of any Preferred Partner Interests will be deemed not to be adversely affected by the creation or issue of, and no vote will be required for the creation or issuance of, any additional series of Preferred Partner Interests or additional general partner Interests. Any required approval of Preferred Partner Interests may be given at a separate meeting of such holders convened for such purpose, at a meeting of the holders of all series of Preferred Partner Interests or pursuant to written consent. The Partnership will cause a notice of any meeting at which holders of any Preferred Partner Interests 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 Preferred Partner Interests. Each such notice will include a statement setting forth (a) the date of such meeting or the date by which such action is to be taken, (b) 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 (c) instructions for the delivery of proxies or consents. 32 No vote or consent of the holders of the Preferred Partner Interests will be required for the Partnership to redeem and cancel the Preferred Partner Interests in accordance with this Agreement. Notwithstanding that holders of Preferred Partner Interests are entitled to vote or consent under any of the circumstances described above, any of the Preferred Partner Interests that are owned by PECO or any entity owned more than 50% by PECO, either directly or indirectly, shall not be entitled to vote or consent and shall, for the purposes of such vote or consent, be treated as if they were not outstanding. (e) Mergers. The Partnership shall not consolidate, amalgamate, merge with or into, or be replaced by, or convey, transfer or lease its properties and assets substantially as an entirety to any corporation or other entity, except with the approval of the General Partner and the holders of 66 2/3% in aggregate stated liquidation preference of such outstanding Preferred Partner Interests or as otherwise described below. The General Partner may, without the consent of the holders of the Preferred Partner Interests, cause the Partnership 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, limited partnership, 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 (1) expressly assumes all of the obligations of the Partnership under the Preferred Partner Interests and the other obligations of the Partnership or (2) substitutes for the Preferred Partner Interests other securities having substantially the same terms as the Preferred Partner Interests (the "Successor Securities") so long as the Successor Securities rank, as regards participation in the profits or assets of the successor entity, at least as high as the Preferred Partner Interests rank, as regards participation in the profits or assets of the Partnership, (ii) PECO confirms its obligations under the Guarantee with regard to the Successor Securities, if any are issued, (iii) such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease does not cause the Preferred Partner Interests or Successor Securities to be delisted by any national securities exchange or other organization on which the Preferred Partner Interests are then listed, (iv) such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease does not cause the Preferred Partner Interests or Successor Securities to be downgraded by any "nationally recognized statistical rating organization", as that term is defined by the Commission for purposes of Rule 436(g)(2) under the Securities Act, (v) such merger, consolidation, amalgamation, replacement, conveyance, 33 transfer or lease does not adversely affect the powers, preferences and special rights of holders of Preferred Partner Interests or Successor Securities in any material respect, (vi) such successor entity has a purpose substantially identical to that of the Partnership and (vii) prior to such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease PECO has received an opinion of counsel (which may be regular counsel to PECO or an Affiliate, but not an employee thereof) experienced in such matters to the effect that (1) holders of outstanding Preferred Partner Interests will not recognize any gain or loss for Federal income tax proposes as a result of the merger, consolidation, amalgamation, replacement, conveyance, transfer or lease, (2) such successor entity will be treated as a partnership for Federal income tax purposes, (3) following such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease, PECO and such successor entity will be in compliance with the 1940 Act without registering thereunder as an "investment company," and (4) such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease will not adversely affect the limited liability of holders of Preferred Partner Interests or Successor Securities. ARTICLE XIV - TRANSFERS ----------------------- SECTION 14.01. TRANSFERS OF PREFERRED PARTNER INTERESTS. Preferred Partner Interests may be freely transferred by a Preferred Partner. No Interest shall be transferred, in whole or in part, except in accordance with the terms and conditions set forth in this Agreement. Any transfer or purported transfer of any Interest not made in accordance with this Agreement shall be null and void. SECTION 14.02. TRANSFER OF CERTIFICATES. The General Partner shall provide for the registration of Certificates. Upon surrender for registration of transfer of any Certificate, the General Partner shall cause one or more new Certificates to be issued in the name of the designated transferee or transferees. Every Certificate surrendered for registration of transfer shall be accompanied by a written instrument of transfer and agreement to be bound by the terms of this Agreement in form satisfactory to the General Partner duly executed by the Preferred Partner or his attorney duly authorized in writing. Each Certificate surrendered for registration of transfer shall be cancelled by the General Partner. A transferee of a Certificate shall provide the Partnership with a completed Form W-8 or such other documents or information as are requested by the Partnership for tax reporting purposes and thereafter shall be admitted to the Partnership as a Preferred Partner and shall be entitled to the rights and subject to the obligations of a Preferred Partner hereunder upon the receipt by such transferee of a Certificate. 34 The transferor of a Certificate shall cease to be a limited partner of the Partnership at the time that the transferee of the Certificate is admitted to the Partnership as a Preferred Partner in accordance with this Section 14.02. SECTION 14.03. PERSONS DEEMED PREFERRED PARTNERS. The Partnership may treat the Person in whose name any Certificate shall be registered on the books and records of the Partnership as the Preferred Partner and the sole holder of such Certificate for purposes of receiving distributions and for all other purposes whatsoever and, accordingly, shall not be bound to recognize any equitable or other claims to or interest in such Certificate on the part of any other Person, whether or not the Partnership shall have actual or other notice thereof. SECTION 14.04. BOOK ENTRY INTERESTS. The Certificates, on original issuance, will be issued in the form of a typewritten Certificate or Certificates representing the Book Entry Interests to be delivered to The Depository Trust Company, the initial Clearing Agency, by, or on behalf of, the Partnership. Such Certificates shall initially be registered on the books and records of the Partnership in the name of Cede & Co., the nominee of the initial Clearing Agency, and no Preferred Partner Interest Owner will receive a definitive Certificate representing such Preferred Partner Interest Owner's interests in such Certificate, except as provided in Section 14.06. Unless and until definitive, fully registered Certificates (the "Definitive Certificates") have been issued to the Preferred Partner Interest Owners pursuant to Section 14.06: (a) The provisions of this Section shall be in full force and effect; (b) The Partnership and the General Partner shall be entitled to deal with the Clearing Agency for all purposes of this Agreement (including the payment of distributions on the Certificates and receiving approvals, votes or consents hereunder) as the Preferred Partner and the sole holder of the Certificates and shall have no obligations to the Preferred Partner Interest Owners; (c) The rights of the Preferred Partner Interest Owners shall be exercised only through the Clearing Agency and shall be limited to those established by law and agreements between such Preferred Partner Interest Owners and the Clearing Agency and/or the Clearing Agency Participants. Unless or until the Definitive Certificates are issued pursuant to Section 14.06, the initial Clearing Agency will make book entry transfers among the Clearing Agency Participants and receive and transmit payments of distributions on the Certificates to such Clearing Agency Participants; 35 (d) To the extent that the provisions of this Section conflict with any other provisions of this Agreement, the provisions of this Section shall control; and (e) Whenever this Agreement requires or permits actions to be taken based upon approvals, votes or consents of a percentage of the Preferred Partners, the Clearing Agency shall be deemed to represent such percentage only to the extent that it has received instructions to such effect from the Preferred Partner Interest Owners and/or Clearing Agency Participants owning or representing, respectively, such required percentage of the beneficial interests in the Certificates and has delivered such instructions to the General Partner. SECTION 14.05. NOTICES TO CLEARING AGENCY. Whenever a notice or other communication to the Preferred Partners is required under this Agreement, unless and until Definitive Certificates shall have been issued pursuant to Section 14.06, the General Partner shall give all such notices and communications specified herein to be given to the Preferred Partners to the Clearing Agency, and shall have no obligations to the Preferred Partner Interest Owners. SECTION 14.06. DEFINITIVE CERTIFICATES. If (i) the Clearing Agency elects to discontinue its services as securities depository and gives reasonable notice to the Partnership, or (ii) the Partnership elects to terminate the book entry system through the Clearing Agency, then the Definitive Certificates shall be prepared by the Partnership. Upon surrender of the typewritten Certificate or Certificates representing the Book Entry Interests by the Clearing Agency, accompanied by registration instructions, the General Partner shall cause the Definitive Certificates to be delivered to the Preferred Partner Interest Owners in accordance with the instructions of the Clearing Agency. The General Partner shall not be liable for any delay in delivery of such instructions and may conclusively rely on, and shall be protected in relying on, such instructions. Any Person receiving a Definitive Certificate in accordance with this Article XIV shall be admitted to the Partnership as a Preferred Partner upon receipt of such Definitive Certificate. The Clearing Agency or the nominee of the Clearing Agency, as the case may be, shall cease to be a Limited Partner of the Partnership under this Section 14.06 at the time that at least one additional Person is admitted to the Partnership as a Preferred Partner in accordance with this Section 14.06. The Definitive Certificates shall be printed, lithographed or engraved or may be produced in any other manner as is reasonably acceptable to the General Partner, as evidenced by its execution thereof. The General Partner will appoint a registrar, transfer agent and paying agent for the Preferred Partner Interests. Registration of transfers of Preferred Partner Interests will be 36 effected without charge by or on behalf of the Partnership, but upon payment of any tax or other governmental charges which may be imposed in relation to it. The Partnership will not be required to register or cause to be registered the transfer of Preferred Partner Interests after such Preferred Partner Interests have been called for redemption. ARTICLE XV - GENERAL -------------------- SECTION 15.01. POWER OF ATTORNEY. (a) The Class A Limited Partner and each Preferred Partner constitutes and appoints the General Partner and the Liquidating Trustee as its true and lawful representative and attorney-in-fact, in its name, place and stead, to make, execute, sign, acknowledge and deliver or file (i) all instruments, documents and certificates which may from time to time be required by any law to effectuate, implement and continue the valid and subsisting existence of the Partnership, (ii) all instruments, documents and certificates that may be required to effectuate the dissolution and termination of the Partnership in accordance with the provisions hereof and Delaware law, (iii) all other amendments of this Agreement or the Certificate of Limited Partnership and other filings contemplated by this Agreement including, without limitation, amendments reflecting the withdrawal of the General Partner, or the return, in whole or in part, of the contribution of any Partner, or the addition, substitution or increased contribution of any Partner, or any action of the Partners duly taken pursuant to this Agreement whether or not such Partner voted in favor of or otherwise approved such action, and (iv) any other instrument, certificate or document required from time to time to admit a Partner, to effect its substitution as a Partner, to effect the substitution of the Partner's assignee as a Partner or to reflect any action of the Partners provided for in this Agreement. (b) The powers of attorney granted herein (i) shall be deemed to be coupled with an interest, shall be irrevocable and shall survive the death, insanity, incompetency or incapacity (or, in the case of a Partner that is a corporation, association, partnership, limited liability company or trust, shall survive the merger, dissolution or other termination of existence) of the Partner and (ii) shall survive the assignment by the Partner of the whole or any portion of his Interest, except that where the assignee of the whole or any portion thereof has furnished a power of attorney, this power of attorney shall survive such assignment for the sole purpose of enabling the General Partner and the Liquidating Trustee to execute, acknowledge and file any instrument necessary to effect any permitted substitution of the assignee for the assignor as a Partner and shall thereafter terminate. In the event that the 37 appointment conferred in this Section 15.01 would not constitute a legal and valid appointment by any Partner under the laws of the jurisdiction in which such Partner is incorporated, established or resident, upon the request of the General Partner or the Liquidating Trustee, such Partner shall deliver to the General Partner or the Liquidating Trustee a properly authenticated and duly executed document constituting a legal and valid power of attorney under the laws of the appropriate jurisdiction covering the matters set forth in this Section 15.01. (c) The General Partner may require a power of attorney to be executed by a transferee of a Partner as a condition of its admission as a substitute Partner. SECTION 15.02. WAIVER OF PARTITION. Each Partner hereby irrevocably waives any and all rights that it may have to maintain an action for partition of any of the Partnership's property or assets. SECTION 15.03. NOTICES. Any notice permitted or required to be given hereunder shall be in writing and shall be deemed given (i) on the day the notice is first mailed to a Partner by first class mail, postage prepaid, or (ii) on the date it was delivered in person to a Partner, receipt acknowledged, at its address appearing on the books and records of the Partnership. Another address may be designated by a Partner by such Partner giving notice of its new address as provided in this Section 15.03. SECTION 15.04. ENTIRE AGREEMENT. This Agreement, including the exhibits annexed hereto and incorporated by reference herein, contains the entire agreement of the parties hereto and supersedes all prior agreements and understandings, oral or otherwise, among the parties hereto with respect to the matters contained herein. SECTION 15.05. WAIVERS. Except as otherwise expressly provided herein, no purported waiver by any party of any breach by another party of any of his obligations, agreements or covenants hereunder, or any part thereof, shall be effective unless made in a writing executed by the party or parties sought to be bound thereby, and no failure to pursue or elect any remedy with respect to any default under or breach of any provision of this Agreement, or any part hereof, shall be deemed to be a waiver of any other subsequent similar or different default or breach, or any election of remedies available in connection therewith, nor shall the acceptance or receipt by any party of any money or other consideration due him under this Agreement, with or without knowledge of any breach hereunder, constitute a 38 waiver of any provision of this Agreement with respect to such or any other breach. SECTION 15.06. HEADINGS. The section headings herein contained have been inserted only as a matter of convenience of reference and in no way define, limit or describe the scope or intent of any provisions of this Agreement nor in any way affect any such provisions. SECTION 15.07. SEPARABILITY. Each provision of this Agreement shall be considered to be separable, and if, for any reason, any such provision or provisions, or any part thereof, is determined to be invalid and contrary to any existing or future applicable law, such invalidity shall not impair the operation of, or affect, those portions of this Agreement which are valid, and this Agreement shall be construed and enforced in all respects as if such invalid or unenforceable provision or provisions had been omitted. SECTION 15.08. CONTRACT CONSTRUCTION. Whenever the content of this Agreement permits, the masculine gender shall include the feminine and neuter genders, and reference to singular or plural shall be interchangeable with the other. References in this Agreement to particular sections of the Code or to provisions of the Delaware Act shall be deemed to refer to such sections or provisions as they may be amended after the date of this Agreement. SECTION 15.09. COUNTERPARTS. This Agreement may be executed in one or more counterparts and each of such counterparts for all purposes shall be deemed to be an original, but all of such counterparts, when taken together, shall constitute but one and the same instrument, binding upon all parties hereto, notwithstanding that all of such parties may not have executed the same counterpart. SECTION 15.10. BENEFIT. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, but shall not be deemed for the benefit of creditors or any other Persons, nor shall it be deemed to permit any assignment by a Partner of any of its rights or obligations hereunder except as expressly provided herein. SECTION 15.11. FURTHER ACTIONS. Each of the Partners hereby agrees that it shall hereafter execute and deliver such further instruments and do such further acts and things as may be required or useful to carry out the intent and purposes of this Agreement and as are not inconsistent with the terms hereof. 39 SECTION 15.12. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the substantive laws of the State of Delaware, without regard to conflicts of laws. SECTION 15.13. AMENDMENTS. Except as otherwise expressly provided herein or as otherwise required by law, this Agreement may only be amended by a written instrument executed by the General Partner provided, however, that any amendment which would adversely affect the powers, preferences or special rights of any series of Preferred Partner Interests may be effected only as permitted by the terms of such series of Preferred Partner Interests. 40 IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above written. GENERAL PARTNER: PECO ENERGY CAPITAL CORP. ______________________________ Name: Title: CLASS A LIMITED PARTNER, solely to reflect its withdrawal from the Partnership: PECO ENERGY COMPANY ______________________________ Name: Title: 41 Exhibit A Certificate Evidencing Preferred Partner Interests of PECO Energy Capital, L.P. __% Cumulative Monthly Income Preferred Partner Interests, Series __ (liquidation preference $25 per Preferred Partner Interest) PECO Energy Capital, L.P., a Delaware limited partnership (the "Partnership"), hereby certifies that Cede & Co. (the "Holder") is the registered owner of ___________ (_________) fully paid Preferred Partner Interests of the Partnership designated the __% Cumulative Monthly Income Preferred Partner Interests, Series __ (liquidation preference $25 per Preferred Partner Interest) (the "Series __ Preferred Partner Interests") representing preferred limited partner interests in the Partnership transferable on the books and records of the Partnership, in person or by a duly authorized attorney, upon surrender of this Certificate duly endorsed and in proper form for transfer. The powers, preferences and special rights and limitations of the Series __ Preferred Partner Interests are set forth in, and this Certificate and the Series __ Preferred Partner Interests represented hereby are issued and shall in all respects be subject to the terms and provisions of, the Amended and Restated Limited Partnership Agreement dated as of ___________, 1994 of the Partnership as the same may, from time A-1 to time, be amended (the "Partnership Agreement") authorizing the issuance of the Series __ Preferred Partner Interests and determining, along with any actions of the General Partner of the Partnership as authorized under the Partnership Agreement, the preferred, deferred and other special rights and restrictions, regarding distributions, voting, redemption and otherwise and other matters relating to the Series __ Preferred Partner Interests. The Partnership will furnish a copy of the Partnership Agreement to the Holder without charge upon written request to the Partnership at its principal place of business or registered office. Capitalized terms used herein but not defined shall have the meaning given them in the Partnership Agreement. The Holder is entitled to the benefits of the Payment and Guarantee Agreement of PECO Energy Company, dated as of _______, 1994 relating to the Preferred Partner Interests (the "Guarantee") and of the Indenture between PECO Energy Company and Meridian Trust Company, dated as of ____________, 1994 (the "Indenture"), under and pursuant to which the related series of Subordinated Debentures are issued and outstanding, in either case to the extent provided therein. The Holder is further entitled to enforce such rights of the Partnership under the Indenture to the extent provided therein and in the Partnership Agreement. The Partnership will furnish a copy of the Guarantee and Indenture to the Holder without charge upon written request to the Partnership at its principal place of business or registered office. A-2 The Holder, by accepting this Certificate, is deemed to have (i) agreed that the Subordinated Debentures issued pursuant to the Indenture are subordinate and junior in right of payment to all general liabilities of PECO Energy Company as and to the extent provided in the Indenture and (ii) agreed that the Guarantee is subordinate and junior in right of payment to all general liabilities of PECO Energy Company. Upon receipt of this Certificate, the Holder is admitted to the Partnership as a Preferred Partner, is bound by the Partnership Agreement and is entitled to the benefits thereunder. IN WITNESS WHEREOF, the Partnership has executed this Certificate this ____ day of ________________, 1994. PECO ENERGY CAPITAL, L.P. By: PECO Energy Capital Corp., its General Partner By:______________________________ Name: Title: A-3 EX-4.3 5 EXHIBIT 4-3 ACTION BY THE GENERAL PARTNER OF PECO ENERGY CAPITAL, L.P. CREATING THE __% CUMULATIVE MONTHLY INCOME PREFERRED PARTNER INTERESTS, SERIES A Pursuant to Section 13.01 of the Amended and Restated Limited Partnership Agreement of PECO Energy Capital, L.P. dated ____________, 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 terms used but not defined herein shall have the meaning set forth in the Partnership Agreement): (a) Designation. ____________ interests with an aggregate liquidation preference of $ ______ of the Preferred Partner Interests of the Partnership, liquidation preference $25 per Preferred Partner Interest, are hereby designated as "__% Cumulative Monthly Income Preferred Partner Interests, Series A" (hereinafter the "Series A Preferred Partner Interests.") (b) Distributions. (i) The Preferred Partners who hold the Series A Preferred Partner Interests 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 A Preferred Partner Interest per annum, commencing _____, 1994. Distributions on the Series A Preferred Partner Interests which accrue from the date of original issue to ____, 1994 shall be payable on ____, 1994. (ii) Distributions on the Series A Preferred Partner Interests 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 on hand legally available therefor sufficient to permit such payments. Distributions on the Series A Preferred Partner Interests will be deferred if and for so long as PECO Energy Company ("PECO Energy") defers payments to the Partnership on the Series A Debentures (as defined below). Accrued and unpaid distributions on the Series A Preferred Partner Interests will accrue additional distributions ("Additional Distributions") in respect thereof, to the extent permitted by law, at the distribution rate per annum for the Series A Preferred Interests. 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 A Preferred Partner Interests will be payable to the Series A Preferred Partners as they appear on the books and records of the Partnership on the relevant record dates, which will be one Business Day prior to the relevant payment dates. (c) Redemption. (i) The Series A Preferred Partner Interests are subject to redemption at the option of the General Partner, in whole or in part, from time to time, on or after _________, 1999, at the Redemption Price (as defined below). (ii) Upon redemption or payment at maturity of the ____% Subordinated Debentures due 2043, Series A (the "Series A Debentures") issued by PECO Energy pursuant to an Indenture dated as of _______, 1994 between PECO Energy and Meridian Trust Company, as Trustee (the "Indenture"), which Series A Debentures were purchased by the Partnership from PECO Energy with the proceeds from the issuance and sale of the Series A Preferred Partner Interests and the related capital contribution of the General Partner, the proceeds from such redemption or payment of the Series A Debentures shall be applied to redeem the Series A Preferred Partner Interests at the redemption price of $25 per Preferred Partner Interest plus accumulated and unpaid distributions (whether or not declared) and Additional Amounts (as defined below) to the date fixed for redemption, together with any accrued Additional Distributions thereon (the "Redemption Price"). (iii) If at any time after the issuance of the Series A Preferred Partner Interests, the Partnership is or would be required to pay 2 Additional Amounts or if PECO Energy would be required to pay Additional Interest (as defined in the Indenture) on the Series A Debentures then, the Series A Preferred Partner Interests will be subject to redemption, at the option of the General Partner, in whole or, if such requirement relates only to certain of the Series A Preferred Partner Interests, the Series A Preferred Partner Interests subject to such requirement, in each case at any time thereafter at the Redemption Price. (iv) If a Tax Event shall occur and be continuing, the Series A Preferred Partner Interests 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 A Preferred Partner Interests will be subject to mandatory redemption in whole at the Redemption Price within ninety (90) days following the occurrence of such Investment Company Event. (d) Liquidation Distribution. In the event of any voluntary or involuntary dissolution and winding up of the Partnership, holders of the Series A Preferred Partner Interests at the time outstanding will be entitled to receive out of the assets of the Partnership available for distribution to holders of Preferred Partner Interests, after satisfaction of liabilities to creditors as required by the Delaware Act and before any distribution of assets is made to holders of the general partner interests, but together with holders of every other series of Preferred Partner Interests outstanding, an amount equal to, in the case of holders of Series A Preferred Partner Interests, the aggregate of the stated liquidation preference of $25 per Series A Preferred Partner Interest plus accumulated and unpaid distributions and Additional Distributions to the date of payment and Additional Amounts, if any (the "Liquidation Distribution"). (e) Voting Rights. The holders of the Series A Preferred Partner Interests shall have no voting rights except as provided in the Partnership Agreement. (f) Additional Amounts. If, as a result of (i) the Series A Debentures not being treated as indebtedness for United States federal income tax purposes or (ii) the Partnership not being treated as a partnership for United States federal income tax purposes, the Partnership is required to withhold or deduct from payments on the Series A Preferred Partner Interests for or 3 on account of any present or future taxes imposed by the United States which would not otherwise be required to be withheld or deducted, the Partnership will pay such additional amounts as may be necessary in order that the net amounts received by the holders of the Series A Preferred Partner Interests after such withholding or deduction will equal the amount which would have been receivable in respect of such Series A Preferred Partner Interests in the absence of such withholding or deduction ("Additional Amounts"), except that no such Additional Amounts will be payable to a holder of Series A Preferred Partner Interests (or a third party on such holder's behalf) with respect to Series A Preferred Partner Interests if: (a) such holder is liable for such taxes by reason of such holder having a connection with the United States, other than being a holder of Series A Preferred Partner Interests; or (b) the Partnership has notified such holder of the obligation to withhold or deduct taxes and requested but not received from such holder a declaration of non-residence, a valid taxpayer identification number or other claim for exemption in such form or content as may be required by the United States Internal Revenue Service, and such withholding or deduction would not have been required had such declaration, taxpayer identification number or claim been received. (g) Subordination. The holders of Series A Preferred Partner Interests are deemed, by acceptance of such Interests, to have (i) agreed that the Debentures issued pursuant to the Indenture are subordinate and junior in right of payment to all general liabilities as and to the extent provided in the Indenture and (ii) agreed that the Guarantee relating to the Series A Preferred Partner Interests is subordinate and junior in right of payment to all general liabilities of PECO Energy. IN WITNESS WHEREOF, the General Partner has executed this Action as of the day and year first above written. PECO Energy Capital Corp. By: _____________________ Name: Title: 4 EX-4.5 6 EXHIBIT 4-5 PECO ENERGY COMPANY AND MERIDIAN TRUST COMPANY, AS TRUSTEE INDENTURE DATED AS OF _________________ BY AND BETWEEN PROVIDING FOR THE ISSUANCE OF SUBORDINATED DEBENTURES IN SERIES AND FOR _% SUBORDINATED DEBENTURES, SERIES A TABLE OF CONTENTS Page ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE SECTION 1.01 Definitions.. . . . . . . . . . . . . . . . . . 2 SECTION 1.02 Other Definitions.. . . . . . . . . . . . . . . 7 SECTION 1.03 Incorporation by Reference of Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . 7 SECTION 1.04 Rules of Construction.. . . . . . . . . . . . . 8 SECTION 1.05 Acts of Holders.. . . . . . . . . . . . . . . . 8 ARTICLE 2 THE DEBENTURES; THE SERIES A DEBENTURES SECTION 2.01 Issue of Debentures Generally.. . . . . . . . . 9 SECTION 2.02 Form of the Series A Securities; Denominations.. . . . . . . . . . . . . . . . 11 SECTION 2.03 Payment of Principal and Interest.. . . . . . . 11 SECTION 2.04 Execution and Authentication. . . . . . . . . . 12 SECTION 2.05 Registrar and Paying Agent. . . . . . . . . . . 12 SECTION 2.06 Paying Agent to Hold Money in Trust.. . . . . . 13 SECTION 2.07 Debentureholder Lists.. . . . . . . . . . . . . 14 SECTION 2.08 Transfer and Exchange.. . . . . . . . . . . . . 14 SECTION 2.09 Replacement Debentures. . . . . . . . . . . . . 15 SECTION 2.10 Outstanding Debentures; Determinations of Holders' Action.. . . . . . . . . . . . . . . 16 SECTION 2.11 Temporary Debentures. . . . . . . . . . . . . . 16 SECTION 2.12 Cancellation. . . . . . . . . . . . . . . . . . 17 SECTION 2.13 Defaulted Interest. . . . . . . . . . . . . . . 17 ARTICLE 3 REDEMPTION SECTION 3.01 Redemption; Notice to Trustee.. . . . . . . . . 18 SECTION 3.02 Selection of Debentures to be Redeemed. . . . . 18 SECTION 3.03 Notice of Redemption. . . . . . . . . . . . . . 18 SECTION 3.04 Effect of Notice of Redemption. . . . . . . . . 19 SECTION 3.05 Deposit of Redemption Price.. . . . . . . . . . 19 SECTION 3.06 Debentures Redeemed in Part . . . . . . . . . . 20 ARTICLE 4 COVENANTS SECTION 4.01 Payment of Debentures . . . . . . . . . . . . . 20 SECTION 4.02 Prohibition Against Dividends, etc. During an Event of Default or an Extension Period . . . 21 SECTION 4.03 SEC Reports . . . . . . . . . . . . . . . . . . 21 SECTION 4.04 Compliance Certificates . . . . . . . . . . . . 21 SECTION 4.05 Relationship with PECO Energy Capital . . . . . 22 SECTION 4.06 Further Instruments and Acts. . . . . . . . . . 22 i SECTION 4.07 Payments for Consents . . . . . . . . . . . . . 22 ARTICLE 5 SUCCESSOR CORPORATION SECTION 5.01 When the Company May Merge, Etc . . . . . . . . 23 ARTICLE 6 DEFAULTS AND REMEDIES SECTION 6.01 Events of Default . . . . . . . . . . . . . . . 24 SECTION 6.02 Acceleration. . . . . . . . . . . . . . . . . . 25 SECTION 6.03 Other Remedies . . . . . . . . . . . . . . . . 26 SECTION 6.04 Waiver of Past Defaults . . . . . . . . . . . . 26 SECTION 6.05 Control by Majority or the Special Representatives . . . . . . . . . . . . . . . 26 SECTION 6.06 Limitation on Suits . . . . . . . . . . . . . . 27 SECTION 6.07 Rights of Holders to Receive Payment. . . . . . 27 SECTION 6.08 Collection Suit by the Trustee. . . . . . . . . 27 SECTION 6.09 The Trustee May File Proofs of Claim. . . . . . 28 SECTION 6.10 Priorities. . . . . . . . . . . . . . . . . . . 28 SECTION 6.11 Undertaking for Costs. . . . . . . . . . . . . . 29 SECTION 6.12 Waiver of Stay, Extension or Usury Laws . . . . 29 ARTICLE 7 THE TRUSTEE SECTION 7.01 Duties of the Trustee . . . . . . . . . . . . . 30 SECTION 7.02 Rights of the Trustee . . . . . . . . . . . . . 31 SECTION 7.03 Individual Rights of the Trustee. . . . . . . . 31 SECTION 7.04 The Trustee's Disclaimer. . . . . . . . . . . . 32 SECTION 7.05 Notice of Defaults. . . . . . . . . . . . . . . 32 SECTION 7.06 Reports by Trustee to Holders . . . . . . . . . 32 SECTION 7.07 Compensation and Indemnity. . . . . . . . . . . 33 SECTION 7.08 Replacement of Trustee. . . . . . . . . . . . . 33 SECTION 7.09 Successor Trustee by Merger . . . . . . . . . . 34 SECTION 7.10 Eligibility; Disqualification . . . . . . . . . 35 SECTION 7.11 Preferential Collection of Claims Against the Company . . . . . . . . . . . . . . . . . . . 35 ARTICLE 8 SATISFACTION AND DISCHARGE OF INDENTURE; DEFEASANCE OF CERTAIN OBLIGATIONS; UNCLAIMED MONEYS SECTION 8.01 Satisfaction and Discharge of Indenture . . . . 35 SECTION 8.02 Application by Trustee of Funds Deposited for Payment of Debentures . . . . . . . . . . . . 36 SECTION 8.03 Repayment of Moneys Held by Paying Agent. . . . 37 SECTION 8.04 Return of Moneys Held by the Trustee and Paying Agent Unclaimed for Three Years. . . . 37 ARTICLE 9 AMENDMENTS SECTION 9.01 Without Consent of Holders. . . . . . . . . . . 37 SECTION 9.02 With Consent of Holders . . . . . . . . . . . . 38 ii SECTION 9.03 Compliance with Trust Indenture Act . . . . . . 39 SECTION 9.04 Revocation and Effect Of Consents, Waivers and Actions . . . . . . . . . . . . . . . . . 39 SECTION 9.05 Notation on or Exchange of Debentures . . . . . 40 SECTION 9.06 Trustee to Sign Supplemental Indentures . . . . 40 SECTION 9.07 Effect of Supplemental Indentures . . . . . . . 40 ARTICLE 10 SUBORDINATION SECTION 10.01 Debentures Subordinated to Senior Indebtedness. . . . . . . . . . . . . . . . . 40 SECTION 10.02 Priority and Payment of Proceeds in Certain Events; Remedies Standstill . . . . . . . . . 41 SECTION 10.03 Payments which May Be Made Prior to Notice. . . 42 SECTION 10.04 Rights of Holders of Senior Indebtedness Not to Be Impaired. . . . . . . . . . . . . . . . 42 SECTION 10.05 Trustee May Take Action to Effectuate Subordination . . . . . . . . . . . . . . . . 43 SECTION 10.06 Subrogation . . . . . . . . . . . . . . . . . . 43 SECTION 10.07 Obligations of Company Unconditional; Reinstatement . . . . . . . . . . . . . . . . 44 SECTION 10.08 Trustee Entitled to Assume Payments Not Prohibited in Absence of Notice . . . . . . . 44 SECTION 10.09 Right of Trustee to Hold Senior Indebtedness. . 45 ARTICLE 11 MISCELLANEOUS SECTION 11.01 Trust Indenture Act Controls. . . . . . . . . . 45 SECTION 11.02 Notices . . . . . . . . . . . . . . . . . . . . 46 SECTION 11.03 Communication by Holders with Other Holders . . 46 SECTION 11.04 Certificate and Opinion as to Conditions Precedent . . . . . . . . . . . . . . . . . . 47 SECTION 11.05 Statements Required in Certificate or Opinion . . . . . . . . . . . . . . . . . . . 47 SECTION 11.06 Severability Clause . . . . . . . . . . . . . . 48 SECTION 11.07 Rules by Trustee, Paying Agent and Registrar. . 48 SECTION 11.08 Legal Holidays. . . . . . . . . . . . . . . . . 48 SECTION 11.09 Governing Law . . . . . . . . . . . . . . . . . 48 SECTION 11.10 No Recourse Against Others. . . . . . . . . . . 48 SECTION 11.11 Successors. . . . . . . . . . . . . . . . . . . 49 SECTION 11.12 Multiple Original Copies of this Indenture. . . 49 SECTION 11.13 No Adverse Interpretation of Other Agreements. . . . . . . . . . . . . . . . . . 49 SECTION 11.14 Table of Contents; Headings, Etc. . . . . . . . 49 SECTION 11.15 Benefits of the Indenture . . . . . . . . . . . 49 EXHIBIT A - Form of Series A Debenture . . . . . . . . . . . .A-1 iii CROSS-REFERENCE TABLE of Provisions of the Indenture Required by the Trust Indenture Act of 1939 TRUST INDENTURE PROVISION OF ACT SECTION INDENTURE - - - - --------------- ------------ Section 310(a)(1) 7.10 (a)(2) 7.10 (a)(3) Not Applicable (a)(4) Not Applicable (a)(5) Not Applicable (b) 7.08; 7.10; 11.01 (c) Not Applicable Section 311(a) 7.11 (b) 7.11 (c) Not Applicable Section 312(a) 2.07 (b) 11.03 (c) 11.03 Section 313(a) 7.06 (b)(1) Not Applicable (b)(2) 7.06 (c) 7.06; 11.02 (d) 7.06 Section 314(a) 4.03; 11.02 (b) Not Applicable (c)(1) 2.02; 11.04 (c)(2) 2.02; 11.04 (c)(3) Not Applicable (d) Not Applicable (e) 11.05 (f) Not Applicable Section 315(a) 7.01(2) (b) 7.05; 11.02 (c) 7.01(1) (d) 7.01(3) (e) 6.11 Section 316(a)(1)(A) 6.05 (a)(1)(B) 6.04 (a)(2) Not Applicable (a)(last sentence) 2.10 (b) 6.07 Section 317(a)(1) 6.08 (a)(2) 6.09 (b) 2.06 Section 318(a) 11.01 ___________________ Note: This Cross-Reference Table shall not, for any purpose, be deemed to be part of the Indenture. iv INDENTURE, dated as of __________________, by and between PECO Energy Company, a Pennsylvania corporation (the "Company"), and Meridian Trust Company, a Pennsylvania trust company, as trustee (the "Trustee). 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, which intends to issue in series from time to time its limited partner interests and to loan the proceeds thereof, together with the investment by PECO Energy Capital Corp. in PECO Energy Capital, L.P., to the Company. WHEREAS, in order to evidence its intention to make such loans and to accept the Debentures as evidence of such loans, and its approval of the terms of the Series A Debentures (as hereinafter defined), PECO Energy Capital, L.P. has joined in this Indenture. WHEREAS, the Company has authorized the issuance of the Series A Debentures to evidence its obligations with respect to a loan from PECO Energy Capital, L.P. of the proceeds of a series of its preferred limited partner interests designated __% Cumulative Monthly Income Preferred Securities, Series A and the related investment by PECO Energy Capital Corp. in PECO Energy Capital, L.P., and to provide therefor, the Company has duly authorized the execution and delivery of this Indenture, all things necessary to make the Series A Debentures when duly issued and executed by the Company and authenticated and delivered hereunder, the valid obligations of the Company, and to make this Indenture a valid and binding agreement of the Company, in accordance with its terms, have been done. NOW THEREFORE: 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 securities issued hereunder, including the Company's __% Subordinated Debentures, Series A (the "Series A Debentures"): ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE SECTION 1.01 DEFINITIONS. ------------ "Additional Interest", with respect to the Series A Debentures, means an amount equal to and payable at the same time as, any Additional Amounts payable on the Series A Preferred Securities as defined in the action pursuant to the Limited Partnership Agreement creating the Series A Preferred Securities plus 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 A Debentures. With respect to any other series of Debentures, "Additional Amounts" shall have the meaning set forth in the supplemental indenture creating such series. "Affiliate" of any specified Person means any other Person, directly or indirectly, controlling or controlled by or under direct or indirect common control with such specified Person. When used with respect to any Person, "control" 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. "Board of Directors" means the Board of Directors of the Company or any committee thereof duly authorized to act on behalf of such Board. "Business Day" means any day that is not a Saturday, a Sunday or a day on which banking institutions in The City of New York or Delaware are authorized or required to close. "Capital Lease Obligations" of a Person means any obligation which is required to be classified and accounted for as a capital lease on the face of a balance sheet of such Person prepared in accordance with GAAP. "Capital Stock" means any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) corporate stock, including any Preferred Stock. "Debentureholder" or "Holder" means a Person in whose name a Debenture is registered on the Registrar's books. "Debentures" shall mean any of the securities of any series issued, authenticated and delivered under this Indenture. 2 "Default" means any event which is, or after notice or passage of time, or both, would be, an Event of Default pursuant to Section 6.01 hereof. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Extension Period" means a period, up to 60 consecutive months, in which the Company elects to extend the interest payment period on the Debentures pursuant to Section 4.01(b) hereof; provided that no Extension Period shall extend beyond the Stated Maturity date or Redemption Date of any series of Subordinated Debentures. "GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board. "General Partner" means PECO Energy Capital Corp., a Delaware corporation and a wholly owned subsidiary of PECO Energy Company, as the general partner of PECO Energy Capital, L.P., a Delaware limited partnership, or any successor thereto that becomes a general partner of PECO Energy Capital pursuant to the Limited Partnership Agreement. "Guarantee Agreement" means that certain payment and guarantee agreement issued by PECO Energy Company with respect to a series of Securities, to irrevocably and nonconditionally agree to pay such Guarantee Payments (as defined in the Guarantee Agreement) to the holders of the series of Preferred Securities issued concurrently therewith. "Holder" or "Debentureholder" means any Person in whose name a Debenture is registered on the Registrar's books. "Indebtedness" means without duplication, (i) the principal of and premium (if any) in respect of (A) indebtedness of the Company for money borrowed and (B) indebtedness evidenced by securities, debentures, bonds or other similar instruments issued by the Company; (ii) all Capital Lease Obligations of the Company; (iii) all obligations of the Company issued or assumed as the deferred purchase price of property, all conditional sale obligations of the Company and all obligations of the Company under any title retention agreement (but excluding trade accounts payable arising in the ordinary course of business); (iv) all obligations of the Company for the reimbursement of any obligor on any letter of credit, banker's acceptance, security purchase facility or similar credit transaction (other than obligations 3 with respect to letters of credit securing obligations (other than obligations described in (i) through (iii) above) entered into in the ordinary course of business of the Company to the extent such letters of credit are not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no later than the third Business Day following receipt by the Company of a demand for reimbursement following payment on the letter of credit); (v) all obligations of the type referred to in clauses (i) through (iv) of other Persons and all dividends of other Persons (other than the Preferred Securities) for the payment of which, in either case, the Company 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 the Company (whether or not such obligation is assumed by the Company), the amount of such obligation being deemed to be the lesser of the value of such property or assets or the amount of the obligation so secured; provided, however, that Indebtedness will not include endorsements of negotiable instruments for collection in the ordinary course of business. "Indenture" means this indenture, as amended or supplemented from time to time in accordance with the terms hereof, including the provisions of the TIA that are deemed to be a part hereof. "Issue Date", with respect to a series of Debentures, means the date on which the Debentures of such series are originally issued. "Limited Partnership Agreement" means the Amended and Restated Limited Partnership Agreement of PECO Energy Capital, L.P. dated __________, 1994, as it may be amended from time to time. "Officer" means, with respect to any corporation, the Chairman of the Board, the Chief Executive Officer, the President, any Vice President, the Treasurer, Assistant Treasurer or the Secretary of such corporation. "Officer's Certificate" means a written certificate containing the applicable information specified in Sections 11.04 and 11.05 hereof, signed in the name of the Company by any one of its Officers, and delivered to the Trustee. "Opinion of Counsel" means a written opinion containing the applicable information specified in Sections 11.04 and 11.05 hereof, by legal counsel who is reasonably acceptable to the Trustee. 4 "PECO Energy Capital" means PECO Energy Capital, L.P., a Delaware limited partnership. "Person" means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity. "Preferred Securities" means the limited partner interests issued form time to time in series by PECO Energy Capital. "Record date", with respect to any series of the Debentures, means the date set to determine the holders of such series entitled to payment of interest or principal or to vote, consent, make a request or exercise any other right associated with such series. "Redemption Date" or "redemption date", with respect to any Debenture to be redeemed, means the date specified for the redemption of such Debenture in accordance with the terms thereof and Article 3 of this Indenture. "Redemption Price" or "redemption price", with respect to any Debenture to be redeemed, means the price at which it is to be redeemed pursuant to this Indenture and such Debenture. "Regular record date", with respect to an interest payment on the Debentures of a series, means the date set forth in paragraph 2 of the Debentures of such series for the determination of Holders entitled to receive payment of interest on the next succeeding interest payment date. "SEC" or "Commission" means the Securities and Exchange Commission. "Securities Act" means the Securities Act of 1933, as amended. "Senior Indebtedness" means all Indebtedness, except for Indebtedness that is by its terms subordinated to or pari passu with the Debentures. Notwithstanding anything to the contrary in the foregoing, Senior Indebtedness shall not include any Indebtedness between or among the Company and any Affiliates. "Series A Debentures" means any of the Company's __% Subordinated Debentures, Series A issued under this Indenture. 5 "Special Representative" means a special representative appointed by the holders of the Preferred Securities pursuant to Section 13.02(d) of the Limited Partnership Agreement. "Stated Maturity", with respect to any Debenture, means, the date specified for the Debentures as the fixed date on which the principal of the Debentures is due and payable. "Subsidiary" means any corporation, association, partnership or other business entity of which more than 50% of the total voting power of shares of Capital Stock or other interests (including partnership interests) entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by (i) the Company, (ii) the Company and one or more Subsidiaries, or (iii) one or more Subsidiaries. "TIA" means the Trust Indenture Act of 1939, as amended and as in effect on the date of this Indenture; provided, however, that if the TIA is amended after such date, TIA means, to the extent required by any such amendment, the TIA as so amended. "Trust Officer", when used with respect to the Trustee, means the chairman or vice-chairman of the Board of Directors, the chairman or vice-chairman of the executive committee of the Board of Directors, the President, any vice president, any assistant vice president, the secretary, any assistant secretary, the treasurer, any assistant treasurer, the cashier, any assistant cashier, any account officer or assistant account officer, the controller and any assistant controller or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "Trustee" means the party named as the "Trustee" in the first paragraph of this Indenture until a successor replaces it pursuant to the applicable provisions of this Indenture and, thereafter, shall mean such successor. "U.S. Government Obligations" means direct obligations (or certificates representing an ownership interest in such obligations) of the United States of America (including any agency or instrumentality thereof) for the payment of which the full faith and credit of the United States of America is pledged and which are not callable at the issuer's option. 6 "Voting Stock" means, with respect to a corporation, all classes of Capital Stock then outstanding of such corporation normally entitled to vote in elections of directors. "Wholly Owned Subsidiary" means a Subsidiary all the Capital Stock of which (other than directors' qualifying shares) is owned by the Company or another Wholly Owned Subsidiary. SECTION 1.02 OTHER DEFINITIONS. ------------------ TERM DEFINED IN SECTION ---- ------------------ "Act" . . . . . . . . . . . . . . . . . . 1.05 "Bankruptcy Law" . . . . . . . . . . . . 6.01 "Custodian" . . . . . . . . . . . . . . . 6.01 "Event of Default". . . . . . . . . . . . 6.01 "Legal Holiday" . . . . . . . . . . . . . 11.08 "Notice of Default" . . . . . . . . . . . 6.01 "Paying Agent" . . . . . . . . . . . . . 2.05 "Register" . . . . . . . . . . . . . . . 2.05 "Registrar" . . . . . . . . . . . . . . . 2.05 "Successor" . . . . . . . . . . . . . . . 5.01 SECTION 1.03 INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT. -------------------------------------------------- Whenever this Indenture refers to a provision of the TIA, such provision is incorporated by reference in and made a part of this Indenture. The following TIA terms used in this Indenture have the following meanings: "Commission" means the SEC. "indenture securities" means the Debentures. "indenture security holder" means a Debentureholder. "indenture to be qualified" means this Indenture. "indenture trustee" or "institutional trustee" means the Trustee. "obligor" on the indenture securities means the Company and any other obligor on the Debentures. All other TIA terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule have the meanings assigned to them by such definitions. 7 SECTION 1.04 RULES OF CONSTRUCTION. ---------------------- Unless the context otherwise requires: (1) A term has the meaning assigned to it; (2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP; (3) "or" is not exclusive; (4) "including" means including, without limitation; (5) words in the singular include the plural, and words in the plural include the singular; and (6) "herein," "hereof" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision. SECTION 1.05. ACTS OF HOLDERS. ---------------- (1) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders, may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section. (2) The fact and date of the execution by any Person of any such instrument or writing may be proved in any manner which the Trustee deems sufficient. (3) The ownership of Debentures shall be proved by the Register. (4) Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any 8 Debenture shall bind every future Holder of the same Debenture and the holder of every Debenture issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Debenture. (5) If the Company solicits from the Holders any request, demand, authorization, direction, notice, consent, waiver or other Act, the Company may, at its option, by or pursuant to a resolution of its Board of Directors, fix in advance a record date for the determination of Holders entitled to give such request, demand, authorization, direction, notice, consent, waiver or other Act, but the Company shall have no obligation to do so. If such a record date is fixed, such request, demand, authorization, direction, notice, consent, waiver or other Act may be given before or after such record date, but only Holders of record at the close of business on such record date shall be deemed to be Holders for the purposes of determining whether Holders of the requisite proportion of outstanding Debentures have authorized or agreed or consented to such request, demand, authorization, direction, notice, consent, waiver or other Act, and for that purpose the outstanding Debentures shall be computed as of such record date. ARTICLE 2 THE DEBENTURES; THE SERIES A DEBENTURES SECTION 2.01 ISSUE OF DEBENTURES GENERALLY. ------------------------------ The aggregate principal amount of the Debentures which may be authenticated and delivered under this Indenture is limited to the aggregate liquidation preference of the Preferred Securities. The Debentures may be issued in one or more series as from time to time shall be authorized by the Board of Directors. The Debentures of each series and the Trustee's Certificate of Authentication shall be substantially in the forms to be attached as exhibits to the Indenture or supplemental indenture providing for their issuance, but in the case of Debentures other than Series A Debentures, with such inclusions, omissions and variations as are such letters, numbers or other marks of identification or designation and such legends or endorsements printed, lithographed or engraved thereon as the Company may deem appropriate and as are not inconsistent with the provisions of this Indenture, or as may be required to comply with any law or with any rule or regulation made pursuant thereto 9 or with any rule or regulation of any securities exchange on which the Debentures may be listed, or to confirm to usage. Each Debenture shall be dated the date of its authentication. The several series of Debentures may differ from the Series A Debentures, and as and between series, in respect of any or all of the following matters: (a) designation; (b) date or dates of maturity, which may be serial; (c) interest rate or method of determination of the interest rate and whether Additional Interest will be payable; (d) interest payment dates and the regular record dates therefor; (e) Issue Date; (f) authorized denominations; (g) the place or places for the payment of principal (and premium, if any) and for the payment of interest; (h) limitation upon the aggregate principal amount of Debentures of the series which may be issued; (i) the optional and mandatory redemption provisions, if any; (j) provisions, if any, for any sinking or analogous fund with respect to the Debentures of such series; and (k) any other provisions expressing or referring to the terms and conditions upon which the Debentures of such series are to be issued under this Indenture which are not in conflict with the provisions of this Indenture; in each case as determined and specified by the Board of Directors. The Trustee shall not authenticate and deliver Debentures of any series (other than the Series A Debentures) upon initial issue unless the terms and conditions of such series shall have been set forth in a supplemental indenture entered into between the Company and the Trustee as provided in Section 9.01. 10 SECTION 2.02 FORM OF THE SERIES A SECURITIES; DENOMINATIONS. ----------------------------------------------- The Series A 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 A Debentures, a form of which is annexed hereto as Exhibit A, shall constitute, and are hereby expressly made, a part of this Indenture. The Company and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. The Trustee shall authenticate and make available for delivery Series A Debentures for original issue in the aggregate principal amount of $ to evidence the Company's obligation with respect to the loan from PECO Energy Capital, upon 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 A Debentures to be authenticated and the date on which the original issue of Debentures is to be authenticated and delivered. The aggregate principal amount of Series A Debentures outstanding at any time may not exceed $ except as provided in Section 2.09 hereof. The Series A Debentures shall be issuable only in registered form without coupons and only in denominations of $25.00 and any integral multiple thereof. SECTION 2.03 PAYMENT OF PRINCIPAL AND INTEREST. ---------------------------------- The principal of and interest on the Debentures of any series, as well as any premium thereon in the case of redemption thereof prior to maturity, shall be payable in the coin or currency of the United States of America which at the time is legal tender for public and private debts at the office of the Paying Agent. Each Debenture shall be dated its Issue Date. Interest on the Debentures shall be computed on the basis of a 360-day year composed of twelve 30-day months. The interest on any Debenture which is payable and is punctually paid or duly provided for, on any interest payment date for Debentures of that series shall be paid to the person in whose name the Debenture is registered at the close of business on the regular record date therefor. In the event that any Debenture of a particular series or portion thereof is called for redemption, and the redemption date is subsequent to the regular record date with respect to any interest payment date and prior to such interest payment date, interest on such Debenture will be paid upon presentation and surrender of such Debenture to the Paying Agent. 11 SECTION 2.04 EXECUTION AND AUTHENTICATION. ----------------------------- The Debentures shall be executed on behalf of the Company by its Chief Executive Officer, its President or one of its Vice Presidents, under its corporate seal imprinted or reproduced thereon attested by its Secretary or one of its Assistant Secretaries. The signature of any such Officer on the Debentures may be manual or facsimile. Debentures bearing the manual or facsimile signatures of individuals who were at any time the proper Officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Debentures or did not hold such offices at the date of such Debentures. No Debenture shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Debenture a certificate of authentication duly executed by the Trustee by manual signature of an authorized officer, and such certificate upon any Debenture shall be conclusive evidence, and the only evidence, that such Debenture has been duly authenticated and made available for delivery hereunder. The Trustee shall act as the initial authenticating agent. Thereafter, the Trustee may appoint an authenticating agent. An authenticating agent may authenticate Debentures whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as a Paying Agent to deal with the Company or an Affiliate of the Company. SECTION 2.05 REGISTRAR AND PAYING AGENT. --------------------------- The Company shall maintain or cause to be maintained, within or outside the Commonwealth of Pennsylvania, an office or agency where the Debentures may be presented for registration of transfer or for exchange ("Registrar"), an office or agency where Debentures may be presented or surrendered for purchase or payment ("Paying Agent"), and an office or agency where notices and demands to or upon the Company in respect of the Debentures and this Indenture may be served. The Registrar shall keep a register (the "Register") of the Debentures and of their transfer and exchange. The Company may have one or more co-Registrars and one or more additional Paying Agents. The term Paying Agent includes any additional paying agent. The corporate trust office of the Trustee at Reading, Pennsylvania, Attention: Corporate Trust Department, shall initially be the Registrar and agent for service of notice or demands on the Company, and Delaware Trust 12 Company, Wilmington, Delaware, shall initially be the Paying Agent. The Company shall enter into an appropriate agency agreement with any Registrar, Paying Agent or co-Registrar (if not the Trustee or the Company). The agreement shall implement the provisions of this Indenture that relate to such agent. The Company shall give prompt written notice to the Trustee of any change of location of such office or agency. If at any time the Company shall fail to maintain or cause to be maintained any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the address of the Trustee set forth in Section 11.02 hereof. The Company shall notify the Trustee of the name and address of any such agent. If the Company fails to maintain a Registrar, Paying Agent or agent for service of notices or demands, the Trustee shall act as such and shall be entitled to appropriate compensation therefor pursuant to Section 7.07 hereof. The Company or any Affiliate of the Company may act as Paying Agent, Registrar or co-Registrar or agent for service of notices and demands. The Company may also from time to time designate one or more other offices or agencies where the Debentures may be presented or surrendered for any or all such purposes and may from time to time rescind such designations. The Company will give prompt written notice to the Trustee of any such designation or rescission and of any change in location of any such other office or agency. SECTION 2.06 PAYING AGENT TO HOLD MONEY IN TRUST. ------------------------------------ Except as otherwise provided herein, prior to each due date of the principal and interest on any Debenture, the Company shall deposit with the Paying Agent a sum of money sufficient to pay such principal, premium (if any) and interest so becoming due. The Company shall require each Paying Agent (other than the Trustee or the Company) to agree in writing that such Paying Agent shall hold in trust for the benefit of Holders or the Trustee all money held by the Paying Agent for the payment of principal and interest on the Debentures and shall notify the Trustee of any default by the Company in making any such payment. At any time during the continuance of any such default, the Paying Agent shall, upon the request of the Trustee, forthwith pay to the Trustee all money so held in trust and account for any money disbursed by it. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee and to account for any money disbursed by it. Upon doing so, the Paying Agent shall have no further liability for the money so paid over to the Trustee. If the Company, a Subsidiary or an Affiliate of 13 either of them acts as Paying Agent, it shall segregate the money held by it as Paying Agent and hold it as a separate trust fund. SECTION 2.07 DEBENTUREHOLDER LISTS. ---------------------- The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Debentureholders. If the Trustee is not the Registrar, the Company shall cause to be furnished to the Trustee on or before the record date for each interest payment date and at such other times as the Trustee may request in writing, within five Business Days of such request, a list, in such form as the Trustee may reasonably require of the names and addresses of Debentureholders, provided that during any deferral period, such information will be provided every six months or upon request of the Trustee. SECTION 2.08 TRANSFER AND EXCHANGE. ---------------------- When Debentures are presented to the Registrar or a co-Registrar with a request to register the transfer or to exchange them for an equal principal amount of Debentures of the same series of other authorized denominations, the Registrar shall register the transfer or make the exchange as requested if its requirements for such transactions are met. To permit registrations of transfer and exchanges, the Company shall execute and the Trustee shall authenticate Debentures, all at the Registrar's request. Every Debenture presented or surrendered for registration of transfer or for exchange shall (if so required by the Company or the Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Registrar duly executed by the Holder or his attorney duly authorized in writing. The Company shall not charge a service charge for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to pay all taxes, assessments or other governmental charges that may be imposed in connection with the transfer or exchange of the Debentures from the Debentureholder requesting such transfer or exchange (other than any exchange of a temporary Debenture for a definitive Debenture not involving any change in ownership). The Company shall not be required to make, and the Registrar need not register, transfers or exchanges of (a) any Debenture for a period beginning at the opening of business 15 days before the mailing of a notice of redemption of Debentures 14 and ending at the close of business on the day of such mailing or (b) any Debenture selected, called or being called for redemption, except, in the case of any Debenture to be redeemed in part, the portion thereof not to be redeemed. SECTION 2.09 REPLACEMENT DEBENTURES. ----------------------- If (a) any mutilated Debenture is surrendered to the Company or the Trustee, or (b) the Company and the Trustee receive evidence to their satisfaction of the destruction, loss or theft of any Debenture, and there is delivered to the Company and the Trustee such Debenture or indemnity as may be required by them to save each of them harmless, then, in the absence of notice to the Company or the Trustee that such Debenture has been acquired by a bona fide purchaser, the Company shall execute in exchange for any such mutilated Debenture or in lieu of any such destroyed, lost or stolen Debenture, a new Debenture of like tenor and principal amount, bearing a number not contemporaneously outstanding, and the Trustee shall authenticate and make such new Debenture available for delivery. In case any such mutilated, destroyed, lost or stolen Debenture has become or is about to become due and payable, or is about to be redeemed by the Company pursuant to Article 3 hereof, the Company in its discretion may, instead of issuing a new Debenture, pay or purchase such Debenture, as the case may be. Upon the issuance of any new Debentures under this Section 2.09, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) in connection therewith. Every new Debenture issued pursuant to this Section 2.09 in lieu of any mutilated, destroyed, lost or stolen Debenture shall constitute an original additional contractual obligation of the Company whether or not the mutilated, destroyed, lost or stolen Debenture shall be at any time enforceable by anyone, and shall be entitled to all benefits of this Indenture equally and ratably with any and all other Debentures duly issued hereunder. The provisions of this Section 2.09 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Debentures. 15 SECTION 2.10 OUTSTANDING DEBENTURES; DETERMINATIONS OF HOLDERS' -------------------------------------------------- ACTION. ------- Debentures outstanding at any time are all the Debentures authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation, those mutilated, destroyed, lost or stolen Debentures referred to in Section 2.09 hereof, those redeemed by the Company pursuant to Article 3 hereof, and those described in this Section 2.10 as not outstanding. A Debenture does not cease to be outstanding because the Company or a Subsidiary or Affiliate thereof holds the Debenture; provided, however, that in determining whether the Holders of the requisite principal amount of Debentures have given or concurred in any request, demand, authorization, direction, notice, consent or waiver hereunder, Debentures owned by the Company shall be disregarded and deemed not to be outstanding. Subject to the foregoing, only Debentures outstanding at the time of such determination shall be considered in any such determination (including determinations pursuant to Articles 3, 6 and 9). If a Debenture is replaced pursuant to Section 2.09, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Debenture is held by a bona fide purchaser. If the Paying Agent (other than the Company) holds, in accordance with this Indenture, at maturity or on a Redemption Date, money sufficient to pay the Debentures payable on that date, then immediately on the date of maturity or such Redemption Date, as the case may be, such Debentures shall cease to be outstanding, and interest, if any, on such Debentures shall cease to accrue. SECTION 2.11 TEMPORARY DEBENTURES. --------------------- So long as PECO Energy Capital shall hold all of the Debentures, the Company may execute temporary Debentures, and upon the Company's written request, signed by two Officers of the Company, the Trustee shall authenticate and make such temporary Debentures available for delivery. Temporary Debentures shall be printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the definitive Debentures in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the Officers of the Company executing such Debentures may determine, as conclusively evidenced by their execution of such Debentures. 16 After the preparation of definitive Debentures, the temporary Debentures shall be exchangeable for definitive Debentures of the same series upon surrender of the temporary Debentures at the office or agency of the Company designated for such purpose pursuant to Section 2.05 hereof, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Debentures, the Company shall execute a like principal amount of definitive Debentures of authorized denominations, and the Trustee, upon written request of the Company signed by two Officers of the Company, shall authenticate and make such Debentures available for delivery in exchange therefor. Until so exchanged, the temporary Debentures shall in all respects be entitled to the same benefits under this Indenture as definitive Debentures. SECTION 2.12 CANCELLATION. ------------- All Debentures surrendered for payment, redemption by the Company pursuant to Article 3 hereof or registration of transfer or exchange shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee and shall be promptly canceled by the Trustee. The Company may at any time deliver to the Trustee for cancellation any Debentures previously authenticated and made available for delivery hereunder which the Company may have acquired in any manner whatsoever, and all Debentures so delivered shall be promptly canceled by the Trustee. The Company may not reissue, or issue new Debentures to replace Debentures it has paid or delivered to the Trustee for cancellation. No Debentures shall be authenticated in lieu of or in exchange for any Debentures canceled as provided in this Section 2.12, except as expressly permitted by this Indenture. All canceled Debentures held by the Trustee shall be destroyed by the Trustee, and the Trustee shall deliver a certificate of destruction to the Company. SECTION 2.13 DEFAULTED INTEREST. ------------------- If the Company defaults in a payment of interest on the Debentures, it shall pay the defaulted interest, plus (to the extent lawful) any interest payable on the defaulted interest, to the Persons who are Holders on a subsequent special record date, and such special record date, as used in this Section 2.13 with respect to the payment of any defaulted interest, shall mean the 15th day next preceding the date fixed by the Company for the payment of defaulted interest, whether or not such day is a Business Day. At least 15 days before the subsequent special record date, the Company shall mail to each Holder and to the Trustee a notice that states the subsequent special record date, the payment date and the amount of defaulted interest to be paid. 17 The Company may also pay defaulted interest in any other lawful manner. ARTICLE 3 REDEMPTION SECTION 3.01 REDEMPTION; NOTICE TO TRUSTEE. ------------------------------ (a) The Series A Debentures are subject to redemption prior to maturity as provided in the form thereof. (b) The redemption terms for any additional series of Debentures shall be as specified in the supplemental indenture creating such series of Debentures; provided that each series of Debentures shall be subject to mandatory redemption upon the dissolution of PECO Energy Capital. (c) If any or all of the Debentures are to be redeemed pursuant to paragraphs (a) or (b) above, the Company shall give notice by first class mail, postage prepaid, to the Trustee within 45 days prior to the date of such redemption. Any such notice of redemption shall state the date and price of redemption. SECTION 3.02 SELECTION OF DEBENTURES TO BE REDEEMED. --------------------------------------- If less than all the outstanding Debentures are to be redeemed at any time, the Trustee shall select the Debentures to be redeemed on a pro rata basis, by lot or any other method the Trustee considers fair and appropriate. The Trustee shall make the selection at least 30 but not more than 60 days before the Redemption Date from outstanding Debentures not previously called for redemption. Provisions of this Indenture that apply to Debentures called for redemption also apply to portions of Debentures called for redemption. The Trustee shall notify the Company promptly of the Debentures or portions of Debentures to be redeemed. SECTION 3.03 NOTICE OF REDEMPTION. --------------------- So long as PECO Energy Capital remains the sole Holder of the Debentures, no notice of any redemption of Debentures will be required. In the event and at such time that PECO Energy Capital ceases to be the sole Holder of the Debentures, at least 30 days but not more than 60 days before a Redemption Date, the Trustee shall mail or cause to be mailed a notice of redemption by first-class mail, postage prepaid, to each Holder of 18 Debentures to be redeemed at the Holder's last address, as it appears on the Register. At the Company's written request, the Trustee shall give the notice of redemption in the Company's name and at its expense. The notice shall identify the Debentures to be redeemed, the provision of the Debentures or this Indenture pursuant to which the Debentures called for redemption are being redeemed and shall state: (1) the Redemption Date; (2) the Redemption Price; (3) the name and address of the Paying Agent; (4) that Debentures called for redemption must be surrendered to the Paying Agent to collect the Redemption Price; (5) if fewer than all the outstanding Debentures are to be redeemed, the identification and principal amounts of the particular Debentures to be redeemed and that, on and after the Redemption Date, upon surrender of such Debentures, a new Debenture or Debentures in principal amount equal to the unredeemed portion thereof will be issued; and (6) that, unless the Company defaults in making such redemption payment, interest will cease to accrue on Debentures called for redemption on and after the Redemption Date. SECTION 3.04 EFFECT OF NOTICE OF REDEMPTION. ------------------------------- If notice of redemption is required as set forth in Section 3.03, and after notice of redemption is given, Debentures called for redemption become due and payable on the Redemption Date and at the Redemption Price. Upon the later of the Redemption Date and the date such Debentures are surrendered to the Paying Agent, such Debentures shall be paid at the Redemption Price, plus accrued interest to the Redemption Date. SECTION 3.05 DEPOSIT OF REDEMPTION PRICE. ---------------------------- On or prior to a Redemption Date, the Company shall deposit with the Paying Agent (or if the Company or an Affiliate is the Paying Agent, shall segregate and hold in trust or cause such Affiliate to segregate and hold in trust) money sufficient to pay the Redemption Price of, and accrued interest on, all Debentures to be redeemed on that date. The Paying Agent shall 19 return to the Company any money not required for the purpose stated herein. SECTION 3.06 DEBENTURES REDEEMED IN PART. ---------------------------- Upon surrender of a Debenture that is redeemed in part, the Trustee shall authenticate for the Holder a new Debenture equal in principal amount to the unredeemed portion of such Debenture. ARTICLE 4 COVENANTS SECTION 4.01 PAYMENT OF DEBENTURES. ---------------------- (a) The Company shall pay the principal of and interest (including interest accruing on or after the filing of a petition in bankruptcy or reorganization relating to the Company, whether or not a claim for post-filing interest is allowed in such proceeding) on the Debentures on (or prior to) the dates and in the manner provided in the Debentures or pursuant to this Indenture. An installment of principal or interest shall be considered paid on the applicable date due if on such date the Trustee or the Paying Agent holds, in accordance with this Indenture, money sufficient to pay all of such installment then due. The Company shall pay interest on overdue principal and interest on overdue installments of interest (including interest accruing during an Extension Period and/or on or after the filing of a petition in bankruptcy or reorganization relating to the Company, whether or not a claim for post-filing interest is allowed in such proceeding), to the extent lawful, at the rate per annum borne by the Debentures, which interest on overdue interest shall accrue from the date such amounts became overdue. (b) Notwithstanding paragraph (a) of this Section 4.01 or any other provision herein to the contrary, the Company shall have the right in its sole and absolute discretion at any time and from time to time while the Debentures are outstanding, so long as an Event of Default has not occurred and is continuing, to extend the interest payment period for up to 60 consecutive months, provided that such Extension Period shall not extend beyond the stated maturity date or redemption date of the Series A Subordinated Debentures, and provided further that at the end of each Extension Period the Company shall pay all interest then accrued and unpaid (together with interest thereon compounded daily to the extent permitted by applicable law). Prior to the termination of an Extension Period, the Company may shorten or may further extend the interest payment period, provided that such Extension Period together with all such further extensions may not exceed 60 months. The Company shall give the Trustee notice of its 20 selection of such extended or shortened interest payment period at least one Business Day prior to the earlier of (i) the date selected by the Company to make the interest payment or (ii) the date PECO Energy Capital is required to give notice of the record or payment date of such related distribution to any national securities exchange on which the Preferred Securities are then listed or other applicable self-regulatory organization, but in any event not less than two Business Days prior to such record date fixed by the Company for the payment of such interest. The Company shall give or cause the Trustee to give such notice of the Company's selection of such extended interest payment period to the Holders. SECTION 4.02 PROHIBITION AGAINST DIVIDENDS, ETC. DURING AN EVENT OF DEFAULT OR AN EXTENSION PERIOD. ---------------------------------------- Neither the Company nor any Subsidiary 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) during an Extension Period or if at such time there shall have occurred any Default or Event of Default or if the Company shall be in default with respect to its payment obligations under the Guarantee Agreement. SECTION 4.03 SEC REPORTS. ------------ The Company shall file with the Trustee, within 15 days after it files them with the SEC, copies of its annual report and of the information, documents and other reports (or copies of such portions of any of the foregoing as the SEC may by rules and regulations prescribe) which the Company is required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act. If the Company is not subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company shall file with the Trustee such information, documents and other reports (or copies of such portions of any of the foregoing as the SEC may by rules and regulations prescribe) which are specified in Sections 13 or 15(d) of the Exchange Act. The Company shall also comply with the provisions of Section 314(a) of the TIA. SECTION 4.04 COMPLIANCE CERTIFICATES. ------------------------ (a) The Company shall deliver to the Trustee within 90 days after the end of each of the Company's fiscal years an Officer's Certificate, stating whether or not the signer knows of any Default or Event of Default. Such certificate shall contain a certification from the principal executive officer, principal 21 financial officer or principal accounting officer of the Company as to his or her knowledge of the Company's compliance with all conditions and covenants under this Indenture. For purposes of this Section 4.04(a), such compliance shall be determined without regard to any period of grace or requirement of notice provided under this Indenture. If such Officer does know of such a Default or Event of Default, the certificate shall describe any such Default or Event of Default, and its status. Such Officer's Certificate need not comply with Sections 11.04 and 11.05 hereof. (b) The Company shall deliver to the Trustee any information reasonably requested by the Trustee in connection with the compliance by the Trustee or the Company with the TIA. SECTION 4.05 RELATIONSHIP WITH PECO ENERGY CAPITAL. -------------------------------------- The Company agrees (i) to maintain direct or indirect through a wholly owned subsidiary 100% ownership of the General Partner and will cause the General Partner to maintain 100% ownership of the general partnership interests in PECO Energy Capital ("Common Debentures"); (ii) to cause at least 10% of the total value of PECO Energy Capital and at least 3% of all interests in the capital, income, gain, loss, deduction and credit of PECO Energy Capital to be represented by general partner interests; (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 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 United States federal income tax purposes. SECTION 4.06 FURTHER INSTRUMENTS AND ACTS. ----------------------------- Upon request of the Trustee, the Company shall execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purposes of this Indenture. SECTION 4.07 PAYMENTS FOR CONSENTS. ---------------------- Neither the Company nor any Subsidiary shall, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to any Holder of any Debentures for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of this Indenture or the Debentures unless such consideration is offered to be paid or agreed to be paid to all Holders of the Debentures who so 22 consent, waive or agree to amend in the time frame set forth in the documents soliciting such consent, waiver or agreement. ARTICLE 5 SUCCESSOR CORPORATION SECTION 5.01 WHEN THE COMPANY MAY MERGE, ETC. -------------------------------- The Company may not 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 unless: (1) the Person formed by or surviving such consolidation or merger or to which such sale, conveyance, transfer or lease shall have been made (the "Successor") if other than the Company, (a) is organized and existing under the laws of the United States of America or any State thereof or the District of Columbia, and (b) shall expressly assume by a supplemental indenture, executed and delivered to the Trustee, in form satisfactory to the Trustee, all the obligations of the Company under the Debentures and the Indenture; (2) immediately prior to and after giving effect to such transaction (and treating any Indebtedness which becomes an obligation of the Successor Person or any Subsidiary as a result of such transaction as having been incurred by such Person or such Subsidiary at the time of such transaction), no Default or Event of Default shall have occurred and be continuing; and (3) the Company, delivers to the Trustee an Officer's Certificate and an Opinion of Counsel, each stating that such consolidation, merger, sale, conveyance, transfer or lease and such supplemental indenture comply with this Indenture. The Successor will be the successor to the Company, and will be substituted for, and may exercise every right and power and become the obligor on the Debentures with the same effect as if the Successor had been named as, the Company herein but, in the case of a sale, conveyance, transfer or lease of all or substantially all of the assets of the Company, the predecessor Company will not be released from its obligation to pay the principal of, premium, if any, and interest on the Debentures. 23 ARTICLE 6 DEFAULTS AND REMEDIES SECTION 6.01 EVENTS OF DEFAULT. ------------------ An "Event of Default" occurs if one of the following shall have occurred and be continuing: (1) The Company defaults in the payment, when due and payable, of (a) interest, including Additional Interest, on any Debenture and the default continues for a period of 10 days; provided, that during an Extension Period, failure to pay interest on the Debentures shall not constitute a Default or Event of Default hereunder, or (b) the principal of, or premium, if any, on any Debentures when the same becomes due and payable at maturity, acceleration, on any Redemption Date, or otherwise; (2) The Company defaults in the performance of, fails to comply with any of its other covenants or agreements in the Debentures or this Indenture and such failure continues for 60 days after receipt by the Company of a "Notice of Default"; (3) The Company, pursuant to or within the meaning of any Bankruptcy Law: (a) commences a voluntary case or proceeding; (b) consents to the entry of an order for relief against it in an involuntary case or proceeding; (c) consents to the appointment of a Custodian of it or for all or substantially all of its property, and such Custodian is not discharged within 60 days; (d) makes a general assignment for the benefit of its creditors; or (e) admits in writing its inability to pay its debts generally as they become due; or (4) A court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (a) is for relief against the Company in an involuntary case or proceeding; 24 (b) appoints a Custodian of the Company for all or substantially all of its properties; (c) orders the liquidation of the Company; (d) and in each case the order or decree remains unstayed and in effect for 60 days. The foregoing will constitute Events of Default whatever the reason for any such Event of Default and whether it is voluntary or involuntary or is effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body. The term "Bankruptcy Law" means Title 11, United States Code, or any similar Federal or state law for the relief of debtors. "Custodian" means any receiver, trustee, assignee, liquidator, sequestrator, custodian or similar official under any Bankruptcy Law. A Default under clause (2) above is not an Event of Default until the Trustee notifies the Company or the Holders of at least a majority in aggregate principal amount of the Debentures at the time outstanding or the Special Representative notifies the Company and the Trustee, of the Default and the Company does not cure such Default within the time specified in clause (2) above after receipt of such notice. Any such notice must specify the Default, demand that it be remedied and state that such notice is a "Notice of Default." SECTION 6.02 ACCELERATION. ------------- If any Event of Default other than an Event of Default under clauses (3) or (4) occurs and is continuing, the Trustee, the Holders of not less than 25% in principal amount of the Debentures then outstanding or the Special Representative may declare the principal of all such Debentures due and payable. Upon such a declaration, such principal and interest shall be due and payable immediately. If an Event of Default specified in clause (3) or (4) with respect to the Company occurs, the principal of and interest on all the Debentures shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Debentureholders. The Special Representative or holders of a majority in aggregate principal amount of the Debentures at the time outstanding by notice to the Trustee may rescind an acceleration 25 and its consequences if the rescission would not conflict with any judgment or decree and if all existing Events of Default have been cured or waived except nonpayment of principal or interest that has become due solely because of acceleration. No such rescission shall affect any subsequent Default or impair any right consequent thereto. SECTION 6.03 OTHER REMEDIES. --------------- If an Event of Default occurs and is continuing, the Trustee may, in its own name or as trustee of an express trust, institute, pursue and prosecute any proceeding, including, without limitation, any action at law or suit in equity or other judicial or administrative proceeding to collect the payment of principal of, premium, if any, or interest on the Debentures, to enforce the performance of any provision of the Debentures or this Indenture or to obtain any other available remedy. The Trustee may maintain a proceeding even if it does not possess any of the Debentures or does not produce any of the Debentures in the proceeding. A delay or omission by the Trustee, the Special Representative or any Debentureholder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of, or acquiescence in, the Event of Default. No remedy is exclusive of any other remedy. All available remedies are cumulative. SECTION 6.04 WAIVER OF PAST DEFAULTS. ------------------------ The Special Representative or the Holders of 66 2/3% in aggregate principal amount of the Debentures at the time outstanding, by notice to the Trustee, the Company and PECO Energy Capital, may waive an existing Default or Event of Default and its consequences. When a Default is waived, it is deemed cured and shall cease to exist, but no such waiver shall extend to any subsequent or other Default or impair any consequent right. SECTION 6.05 CONTROL BY MAJORITY OR THE SPECIAL ---------------------------------- REPRESENTATIVES. ---------------- The Holders of a majority in aggregate principal amount of the Debentures then outstanding or the Special Representative may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture or that the Trustee determines in good 26 faith is unduly prejudicial to the rights of other Debentureholders or would involve the Trustee in personal liability. The Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction, including withholding notice to the Holders of the Debentures of any series of continuing default (except in the payment of the principal (other than any mandatory sinking fund payment) of (or premium, if any) or interest on any Debentures of such series) if the Trustee considers it in the interest of the holders of such series of Debentures to do so. SECTION 6.06 LIMITATION ON SUITS. -------------------- Except as provided in Section 6.07 hereof, the Special Representative may not pursue any remedy with respect to this Indenture or the Debentures unless: (1) the Holders or the Special Representative gives to the Trustee written notice stating that an Event of Default is continuing; (2) the Holders or the Special Representative provides to the Trustee reasonable security and indemnity against any loss, liability or expense satisfactory to the Trustee; (3) the Trustee does not comply with the request within 60 days after receipt of the notice, the request and the offer of security and indemnity; and SECTION 6.07 RIGHTS OF HOLDERS TO RECEIVE PAYMENT. ------------------------------------- Notwithstanding any other provision of this Indenture, the right of any Holder to receive payment of the principal amount of or interest on the Debentures held by such Holder, on or after the respective due dates expressed in the Debentures (in the case of interest, as the same may be extended pursuant to Section 4.01(b)) or any Redemption Date, or to bring suit for the enforcement of any such payment on or after such respective dates shall not be impaired or affected adversely without the consent of each such Holder. SECTION 6.08 COLLECTION SUIT BY THE TRUSTEE. ------------------------------- If an Event of Default described in Section 6.01(1) hereof occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Company or any obligor on the Debentures for the whole amount 27 owing with respect to the Debentures and the amounts provided for in Section 6.07 hereof. SECTION 6.09 THE TRUSTEE MAY FILE PROOFS OF CLAIM. ------------------------------------- In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company or its properties or assets, the Trustee shall be entitled and empowered, by intervention in such proceeding or otherwise: (1) to file and prove a claim for the whole amount of the principal amount, premium, if any, and interest on the Debentures and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and of the Holders allowed in such judicial proceeding; and (2) to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any Custodian in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07 hereof. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Debentures or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. SECTION 6.10 PRIORITIES. ----------- If the Trustee collects any money pursuant to this Article 6, it shall pay out the money in the following order: FIRST: to the Trustee for amounts due under Section 7.07 hereof; SECOND: to Debentureholders for amounts due and unpaid on the Debentures for the principal amount, 28 Redemption Price or interest, if any, as the case may be, ratably, without preference or priority of any kind, according to such amounts due and payable on the Debentures; and THIRD: the balance, if any, to the Company. The Trustee may fix a record date and payment date for any payment to Debentureholders pursuant to this Section 6.10. SECTION 6.11 UNDERTAKING FOR COSTS. ---------------------- In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant (other than the Trustee) in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees and expenses, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.07 hereof or a suit by Holders of more than 10% in aggregate principal amount of the Debentures at the time outstanding or a suit by the Special Representative. SECTION 6.12 WAIVER OF STAY, EXTENSION OR USURY LAWS. ---------------------------------------- The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law or any usury or other law wherever enacted, now or at any time hereafter in force, that would prohibit or forgive the Company from paying all or any portion of the principal or premium, if any, or interest on the Debentures as contemplated herein or affect the covenants or the performance by the Company of its obligations under this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. 29 ARTICLE 7 THE TRUSTEE SECTION 7.01 DUTIES OF THE TRUSTEE. ---------------------- (1) If an Event of Default has occurred and is continuing, the Trustee shall exercise the rights and powers vested in it by this Indenture and use the same degree of care and skill in its exercise as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. (2) Except during the continuance of an Event of Default, (a) the Trustee need perform only those duties that are specifically set forth in this Indenture and no others; and (b) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, in the case of any certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture. (3) The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that: (a) this paragraph (3) does not limit the effect of paragraph (2) of this Section 7.01; (b) the Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and (c) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05 hereof. (4) Every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (1), (2), (3) and (5) of this Section 7.01 and Section 7.02. (5) The Trustee may refuse to perform any duty or exercise any right or power or extend or risk its own funds or 30 otherwise incur any financial liability unless it receives security and indemnity reasonably satisfactory to it against any loss, liability or expense. (6) Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee shall not be liable for interest on any money held by it hereunder. SECTION 7.02 RIGHTS OF THE TRUSTEE. ---------------------- (1) The Trustee may rely on any document believed by it to be genuine and to have been signed or presented by the proper person. The Trustee need not investigate any fact or matter stated in the document; (2) Before the Trustee acts or refrains from acting, it may require an Officer's Certificate and, if appropriate, an Opinion of Counsel. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officer's Certificate and Opinion of Counsel; (3) The Trustee may act through agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care; (4) The Trustee shall not be liable for any action it takes or omits to take in good faith which it reasonably believes to be authorized or within its rights or powers; (5) The Trustee may consult with counsel of its selection and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; and (6) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders or Special Representative pursuant to this Indenture, unless such Holders shall have offered to the Trustee reasonable security and indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction. SECTION 7.03 INDIVIDUAL RIGHTS OF THE TRUSTEE. --------------------------------- The Trustee in its individual or any other capacity may become the owner or pledgee of Debentures and may otherwise deal with the Company or its Affiliates with the same rights it would 31 have if it were not Trustee. Any Paying Agent, Registrar or co-registrar may do the same with like rights. However, the Trustee must comply with Sections 7.10 and 7.11 hereof. SECTION 7.04 THE TRUSTEE'S DISCLAIMER. ------------------------- The Trustee makes no representation as to the validity or adequacy of this Indenture or the Debentures, it shall not be accountable for the Company's use of the proceeds from the Debentures, and it shall not be responsible for any statement in this Indenture or the Debentures or any report or certificate issued by the Company hereunder or any registration statement relating to the Debentures (other than the Trustee's certificate of authentication), or the determination as to which beneficial owners are entitled to receive any notices hereunder. SECTION 7.05 NOTICE OF DEFAULTS. ------------------- If a Default occurs and is continuing and if it is known to the Trustee, the Trustee shall mail to each Debentureholder, as their names and addresses appear on the Debenture Register, notice of the Default within 90 days after it becomes known to the Trustee unless such Default shall have been cured or waived. Except in the case of a Default described in Section 6.01(1) hereof, the Trustee may withhold such notice if and so long as a committee of Trust Officers in good faith determines that the withholding of such notice is in the interests of Debentureholders. The second sentence of this Section 7.05 shall be in lieu of the proviso to TIA Section 315(b). Said proviso is hereby expressly excluded from this Indenture, as permitted by the TIA. SECTION 7.06 REPORTS BY TRUSTEE TO HOLDERS. ------------------------------ Within 60 days after each May 31, beginning with the May 31 next following the date of this Indenture, the Trustee shall mail to each Debentureholder, and such other holders that have submitted their names to the Trustee for such purpose, a brief report dated as of such May 31 in accordance with and to the extent required under TIA Section 313. A copy of each report at the time of its mailing to Debentureholders shall be filed with the Company, the SEC and each securities exchange on which the Debentures are listed. The Company agrees to promptly notify the Trustee whenever the Debentures become listed on any securities exchange and of any listing thereof. 32 SECTION 7.07 COMPENSATION AND INDEMNITY. --------------------------- The Company agrees: (1) to pay to the Trustee from time to time such compensation as shall be agreed in writing between the Company and the Trustee for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (2) to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses, and advances of its agents and counsel), including all reasonable expenses and advances incurred or made by the Trustee in connection with any Event of Default or any membership on any creditors' committee, except any such expense or advance as may be attributable to its negligence or bad faith; and (3) to indemnify the Trustee, its officers, directors and shareholders, for, and to hold it harmless against, any and all loss, liability or expense, incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of this trust, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. Before, after or during an Event of Default, the Trustee shall have a claim and lien prior to the Debentures as to all property and funds held by it hereunder for any amount owing it or any predecessor Trustee pursuant to this Section 7.07, except with respect to funds held in trust for the payment of principal of, premium, if any, or interest on particular Debentures. The Company's payment obligations pursuant to this Section 7.07 are not subject to Article 10 of this Indenture and shall survive the discharge of this Indenture. When the Trustee renders services or incurs expenses after the occurrence of a Default specified in Section 6.01 hereof, the compensation for services and expenses are intended to constitute expenses of administration under any Bankruptcy Law. SECTION 7.08 REPLACEMENT OF TRUSTEE. ----------------------- The Trustee may resign by so notifying the Company in writing at least 30 days prior to the date of the proposed resignation; provided, however, no such resignation shall be 33 effective until a successor Trustee has accepted its appointment pursuant to this Section 7.08. The Special Representative or the Holders of a majority in aggregate principal amount of the Debentures at the time outstanding, may remove the Trustee by so notifying the Trustee in writing and may appoint a successor Trustee, which shall be subject to the consent of the Company unless an Event of Default has occurred and is continuing. The Trustee shall resign if: (1) the Trustee fails to comply with Section 7.10 hereof; (2) the Trustee is adjudged bankrupt or insolvent; (3) a receiver or public officer takes charge of the Trustee or its property; or (4) the Trustee otherwise becomes incapable of acting. If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall promptly appoint a successor Trustee. A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Thereupon the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to Debentureholders. Subject to payment of all amounts owing to the Trustee under Section 7.07 hereof and subject further to its lien under Section 7.07, the retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee. If a successor Trustee does not take office within 30 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company, the Special Representative or the Holders of a majority in aggregate principal amount of the Debentures at the time outstanding, may petition any court of competent jurisdiction for the appointment of a successor Trustee. If the Trustee fails to comply with Section 7.10 hereof, any Debentureholder may petition any court of competent jurisdiction for its removal and the appointment of a successor Trustee. SECTION 7.09 SUCCESSOR TRUSTEE BY MERGER. ---------------------------- If the Trustee consolidates with, merges or converts into, or transfers all or substantially all its corporate trust business or assets (including this Trusteeship) to another 34 corporation, the resulting, surviving or transferee corporation without any further act shall be the successor Trustee. SECTION 7.10 ELIGIBILITY; DISQUALIFICATION. ------------------------------ The Trustee shall at all times satisfy the requirements of TIA Sections 310(a)(1) and 310(a)(2). The Trustee (or any Affiliate thereof which has unconditionally guaranteed the obligations of the Trustee hereunder) shall have a combined capital and surplus of at least $50,000,000 as set forth in its most recent published annual report of condition. The Trustee shall comply with TIA Section 310(b). In determining whether the Trustee has conflicting interests as defined in TIA Section 310(b)(1), the provisions contained in the proviso to TIA Section 310(b)(1) shall be deemed incorporated herein. SECTION 7.11 PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE --------------------------------------------- COMPANY. -------- If and when the Trustee shall be or become a creditor of the Company, the Trustee shall be subject to the provisions of the TIA regarding the collection of claims against the Company. ARTICLE 8 SATISFACTION AND DISCHARGE OF INDENTURE; DEFEASANCE OF CERTAIN OBLIGATIONS; UNCLAIMED MONEYS SECTION 8.01 SATISFACTION AND DISCHARGE OF INDENTURE. ---------------------------------------- The Company shall be deemed to have paid and discharged the entire indebtedness on any series of the Debentures outstanding on the date the Company has irrevocably deposited or caused to be irrevocably deposited with the Trustee or any Paying Agent as trust funds in trust, specifically pledged as security for, and dedicated solely to, the benefit the Holders (1) cash in an amount, or (2) U.S. Government Obligations, maturing as to principal and interest at such times and in such amounts as will ensure the availability of cash, or (3) a combination thereof, sufficient to pay the principal of, premium, if any, and interest on, all Debentures then outstanding, and on such date; the provisions of this Indenture with respect to the Debentures shall no longer be in effect (except as to (1) the rights of registration of transfer, substitution and exchange of Debentures, (2) the replacement of apparently mutilated, defaced, destroyed, lost or stolen Debentures, (3) the rights of the Holders to receive payments of principal thereof and interest thereon, (4) the rights of the Holders as beneficiaries hereof 35 with respect to the property so deposited with the Trustee payable to all or any of them, (5) the obligation of the Company to maintain an office or agency for payments on and registration of transfer of the Debentures, and (6) the rights, obligations and immunities of the Trustee hereunder); and the Trustee shall, at the request and expense of the Company, execute proper instruments acknowledging the same; provided that if the Company deposits U.S. Government Obligations with the Trustee: (A) no Default or Event of Default with respect to the Debentures has occurred and is continuing on the date of such deposit or occurs as a result of such deposit; (B) the Company has delivered to the Trustee an Officer's Certificate and an Opinion of Counsel, each stating that all conditions precedent relating to the defeasance contemplated by this provision have been complied with; and (C) the Company has delivered to the Trustee (i) either a private Internal Revenue Service ruling or an Opinion of Counsel based on a ruling of the Internal Revenue Service or other change in Federal income tax law to the effect that the Holders will not recognize income, gain or loss for federal income tax purposes as a result of such deposit, defeasance and discharge and will be subject to federal income tax on the same amount and in the manner and at the same times as would have been the case if such deposit, defeasance and discharge had not occurred, and (ii) an Opinion of Counsel to the effect that (A) the deposit shall not result in the Company, the Trustee or the trust being deemed to be an "investment company" under the Investment Company Act of 1940, as amended, and (B) such deposit creates a valid trust in which such Holders of the Debentures have the sole beneficial ownership interest or that such Holders of the Debentures have a nonavoidable first priority security interest in such trust. SECTION 8.02 APPLICATION BY TRUSTEE OF FUNDS DEPOSITED FOR --------------------------------------------- PAYMENT OF DEBENTURES. ---------------------- Subject to Section 8.04, and Article 10 of this Indenture, all moneys deposited with the Trustee pursuant to Section 8.01 hereof shall be held in trust and applied by it to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent), to the Holders for the payment or redemption of which such moneys have been deposited with the Trustee, of all sums due and to become due thereon for principal and interest; but such money need not 36 be segregated from other funds except to the extent required by law. SECTION 8.03 REPAYMENT OF MONEYS HELD BY PAYING AGENT. ----------------------------------------- In connection with the satisfaction and discharge of this Indenture, all moneys then held by any Paying Agent under this Indenture shall, upon demand of the Company, be repaid to it or paid to the Trustee, and thereupon such Paying Agent shall be released from all further liability with respect to such moneys. SECTION 8.04 RETURN OF MONEYS HELD BY THE TRUSTEE AND PAYING ----------------------------------------------- AGENT UNCLAIMED FOR THREE YEARS. -------------------------------- Any moneys deposited with or paid to the Trustee or any Paying Agent for the payment of the principal, premium, if any, or interest on any Debenture and not applied but remaining unclaimed for three years after the date when such principal, premium, if any, or interest shall have become due and payable shall unless otherwise required by mandatory provisions of applicable escheat or abandoned or unclaimed property law, be repaid to the Company by the Trustee or such Paying Agent, and the Holder of such Debenture shall, unless otherwise required by mandatory provisions of applicable escheat or abandoned or unclaimed property laws, thereafter look only to the Company for any payment which such Holder may be entitled to collect, and all liability of the Trustee or any Paying Agent with respect to such moneys shall thereupon cease. ARTICLE 9 AMENDMENTS SECTION 9.01 WITHOUT CONSENT OF HOLDERS. --------------------------- From time to time, when authorized by a resolution of the Board of Directors, the Company and the Trustee, without notice to or the consent of any holders of the Debentures or their Special Representative issued hereunder, may amend or supplement this Indenture or the Debentures: (1) to cure any ambiguity, defect or inconsistency; (2) to comply with Article 5 hereof; (3) to provide for uncertificated Debentures in addition to or in place of certificated Debentures; 37 (4) to make any other change that does not adversely affect the rights of any Debentureholder; or (5) to comply with any requirement of the SEC in connection with the qualification of this Indenture under the TIA; and (6) to set forth the terms and conditions, which shall not be inconsistent with this Indenture, of the series of Debentures (other than the Series A Debentures) that are to be issued hereunder and the form of Debentures of such series. SECTION 9.02 WITH CONSENT OF HOLDERS. ------------------------ With written consent of the Special Representative or the Holders of at least 66 2/3% in aggregate principal amount of the series of Debentures at the time outstanding, the Company and the Trustee may amend this Indenture or the Debentures or may waive future compliance by the Company with any provisions of this Indenture or the Debentures. However, without the consent of each Debentureholder affected, such an amendment or waiver may not: (1) reduce the principal amount of the Debentures the Holders of which must consent to an amendment of the Indenture or a waiver; (2) change the Stated Maturity of the principal of, or the interest or rate of interest on the Debentures, change adversely to the Holders the redemption provisions of Article 3 hereof, or impair the right to institute suit for the enforcement of any such payment or make any Debenture payable in money or securities other than that stated in the Debenture; (3) make any change in Article 10 hereof that adversely affects the rights of the Holders of the Debentures or any change to any other section hereof that adversely affects their rights under Article 10 hereof; (4) waive a Default in the payment of the principal of, premium, if any, or interest on, any Debenture; or (5) change Section 6.07 hereof. It shall not be necessary for the consent of the Holders under this Section 9.02 to approve the particular form of any proposed amendment, but it shall be sufficient if such consent approves the substance thereof. If certain Holders agree to defer or waive certain obligations of the Company hereunder with respect to Debentures 38 held by them, such deferral or waiver shall not affect the rights of any other Holder to receive the payment or performance required hereunder in a timely manner. After an amendment or waiver under this Section 9.02 becomes effective, the Company shall mail to the Special Representative and to each Holder a notice briefly describing the amendment or waiver. Any failure of the Company to mail such notices, or any defect therein, shall not, however, in any way impair or affect the validity of such amendment or waiver. SECTION 9.03 COMPLIANCE WITH TRUST INDENTURE ACT. ------------------------------------ Every supplemental indenture executed pursuant to this Article 9 shall comply with the TIA. SECTION 9.04 REVOCATION AND EFFECT OF CONSENTS, WAIVERS AND ---------------------------------------------- ACTIONS. -------- Until an amendment, waiver or other action by Holders becomes effective, a consent to it or any other action by a Holder of a Debenture hereunder is a continuing consent by the Holder and every subsequent Holder of that Debenture or portion of the Debenture that evidences the same obligation as the consenting Holder's Debenture, even if notation of the consent, waiver or action is not made on the Debenture. However, any such Holder or subsequent Holder may revoke the consent, waiver or action as to such Holder's Debenture or portion of the Debenture if the Trustee receives the notice of revocation before the consent of the requisite aggregate principal amount of the Debentures then outstanding has been obtained and not revoked. After an amendment, waiver or action becomes effective, it shall bind every Debentureholder, except as provided in Section 9.02 hereof. The Company may, but shall not be obligated to, fix a record date for the purpose of determining the Holders entitled to consent to any amendment or waiver. If a record date is fixed, then, notwithstanding the first two sentences of the immediately preceding paragraph, those Persons who were Holders at such record date or their duly designated proxies, and only those Persons, shall be entitled to consent to such amendment, supplement or waiver or to revoke any consent previously given, whether or not such Persons continue to be Holders after such record date. No such consent shall be valid or effective for more than 90 days after such record date. 39 SECTION 9.05 NOTATION ON OR EXCHANGE OF DEBENTURES. -------------------------------------- Debentures authenticated and made available for delivery after the execution of any supplemental indenture pursuant to this Article 9 may, and shall, if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Debentures so modified as to conform, in the opinion of the Trustee and the Board of Directors, to any such supplemental indenture may be prepared and executed by the Company and authenticated and made available for delivery by the Trustee in exchange for outstanding Debentures. SECTION 9.06 TRUSTEE TO SIGN SUPPLEMENTAL INDENTURES. ---------------------------------------- The Trustee shall sign any supplemental indenture authorized pursuant to this Article 9 if the supplemental indenture does not adversely affect the rights, duties, liabilities or immunities of the Trustee. If it does, the Trustee may, but need not, sign it. In signing such amendment the Trustee shall be entitled to receive, and shall be fully protected in relying upon, an Officer's Certificate and Opinion of Counsel stating that such supplemental indenture is authorized or permitted by this Indenture. SECTION 9.07 EFFECT OF SUPPLEMENTAL INDENTURES. ---------------------------------- Upon the execution of any supplemental indenture under this Article 9, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes and every Holder of Debentures theretofore or thereafter authenticated and made available for delivery hereunder shall be bound thereby. ARTICLE 10 SUBORDINATION SECTION 10.01 DEBENTURES SUBORDINATED TO SENIOR INDEBTEDNESS. ----------------------------------------------- Notwithstanding the provisions of Section 6.01 hereof or any other provision herein or in the Debentures, the Company and the Trustee or Holder by his acceptance thereof (a) covenants and agrees, that all payments by the Company of the principal of, premium, if any, and interest on the Debentures shall be subordinated in accordance with the provisions of this Article 10 to the prior payment in full, in cash or cash equivalents, of all amounts payable on, under or in connection with Senior 40 Indebtedness, and (b) acknowledges that holders of Senior Indebtedness are or shall be relying on this Article 10. SECTION 10.02 PRIORITY AND PAYMENT OF PROCEEDS IN CERTAIN EVENTS; --------------------------------------------------- REMEDIES STANDSTILL. -------------------- (a) Upon any payment or distribution of assets or securities of the Company, as the case may be, of any kind or character, whether in cash, property or securities, upon any dissolution or winding up or total or partial liquidation or reorganization of the Company, whether voluntary or involuntary, or in bankruptcy, insolvency, receivership or other proceedings, all amounts payable on, under or in connection with 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 in cash, or payment provided for in cash or cash equivalents, before the Holders or the Trustee on behalf of the Holders shall be entitled to receive from the Company any payment of principal of or interest on or any other amounts in respect of the Debentures or distribution of any assets or securities. (b) No direct or indirect payment by or on behalf of the Company of principal of or interest on the Debentures whether pursuant to the terms of the 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 (and the Trustee has received written notice thereof from the Company, one or more holders of Senior Indebtedness or from any trustee, representative or agent therefor), or (ii) any other default affecting Senior Indebtedness permitting its acceleration, as the result of which the maturity of Senior Indebtedness has been accelerated, and the Trustee has received written notice from any trustee, representative or agent for the holders of the Senior Indebtedness or the holders of at least a majority in principal amount of the Senior Indebtedness then outstanding of such default and acceleration, and such default shall not have been cured or waived by or on behalf of the holders of such Senior Indebtedness. (c) If, notwithstanding the foregoing provision prohibiting such payment or distribution, the Trustee or any Holder shall have received any payment on account of the principal of or interest on the Debentures (other than as permitted by subsections (a) and (b) of this Section 10.02) when such payment is prohibited by this Section 10.02 and before all amounts payable on, under or in connection with Senior Indebtedness are paid in full in cash or cash equivalents, then and in such event (subject to the provisions of Section 10.08) such payment or distribution shall be received and held in trust for the holders of Senior Indebtedness and shall 41 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 in cash or cash equivalents. Upon any payment or distribution of assets or securities referred to in this Article 10, the Trustee and the Holders shall be entitled to rely upon any order or decree of a court of competent jurisdiction in which such dissolution, winding up, liquidation or reorganization proceedings are pending, and upon a certificate of the receiver, trustee in bankruptcy, liquidating trustee, agent or other Person making any such payment or distribution, delivered to the Trustee for the purpose of ascertaining the Persons entitled to participate in such distribution, the holders of Senior Indebtedness and other Indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article 10. SECTION 10.03 PAYMENTS WHICH MAY BE MADE PRIOR TO NOTICE. ------------------------------------------- Nothing in this Article 10 or elsewhere in this Indenture shall prevent (i) the Company, except under the conditions described in Section 10.02 hereof, from making payments of principal of and interest on the Debentures or from depositing with the Trustee any monies for such payments, or (ii) the application by the Trustee of any monies deposited with it for the purpose of making such payments of principal of and interest on the Debentures, to the Holders entitled thereto, unless at least one day prior to the date when such payment would otherwise (except for the prohibitions contained in Section 10.02 hereof) become due and payable, the Trustee shall have received the written notice provided for in Section 10.02(b)(ii) hereof. SECTION 10.04 RIGHTS OF HOLDERS OF SENIOR INDEBTEDNESS NOT TO BE -------------------------------------------------- IMPAIRED. --------- No right of any present or future holder of any Senior Indebtedness to enforce subordination as herein provided shall at any time or in any way be prejudiced or impaired by any act or failure to act in good faith by any such holder, or by any noncompliance by the Company with the terms and provisions and covenants herein regardless of any knowledge thereof any such holder may have or otherwise be charged with. The provisions of this Article 10 are intended to be for the benefit of, and shall be enforceable directly by, the holders of Senior Indebtedness. 42 Notwithstanding anything to the contrary in this Article 10, to the extent any Holders or the Trustee have paid over or delivered to any holder of Senior Indebtedness any payment or distribution received on account of the principal of, or interest on the Debentures to which any other holder of Senior Indebtedness shall be entitled to share in accordance with Section 10.02 hereof, no holder of Senior Indebtedness shall have a claim or right against any Holders or the Trustee with respect to any such payment or distribution or as a result of the failure to make payments or distributions to such other holder of Senior Indebtedness. SECTION 10.05 TRUSTEE MAY TAKE ACTION TO EFFECTUATE SUBORDINATION. ---------------------------------------------------- Each Holder by his acceptance thereof authorizes and directs the Trustee on his behalf to take such action as may be necessary or appropriate to effectuate, as between the holders of Senior Indebtedness and such Holders, the subordination as provided in this Article 10 and appoints the Trustee his attorney-in-fact for any and all such purposes. SECTION 10.06 SUBROGATION. ------------ Upon the payment in full, in cash or cash equivalents, of all Senior Indebtedness, any Holder shall be subrogated to the rights of the holders of such Senior Indebtedness to receive payments or distributions of assets of the Company made on such Senior Indebtedness until the Debentures shall be paid in full; and for the purposes of such subrogation, no payments or distributions to holders of such Senior Indebtedness of any cash, property or securities to which such Holders of the Debentures would be entitled except for this Article 10, and no payment pursuant to this Article 10 to holders of such Senior Indebtedness by such Holders of the Debentures, shall, as between the Company, its creditors other than holders of such Senior Indebtedness and such Holders of the Debentures, be deemed to be a payment by the Company to or on account of such Senior Indebtedness, it being understood that the provisions of this Article 10 are solely for the purpose of defining the relative rights of the holders of such Senior Indebtedness, on the one hand, and such Holders of the Debentures, on the other hand. If any payment or distribution to which such Holders of the Debentures would otherwise have been entitled but for the provisions of this Article 10 shall have been applied, pursuant to this Article 10, to the payment of all Senior Indebtedness, then and in such case, such Holders of the Debentures shall be entitled to receive from the holders of such Senior Indebtedness at the time outstanding any payments or distributions received by such holders 43 of Senior Indebtedness in excess of the amount sufficient to pay, in cash or cash equivalents, all such Senior Indebtedness in full. SECTION 10.07 OBLIGATIONS OF COMPANY UNCONDITIONAL; ------------------------------------- REINSTATEMENT. -------------- Nothing in this Article 10, or elsewhere in this Indenture or in any Debenture, is intended to or shall impair, as between the Company and Holders of the Debentures, the obligations of the Company, which are absolute and unconditional, to pay to such Holders the principal of, and interest on, the Debentures as and when the same shall become due and payable in accordance with their terms, or is intended to or shall affect the relative rights of such Holders of the Debentures and creditors of the Company other than the holders of the Senior Indebtedness, nor shall anything herein or therein prevent the Trustee, the Special Representative or any Holder from exercising all remedies otherwise permitted by applicable law upon Default under this Indenture, subject to the rights, if any, under this Article 10 of the holders of such Senior Indebtedness in respect of cash, property or securities of the Company received upon the exercise of any such remedy. The failure to make a scheduled payment of principal of, or interest on, the Debentures by reason of Section 10.02 shall not be construed as preventing the occurrence of an Event of Default under Section 6.01 hereof; provided, however, that if (i) the conditions preventing the making of such payment no longer exist, and (ii) such Holders of the Debentures are made whole with respect to such omitted payments, the Event of Default relating thereto (including any failure to pay any accelerated amounts) shall be automatically waived, and the provisions of the Indenture shall be reinstated as if no such Event of Default had occurred. SECTION 10.08 TRUSTEE ENTITLED TO ASSUME PAYMENTS NOT PROHIBITED -------------------------------------------------- IN ABSENCE OF NOTICE. --------------------- The Trustee or Paying Agent shall not be charged with the knowledge of the existence of any facts which would prohibit the making of any payment to or by the Trustee or Paying Agent, unless and until the Trustee or Paying Agent shall have received written notice thereof from the Company or one or more holders of Senior Indebtedness or from any trustee or agent therefor or unless the Trustee or Paying Agent otherwise had actual knowledge thereof; and, prior to the receipt of any such written notice or actual knowledge, the Trustee or Paying Agent may conclusively assume that no such facts exist. 44 Unless at least one day prior to the date when by the terms of this Indenture any monies are to be deposited by the Company with the Trustee or any Paying Agent for any purpose (including, without limitation, the payment of the principal or the interest on any Debenture), the Trustee or Paying Agent shall, except where no notice is necessary or where notice is deemed given in Sections 10.02 and 10.03 hereof, have received with respect to such monies the notice provided for in the preceding sentence, the Trustee or Paying Agent shall have full power and authority to receive and apply such monies to the purpose for which they were received. Neither of them shall be affected by any notice to the contrary, which may be received by either on or after such date. The foregoing shall not apply to the Paying Agent if the Company is acting as Paying Agent. Nothing in this Section 10.08 shall limit the right of the holders of Senior Indebtedness to recover payments as contemplated by Section 10.02 hereof. The Trustee or Paying Agent shall be entitled to rely on the delivery to it of a written notice by a Person representing himself or itself to be a holder of such Senior Indebtedness (or a trustee on behalf of, or other representative of, such holder) to establish that such notice has been given by a holder of such Senior Indebtedness or a trustee or representative on behalf of any such holder. The Trustee shall not be deemed to have any duty to the holders of Senior Indebtedness. SECTION 10.09 RIGHT OF TRUSTEE TO HOLD SENIOR INDEBTEDNESS. --------------------------------------------- The Trustee and any Paying Agent shall be entitled to all of the rights set forth in this Article 10 in respect of any Senior Indebtedness at any time held by them to the same extent as any other holder of such Senior Indebtedness, and nothing in this Indenture shall be construed to deprive the Trustee or any Paying Agent of any of its rights as such holder. ARTICLE 11 MISCELLANEOUS SECTION 11.01 TRUST INDENTURE ACT CONTROLS. ----------------------------- If any provision of this 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) are a part of and govern this Indenture, except as, and to the extent, they are expressly excluded from this Indenture, as permitted by the TIA. 45 SECTION 11.02 NOTICES. -------- Any notice or communication shall be in writing and delivered in person or mailed by first-class mail, postage prepaid, addressed as follows: if to the Company: PECO Energy Company 2301 Market Street P.O. Box 8699 Philadelphia, Pennsylvania 19101 Attention: Todd D. Cutler, Esq. Facsimile No.: (215) 841-5743 if to the Trustee: Meridian Trust Company 35 North 6th Street P.O. Box 15111 Reading, Pennsylvania 19612-5111 Attn: Corporate Trust Administration The Company or the Trustee, by giving notice to the other, may designate additional or different addresses for subsequent notices of communications. The Company shall notify the holder, if any, of Senior Indebtedness of any such additional or different addresses of which the Company receives notice from the Trustee. Any notice or communication given to a Debentureholder other than PECO Energy Capital shall be mailed to the Debentureholder at the Debentureholder's address as it appears on the Register of the Registrar and shall be sufficiently given if mailed within the time prescribed. Failure to mail a notice or communication to a Debentureholder or any defect in it shall not affect its sufficiency with respect to other Debentureholders. If a notice or communication is mailed in the manner provided above, it is duly given, whether or not received by the addressee. If the Company mails a notice or communication to the Debentureholders, it shall mail a copy to the Trustee and each Registrar, Paying Agent or co-Registrar. SECTION 11.03 COMMUNICATION BY HOLDERS WITH OTHER HOLDERS. -------------------------------------------- Debentureholders may communicate, pursuant to TIA Section 312(b), with other Debentureholders with respect to their rights 46 under this Indenture or the Debentures. The Company, the Trustee, the Registrar, the Paying Agent and anyone else shall have the protection of TIA Section 312(c). SECTION 11.04 CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT. --------------------------------------------------- Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee: (1) an Officer's Certificate (complying with Section 11.05 hereof) stating that, in the opinion of such Officer, all conditions precedent to the taking of such action have been complied with; and (2) if appropriate, an Opinion of Counsel (complying with Section 11.05 hereof) stating that, in the opinion of such counsel, all such conditions precedent to the taking of such action have been complied with. SECTION 11.05 STATEMENTS REQUIRED IN CERTIFICATE OR OPINION. ---------------------------------------------- Each Officer's Certificate and Opinion of Counsel with respect to compliance with a covenant or condition provided for in this Indenture shall include: (1) a statement that each Person making such Officer's Certificate or Opinion of Counsel has read such covenant or condition; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such Officer's Certificate or Opinion of Counsel are based; (3) a statement that, in the opinion of each such Person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement that, in the opinion of such Person, such covenant or condition has been complied with; provided, however, that with respect to matters of fact not involving any legal conclusion, an Opinion of Counsel may rely on an Officer's Certificate or certificates of public officials. 47 SECTION 11.06 SEVERABILITY CLAUSE. -------------------- If any provision in this Indenture or in the 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 11.07 RULES BY TRUSTEE, PAYING AGENT AND REGISTRAR. --------------------------------------------- The Trustee may make reasonable rules for action by or a meeting of Debentureholders. The Registrar and Paying Agent may make reasonable rules for their functions. SECTION 11.08 LEGAL HOLIDAYS. --------------- A "Legal Holiday" is any day other than a Business Day. If any specified date (including a date for giving notice) is a Legal Holiday, the action to be taken on such date shall be taken on the next succeeding day that is not a Legal Holiday, and if such action is a payment in respect of the Debentures, no principal or interest installment shall accrue for the intervening period; except that if any interest payment is due on a Legal Holiday and the next succeeding day is in the next succeeding calendar year, such payment shall be made on the Business Day immediately preceding such Legal Holiday. SECTION 11.09 GOVERNING LAW. -------------- This Indenture and the 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 11.10 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 Debentures or this Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. By accepting a Debenture, each Debentureholder shall waive and release all such liability. The waiver and release shall be part of the consideration for the issue of the Debentures. 48 SECTION 11.11 SUCCESSORS. ----------- All agreements of the Company in this Indenture and the Debentures shall bind its successors and assigns. All agreements of the Trustee in this Indenture shall bind its successors and assigns. SECTION 11.12 MULTIPLE ORIGINAL COPIES OF THIS INDENTURE. ------------------------------------------- The parties may sign any number of copies of this 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 Indenture. SECTION 11.13 NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS. ---------------------------------------------- This Indenture may not be used to interpret another indenture, loan or debt agreement of the Company or any Subsidiary. Any such indenture, loan or debt agreement may not be used to interpret this Indenture. SECTION 11.14 TABLE OF CONTENTS; HEADINGS, ETC. --------------------------------- The Table of Contents, Cross-Reference Table, and headings of the Articles and Sections of this 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 11.15 BENEFITS OF THE INDENTURE. -------------------------- Except as expressly provided in Article 10 hereof, nothing in this Indenture or in the Debentures, express or implied, shall give to any person, other than the parties hereto and their successors hereunder, the Holders and the Special Representative, any benefit or any legal or equitable right, remedy or claim under this Indenture. 49 SIGNATURES IN WITNESS WHEREOF, the undersigned, being duly authorized, have executed this Indenture on behalf of the respective parties hereto as of the date first above written. PECO ENERGY COMPANY By: __________________________ Name: ________________________ Title: _______________________ MERIDIAN TRUST COMPANY, AS TRUSTEE By: __________________________ Name: ________________________ Title: ________________________ PECO Energy Capital, L.P. By its General Partner, PECO Energy Capital Corp. By _____________________ Solely for the purposes stated in the recitals hereto. 50 EXHIBIT A [FORM OF FACE OF DEBENTURE] __% SUBORDINATED DEBENTURES, SERIES A DUE 2043 No. _______________ $___________ PECO Energy Company, a Pennsylvania corporation (the "Company"), which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to ___________________________ or registered assigns, the principal sum of __________________ Dollars on _____________, 2043, and to pay interest on said principal sum from _____________, 1994 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 ___________, 1994 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. 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 A 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 close of business on the Business Day 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 hereinafter referred to. The principal of (and premium, if any) and the interest on this Debenture shall be payable at the office A-1 or agency of the Company maintained for that purpose in Reading, Pennsylvania, 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, if any) and interest (including Additional Interest, if any) in 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 his behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination so provided and (c) appoints the Trustee his attorney-in-fact for any and all such purposes. Each Holder hereof, by his 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 A 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 ________, 1994 (the "Indenture") executed and delivered between the Company and Meridian Trust Company, as trustee (the "Trustee") to which reference is made to the Indenture for a description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee, the Company and the holders of the Debentures. By the terms of the Indenture, debentures (the "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 A 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 A-2 (ii) in whole or in part upon a redemption of the Series A Preferred Securities (as defined in the Indenture), but if in part, in an aggregate principal amount equal to the aggregate stated liquidation preference of the Series A Preferred Securities redeemed. The Series A Debentures are subject to redemption prior to maturity at any time on or after __________, 1999 at the option of the Company, in whole or in part, at 100% of the principal amount thereof plus accrued interest to the redemption date. In the event of redemption of this Debenture in part only, a new Debenture or Debentures of this series for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof. In case an Event of Default, as defined in the Indenture, 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 A Debentures may be amended with the written consent of the Holders of a majority in aggregate principal amount of the Series A 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 A 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 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 A-3 Debenture at the time and place and at the rate and in the money herein prescribed. The Company shall have the right at any time during the term of the Series A 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 A 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 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 Trustee 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 his 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 A-4 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. All 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 By: __________________________ Name: ________________________ Title: _______________________ Dated: _____________________ TRUSTEE'S CERTIFICATE OF AUTHENTICATION THIS IS ONE OF THE DEBENTURES REFERRED TO IN THE WITHIN-MENTIONED INDENTURE. MERIDIAN TRUST COMPANY By: __________________________ Name ______________________________ Authorized Signatory A-5 ASSIGNMENT FORM To assign this Debenture, fill in the form below: (I) or (we) assign and transfer this Debenture to: __________________________________________________________________ (Insert assignee's social security or tax I.D. number) ___________________________________________________________________ (Print or type assignee's name, address and zip code) and irrevocably appoint ______________________________ agent to transfer this Debenture on the books of the Company. The agent may substitute another to act for him. Dated: ________________ Signature: ________________________ (Sign exactly as your name appears on the other side of this Debenture) Signature Guaranty: ________________________ A-6 EX-4.7 7 EXHIBIT 4-7 PAYMENT AND GUARANTEE AGREEMENT THIS PAYMENT AND GUARANTEE AGREEMENT ("Guarantee Agreement"), dated as of _______ ___, 1994, is executed and delivered by PECO Energy Company, a Pennsylvania corporation (the "Guarantor"), for the benefit of the Holders (as defined below) from time to time of the Series A 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 $___________ aggregate stated liquidation preference of limited partner interests of a series designated the __% Cumulative Monthly Income Preferred Securities, Series A (the "Series A Preferred Securities"), and the Guarantor desires to enter into this Guarantee Agreement for the benefit of the Holders, as provided herein; WHEREAS, PECO Energy Capital will loan the proceeds from the issuance and sale of the Preferred Securities and the related capital contribution of the General Partner to PECO Energy Capital (the "G.P. Capital Contribution") to the Guarantor, and the Guarantor will issue Subordinated Debentures in accordance with the Indenture (as defined below) to evidence such loan; 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 shall, unless the context otherwise requires, 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 _______ __, 1994 (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 A Preferred Securities out of moneys legally available therefor held by PECO Energy Capital, (ii) the Redemption Price 2 (as defined below) payable with respect to any Series A Preferred Securities called for redemption by PECO Energy Capital out of moneys legally available therefor held by PECO Energy Capital, and (iii) upon a 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 Holders in liquidation of PECO Energy Capital, and (iv) any Additional Amounts (as defined in the Action of the General Partner creating the Series A Preferred Securities under the Limited Partnership Agreement) payable by PECO Energy Capital in respect of the Series A Preferred Securities. "Holder" shall mean any person in whose name a Series A Preferred Security is registered on the registration books maintained by PECO Energy Capital; provided, however, that in determining whether the Holders of the requisite percentage of Series A 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 ___________________, 1994, between the Guarantor and Meridian Trust Company and pursuant to which the Guarantor has issued its __% Subordinated Debentures, Series A (the "Series A Subordinated Debentures") in an amount equal to the aggregate stated 3 liquidation preference of the Series A Preferred Securities and the G.P. Capital Contribution. "Liquidation Distribution" shall mean the aggregate of the stated liquidation preference of $25 per Series A Preferred Security and all accumulated and unpaid distributions to the date of payment. "Redemption Price" shall mean the aggregate of $25 per Series A Preferred Security and all accumulated and unpaid distributions to the date fixed for redemption. "Special Representative" shall mean any representative of the holders of the limited partner interests of PECO Energy Capital appointed pursuant to Section 13.02(d) of the Limited Partnership 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 or the General Partner. The Guarantor's obligation to make a 4 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 A Subordinated Debentures and the Guarantor shall not be obligated hereunder to pay during an Extension Period any monthly distributions on the Series A Preferred Securities which are not paid by PECO Energy Capital during such Extension Period. SECTION 2.02. The Guarantor hereby waives notice of acceptance of this Guarantee Agreement and of any liability to which it applies or may apply, presentment, demand for payment, protest, notice of nonpayment, notice of dishonor, notice of redemption and all other notices and demands. SECTION 2.03. Except as otherwise set forth herein, the obligations, covenants, agreements and duties of the Guarantor under this Guarantee Agreement shall in no way be affected or impaired by reason of the happening from time to time of any of the following: (a) the release or waiver, by operation of law or otherwise, of the performance or observance by PECO Energy Capital of any express or implied agreement, 5 covenant, term or condition relating to the Series A 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 A Preferred Securities or the extension of time for the performance of any other obligation under, arising out of, or in connection with, the Series A 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 A 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 6 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 A 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 not less than 10% in aggregate stated liquidation preference of the Series A 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 7 directions to the General Partner or the Special Representative as the case may be; and (v) if the General Partner or Special Representative fails to enforce this Guarantee Agreement as above provided, any Holder 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. A Holder or the 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 8 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 A Preferred Securities and that the Guarantor shall be liable as principal and sole debtor hereunder to make Guarantee Payments pursuant to the terms of this Guarantee Agreement notwithstanding the occurrence of any event referred to in subsections (a) through (f), inclusive, of Section 2.03 hereof. ARTICLE III ----------- SECTION 3.01. So long as any Series A 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 9 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 A 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 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. 10 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 A 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 any Holder must restore payments of any sums paid under the Series A Preferred Securities or under this Guarantee Agreement for any reason whatsoever. ARTICLE V --------- SECTION 5.01. All guarantees and agreements contained in this Guarantee Agreement shall bind the successors, assigns, receivers, trustees and representatives of the Guarantor and shall inure to the benefit of the Holders. Except as provided in Section 3.01, the Guarantor may not assign its obligations hereunder without the prior approval of the Holders of not less than 66 2/3% of the aggregate stated liquidation preference of all Series A 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 A Preferred Securities remain 11 outstanding, any such amendment that adversely affects the holders of Series A Preferred Securities, 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 not less than 66 2/3% of the aggregate liquidation preference of all Series A 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 notice to the Holders): PECO Energy Company 2301 Market Street P.O. Box 8699 Philadelphia, Pennsylvania 19101 Facsimile No.: (215) 841-5743 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. 12 SECTION 5.04. This Guarantee Agreement is solely for the benefit of the Holders and is not separately transferable from the Series A Preferred Securities. SECTION 5.05. THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA WITHOUT GIVING EFFECT TO CONFLICT OF LAW PRINCIPLES THEREOF. THIS GUARANTEE AGREEMENT is executed as of the day and year first above written. PECO ENERGY COMPANY By:________________________ Name: Title: 13 EX-5.1 8 EXHIBIT 5-1 Exhibit 5-1 ----------- Ballard Spahr Andrews & Ingersoll 1735 Market Street Philadelphia, PA 19103 May 25, 1994 PECO Energy Company 2301 Market Street Philadelphia, PA 19103 Re: $350,000,000 of Preferred Securities 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 from time to time by PECO Energy Capital, L.P., a Delaware limited partnership ("PECO Energy Capital"), of $350,000,000 stated liquidation preference of Cumulative Monthly Income Preferred Securities (the "Preferred Securities"), representing limited partner interests, and the execution and delivery by the Company of one or more Payment and Guaranty Agreements (the "Guarantees") and the issuance of one or more series of Subordinated Debentures (the "Subordinated Debentures") in connection therewith and the registration of the Preferred Securities, the Guarantees and the Subordinated Debentures under the Securities Act of 1933, as amended. The Subordinated Debentures will be issued under an Indenture (the "Indenture") between the Company and Meridian Trust Company, as trustee. The opinions expressed below are based on the following assumptions: (a) The Registration Statement filed by the Company and PECO Energy Capital with the Securities and Exchange Commission with respect to the Preferred Securities, the Guarantees 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 PECO Energy Company May 25, 1994 Page 2 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 any series of Preferred Securities: (i) the general partner of PECO Energy Capital will authorize the issuance of, and determine the terms of, such series of Preferred Securities; (ii) the 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 series of the Subordinated Debentures related to such series of Preferred Securities; (iii) the Guarantee related to such series of Preferred Securities 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; and (d) The 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, the Subordinated Debentures will be legally issued, valid and binding obligations of the Company. 2. When executed and delivered by the Company, the Guarantees will be valid and binding obligations 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 heading "Legal Matters" in the Prospectus and under the heading "United States Taxation" in the Prospective Supplement included in the Registration Statement. Very truly yours, BALLARD SPAHR ANDREWS & INGERSOLL EX-5.2 9 EXHIBIT 5-2 [Letterhead of Richards, Layton & Finger] May 25, 1994 PECO Energy Capital, L.P. 1013 Centre Road, Suite 350F Wilmington, DE 19805 Re: PECO Energy Capital, L.P. ------------------------- Ladies and Gentlemen: We have acted as special Delaware counsel for PECO Energy Capital, L.P., a Delaware limited partnership (the "Partnership"), in connection with the matters set forth herein. At your request, this opinion is being furnished to you. For purposes of giving the opinions hereinafter set forth, our examination of documents has been limited to the examination of originals or copies of the following: (a) The Certificate of Limited Partnership of the Partnership, dated as of May 23, 1994 (the "Partnership Certificate"), as filed in the office of the Secretary of State of the State of Delaware (the "Secretary of State") on May 23, 1994; (b) The Agreement of Limited Partnership of the Partnership, dated as of May 23, 1994; (c) A registration statement (the "Registration Statement") on Form S-3, including a related prospectus (the "Prospectus") and a prospectus supplement, proposed to be filed by PECO Energy Company, a Pennsylvania corporation, and the Partnership with the Securities and Exchange Commission on or about May 25, 1994; (d) A form of Amended and Restated Limited Partnership Agreement of the Partnership, attached as an exhibit to the Registration Statement (the "Agreement"); (e) A form of Action of PECO Energy Capital Corp., a Delaware corporation (the "General Partner"), relating to the Preferred Partner Interests (the "Action"); and PECO Energy Capital, L.P. May 25, 1994 Page 2 (f) A Certificate of Good Standing for the Partnership, dated May 25, 1994, obtained from the Secretary of State. The 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 (f) above. In particular, we have not reviewed any document (other than the documents listed in paragraphs (a) through (f) above) that is referred to in or incorporated by reference into the LP Agreement or the Registration Statement. 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) except to the extent provided in paragraph 1 below, the due organization or due formation, as the case may be, and valid existence in good standing of each party to the documents examined by us under the laws of the jurisdiction governing its organization or formation, (iii) the legal capacity of natural persons who are parties to the documents examined by us, (iv) 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, (v) the due authorization, execution and delivery by all parties thereto of all documents examined by us, including the LP Agreement, (vi) the receipt by each Preferred Partner of a Certificate and the payment for the Preferred Partner Interests PECO Energy Capital, L.P. May 25, 1994 Page 3 acquired by it, in accordance with the LP Agreement, (vii) that the books and records of the Partnership set forth all information required by the LP Agreement and the Delaware Revised Uniform Limited Partnership Act (6 Del. C. Section 17-101, et seq.) (the "Act"), including all information with respect to all Persons to be admitted as Partners and their contributions to the Partnership, and (viii) that the Preferred Partner Interests are issued and sold to the Preferred Partners in accordance with the Registration Statement and the LP 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 Act. 2. Assuming that the Preferred Partners, as limited partners of the Partnership, do not participate in the control of the business of the Partnership, upon issuance and payment as contemplated by the LP Agreement, the Preferred Partner Interests will represent valid and, subject to the qualifications set forth herein, will be fully paid and nonassessable limited partner interests in the Partnership, as to which the Preferred Partners, as limited partners of the Partnership, will have no liability in excess of their obligations to make payments provided for in the LP Agreement and their share of the Partnership's assets and undistributed profits (subject to the obligation of a Preferred Partner to repay any funds wrongfully distributed to it). 3. There are no provisions in the LP Agreement the inclusion of which, subject to the terms and conditions therein, or, assuming that the Preferred Partners, as limited partners of the Partnership, take no action other than actions permitted by the LP Agreement, the exercise of which, in accordance with the terms and conditions therein, would cause the PECO Energy Capital, L.P. May 25, 1994 Page 4 Preferred Partners, as limited partners of the Partnership, to be deemed to be participating in the control of the business of the Partnership. We consent to the filing of this opinion with the Securities and Exchange Commission as an exhibit to the Registration Statement. We hereby consent to the use of our name under the heading "Legal Matters" in the Prospectus. In giving the foregoing consents, we do not thereby admit that we come within the category of persons whose consent is required under Section 7 of the Securities Act of 1933, as amended, or the rules and regulations of the Securities and Exchange Commission thereunder. Except as stated above, without our prior written consent, this opinion may not be furnished or quoted to, or relied upon by, any other person or entity for any purpose. Very truly yours, EX-8 10 EXHIBIT 8 Ballard Spahr Andrews & Ingersoll 1735 Market Street Philadelphia, PA 19103 May 25, 1994 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 $350,000,000 stated liquidation preference of Cumulative Monthly Income Preferred Securities of PECO Energy Capital, L.P., a Delaware limited partnership and the related Guarantees and Subordinated Debentures, of the Company and hereby confirm to you our opinion as set forth under the heading "United States Taxation" in the Prospectus Supplement included in the Registration Statement. Very truly yours, BALLARD SPAHR ANDREWS & INGERSOLL EX-23.1 11 EXHIBIT 23-1 CONSENT OF INDEPENDENT ACCOUNTANTS To the Board of Directors, PECO Energy Company: We consent to the incorporation by reference in the registration statement of PECO Energy Company and PECO Energy Capital, L.P. on Form S-3, with respect to the registration of $350,000,000 of Cumulative Monthly Income Preferred Securities of PECO Energy Capital, L.P. and guarantees of PECO Energy Company related thereto and $350,000,000 principal amount of Subordinated Debentures of PECO Energy Company, of our reports dated January 31, 1994 on our audits of the consolidated financial statements and financial statement schedules of PECO Energy Company and Subsidiary Companies as of December 31, 1993 and 1992, and for each of the three years in the period ended December 31, 1993, listed in Item 14 of the 1993 Annual Report of PECO Energy Company on Form 10-K. We also consent to the reference to our firm under the heading "EXPERTS". /s/ Coopers & Lybrand -------------------------------------- Coopers & Lybrand Philadelphia, Pennsylvania May 24, 1994 EX-24 12 EXHIBIT 24 EXHIBIT 24 1 OF 12 PECO ENERGY COMPANY P O W E R O F A T T O R N E Y KNOW ALL MEN BY THESE PRESENTS That I, Susan W. Catherwood of Bryn Mawr, PA, do hereby appoint J. F. PAQUETTE, JR., and K. G. LAWRENCE, 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, in connection with the registration of the securities of this 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. Dated: April 13, 1994 /s/ Susan W. Catherwood (L.S.) ----------------------- Susan W. Catherwood EXHIBIT 24 2 of 12 PECO ENERGY COMPANY P O W E R O F A T T O R N E Y KNOW ALL MEN BY THESE PRESENTS That I, M. Walter D'Alessio of Philadelphia, PA, do hereby appoint J. F. PAQUETTE, JR., and K. G. LAWRENCE, 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, in connection with the registration of the securities of this 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. Dated: April 13, 1994 /s/ M. Walter D'Alessio (L.S.) ------------------------ M. Walter D'Alessio EXHIBIT 24 3 OF 12 PECO ENERGY COMPANY P O W E R O F A T T O R N E Y KNOW ALL MEN BY THESE PRESENTS That I, Richard G. Gilmore of Sarasota, FL, do hereby appoint J. F. PAQUETTE, JR., and K. G. LAWRENCE, 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, in connection with the registration of the securities of this 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. Dated: April 13, 1994 /s/ Richard G. Gilmore (L.S.) ---------------------- Richard G. Gilmore EXHIBIT 24 4 OF 12 PECO ENERGY COMPANY P O W E R O F A T T O R N E Y KNOW ALL MEN BY THESE PRESENTS That I, Richard H. Glanton of Philadelphia, PA, do hereby appoint J. F. PAQUETTE, JR., and K. G. LAWRENCE, 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, in connection with the registration of the securities of this 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. Dated: April 13, 1994 /s/ Richard H. Glanton (L.S.) ---------------------- Richard H. Glanton EXHIBIT 24 5 of 12 PECO ENERGY COMPANY P O W E R O F A T T O R N E Y KNOW ALL MEN BY THESE PRESENTS That I, James A. Hagen of Villanova, PA, do hereby appoint J. F. PAQUETTE, JR., and K. G. LAWRENCE, 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, in connection with the registration of the securities of this 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. Dated: April 13, 1994 /s/ James A. Hagen (L.S.) ------------------ James A. Hagen EXHIBIT 24 6 of 12 PECO ENERGY COMPANY P O W E R O F A T T O R N E Y KNOW ALL MEN BY THESE PRESENTS That I, Nelson G. Harris of Lafayette Hill, PA, do hereby appoint J. F. PAQUETTE, JR., and K. G. LAWRENCE, 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, in connection with the registration of the securities of this 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. Dated: April 13, 1994 /s/ Nelson G. Harris (L.S.) -------------------- Nelson G. Harris EXHIBIT 24 7 of 12 PECO ENERGY COMPANY P O W E R O F A T T O R N E Y KNOW ALL MEN BY THESE PRESENTS That I, Joseph C. Ladd of Rosemont, PA, do hereby appoint J. F. PAQUETTE, JR., and K. G. LAWRENCE, 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, in connection with the registration of the securities of this 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. Dated: April 13, 1994 /s/ Joseph C. Ladd (L.S.) ------------------ Joseph C. Ladd EXHIBIT 24 8 of 12 PECO ENERGY COMPANY P O W E R O F A T T O R N E Y KNOW ALL MEN BY THESE PRESENTS That I, Edithe J. Levit of Philadelphia, PA, do hereby appoint J. F. PAQUETTE, JR., and K. G. LAWRENCE, 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, in connection with the registration of the securities of this 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. Dated: April 13, 1994 /s/ Edithe J. Levit (L.S.) ------------------- Edithe J. Levit EXHIBIT 24 9 of 12 PECO ENERGY COMPANY P O W E R O F A T T O R N E Y KNOW ALL MEN BY THESE PRESENTS That I, Kinnaird R. McKee of Oxford, MD, do hereby appoint J. F. PAQUETTE, JR., and K. G. LAWRENCE, 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, in connection with the registration of the securities of this 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. Dated: April 13, 1994 /s/ Kinnaird R. McKee (L.S.) --------------------- Kinnaird R. McKee EXHIBIT 24 10 of 12 PECO ENERGY COMPANY P O W E R O F A T T O R N E Y KNOW ALL MEN BY THESE PRESENTS That I, Joseph J. McLaughlin of Rosemont, PA, do hereby appoint J. F. PAQUETTE, JR., and K. G. LAWRENCE, 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, in connection with the registration of the securities of this 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. Dated: April 13, 1994 /s/ Joseph J. McLaughlin (L.S.) ------------------------ Joseph J. McLaughlin EXHIBIT 24 11 of 12 PECO ENERGY COMPANY P O W E R O F A T T O R N E Y KNOW ALL MEN BY THESE PRESENTS That I, Dr. John M. Palms of Columbia, SC, do hereby appoint J. F. PAQUETTE, JR., and K. G. LAWRENCE, 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, in connection with the registration of the securities of this 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. Dated: April 13, 1994 /s/ John M. Palms (L.S.) ----------------- Dr. John M. Palms EXHIBIT 24 12 of 12 PECO ENERGY COMPANY P O W E R O F A T T O R N E Y KNOW ALL MEN BY THESE PRESENTS That I, Ronald Rubin of Narberth, PA, do hereby appoint J. F. PAQUETTE, JR., and K. G. LAWRENCE, 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, in connection with the registration of the securities of this 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. Dated: April 13, 1994 /s/ Ronald Rubin (L.S.) ---------------- Ronald Rubin EX-25 13 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) ____ MERIDIAN TRUST COMPANY --------------------------------------------------- (Exact name of Trustee as specified in its charter) Pennsylvania 23-2332649 - - - - ------------------------------ ------------------- (jurisdiction of incorporation (I.R.S. Employer or organization if not a U.S. Identification No.) national bank) 35 North Sixth Street Reading, Pennsylvania 19601 - - - - --------------------- ---------- (Address of principal (Zip Code) executive offices) Michael Ruppel 35 North Sixth Street Reading, PA 19601 (610) 655-3151 --------------------------------------------------------- (Name, address and telephone number of agent for service) PECO ENERGY COMPANY --------------------------------------------------- (Exact name of obligor as specified in its charter) Pennsylvania 23-0970240 - - - - --------------------------------- ------------------- (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 2301 Market Street Philadelphia, Pennsylvania 19101 - - - - -------------------------- ---------- (Address of principal (Zip Code) executive offices) DEBT SECURITIES ----------------------------------- (Title of the indenture securities) - - - - ------------------------------------------------------------------------------ Item 1. General Information. -------------------- Furnish the following information as to the Trustee: (a) Name and address of each examining or supervising authority to which it is subject. Federal Reserve Bank (3rd District), Ten Independence Mall, Philadelphia, Pennsylvania 19106. Department of Banking, Commonwealth of Pennsylvania, 333 Market Street, Harrisburg, Pennsylvania 17101. (b) Whether it is authorized to exercise corporate trust powers. The Trustee is authorized to exercise corporate trust powers. Item 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, including Meridian Bancorp, Inc.). Item 3. Voting Securities of the Trustee. --------------------------------- Furnish the following information as to each class of voting securities of the Trustee: As of May 20, 1994 - - - - ------------------------------------------------------------------------------ Col. A Col. B Title of class Amount outstanding *Common Capital Stock - Par Value $1.00 *300,000 Shares - - - - ------------------------------------------------------------------------------ * All voting securities of the Trustee are owned by Meridian Asset Management, Inc., a Pennsylvania business corporation, all of whose voting securities are owned by Meridian Bancorp, Inc., a Pennsylvania business corporation. Item 4. Trusteeship 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: (a) Title of the securities outstanding under each such other indenture. The Trustee is not 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. -2- (b) A brief statement of the facts relied upon as a basis for the claim that no conflicting interest within the meaning of Section 310(b)(1) of the Act arises as a result of the trust- eeship under any such other indenture, including a statement as to how the indenture securities will rank as compared with the securities issued under such other indenture. No conflicting interest within the meaning of Section 310(b)(1) of the Act arises because the Trustee is not a trustee under another indenture under which any other securi- ties, or certificates of interest or participation in any other securities, of the Obligor are outstanding. Item 5. Interlocking Directorates and Similar Relationships with the ------------------------------------------------------------ Obligor or Underwriters. ------------------------ If the Trustee or any of the directors or executive officers of the Trustee is a director, officer, partner, employee, appointee, or repre- sentative 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. Mr. Joseph F. Paquette, Jr. is Chairman of the Board and a director of the Obligor and a director of Meridian Bancorp, Inc., the parent corporation of the Trustee. (See Note on page 8.) Mr. Walter J. Laird, Jr. is a Senior Vice President of Dean Witter Reynolds Inc., one of the Underwriters, and a director of Delaware Trust Capital Management, Inc., an affiliate of the Trustee. (See Note on page 8.) Item 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: As of May 20, 1994 - - - - ------------------------------------------------------------------------------ Col. A Col. B Col. C Col. D Percentage of voting securi- ties represented Amount owned by amount given Name of owner Title of class beneficially in Col. C * * * * - - - - ------------------------------------------------------------------------------ * The amount of voting securities of the Trustee (or any of its affiliates, including Meridian Bancorp, Inc.) owned beneficially by the Obligor and its directors, partners and executive officers, taken as a group, does not exceed one percent of the outstanding voting securities of the Trustee (or any of its affiliates, including Meridian Bancorp, Inc.). (See Note on page 8.) -3- Item 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: As of May 20, 1994 - - - - ------------------------------------------------------------------------------ Col. A Col. B Col. C Col. D Percentage of voting securi- ties represented Amount owned by amount given Name of owner Title of class beneficially in Col. C * * * * - - - - ------------------------------------------------------------------------------ * The amount of voting securities of the Trustee (or any of its affiliates, including Meridian Bancorp, Inc.) owned beneficially by each Underwriter for the Obligor and its directors, partners and executive officers, taken as a group, does not exceed one percent of the outstand- ing voting securities of the Trustee (or any of its affiliates, including Meridian Bancorp, Inc.). (See Note on page 8.) Item 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: As of May 20, 1994 - - - - ------------------------------------------------------------------------------ Col. A Col. B Col. C Col. D Amount owned Whether the se- beneficially or curities are held as collat- Percent of class voting or non- eral security represented by voting securi- for obligations amount given in Title of class ties in default Col. C * * * * - - - - ------------------------------------------------------------------------------ * The Trustee (or any of its affiliates, including Meridian Bancorp, Inc.) does not own beneficially or hold as collateral security for obligations in default more than one percent of any class of outstanding securities of the Obligor. (See Note on page 8.) Item 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: -4- As of May 20, 1994 - - - - ------------------------------------------------------------------------------ Col. A Col. B Col. C Col. D Amount owned beneficially or held as collat- eral security Percent of class Title of issuer for obligations represented by and title of Amount outstand- in default by amount given in class ing Trustee Col. C * * * * - - - - ------------------------------------------------------------------------------ * The Trustee (or any of its affiliates, including Meridian Bancorp, Inc.) does not own beneficially or hold as collateral security for obligations in default more than one percent of any class of any securities of an Underwriter for the Obligor. (See Note on page 8.) Item 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 knowl- edge of the Trustee (1) owns 10 percent or more of the voting securities 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: As of May 20, 1994 - - - - ------------------------------------------------------------------------------ Col. A Col. B Col. C Col. D Amount owned beneficially or held as collat- eral security Percent of class Title of issuer for obligations represented by and title of Amount outstand- in default by amount given in class ing Trustee Col. C * * * * - - - - ------------------------------------------------------------------------------ * The Trustee (or any of its affiliates, including Meridian Bancorp, Inc.) does not own beneficially or hold as collateral security for obligations in default more than one percent of the voting securities of any person who, to the knowledge of the Trustee (or any of its affili- ates, including Meridian Bancorp, Inc.), (1) owns 10 percent or more of the voting securities of the Obligor or (2) is an affiliate, other than a subsidiary, of the Obligor. (See Note on page 8.) Item 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: -5- As of May 20, 1994 - - - - ------------------------------------------------------------------------------ Col. A Col. B Col. C Col. D Amount owned beneficially or held as collat- eral security Percent of class Title of issuer for obligations represented by and title of Amount outstand- in default by amount given in class ing Trustee Col. C * * * * - - - - ------------------------------------------------------------------------------ * The Trustee (or any of its affiliates, including Meridian Bancorp, Inc.) does not own beneficially or hold as collateral security for obligations in default more than one percent of any securities of a person who, to the knowledge of the Trustee (or any of its affiliates, including Meridian Bancorp, Inc.), owns 50 percent or more of the voting securities of the Obligor. (See Note on page 8.) Item 12. Indebtedness of the Obligor to the Trustee. ------------------------------------------- Except as noted on the instructions, if the Obligor is indebted to the Trustee, furnish the following information: As of May 20, 1994 - - - - ------------------------------------------------------------------------------ Col. A Col. B Col. C Nature of indebtedness Amount outstanding Date due $35,000,000 Line of Credit -- Not applicable $12,500,000 Line of Credit $500,000 May 31, 1994 $1,000,000 Line of Credit -- Not applicable $1,000,000 Letter of Credit $536,429 May 31, 1994 $302,049 Letter of Credit $302,049 May 31, 1994 $224,380 Letter of Credit -- Not applicable $75,000 Letter of Credit -- Not applicable $10,000 Letter of Credit $10,000 May 31, 1994 - - - - ------------------------------------------------------------------------------ Meridian Bank, an affiliate of the Trustee, has established the foregoing lines and letters of credit totaling $50,111,429, which may be drawn upon by the Obligor. As of May 20, 1994, there was an aggregate of $1,348,478 outstanding on these lines and letters of credit. Item 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. -6- There is not nor has there been a default with respect to the securities under this indenture. (See Note on page 8.) (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, iden- tify the indenture or series affected, and explain the nature of any such default. The Trustee is not a trustee under any other 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 out- standing securities under this indenture. (See Note on page 8.) Item 14. Affiliations with the Underwriters. ----------------------------------- If any Underwriter is an affiliate of the Trustee, describe each such affiliation. No Underwriter for the Obligor is an affiliate of the Trustee. (See Note on page 8.) Item 15. Foreign Trustee. ---------------- Identify the order or rule 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. Item 16. List of Exhibits. ----------------- List below all exhibits filed as part of this statement of eligibil- ity and qualification. 1. A copy of the articles of incorporation of the Trustee as now in effect (incorporated by reference to Exhibit 1 to Form T-1 filed in Form S-3 Registration Statement of The Bell Tele- phone Company of Pennsylvania (Reg. No. 33-43712)). 2. Certificate of authority of the Trustee to commence business (incorporated by reference to Exhibit 2 to Form T-1 filed in Form S-3 Registration Statement of The Bell Telephone Company of Pennsylvania (Reg. No. 33-43712)). 3. Authorization of the Trustee to exercise corporate trust powers (incorporated by reference to Exhibit 3 to Form T-1 filed in Form S-3 Registration Statement of The Bell Tele- phone Company of Pennsylvania (Reg. No. 33-43712)). 4. A copy of the existing by-laws of the Trustee (incorporated by reference to Exhibit 4 to Form T-1 filed in Form S-3 -7- Registration Statement of The Bell Telephone Company of Pennsylvania (Reg. No. 33-43712)). 5. A copy of the indenture referred to in Item 4, if the Obligor is in default. Not applicable. 6. The consent of the Trustee required by Section 321(b) of the Act. 7. A copy of the latest report of condition of the Trustee as of the close of business on March 31, 1994, published pursuant to law or the requirement of its supervising or examining authority. 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 informa- tion furnished to it by the Obligor and such Underwriter and the Trustee disclaims responsibility for the accuracy or completeness of such infor- mation. -8- SIGNATURE --------- Pursuant to the requirement of the Trust Indenture Act of 1939, the Trustee, Meridian Trust Company, a corporation organized and existing under the laws of the Commonwealth of Pennsylvania, has duly caused this statement of eligibility and qualification to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Reading and the Commonwealth of Pennsylvania, on the 20th day of May, 1994. MERIDIAN TRUST COMPANY By: /s/ Michael Ruppel -------------------------------- Name: Michael Ruppel Title: Account Officer 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 up to $360,500,000 aggregate principal amount of PECO Energy Company Subordinated Debentures due to mature in 2043, 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. MERIDIAN TRUST COMPANY By: /s/ Michael G. Ruppel -------------------------------- Name: Michael G. Ruppel Title: Account Officer Dated: May 25, 1994 ------------------ CONSOLIDATED REPORTS OF CONDITION AND INCOME STATE 034 FOR A COMMERCIAL BANK OR A SAVINGS BANK WITH DOMESTIC OFFICES ONLY Page RC-1 AND TOTAL ASSETS OF LESS THAN $100 MILLION (3-94) - - - - ------------------------------------------------------------------------------ LEGAL TITLE OF BANK STATE BANK NO. MERIDIAN TRUST COMPANY -------------------------------- FEDERAL RESERVE DISTRICT NO. THIRD - - - - ------------------------------------------------------------------------------ CITY COUNTY STATE ZIP CODE CLOSE OF BUSINESS MALVERN CHESTER PA 19355 MARCH 31, 1994 - - - - ------------------------------------------------------------------------------ Consolidated Report of Condition for Insured Commercial and State-Chartered Savings Banks All schedules are to be reported in thousands of dollars. Unless otherwise indicated, report the amount outstanding as of the last business day of the quarter. Schedule RC -- Balance Sheet -------- | C100 | <- ---------------------- Dollar Amounts in Thousands | Mil Thou | - - - - -------------------------------------------------------------------------- ASSETS | ////////////////// | 1. Cash and balances due from depository | ////////////////// | institutions: | ////////////////// | a. Noninterest-bearing balances and currency | ////////////////// | and coin(1)(2) ............................ | RCON 0081 5 | 1.a. b. Interest-bearing balances(3) .............. | RCON 0071 760 | 1.b. 2. Securities: | ////////////////// | a. HELD-TO-MATURITY SECURITIES (FROM SCHEDULE | ////////////////// | RC-B, COLUMN A) ........................... | RCON 1754 358 | 2.a. b. AVAILABLE-FOR-SALE SECURITIES (FROM | ////////////////// | SCHEDULE RC-B, COLUMN D) .................. | RCON 1773 0 | 2.b 3. Federal funds sold and securities purchased | ////////////////// | under agreements to resell: | ////////////////// | a. Federal funds sold(4) ...................... | RCON 0276 0 | 3.a. b. Securities purchased under agreements | ////////////////// | to resell(5) ............................... | RCON 0277 0 | 3.b. 4. Loans and lease financing receivables: | ////////////////// | a. Loans and leases, net of unearned | ////////////////// | income (from ----------------------| ////////////////// | Schedule RC-C) ...... | RCON 2122 173 | ////////////////// | 4.a. b. LESS: Allowance | //////////////////// | ////////////////// | for loan and | //////////////////// | ////////////////// | lease losses ........ | RCON 3123 0 | ////////////////// | 4.b. c. LESS: Allocated | //////////////////// | ////////////////// | transfer risk | //////////////////// | ////////////////// | reserve ............. | RCON 3128 0 | ////////////////// | 4.c. ----------------------| ////////////////// | d. Loans and leases, net of unearned income, | ////////////////// | allowance, and reserve (item 4.a minus 4.b | ////////////////// | and 4.c) ................................... | RCON 2125 173 | 4.d. 5. Assets held in trading accounts ............... | RCON 3545 0 | 5. 6. Premises and fixed assets (including | ////////////////// | capitalized leases) ........................... | RCON 2145 1,003 | 6. 7. Other real estate owned (from Schedule RC-M) .. | RCON 2150 0 | 7. 8. Investments in unconsolidated subsidiaries and | ////////////////// | associated companies (from Schedule RC-M) ..... | RCON 2130 0 | 8. 9. Customers' liability to this bank on | ////////////////// | acceptances outstanding ....................... | RCON 2155 0 | 9. 10. Intangible assets (from Schedule RC-M) ........ | RCON 2143 0 |10. 11. Other assets (from Schedule RC-F) ............. | RCON 2160 5,496 |11. 12. a. Total assets (sum of items 1 through 11) ... | RCON 2170 7,795 |12.a. b. Losses deferred pursuant to 12 U.S.C. | ////////////////// | 1823(j) (from Schedule RC-M) ............... | RCON 0306 0 |12.b. c. Total assets and losses deferred pursuant | ////////////////// | to 12 U.S.C. 1823(j) (sum of items 12.a and | ////////////////// | 12.b) ...................................... | RCON 0307 7,795 |12.c. ---------------------- - - - - ---------- (1) Includes cash items in process of collection and unposted debits. Report deposit accounts "due from" depository institutions that are overdrawn in Schedule RC, item 16, "Other borrowed money." (2) The amount reported in this item must be greater than or equal to the sum of Schedule RC-M, items 2 and 3. (3) Includes time certificates of deposit not held in trading accounts. (4) Report "term federal funds sold" in Schedule RC, item 4.a, "Loans and leases, net of unearned income," and in Schedule RC-C, part I. (5) Report securities purchased under agreements to resell that involve the receipt of immediately available funds and mature in one business day or roll over under a continuing contract in Schedule RC, item 3.a, "Federal funds sold." STATE 034 Page RC-2 (3-94) Schedule RC -- Continued -------- | //// | <- -------------------------- Dollar Amounts in Thousands | ///////////// Mil Thou | - - - - ----------------------------------------------------------------------- LIABILITIES | ////////////////////// | 13. Deposits: | ////////////////////// | a. In domestic offices (sum of totals | ////////////////////// | of columns A and C from Schedule | ////////////////////// | RC-E) ............................... | RCON 2200 0 |13.a. (1) Non- | ////////////////////// | interest -----------------------| ////////////////////// | bearing(1) | RCON 6631 0 | ////////////////////// |13.a.(1) (2) Interest | //////////////////// | ////////////////////// | bearing .. | RCON 6636 0 | ////////////////////// |13.a.(2) -----------------------| ////////////////////// | b. In foreign offices, Edge and | ////////////////////// | Agreement subsidiaries, and IBFs .... | ////////////////////// | (1) Non-interest bearing ............ | ////////////////////// | (2) Interest bearing ................ | ////////////////////// | 14. Federal funds purchased and securities | ////////////////////// | sold under agreements to repurchase: | ////////////////////// | a. Federal funds purchased(2) .......... | RCON 0278 0 | 14.a. b. Securities sold under agreements | ////////////////////// | to repurchase(3) .................... | RCON 0279 0 | 14.b. 15. a. Demand notes issued to the U.S. | ////////////////////// | Treasury ............................ | RCON 2840 0 | 15.a. b. TRADING LIABILITIES ................. | RCON 3548 0 | 15.b. 16. Other borrowed money: | ////////////////////// | a. WITH ORIGINAL MATURITY OF ONE YEAR | ////////////////////// | OR LESS ............................. | RCON 2332 0 | 16.a. b. WITH ORIGINAL MATURITY OF MORE THAN | ////////////////////// | ONE YEAR ............................ | RCON 2333 0 | 16.b. 17. Mortgage indebtedness and obligations | ////////////////////// | under capitalized leases ............... | RCON 2910 0 | 17. 18. Bank's liability on acceptances executed | ////////////////////// | and outstanding ........................ | RCON 2920 0 | 18. 19. Subordinated notes and debentures....... | RCON 3200 0 | 19. 20. Other liabilities (from Schedule RC-G).. | RCON 2930 3,190 | 20. 21. Total liabilities (sum of items 13 | ////////////////////// | through 20) ............................ | RCON 2948 3,190 | 21. | ////////////////////// | 22. Limited-life preferred stock and | ////////////////////// | related surplus ........................ | RCON 3282////////////0 | 22. EQUITY CAPITAL | ////////////////////// | 23. Perpetual preferred stock and related | ////////////////////// | surplus ................................ | RCON 3838 0 | 23. 24. Common stock ........................... | RCON 3230 300 | 24. 25. Surplus (exclude all surplus related | ////////////////////// | to preferred stock) .................... | RCON 3839 477 | 25. 26. a. Undivided profits and capital | ////////////////////// | reserves ............................ | RCON 3632 3,828 | 26.a. b. NET UNREALIZED HOLDING GAINS | ////////////////////// | (LOSSES) ON AVAILABLE-FOR SALE | ////////////////////// | SECURITIES .......................... | RCON 8434 0 | 26.b. 27. Cumulative foreign currency | ////////////////////// | translation adjustments ................ | ////////////////////// | 28. a. Total equity capital (sum of items | ////////////////////// | 23 through 27) ...................... | RCON 3210 4,606 | 28.a. b. Losses deferred pursuant to 12 U.S.C. | ////////////////////// | 1823(j) (from Schedule RC-M) ........ | RCON 0306 0 | 28.b. c. Total equity capital and losses | ////////////////////// | deferred pursuant to 12 U.S.C. | ////////////////////// | 1823(j) (sum of items 28.a and 28.b). | RCON 3559 4,606 | 28.c. 29. Total liabilities, limited-life | ////////////////////// | preferred stock, equity capital, and | ////////////////////// | losses deferred pursuant to 12 U.S.C. | ////////////////////// | 1823(j) (sum of items 21, 22, and 28.c). | RCON 2257 7,795 | 29. -------------------------- Memorandum TO BE REPORTED ONLY WITH THE MARCH REPORT OF CONDITION. 1. Indicate in the box at the right the number of the statement below that best describes the most comprehensive level of auditing work performed for the bank by Number independent external auditors as of any ------------------ date during 1993 ................................... | RCON 6724 2 | M.1. ------------------ 1 = Independent audit of the bank conducted in accordance with generally accepted auditing standards by a certified public accounting firm which submits a report on the bank 2 = Independent audit of the bank's parent holding company conducted in accordance with generally accepted auditing standards by a certified public accounting firm which submits a report on the consolidated holding company (but not on the bank separately) 3 = Directors' examination of the bank conducted in accordance with generally accepted auditing standards by a certified public accounting firm (may be required by state chartering authority) 4 = Directors' examination of the bank performed by other external auditors (may be required by state chartering authority) 5 = Review of the bank's financial statements by external auditors 6 = Compilation of the bank's financial statements by external auditors 7 = Other audit procedures (excluding tax preparation work) 8 = No external audit work - - - - ---------- (1) Includes total demand deposits and noninterest-bearing time and savings deposits. (2) Report "term federal funds purchased" in Schedule RC, item 16, "Other borrowed money." (3) Report securities sold under agreements to repurchase that involve the receipt of immediately available funds and mature in one business day or roll over under a continuing contract in schedule RC, item 14.a, "Federal funds purchased." -----END PRIVACY-ENHANCED MESSAGE-----