================================================================================
PECO ENERGY TRANSITION TRUST
AMENDED AND RESTATED
TRUST AGREEMENT
as of September _, 1998
AMONG
XXXXXX XXXXXXX and XXXXX XXX XXXXX, as BENEFICIARY TRUSTEES,
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION, as ISSUER TRUSTEE,
DELAWARE TRUSTEE AND INDEPENDENT TRUSTEE
and
PECO ENERGY COMPANY,
as GRANTOR and OWNER
================================================================================
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
1.01. Capitalized Terms.................................................... 1
ARTICLE II
ORGANIZATION
2.01. Name ................................................................ 5
2.02. Office .............................................................. 5
2.03. Purposes and Powers ................................................. 5
2.04. Appointment of the Trustees; Initial Trust Property ................. 6
2.05. Declaration of Trust ................................................ 6
2.06. Other Expenses, Liabilities of Trust ................................ 7
2.07. Situs of Trust ...................................................... 7
2.08. Additional Capital Contributions .................................... 7
2.09. Assignment of Right to Distributions or Payments; Transfers ......... 7
ARTICLE III
COMPLIANCE WITH THE CODE
3.01. Trust to be Treated as a Division For Tax Purposes . ................ 8
ARTICLE IV
SEPARATE EXISTENCE OF TRUST
4.01. Maintenance of Separate Existence ................................... 8
4.02. Merger and Other Transactions ....................................... 12
4.03. Transactions with Affiliates ........................................ 12
4.04. Insolvency .......................................................... 13
i
ARTICLE V
INVESTMENT AND APPLICATION OF TRUST FUNDS
5.01. Investment of Trust Funds ........................................... 13
5.02. Application of Funds ................................................ 13
ARTICLE VI
AUTHORITY AND DUTIES OF THE TRUSTEES
6.01. General Authority ................................................... 13
6.02. Specific Authority; Special Authority of Beneficiary Trustees ....... 13
6.03. Accounting and Reports to the Grantor, any Owner,
the Internal Revenue Service and Others ............................. 15
6.04. Signature of Returns ................................................ 15
6.05. Right to Receive Instructions ....................................... 15
6.06. No Duties Except as Specified in this Agreement or in Instructions .. 15
6.07. No Action Except Under Specified Documents or Instructions .......... 16
ARTICLE VII
CONCERNING THE TRUSTEES
7.01. Acceptance of Trusts and Duties ..................................... 16
7.02. Furnishing of Documents ............................................. 17
7.03. Reliance; Advice of Counsel ......................................... 17
7.04. Not Acting in Individual Capacity ................................... 17
ARTICLE VIII
COMPENSATION OF TRUSTEES
8.01. Issuer Trustee's Fees and Expenses .................................. 18
8.02. Beneficiary Trustees' Fees and Expenses ............................. 18
8.03. Fees of Separate Independent Trustee and Delaware Trustee ........... 18
ii
ARTICLE IX
INDEMNIFICATION OF TRUSTEES
9.01. Scope of Indemnification............................................ 18
ARTICLE X
TERMINATION OF TRUST
10.01. Dissolution of Trust ............................................... 19
10.02. No Termination by Grantor or Owner ................................. 19
10.03. Cancellation of Certificate of Trust ............................... 19
ARTICLE XI
SUCCESSOR TRUSTEES AND ADDITIONAL TRUSTEES
11.01. Resignation of Trustee; Appointment of Successor ................... 19
ARTICLE XII
MISCELLANEOUS
12.01. Supplements and Amendments ....................................... 20
12.02. No Legal Title to Trust Property in Grantor and Owner ............ 20
12.03. Limitations on Rights of Others .................................. 21
12.04. Notices .......................................................... 21
12.05. Severability ..................................................... 21
12.06. Separate Counterparts............................................. 22
12.07. Successors and Assigns............................................ 22
12.08. Headings ......................................................... 22
12.09. Governing Law..................................................... 22
Exhibit 1 Trustee Fee Schedule
Exhibit 2 Certificate of Trust
iii
AMENDED AND RESTATED TRUST AGREEMENT dated as of September _, 1998
among PECO Energy Company, a Pennsylvania corporation, as Grantor and Owner, and
First Union Trust Company, National Association, a Delaware banking corporation,
as Issuer Trustee, Delaware Trustee and Independent Trustee, Xxxxxx Xxxxxxx, an
individual, and Xxxxx Xxx Xxxxx, an individual, as Beneficiary Trustees.
A Certificate of Trust of the Trust was filed with the Secretary of
State of the State of Delaware on June 23, 1998.
The Grantor, the Beneficiary Trustees and the Issuer Trustee are
parties to that certain Trust Agreement dated as of June 23, 1998 (the "Prior
Trust Agreement") and now desire to amend and restate the Prior Trust Agreement
as set forth below.
NOW, THEREFORE, the parties hereto, intending to be legally bound
hereby, agree to amend and restate the Prior Trust Agreement in its entirety as
follows.
ARTICLE I
DEFINITIONS
1.01. Capitalized Terms. For all purposes of this Agreement, the
following terms shall have the meanings set forth below:
"Agreement" means this Amended and Restated Trust Agreement, as it may
be amended from time to time.
"Affiliate" shall mean, with reference to any specified Person, any
other Person controlling or controlled by or under common control with such
specified Person; provided, that, for purposes of this Agreement when used with
respect to the Grantor's or any Owner's direct or indirect subsidiaries, any
limited partners thereof shall also be deemed "Affiliates." For the purposes of
this definition, "control," when used with reference to any specified Person,
shall mean the power to direct the management and policies of such specified
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.
"Affiliated Entity" means the Grantor, any Owner, any of their
respective direct or indirect subsidiaries or any Affiliate of any of the
foregoing other than the Trust.
"Beneficiary Trustee" means any Trustee other than the Issuer Trustee,
the Independent Trustee or the Delaware Trustee.
"Bond Trustee" means The Bank of New York, as Bond Trustee under the
Indenture, and its successors.
"Business Day" means any day other than a Saturday, Sunday, or a day on
which banking institutions in the City of Philadelphia, the City of New York or
the State of Delaware are required by law or executive order to remain closed.
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware Code,
12 Del. C. ss.3801, et seq., and any successor statute, as amended from time to
time.
"Code" means the Internal Revenue Code of 1986, as amended.
"Competition Act" means the Pennsylvania Electricity Generation
Customer Choice and Competition Act, Chapter 28 of Title 66 of the Pennsylvania
Consolidated Statutes, 66 Pa.C.S. ss. 2801, et seq.;
"Delaware Trustee" means a Trustee who is a natural person and who is a
resident of the State of Delaware, or, in all other cases, a trustee has its
principal place of business in the State of Delaware.
"Eligible Investments" shall be the investments so designated from time
to time by any Beneficiary Trustee.
"Fiscal Year" means the calendar year from each January 1 to the
following December 31.
"GAAP" means generally accepted accounting principles in effect from
time to time.
"Grantor" means PECO Energy Company.
"Indenture" means the Indenture, dated as of _______________, 1998
between the Trust and the Bond Trustee as the same may be amended, supplemented
or otherwise modified from time to time.
"Independent Trustee" means a Trustee that is not and has not been for
at least three years from the date of his or her or its appointment (i) a direct
or indirect legal or beneficial owner of the Trust or PECO Energy or any of
their respective Affiliates, (ii) a relative, supplier, employee, officer,
director, manager, contractor or material creditor of the Trust or PECO Energy
or any of their respective Affiliates or (iii) a Person who controls PECO Energy
or its Affiliates.
"Insolvency Event" means the Significant Events described in (a)(i) and
(a)(ii) of that definition.
2
"Issuer Trustee" means First Union Trust Company, National Association
or any other Issuer Trustee designated by the Grantor or any Owner from time to
time.
"Liability" means any damage, judgment, amount paid in settlement,
fine, penalty, punitive damages, or cost or expense of any nature (including,
without limitation, attorneys' fees and disbursements).
"Owner" means the Grantor and its successors and permitted assigns as a
beneficial owner (within the meaning of the Business Trust Act) of the Trust.
All references in this Agreement to "any Owner" means each of the Grantor's
successors and permitted assigns as a beneficial owner of the Trust, and not the
Grantor itself.
"PECO Energy" means PECO Energy Company, a Pennsylvania corporation,
its successors and permitted assigns.
"Periodic Filings" means any filings or submissions that the Trust is
required to make with any state or federal regulatory agency or under the Code.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization, governmental authority or any other entity of
similar nature.
"Proceeding" means any threatened, pending or completed action, suit,
appeal or other proceeding of any nature, whether civil, criminal,
administrative or investigative, whether formal or informal, and whether brought
by or in the right of the Trust, the Grantor, any Owner or otherwise.
"Series" has the meaning assigned to that term in the Indenture.
"Significant Event" means (a) with respect to the Trust, that the Trust
(i) shall fail to or admit in writing its inability to pay its debts generally
as they become due, or shall commence a voluntary case or other Proceeding under
any applicable bankruptcy, insolvency, reorganization, debt arrangement,
dissolution or other similar law now or hereafter in effect, or shall consent to
the appointment of or taking possession by a receiver, liquidator, assignee,
trustee, custodian, sequestrator (or other similar official) for the Trust or
for any substantial part of its property, or shall make any general assignment
for the benefit of creditors, or shall take any trust, corporate or partnership
action authorizing the taking of any of the foregoing actions or (ii) a case or
other Proceeding shall be commenced without the application or consent of the
Trust, in any court, seeking the liquidation, reorganization, debt arrangement,
dissolution, winding up, or compensation or readjustment of debts of the
Trust, the appointment of a trustee, receiver, custodian, liquidator, assignee,
sequestrator, or the like for the Trust or any substantial part of its assets,
or any similar action with respect to the Trust under any law (foreign or
domestic) relating to bankruptcy, insolvency, reorganization, winding up or
composition or adjustment of debts and such case or Proceeding shall continue
3
undismissed or unstayed and in effect for a period of 90 days; or any of the
actions sought in such petition or Proceeding, including the entering of an
order for relief in respect of the Trust or the appointment of any trustee,
receiver, custodian, liquidator, assignee, sequestrator or the like for the
Trust or any substantial portion of the Trust's property shall be granted or
otherwise occur (each of (i) and (ii) an "Insolvency Event");
(b) The Trust shall become subject to the registration
requirements of the Investment Company Act; or
(c) Any Event of Default as set forth in the Indenture shall have
occurred.
"Supplemental Indenture" means any Supplemental Indenture with respect
to a Series of Transition Bonds as defined in such Supplemental Indenture or
that amends the Indenture.
"Transition Bonds" means the transition bonds issued from time to time
by the Trust pursuant to the Indenture and any Supplemental Indenture.
"Transfer" means the sale, transfer or other assignment of all of the
Grantor's right, title and interest in all or a portion of its beneficial
interest in the Trust.
"Trust" means the Delaware statutory business trust continued under
this Agreement.
"Trustees" means the trustees of the Trust, which, as provided herein,
shall mean the Beneficiary Trustees, the Independent Trustee, the Delaware
Trustee and the Issuer Trustee collectively, not in their respective individual
capacities but solely as trustees under this Agreement, and any successor
trustees hereunder whether designated as Issuer Trustee, Independent Trustee,
Delaware Trustee or a Beneficiary Trustee.
"Trust Property" means all right, title and interest in and to any
property contributed to the Trust by the Grantor or any Owner or otherwise
acquired by the Trust, including, without limitation, all distributions or
payments thereon or proceeds thereof.
"Trust Related Agreements" means any instrument or agreement executed
in connection with or relating to the Trust or the Transition Bonds, including,
but not limited to, the Master Servicing Agreement, dated ______________, 1998
between the Trust and PECO Energy, as Servicer thereunder (the "Master Servicing
Agreement"), the Sale Agreement, dated _____________, 1998 between the Trust and
PECO Energy, as Seller thereunder (the "Sale Agreement"), the Indenture and any
supplemental indentures and any xxxx of sale, as each may be supplemented or
amended from time to time.
4
Each of the terms used herein and not defined herein shall have the
meanings given to such terms in the Trust Related Agreements, even after the
termination of such agreements.
ARTICLE II
ORGANIZATION
2.01. Name. The Trust continued hereby shall be known as "PECO Energy
Transition Trust," in which name the Trustees shall conduct the business of the
Trust, make and execute contracts, and xxx and be sued.
2.02. Office. The initial office of the Trust shall be in care of the
Issuer Trustee, One Xxxxxx Square, 000 Xxxx Xxxxxx, xxx Xxxxx, Xxxxxxxxxx,
Xxxxxxxx 00000 (telephone number 000-000-0000) or at such other address as the
Trustees may designate by notice to the Grantor, any Owner and the Bond Trustee,
provided that any other office will comply with the provisions of 4.01(c) and
(e).
2.03. Purposes and Powers; Intent. (a) The Trust has been created for
the purpose of purchasing and owning Intangible Transition Property, issuing
Transition Bonds from time to time, pledging its interest in Intangible
Transition Property and other Collateral to the Bond Trustee under the Indenture
in order to secure the Transition Bonds and performing activities that are
necessary, suitable or convenient to accomplish these purposes.
(b) The Grantor has determined that each of (i) the creation
and ownership of the Trust by the Grantor and (ii) the limited purposes of the
Trust is in the best interests of the Grantor and its creditors and represents
a prudent and advisable course of action that does not impair the rights and
interests of the Grantor's creditors. The Grantor has determined that the
transactions contemplated by this Agreement and the Trust Related Agreements
are in the best interests of the Grantor and its creditors and represent a
prudent and advisable course of action that does not impair the rights and
interests of the Grantor's creditors. Such determinations are memorialized in
the corporate records of the Grantor. The Grantor did not create the Trust with
the intent to hinder, delay, or defraud the Grantor's creditors, and any
transfer to the Trust will not render the Grantor insolvent or incapable of
conducting its business in the manner and to the extent presently conducted.
(c) The Trust shall not have the power to (i) incur any debt
other than the Transition Bonds and certain costs and expenses associated
therewith, debt in connection with any credit enhancement required for any
Series of Transition Bonds, or debt which is rated as high as any rating on the
Transition Bonds, which is fully subordinated to the outstanding Transition
Bonds, which is without recourse to the Trust other than cash flows in excess
of the amount necessary to pay the holders of Transition Bonds and which does
not constitute a claim against the Trust to the extent cash flows are
insufficient to pay such
5
additional debt or (ii) engage in any business or activity other than the
business and activities enumerated in Section 2.03.
(d) The Trust's existence is not dependent on its being a
subsidiary of the Grantor or being affiliated with any Affiliated Entity, and
the Trust's business operations could be maintained even if it were not a
subsidiary of the Grantor or affiliated with any other Affiliated Entity. The
Grantor will not transfer additional Intangible Transition Property to the Trust
for the purpose of mitigating losses on the Intangible Transition Property that
has previously been transferred to the Trust.
(e) The Trust has determinated that the transactions
contemplated by the Trust Related Agreements are in the best interests of the
Trust and its creditors and represent a prudent and advisable course of action
that does not impair the rights and interests of the Trust's creditors.
2.04. Appointment of the Trustees; Initial Trust Property. (a) The
Trust shall have no fewer than one and no more than three trustees (if the
Delaware Trustee and Independent Trustee are the same entity) or five trustees
(if the Delaware Trustee and Independent Trustee are different entities)
appointed from time to time by the Grantor or, in the event of a Transfer, by
the Owner or Owners. The Grantor or, in the event of a Transfer, the Owners may
at any time increase the number of Trustees, subject to the provisions of
Sections 2.04(b), 3.01, 4.01 and 4.03. The Grantor has appointed First Union
Trust Company, National Association as Issuer Trustee, Delaware Trustee and
Independent Trustee, and Xxxxxx Xxxxxxx and Xxxxx Xxx Xxxxx as Beneficiary
Trustees of the Trust, which Trustees shall have all the rights, powers and
duties set forth herein.
(b) The Trust shall at all times have as Issuer Trustee a
Person meeting the qualifications of Section 11.01(c) of this Agreement. In
addition, the Trust shall at all times have at least one Trustee which qualifies
as a Delaware Trustee and at least one Trustee which qualifies as an Independent
Trustee. The Issuer Trustee, the Delaware Trustee and the Independent Trustee
may, and will initially, be the same entity.
(c) The Trustees acknowledge receipt in trust from the
Grantor, as of June 23, 1998, of the sum of $5,000, constituting the initial
Trust Property.
2.05. Declaration of Trust. The Trustees hereby declare that they
will hold the Trust Property in trust upon and subject to the conditions set
forth herein for the use and benefit of the Grantor or, in the event of a
Transfer, any Owner, subject to the obligations of the Trustees under the Trust
Related Agreements. It is the intention of the parties hereto that the Trust
constitutes a business trust under the Business Trust Act and that this
Agreement constitutes the governing instrument of the Trust. On June 23, 1998,
the Trustees filed a Certificate of Trust with the Delaware Secretary of State
in accordance with the provisions of the Business Trust Act in substantially
the form attached hereto as Exhibit 2.
6
2.06. Other Expenses, Liabilities of Trust. None of the Grantor, the
Trustees or any Owner shall be liable for any liabilities or obligations of the
Trust, including but not limited to, the indemnification obligations under
Article IX.
2.07. Situs of Trust. The Trust will be located and administered in the
State of Delaware. All bank accounts maintained by the Trustees on behalf of the
Trust shall be located in the State of Delaware. The Trust shall not have any
employees in any state other than in the State of Delaware. Payments will be
received by the Trust only in the State of Delaware and payments will be made by
the Trust only from the State of Delaware.
2.08. Additional Capital Contributions. The assets of the Trust are
expected to generate a return sufficient to satisfy all obligations of the Trust
under this Agreement and the Trust Related Agreements and any other obligations
of the Trust. It is expected that no capital contributions to the Trust will be
necessary after the purchase of the initial Intangible Transition Property,
except for capital contributions in connection with the issuance of additional
Series of Transition Bonds. In accordance with the private letter ruling
received by the Grantor from the Internal Revenue Service dated December 19,
1997 (the "Private Letter Ruling"), on or prior to the date of issuance of each
Series of Transition Bonds, the Grantor or, in the event of a Transfer, any
Owner, shall make an additional contribution to the Trust in an amount equal to
at least 0.50% of the initial principal amount of such Series or such greater
amount as agreed to by the Grantor in connection with the issuance by the Trust
of any Series of Transition Bonds. No capital contribution by the Grantor or any
Owner, as the case may be, to the Trust will be made for the purpose of
mitigating losses on Transition Property that has previously been transferred to
the Trust. Each capital contribution will be acknowledged by a written receipt
signed by any of the Trustees. The Trustees acknowledge and agree that,
notwithstanding anything in this Agreement to the contrary, such additional
contribution will be managed by an investment manager selected by the Grantor
or, in the event of a transfer, the Owner or Owners and all income earned
thereon shall be allocated or paid by the Bond Trustee in accordance with the
provisions of the Indenture.
2.09. Assignment of Right to Distributions or Payments; Transfers. The
Grantor and any Owner may assign all or any part of their respective rights to
receive distributions or payments hereunder, but such assignment shall effect no
change in the ownership of the Trust. No Transfer of a beneficial interest in
the Trust shall be made by the Grantor, except to an Affiliate or in connection
with the sale or disposition of all or substantially all of the Grantor's
electric generating business, whether by operation of law or otherwise.
7
ARTICLE III
COMPLIANCE WITH THE CODE
3.01. Trust to be Treated as a Division For Tax Purposes. The Trustees
shall cause the Trust to comply with the applicable provisions of the Code and
the applicable Treasury regulations thereunder in the manner necessary to effect
the intention of the parties that the Trust be treated as a division of PECO
Energy for federal income tax purposes pursuant to Treasury regulation
ss.301.7701-1 et seq. and that the Trust be accorded such treatment until its
termination pursuant to Section 10.01 hereof and shall take, or refrain from
taking, any action required by the Code or Treasury regulations thereunder in
order to maintain such status of the Trust. In addition, the Trust may not claim
any credit on, or make any deduction from the principal and interest payable in
respect of, the Transition Bonds (other than amounts properly withheld under the
Code), or assert any claim against any present or former Transition Bondholder
because of the payment of taxes levied or assessed upon the Trust.
ARTICLE IV
SEPARATE EXISTENCE OF TRUST
4.01. Maintenance of Separate Existence. The Trustees shall take all
steps necessary to continue the identity of the Trust as a separate legal entity
and to make it apparent to third Persons that the Trust is an entity with assets
and liabilities distinct from those of the Grantor, any Owner, the Trustees,
Affiliates of the Grantor or any Owner or any other Person, and that, except for
financial reporting purposes (to the extent required by generally accepted
accounting principles) and for state and federal income and franchise tax
purposes, it is not a division of any of the Affiliated Entities or any other
Person. In that regard, and without limiting the foregoing in any manner, the
Trust shall:
(a) be managed by the Trustees who shall make independent
decisions with respect to the daily operations and business affairs of the Trust
and, except as otherwise provided herein, neither the Trustees nor the Trust
shall be controlled in making such decisions by the Grantor, any Owner, any
Affiliated Entity or any other Person;
(b) maintain at least one Independent Trustee and one
Delaware Trustee (who may be the same Person);
(c) if the office of the Trust is not in the care of the
Issuer Trustee, as provided by 2.02, maintain office space separate and clearly
delineated from the office space of any Affiliated Entity, owned by the Trust or
evidenced by a written lease or sublease (even if located in an office owned or
leased by, or shared with, an Affiliated Entity);
8
(d) maintain the assets of the Trust in such a manner that it
is not costly or difficult to segregate, identify or ascertain its individual
assets from those of any other Person, including any Affiliated Entity;
(e) if the office of the Trust is not in the care of the
Issuer Trustee, as provided by 2.02, maintain a separate telephone number which
will be answered only in its own name, and keep and use separate stationary,
checks and other business forms;
(f) conduct all intercompany transactions with Affiliated
Entities on an arm's-length basis and in accordance with Section 4.03;
(g) not guarantee or become obligated for the debts of any
Affiliated Entity or hold the credit of the Trust out as being available to
satisfy the obligations of any Affiliated Entity or other Person, nor have any
of the Trust's obligations guaranteed by any Affiliated Entity or hold the Trust
out as responsible for the debts of any Affiliated Entity or for the decisions
or actions with respect to the business and affairs of any Affiliated Entity,
nor seek or obtain credit or incur any obligation to any third-party based upon
the creditworthiness or assets of any Affiliated Entity or any other Person
(i.e. other than based on the assets of the Trust) nor allow any Affiliated
Entity to do such things based on the credit of the Trust;
(h) except as expressly otherwise permitted hereunder or
under any of the Trust Related Agreements, not permit the commingling or pooling
of the Trust's funds or other assets with the funds or other assets of any
Affiliated Entity;
(i) maintain separate deposit and other bank accounts and
funds to which no Affiliated Entity has any access, which accounts shall be
maintained in the name and tax identification number of the Trust;
(j) maintain full books of accounts and records (financial or
other) and financial statements separate from those of the Affiliated Entities
or any other Person, prepared and maintained in accordance with GAAP,
(including, but not limited to, all resolutions, records, agreements or
instruments underlying or regarding the transactions contemplated by the Trust
Related Agreements or otherwise) and will be audited annually by an independent
accounting firm which shall provide such audit to the Bond Trustee;
(k) compensate (either directly or through reimbursement of
the Trust's allocable share of any shared expenses) all employees, consultants
and agents and Affiliated Entities, to the extent applicable, for services
provided to the Trust by such employees, consultants and agents or Affiliated
Entities, in each case, from the Trust's own funds and maintain a sufficient
number of employees in light of its contemplated operations;
(1) pay for its own account for accounting and payroll
services, rent, lease and other expenses (or the Trust's allocable share of any
such amounts provided by one
9
or more other Affiliated Entity) and not have such operating expenses (or the
Trust's allocable share thereof) paid by any Affiliated Entities, provided, that
the Grantor shall be permitted to pay the initial organization expenses of the
Trust;
(m) maintain adequate capitalization in light of the Trust's
business and purpose;
(n) conduct all of the Trust's business (whether in writing
or orally) solely in the name of the Trust through its Trustees, employees and
agents and hold the Trust out as an entity separate from any Affiliated Entity;
(o) not make or declare any distributions of cash or property
to the Grantor or any Owner except in accordance with appropriate trust
formalities and only consistent with sound business judgment to the extent that
it is permitted pursuant to the Trust Related Agreements and not violative of
any applicable law and only if no Significant Event or potential Significant
Event then exists or would result therefrom;
(p) otherwise practice and adhere to all trust procedures and
formalities, such as the holding of regularly scheduled meetings of the
Trustees, to the extent required by such formalities and by this Agreement, the
State of Delaware and all other appropriate constituent documents;
(q) not appoint an Affiliated Entity or any employee of an
Affiliated Entity as an agent of the Trust, except as otherwise permitted in the
Trust Related Agreements (although such Persons can qualify as Beneficiary
Trustees);
(r) not acquire obligations or securities of or make loans or
advances to or pledge its assets for the benefit of the Grantor, any Owner or
any Affiliate of such parties;
(s) not permit the Grantor, any Owner or any Affiliated
Entity to acquire obligations of or make loans or advances to the Trust;
(t) not permit the Grantor, any Owner or any Affiliated
Entity to guarantee, pay or become liable for the debts of the Trust or permit
any such entity to hold out its creditworthiness as being available to pay the
liabilities and expenses of the Trust;
(u) maintain separate minutes of the actions of the Trustees,
including of the transactions contemplated by the Trust Related Agreements.
(v) cause (i) all written and oral communications, including,
without limitation, letters, invoices, purchase orders, and contracts, of the
Trust to be made solely in the name of the Trust, (ii) the Trust to have its own
tax identification number, stationery, and business forms, separate from those
of any Affiliated Entity, (iii) all Affiliated Entities not to
10
use the stationery or business forms of the Trust, and for the Trust not to use
the stationery or business forms of any Affiliated Entity, and (iv) all
Affiliated Entities not to conduct business in the name of the Trust, and the
Trust not to conduct business in the name of any Affiliated Entity;
(w) direct creditors of the Trust to send invoices and other
statements of account of the Trust directly to the Trust and not to any
Affiliated Entity and to cause the Affiliated Entities not to direct their
creditors to send invoices and other statements of accounts to the Trust;
(x) cause the Grantor or, in the event of a Transfer, any
Owner to maintain as official records all resolutions, agreements, and other
instruments underlying or regarding the transactions contemplated by the Trust
Related Agreements;
(y) disclose, and cause the Grantor to disclose, in its
financial statements the effects of all transactions between the Grantor
and the Trust in accordance with generally accepted accounting principles, and
in a manner which makes it clear that the assets of the Trust (including the
Transition Property) are not assets of any Affiliated Entity and are not
available to pay creditors of any Affiliated Entity;
(z) treat and cause the Grantor to treat the transfer of
Intangible Transition Property from the Grantor to the Trust as a sale under the
Competition Act;
(aa) if in accordance with GAAP, the assets and liabilities
of the Trust are included in the consolidated financial statements of the
Grantor, including if the Trust is treated as a division of PECO Energy, cause
the Grantor to prominently and clearly disclose, whether in a footnote or in the
notes to such financial statements, that (i) the Trust is a separate legal
entity, (ii) the assets of the Trust are not available to pay the debts of the
Grantor or any other Affiliated Entity and (iii) neither the Grantor nor any
other Affiliated Entity is liable or responsible for the debts of the Trust;
(bb) except as described herein with respect to tax reporting
and financial reporting, describe and cause each Affiliated Entity to describe
the Trust, and hold the Trust out as a separate legal entity and not as a
division or department of any Affiliate Entity, and promptly correct any known
misunderstandings regarding its identity separate from any Affiliated Entity or
any Person;
(cc) treat the Transition Bonds as debt obligations of the
Trust;
(dd) maintain its valid existence in good standing under the
laws of the State of Delaware and maintain its qualification to do business
under the laws of such other jurisdictions as its operations require;
11
(ee) comply with all laws applicable to the transactions
contemplated by this Agreement and the Trust Related Agreements; and
(ff) cause PECO Energy to observe in all material respects
all corporate procedures and formalities required by its constituent documents
and the laws of its state of formation and all other appropriate jurisdictions.
4.02. Merger and Other Transactions. As long as the Transition Bonds
are outstanding, the Trust may not consolidate with, merge or convert into
another entity or sell all or substantially all of its assets to another entity
and dissolve, unless: (i) the entity formed by or surviving such consolidation,
merger or conversion or to whom substantially all of such assets are sold is
organized under the laws of the United States, any state thereof or the District
of Columbia, (ii) such entity expressly assumes by a Supplemental Indenture the
Trust's obligation to make due and punctual payments upon the Transition Bonds
and the performance or observance of every agreement and covenant of the Trust
under the Indenture, (iii) no Default or Event of Default will have occurred and
be continuing immediately after such consolidation, merger, conversion or sale
of assets, (iv) the Rating Agency Condition (as defined in the Indenture) will
have been satisfied with respect to such transaction, (v) the Trust has received
an opinion of counsel to the effect that such consolidation, merger, conversion
or sale of assets would have no material adverse tax consequence to the Trust or
any Transition Bondholder and such consolidation, merger, conversion or sale of
assets complies with the Indenture and all conditions precedent therein provided
relating to such transaction, (vi) none of the Intangible Transition Property,
the Qualified Rate Order or PECO Energy's or the Trust's rights under the
Competition Act or the Qualified Rate Order are impaired and (vii) any action
that is necessary to maintain the lien and security interest created by the
Indenture will have been taken. Further, the Trust may not sell, transfer,
exchange or otherwise dispose of any of its assets, except as expressly
permitted by the Indenture, any Supplemental Indenture, the Master Servicing
Agreement or the Sale Agreement.
4.03. Transactions with Affiliates. The Trust will not enter into, or
be a party to, any transaction with any of its Affiliates, except (i) the
transactions contemplated by the Trust Related Agreements and (ii) any other
transactions (including, without limitation, the lease of office space or
computer equipment or software by the Trust from an Affiliate of the Trust and
the sharing of employees and employee resources and benefits) (A) in the
ordinary course of business or as otherwise permitted hereunder, (B) pursuant to
the reasonable requirements and purposes of the Trust's business, (C) upon fair
and reasonable terms (and, to the extent material, pursuant to written
agreements) that are on terms and conditions available at the time to the Trust
for comparable transactions with unaffiliated Persons and (D) not inconsistent
with the terms of Section 4.01. Unless such transactions are in the ordinary
course of business in which case any of the Trustees, acting singly or
collectively, may take all actions necessary to effectuate such transactions,
they will require the approval of a majority of the Trustees, and the
Independent Trustee.
12
4.04. Insolvency. As of the date hereof, neither the Grantor nor the
Trust intends to file a voluntary petition for relief under the Bankruptcy Code
or any similar law. None of the Grantor nor any Owner will cause the Trust to
file a voluntary petition for relief under the Bankruptcy Code or similar law.
The Trustees shall not file a bankruptcy or insolvency petition or otherwise
institute insolvency or bankruptcy proceedings without the prior written consent
of all of the Trustees, including the Independent Trustee.
ARTICLE V
INVESTMENT AND APPLICATION OF TRUST FUNDS
5.01. Investment of Trust Funds. The provisions of this Article V apply
only to funds or Trust Property that have been released from the lien of the
Indenture and are permitted to be held or applied by the Trust. Unless otherwise
directed in writing by the Beneficiary Trustees, funds or Trust Property
released by the Bond Trustee to the Trust or funds in the possession of the
Trust shall be invested and reinvested by the Trustees (or by an independent
investment manager appointed in writing by the Beneficiary Trustees) in Eligible
Investments.
5.02. Application of Funds. Income with respect to and proceeds of any
funds or Trust Property held by the Trustees shall be transferred as determined
by the Beneficiary Trustees from time to time.
ARTICLE VI
AUTHORITY AND DUTIES OF THE TRUSTEES
6.01. General Authority. The Trustees are authorized to take all
actions required or permitted to be taken by them pursuant to the terms of this
Agreement and the Trust Related Agreements.
6.02. Specific Authority; Special Authority of Beneficiary Trustees.
(a) Notwithstanding any other provision in this Agreement to the contrary and
without the need for any additional consent of any Person, the Trustees, acting
singly or collectively, are hereby authorized and directed to take the following
action on behalf of the Trust: (i) execute, deliver and perform any agreements
related to the issuance and sale of Transition Bonds, including the Trust
Related Agreements, as necessary, (ii) execute and deliver all certificates and
other documents required by any such agreements and (iii) issue and deliver one
or more series of Transition Bonds in an aggregate principal amount not to
exceed $4,000,000,000 plus the amounts in respect of any Refunding Issuance (as
defined in the Indenture) in accordance with the provisions of such agreements
and the Qualified Rate Order issued on May 14, 1998 and qualify and register the
Transition Bonds for sale in various states. The Trustees, acting
13
singly or collectively, are authorized to take all actions necessary or
incidental to the day-to-day operations of the Trust. All non-day-to-day matters
shall be determined by a majority of the then current Trustees, provided that,
such majority must include the Independent Trustee (which may also be the Issuer
Trustee) for all actions specified in Sections 4.02, 4.03 and 4.04 and any
matter that would, if approved by the Trustees, cause the Trust to deviate from
the provisions of Sections 2.03(a), 2.03(c), 2.04(b), 4.01 and 6.06(b) of this
Agreement, subject to the provisions of Section 6.05. For purposes of
determining a majority under this Agreement, each Person that is serving as a
Trustee shall be counted as a single Trustee, even if such Person holds multiple
Trustee positions (i.e., the vote of one Person that acts as both Delaware
Trustee and Independent Trustee shall be counted only once).
(b) The Grantor and the Trustees hereby authorize and direct
the Beneficiary Trustees, acting singly or collectively, (i) to file with the
Securities and Exchange Commission (the "Commission") and execute, in each case
on behalf of the Trust, the Registration Statement on either Form S-3 or Form
S-1 (the "1933 Act Registration Statement"), including any pre-effective or
post-effective amendments to such 1933 Act Registration Statement (including the
prospectus supplement, the prospectus and the exhibits contained therein),
relating to the registration under the Securities Act of 1933, as amended, of
the Transition Bonds, (ii) to file and execute on behalf of the Trust such
applications, reports, surety bonds, irrevocable consents, appointments of
attorney for service of process and other papers and documents as shall be
necessary or desirable to register the Transition Bonds under the securities or
"Blue Sky" laws of such jurisdictions as the Trust may deem necessary or
desirable and (iii) to do or cause to be done all such other acts or things and
to execute and deliver all such instruments and documents that any such
Beneficiary Trustee shall deem necessary or appropriate to carry out the intent
of the foregoing. In the event that any filing referred to above is required by
the rules and regulations of the Commission or state securities or "Blue Sky"
laws, to be executed on behalf of the Trust by the Issuer Trustee, then the
Issuer Trustee, not in its individual capacity, but solely in its capacity as
trustee of the Trust, is hereby authorized and directed to join in any such
filing and to execute on behalf of the Trust any and all of the foregoing. In
connection with all of the foregoing, the Trust hereby constitutes and appoints
each of the Beneficiary Trustees as its true and lawful attorney-in-fact and
agent, with full power of substitution and resubstitution, for the Trust or in
the Trust's name, place and stead, in any and all capacities, to sign any and
all amendments (including post-effective amendments) to the 1933 Act
Registration Statement and any other registration statements and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Commission, granting unto said attorney-in-fact and agent full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all intents and
purposes as the Trust might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or his respective
substitute or substitutes, shall do or cause to be done by virtue hereof.
(c) Meetings of the Trustees for the purpose of establishing
a majority under this Article VI or otherwise may be called at any time by any
of the Trustees upon two days written or oral notice, stating the time, place
and purpose of the meeting, to all Trustees prior
14
to the time of the meeting. In addition, any action required or permitted to be
taken at a meeting of the Trustees may be taken without a meeting upon the
written consent of the Trustees who would be necessary to authorize the action
at a meeting at which all Trustees were present and voting or upon the unanimous
written consent of the Trustees. The Issuer Trustee shall maintain the minutes
of all meetings of the Trustees. Any meeting may be held by means of conference
telephone or similar communications equipment by which all persons participating
in the meeting can hear one another. Attendance, whether by telephone or in
person, at any meeting of the Trustees shall constitute a waiver of notice of
such meeting.
6.03. Accounting and Reports to the Grantor, any Owner, the Internal
Revenue Service and Others. The Grantor shall designate, from time to time, a
Trustee which shall, on behalf of the Trust, (i) maintain or cause to be
maintained the books of the Trust on a calendar year basis on the accrual method
of accounting, (ii) deliver to the Grantor and any Owner, within 90 days of the
end of each Fiscal Year, or more often, as may be required by the Code and the
regulations thereunder, a copy of the annual financial statement of the Trust
for such Fiscal Year and a statement in such form and containing such
information as may be required by such regulations, and as is necessary and
appropriate to enable the Grantor and any Owner to prepare its federal and state
income tax returns, (iii) file such tax returns relating to the Trust, cause the
Trust to pay all taxes incurred by it pursuant to the terms of any tax sharing
agreement entered into by the Trust and the Grantor and take all actions
necessary for the Trust to qualify or continue to qualify as a division of PECO
Energy or its designated affiliate for federal income tax purposes, (iv) cause
such tax returns to be signed by the Trust in the manner required by law, and
(v) cause to be mailed to the Grantor and any Owner copies of all such reports
and tax returns of the Trust.
6.04. Signature of Returns. The Trustee designated in Section 6.03
shall sign on behalf of the Trust the tax returns and other periodic filings of
the Trust, unless applicable law requires the Owner to sign such documents, in
which case, so long as the Grantor is the Owner and applicable law allows the
Grantor to sign any such document, the Grantor shall sign such document. At any
time that the Grantor is not the Owner, or is otherwise not allowed by law to
sign any such document, then the party required by law to sign such document
shall sign.
6.05. Right to Receive Instructions. In the event that the Trustees
are unable to decide between alternative courses of action for whatever reason,
or are unsure as to the application of any provision of this Agreement or any
Trust Related Agreement, or such provision is ambiguous as to its application,
or is, or appears to be, in conflict with any other applicable provision, or in
the event that this Agreement or any Trust Related Agreement permits any
determination by the Trustees or is silent or is incomplete as to the course of
action which the Trustees are required to take with respect to a particular set
of facts, any one or more of the Trustees may give notice of such circumstances
(in such form as shall be appropriate under the circumstances) to the Grantor
or, in the event of a Transfer, to the Owner and request instructions from
independent, appropriate legal or other counsel to the Trustees in accordance
with Section 7.03 of this Agreement.
15
6.06. No Duties Except as Specified in this Agreement or in
Instructions. The Trustees shall not have any duty or obligation to manage, make
any payment in respect of, register, record, sell, dispose of or otherwise deal
with the Trust Property, or to otherwise take or refrain from taking any action
under, or in connection with, any document contemplated hereby to which the
Trustees are a party, except as expressly provided by the terms of this
Agreement or the Trust Related Agreements and no implied duties or obligations
shall be read into this Agreement or the Trust Related Agreements against the
Trustees. The Trustees nevertheless agree that, in the event that claims are
made against any of the Trustees in their individual capacities that are not
related to the ownership or the administration of the Trust Property or the
transactions contemplated by the Trust Related Agreements, the Trustee against
whom such claims were made shall, at its own cost and expense, promptly take all
action as may be necessary to discharge any liens on any part of the Trust
Property resulting from those claims.
6.07. No Action Except Under Specified Documents or Instructions. The
Trustees shall not manage, control, use, sell, dispose of or otherwise deal with
any part of the Trust Property except in accordance with the powers granted to
and the authority conferred upon the Trustees pursuant to this Agreement and the
Trust Related Agreements.
ARTICLE VII
CONCERNING THE TRUSTEES
7.01. Acceptance of Trusts and Duties. The Trustees accept the trusts
hereby created and agree to perform their respective duties hereunder with
respect to the same but only upon the terms of this Agreement. The Trustees
shall not be personally liable under any circumstances except (i) for their own
willful misconduct or gross negligence, (ii) for liabilities arising from the
failure by any of the Trustees to perform obligations expressly undertaken by
them in Article VI, or (iii) for taxes, fees or other charges on, based on or
measured by any fees, commissions or compensation received by the Trustees in
connection with any of the transactions contemplated by this Agreement or the
Trust Related Agreements. In particular, but not by way of limitation:
(a) The Trustees shall not be personally liable for any error
of judgment made in good faith by any of the Trustees;
(b) The Trustees shall not be personally liable with respect
to any action taken or omitted to be taken by the Trustees in good faith in
accordance with the instructions delivered pursuant to Section 6.05;
(c) No provision Of this Agreement shall require the Trustees
to expend or risk their personal funds or otherwise incur any financial
Liability in the performance of any of their rights or powers hereunder, if the
Trustees shall have reasonable
16
grounds for believing that repayment of such funds or adequate indemnity against
such risk or Liability is not reasonably assured or provided to them;
(d) Under no circumstance shall the Trustees be personally
liable for any indebtedness of the Trust under any Trust Related Agreement; and
(e) The Trustees shall not be personally responsible for or
in respect of the validity or sufficiency of this Agreement or for the due
execution hereof by the Grantor, or for the form, character, genuineness,
sufficiency, value or validity of any Collateral, or for or in respect of the
validity or sufficiency of the Trust Related Agreements.
7.02. Furnishing of Documents. The Trustees shall furnish to the
Grantor and any Owner, promptly upon receipt thereof, duplicates or copies of
all material reports, notices, requests, demands, certificates, financial
statements and any other instruments furnished to the Trustees by any party
pursuant to the Trust Related Agreements (other than documents originated by or
otherwise furnished by the Grantor or any Owner).
7.03. Reliance; Advice of Counsel. (a) The Trustees shall incur no
Liability to anyone in acting upon any signature, instrument, notice,
resolution, request, consent, order, certificate, report, opinion, bond or other
document or paper believed by them to be genuine and believed by them to be
signed by the proper party or parties. The Trustees may accept a certified copy
of a resolution of the board of directors or other governing body of any
corporate party as conclusive evidence that such resolution has been duly
adopted by such body and that the same is in full force and effect. As to any
fact or matter the manner of ascertainment of which is not specifically
prescribed herein, the Trustees may for all purposes hereof rely on a
certificate, signed by the president or any vice president or by the treasurer
or any assistant treasurer or the secretary or any assistant secretary of the
relevant party, as to such fact or matter, and such certificate shall constitute
full protection to the Trustees for any action taken or omitted to be taken by
them in good faith in reliance thereon.
(b) In the exercise or administration of the trusts hereunder
and in the performance of their respective duties and obligations under any of
the Trust Related Agreements, the Trustees (i) may act directly or, at the
expense of the Trust in the case of the Issuer Trustee, through agents or
attorneys pursuant to agreements entered into with any of them, and the Trustees
shall not be liable for the default or misconduct of such agents or attorneys if
such agents or attorneys shall have been selected by the Trustees with
reasonable care and (ii) may, at the expense of the Trust in the case of the
Issuer Trustee, consult with counsel, accountants and other skilled persons to
be selected with reasonable care and employed by them, and the Trustees shall
not be liable for anything done, suffered or omitted in good faith by it in
accordance with the advice or opinion of any such counsel, accountants or other
skilled persons.
7.04. Not Acting in Individual Capacity. Except as expressly provided
in this Article VII, in accepting the trusts hereby created the Trustees each
act solely as trustees
17
hereunder and not in their respective individual capacities, and all Persons
having any claim against the Trustees by reason of the transactions contemplated
by this Agreement or the Trust Related Agreements shall look only to the Trust
Property for payment or satisfaction thereof.
ARTICLE VIII
COMPENSATION OF TRUSTEES
8.01. Issuer Trustee's Fees and Expenses. The Issuer Trustee shall
receive compensation for its services hereunder as set forth on the fee schedule
attached hereto as Exhibit 1. The Issuer Trustee shall be entitled to be
reimbursed from the Trust Property for its reasonable expenses hereunder,
including, without limitation, the reasonable compensation, expenses and
disbursements of such agents, representatives, experts and counsel as the Issuer
Trustee may employ in connection with the exercise and performance of its rights
and duties under this Agreement and the Trust Related Agreements.
8.02. Benericiary Trustees' Fees and Expenses. The Beneficiary Trustees
shall not be compensated by the Trust for their services performed for or on
behalf of the Trust.
8.03. Fees of Separate Independent Trustee and Delaware Trustee. At
such time as the Independent Trustee and Delaware Trustee are not the same
Person, the Trust shall pay such fees to each of the Independent Trustee and
Delaware Trustee as the majority of the Trustees shall approve.
ARTICLE IX
INDEMNIFICATION OF TRUSTEES
9.01. Scope of Indemnification. To the fullest extent permitted by
law, the Trust shall indemnify the Trustees against any Liability incurred in
connection with any Proceeding in which the Trustees may be involved as a party
or otherwise by reason of the fact that such Trustee is or was serving in its
capacity as a Trustee, unless such Liability is based on or arises in connection
with the Trustee's own wilful misconduct or gross negligence, the failure to
perform the obligations set forth in Article VI, or taxes, fees or other charges
on, based on or measured by any fees, commissions or compensation received by
the Trustees in connection with any of the transactions contemplated by this
Agreement or the Trust Related Agreements.
18
ARTICLE X
TERMINATION OF TRUST
10.01. Dissolution of Trust. (a) The Trust shall dissolve and, after
satisfaction of the creditors of the Trust as required by applicable law,
property held by the Trust will be distributed to the Grantor or, in the event
of a Transfer, to any Owner thirty years from the date of its creation or
sooner, at the option and expense, and upon written instruction of the Grantor,
but in no event before payment in full of all Series of Transition Bonds.
(b) The bankruptcy of either the Grantor or any Owner or both
shall not operate to terminate this Agreement, to dissolve, terminate or annul
the Trust, to entitle the Grantor's or any Owner's legal representatives to
claim an accounting or to take any action or Proceeding in any court for a
partition or winding up of the Trust Property, nor otherwise affect the rights,
obligations and liabilities of the parties hereto.
10.02. No Termination by Grantor or Owner. Except as provided in
Section 10.01, neither the Grantor nor any Owner shall be entitled to dissolve
or terminate or revoke the Trust established hereunder.
10.03. Cancellation of Certificate of Trust. Upon completion of the
winding up of the affairs of the Trust after dissolution of the Trust in
accordance with Section 10.01 or otherwise, the Certificate of Trust shall be
canceled by a Beneficiary Trustee's executing and filing a Certificate of
Cancellation with the Secretary of State of Delaware.
ARTICLE XI
SUCCESSOR TRUSTEES AND ADDITIONAL TRUSTEES
11.01. Resignation of Trustee; Appointment of Successor. (a) The
Trustees may resign at any time without cause by giving at least 90 days' prior
written notice to the Grantor and any Owner, such resignation to be effective
upon the acceptance of appointment by a successor Trustee under Section
11.01(b). In addition, the Grantor or, in the event of a Transfer, any Owner may
at any time remove any of the Trustees with or without cause by an instrument in
writing delivered to the Trustee, such removal to be effective upon the
acceptance of appointment by a successor Trustee under Section 11.01(b); except
that, neither the Grantor nor any Owner may remove the Independent Trustee (i)
after an Event of Default under the Indenture or (ii) if the removal of one or
more Trustees would cause the breach of Section 2.04(b). In case of the
resignation or removal of a Trustee, the Grantor or, in the event of a Transfer,
any Owner may appoint a successor Trustee by an instrument signed by the Grantor
or any Owner, as applicable, subject to Section 2.04(b). If the last remaining
Trustee of the Trust resigns or is removed or the Independent Trustee or
Delaware Trustee
19
resigns or is removed and a successor Trustee shall not have been appointed
within 30 days after the giving of written notice of such resignation or the
delivery of the written instrument with respect to such removal, such Trustee,
the Grantor or any Owner may apply to any court of competent jurisdiction to
appoint a successor Trustee in compliance with Section 2.04(b) to act until such
time, if any, as a successor Trustee shall have been appointed as provided
above. Any successor Trustee so appointed by such court shall immediately and
without further act be superseded by any successor Trustee appointed as above
provided.
(b) Any successor Trustee, however appointed, shall execute
and deliver to the predecessor Trustee and the Trust an instrument accepting
such appointment, and thereupon such successor Trustee, without further acts,
shall become vested with all the estates, properties, rights, powers, duties and
trusts of the predecessor Trustee in the trusts hereunder with like effect as if
originally named as a Trustee herein; but nevertheless, upon the written request
of such successor Trustee, such predecessor Trustee shall execute and deliver an
instrument transferring to such successor Trustee, upon the trusts herein
expressed, all the estates, properties, rights, powers, duties and trusts of
such predecessor Trustee, and such predecessor Trustee shall duly assign,
transfer, deliver and pay over to such successor Trustee all moneys or other
property then held or subsequently received by such predecessor Trustee upon the
trusts herein expressed.
(c) Any successor Issuer Trustee, however appointed, shall be
a bank or trust company incorporated and doing business within the United States
of America and having a combined capital and surplus of at least $550,000,000.
Any corporation into which the Issuer Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Issuer Trustee shall be a party, or any
corporation to which substantially all the corporate trust business of the
Issuer Trustee may be transferred, shall, subject to the terms of this
Agreement, be the Issuer Trustee of the Trust under this Agreement without
further act or consent of any Person.
ARTICLE XII
MISCELLANEOUS
12.01. Supplements and Amendments. This Agreement may be amended only
by a written instrument signed by the Grantor, any Owner and a majority of the
Trustees (which majority shall include the Independent Trustee) at the time of
such amendment. No such amendment may be made unless the Rating Agency Condition
is satisfied in connection herewith.
12.02. No Legal Title to Trust Property in Grantor and Owner. Neither
the Grantor nor any Owner shall have legal title to or ownership of any part of
the Trust Property. No transfer, by operation of law or otherwise, of any right,
title and interest of the Grantor or
20
any Owner in and to their undivided beneficial interest in the Trust Property
hereunder shall operate to terminate this Agreement or the trusts hereunder, to
dissolve, terminate or annul the Trust or to entitle any successor transferee to
an accounting or to the transfer to it of legal title to any part of the Trust
Property.
12.03. Limitations on Rights of Others. Nothing in this Agreement,
whether express or implied, shall be construed to give to any Person other than
the Trust, the Grantor and any Owner any legal or equitable right, remedy or
claim in the Trust Property or except for the Grantor and any Owner, under or in
respect of this Agreement or any covenants, conditions or provisions contained
herein.
12.04. Notices. Unless otherwise expressly specified or permitted by
the terms hereof, all notices shall be in writing and delivered by hand or
mailed by certified mail, postage prepaid, if to the Trustees, addressed to:
First Union Trust Company, One Xxxxxx Square
National Association 000 Xxxx Xxxxxx, xxx Xxxxx
Xxxxxxxxxx, XX 00000
Xxxxxx Xxxxxxx c/o First Union Trust Company,
National Association
One Xxxxxx Square
000 Xxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxxx, XX 00000
Xxxxx Xxx Xxxxx c/o First Union Trust Company,
National Association
One Xxxxxx Square
000 Xxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxxx, XX 00000
or to such other addresses as the Trustees may have set forth in a written
notice to the Grantor, any Owner and the Bond Trustee; and if to the Grantor,
addressed to: PECO Energy Company, 0000 Xxxxxx Xxxxxx, X00-0, Xxxxxxxxxxxx, XX
00000 or to such other address as the Grantor may have set forth in a written
notice to the Trustees and the Bond Trustee. All notices to any Owner shall be
sent care of the Grantor to the Grantor's address set forth above or to such
other address as such Owner may have set forth in a written notice to the
Grantor, the Trustees and the Bond Trustee. Whenever any notice in writing is
required to be given by the Trustees hereunder, such notice shall be deemed
given and such requirement satisfied 72 hours after such notice is mailed by
certified mail, postage prepaid, addressed as provided above; any notice given
by the Grantor or any Owner to the Trustees shall be effective upon receipt.
21
12.05. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
12.06. Separate Counterparts. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
12.07. Successors and Assigns. All covenants and agreements contained
herein shall be binding upon, and inure to the benefit of, the Trustees and
their respective successors and assigns and the Grantor, any Owner and their
respective successors and permitted assigns, all as herein provided. Any
request, notice, direction, consent, waiver or other instrument or action by the
Grantor and any Owner shall bind its successors and permitted assigns.
12.08. Headings. The headings of the various Articles and Sections
herein are for convenience of reference only and shall not define or limit any
of the terms or provisions hereof. Any reference to any Article or Section
contained in this Agreement shall refer to such Article or Section as set forth
in this Agreement, notwithstanding failure to use the term "hereof," "hereto" or
"herein" in connection with such reference.
12.09. Governing Law. This Agreement shall in all respects be governed
by, and construed in accordance with, the laws of the State of Delaware (without
regard to conflict of laws principles), including all matters of construction,
validity and performance.
[Remainder of this page left intentionally blank]
22
IN WITNESS WHEREOF, the parties hereto have duly executed or caused
this Agreement to be duly executed by their respective officers hereunto duly
authorized, as of the day and year first above written.
PECO ENERGY COMPANY,
as Grantor and Owner
By_____________________________
Name___________________________
Title__________________________
FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION, not in its
individual capacity but solely as Issuer
Trustee, Delaware Trustee and Independent
Trustee
By_____________________________
Name___________________________
Title__________________________
XXXXXX XXXXXXX, not in his individual
capacity but solely as a Beneficiary
Trustee
By_____________________________
Name___________________________
XXXXX XXX XXXXX, not in her
individual capacity but solely as a
Beneficiary Trustee
By_____________________________
Name___________________________
23
EXHIBIT 1
TRUSTEE FEE SCHEDULE
Exhibit 1
EXHIBIT 2
CERTIFICATE OF TRUST
OF PECO ENERGY TRANSITION TRUST
THIS Certificate of Trust of PECO Energy Transition Trust (the
"Trust"), dated as of June 23, 1998, is being fully executed and filed by the
undersigned, as trustees, to form a business trust under the Delaware Business
Trust Act (12 Del. C. ss.3801, et seq.).
1. Name. The name of the business trust formed hereby is PECO Energy
Transition Trust.
2. Delaware Trustee. The name and business address of the trustee of
the Trust with its principal place of business in the State of Delaware are
First Union Trust Company, National Association, One Xxxxxx Square, 000 Xxxx
Xxxxxx, Xxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, Attention: Corporate Trust
Administration.
3. Effective Date. This Certificate of Trust shall be effective as of
its filing with the Secretary of State of the State of Delaware.
IN WITNESS WHEREOF, the undersigned, being the trustees of the Trust,
have executed this Certificate of Trust as of the date first-above written.
XXXXX XXX XXXXX, not in her FIRST UNION TRUST COMPANY,
individual capacity, but solely as NATIONAL ASSOCIATION, not in its
trustee of the Trust individual capacity, but solely as
trustee of the Trust
/s/ Xxxxx Xxx Xxxxx
___________________________________
By: /s/ Xxxxxx X. Xxxxxx, Xx.
_______________________________
Name: Xxxxxx X. Xxxxxx, Xx.
Title: Assistant Vice President
XXXXXX XXXXXXX, not in his
individual capacity, but solely as
trustee of the Trust
/s/ Xxxxxx Xxxxxxx
___________________________
Exhibit 2