EXHIBIT 8.1
[Letterhead of]
CRAVATH, SWAINE & XXXXX
[New York Office]
May 15, 2000
Amended and Restated Agreement and Plan of
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Exchange and Merger dated as of September 22, 1999,
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as Amended and Restated as of January 7, 2000,
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Among PECO Energy Company,
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Exelon Corporation and Unicom Corporation
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Ladies and Gentlemen:
We have acted as tax counsel for PECO Energy Company, a Pennsylvania
corporation ("PECO Energy"), in connection with (i) the proposed acquisition
(the "First Step Exchange") of each outstanding share of common stock of PECO
Energy by Exelon Corporation, a Pennsylvania corporation and a wholly owned
subsidiary of PECO Energy ("Exelon"), in exchange for common stock of Exelon and
(ii) the proposed merger (the "Second Step Merger", and together with the First
Step Exchange, the "Merger") of Unicom Corporation, an Illinois corporation
("Unicom") with and into Exelon, in each case pursuant to an Agreement and Plan
of Exchange and Merger, dated as of September 22, 1999 (the "Exchange and Merger
Agreement"), as amended and restated as of January 7, 2000 among PECO Energy,
Exelon and Unicom. In the Merger, (i) each issued and outstanding share of
common stock, no par value, of PECO Energy (the "PECO Energy Common Stock") not
owned directly by PECO Energy will be converted into common stock, no par value,
of Exelon (the "Exelon
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Common Stock") and (ii) each issued and outstanding share of common stock, no
par value, of Unicom (the "Unicom Common Stock") will be converted into Exelon
Common Stock and cash.
In that connection, you have requested our opinion regarding the
material U.S. federal income tax consequences to PECO Energy shareholders of the
Merger. In providing our opinion, we have examined the Exchange and Merger
Agreement, the registration statement on Form S-4 (the "Registration
Statement"), which includes the Proxy Statement/Prospectus of PECO Energy and
Unicom, as filed with the Securities and Exchange Commission, and such other
documents and corporate records as we have deemed necessary or appropriate for
purposes of our opinion. In addition, we have assumed that (i) the Merger will
be consummated in the manner contemplated by the Registration Statement and in
accordance with the provisions of the Merger Agreement, (ii) the statements
concerning the Merger set forth in the Merger Agreement and the Registration
Statement are true, correct and complete, (iii) the representations made to us
by PECO Energy, Exelon and Unicom in their respective letters to us each dated
as of the date hereof, and delivered to us for purposes of this opinion are
true, correct and complete (the "Representation Letters") and (iv) any
representations made in the Representation Letters or in the Merger Agreement
"to the best knowledge of" or similarly qualified are true, correct and complete
without such qualification. If any of the above-described assumptions are
untrue for any reason or if the Merger is consummated in a manner that is
inconsistent with the manner in which it is described in the Merger Agreement or
the Registration Statement, our opinions as expressed below may be adversely
affected and may not be relied upon. For purposes of this opinion, "U.S.
Holder" means (i) an individual citizen or resident of the United States, (ii) a
corporation or other entity taxable as a corporation created or organized under
the laws of the United States or any of its political subdivisions, (iii) a
trust if a U.S. court is able to exercise primary supervision over the
administration of the trust and one or more U.S. fiduciaries have the authority
to control all substantial decisions of the trust or (iv) an estate that is
subject to U.S. federal income tax on its income regardless of its source.
Based upon the foregoing, we are of opinion that, for U.S. federal
income tax purposes:
(i) The Merger will be treated as a transaction described in Section
351 of the Internal Revenue Code of 1986, as amended (the "Code").
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(ii) No gain or loss will be recognized by U.S. Holders of PECO Energy
Common Stock on the exchange of their PECO Energy Common Stock for Exelon
Common Stock.
(iii) The aggregate adjusted tax basis of the Exelon Common Stock
received in the Merger by a U.S. Holder of PECO Energy Common Stock will be
equal to the aggregate adjusted tax basis of the U.S. Holder's PECO Energy
Common Stock exchanged for that Exelon Common Stock.
(iv) The holding period of Exelon Common Stock received in the Merger
by a U.S. Holder of PECO Energy Common Stock will include the holding
period of the U.S. Holder's PECO Energy Common Stock exchanged for that
Exelon Common Stock.
(v) While the matter is not free from doubt, and there is no directly
authoritative precedent, it is more likely than not that the pre-closing
share repurchases by PECO Energy referred to in Section 6.15 of the
Exchange and Merger Agreement will be independent of and will not be
integrated with the Merger.
(vi) The Internal Revenue Service, however, may not agree with the
conclusion that the pre-closing share repurchases by PECO Energy referred
to in Section 6.15 of the Exchange and Merger Agreement are independent of
the Merger and, therefore, should not be integrated with the Merger. If
the Internal Revenue Service were successful in asserting this contrary
view, this would not be likely to have a material effect on U.S. Holders of
PECO Energy Common Stock. The U.S. federal income tax treatment of amounts
received with respect to the share repurchases by PECO Energy referred to
in Section 6.15 of the Exchange and Merger Agreement by a U.S. Holder of
PECO Energy Common Stock who is not described in the next sentence should
not change. However, in unusual circumstances, involving a U.S. Holder of
PECO Energy Common Stock who is also a substantial holder of Unicom Common
Stock immediately prior to the Merger, the amounts received by such U.S.
Holder with respect to the share repurchases by PECO Energy referred to in
Section 6.15 of the Exchange and Merger Agreement that would otherwise have
been taxed as capital gain or loss could be taxed as a dividend.
Our opinions are limited to the tax matters specifically covered
hereby, and we have not been asked to
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address, nor have we addressed, any other tax consequences of the Merger or any
other transactions. Our opinions are based upon current statutory, regulatory
and judicial authority, any of which may be changed at any time with retroactive
effect. We disclaim any undertaking to advise you of any subsequent changes of
the matters stated, represented or assumed herein or any subsequent changes in
applicable law, regulations or interpretations thereof.
We consent to the filing of this opinion as Exhibit 8.1 to the
Registration Statement and to the reference of our firm name in the section of
the Registration Statement under the heading "Material United States Federal
Income Tax Consequences of the Merger". In giving this consent, we do not admit
that we are 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 promulgated thereunder.
Very truly yours,
/s/ Cravath, Swaine & Xxxxx
PECO Energy Company
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