PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED MAY 1, 2001
$500,000,000
[LOGO]
EXELON CORPORATION
6 3/4% Senior Notes due 2011
---------
We will pay interest on the senior notes each May 1 and November 1. The
first interest payment will be made on November 1, 2001.
We may redeem any or all of the senior notes at any time as described in
this prospectus supplement. There is no sinking fund for the senior notes.
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC(1) COMMISSIONS EXELON(1)
------------- ------------- -------------
Per Senior Note...................................... 99.844% 0.65% 99.194%
Total................................................ $499,220,000 $3,250,000 $495,970,000
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(1) Plus accrued interest, if any, from May 8, 2001.
Delivery of the senior notes in book-entry form only, will be made on or
about May 8, 2001.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus supplement or the prospectus to which it relates is truthful or
complete. Any representation to the contrary is a criminal offense.
Joint Book-Running Managers
CREDIT SUISSE FIRST BOSTON SALOMON SMITH BARNEY
-----------
BANC ONE CAPITAL MARKETS, INC.
-----------
FIRST UNION SECURITIES, INC. LEHMAN BROTHERS
ABN AMRO INCORPORATED BARCLAYS CAPITAL
BNY CAPITAL MARKETS, INC. LOOP CAPITAL MARKETS, LLC
The date of this prospectus supplement is May 3, 2001.
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
PAGE
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ABOUT THIS PROSPECTUS SUPPLEMENT...... S-1
EXELON CORPORATION.................... S-2
USE OF PROCEEDS....................... S-5
CAPITALIZATION........................ S-5
SELECTED HISTORICAL CONSOLIDATED
FINANCIAL INFORMATION............... S-6
SELECTED UNAUDITED PRO FORMA COMBINED
FINANCIAL INFORMATION............... S-7
RECENT DEVELOPMENTS................... S-8
DESCRIPTION OF THE SENIOR NOTES....... S-9
REGARDING THE TRUSTEE................. S-12
UNDERWRITING.......................... S-13
LEGAL MATTERS......................... S-14
PROSPECTUS
PAGE
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ABOUT THIS PROSPECTUS................. 2
FORWARD-LOOKING STATEMENTS............ 2
WHERE YOU CAN FIND MORE INFORMATION... 3
EXELON CORPORATION.................... 4
RATIO OF EARNINGS TO FIXED
CHARGES............................. 5
USE OF PROCEEDS....................... 5
DESCRIPTION OF DEBT SECURITIES........ 5
PLAN OF DISTRIBUTION.................. 16
VALIDITY OF DEBT SECURITIES........... 16
EXPERTS............................... 16
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR TO
WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT. THIS DOCUMENT MAY ONLY BE USED WHERE IT IS LEGAL
TO SELL THESE SECURITIES. THE INFORMATION IN THIS DOCUMENT MAY ONLY BE ACCURATE
ON THE DATE OF THIS DOCUMENT.
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ABOUT THIS PROSPECTUS SUPPLEMENT
This prospectus supplement and the attached prospectus contain information
about our company and about the senior notes. They also refer to information
contained in other documents that we file with the Securities and Exchange
Commission. If this prospectus supplement is inconsistent with the prospectus or
the documents that are incorporated by reference in the prospectus, rely on this
prospectus supplement.
When we refer to "Exelon," "the Company," "we," "us," or "our" in this
prospectus supplement, we mean Exelon Corporation.
EXELON CORPORATION
We are one of the largest public utility holding companies in the United
States. Through our subsidiaries, we deliver electricity to more than 5 million
customers and natural gas to 425,000 customers, own or control approximately
33,500 MW of net generation capacity, and own substantial equity interests in
companies with 6,160 MW of net generation capacity and 6,250 MW of capacity
under construction or in advanced development.
On October 20, 2000, we became the parent of Commonwealth Edison Company and
PECO Energy Company as a result of our merger with Unicom Corporation, the
parent of ComEd. Pro forma for the merger, our 2000 revenues and operating
income would have been $13.5 billion and $3.0 billion, respectively. Our total
assets as of December 31, 2000 were $34.6 billion.
We believe that the merger will provide substantial strategic and financial
benefits to shareholders, employees and customers. The benefits include expanded
generation capacity, an enhanced power marketing business, a broadened
distribution platform, strategic fit and compatibility, a foundation for growth
of unregulated businesses and cost savings.
Through our subsidiaries, we operate in three business segments:
- ENERGY DELIVERY, consisting of the retail electricity distribution and
transmission businesses of ComEd and PECO and the natural gas distribution
business of PECO.
- GENERATION, consisting of electric generating facilities, power marketing
operations and equity interests in Sithe Energies, Inc. and AmerGen Energy
Company, LLC.
- ENTERPRISES, consisting of competitive retail energy sales, energy and
infrastructure services, communications and related investments.
During January 2001, we restructured to separate our generation and other
competitive businesses from the regulated energy delivery business. The
non-regulated operations and related assets of ComEd and PECO were transferred
to separate subsidiaries of Exelon. As part of the restructuring, ComEd and PECO
entered into long-term power purchase agreements with our new generation
subsidiary. The restructuring streamlined the process for managing, operating
and tracking the financial performance of each business segment.
We and various of our subsidiaries are subject to federal and state
regulation. We are a registered holding company under the Public Utility Holding
Company Act of 1935. ComEd is a public utility under the Illinois Public
Utilities Act subject to regulation by the Illinois Commerce Commission. PECO is
a public utility under the Pennsylvania Public Utility Code subject to
regulation by the Pennsylvania Public Utility Commission.
We were incorporated in February 1999 under the laws of the Commonwealth of
Pennsylvania. Our principal executive offices are located at 10 South Dearborn
Street, 37th Floor, Chicago, Illinois 60680-5379, and our telephone number is
(312) 394-4321.
S-2
The following chart shows our principal subsidiaries and business segments:
EXELON CORPORATION
PRINCIPAL SUBSIDIARIES
[CHART]
STRATEGY
We follow an integrated approach to strategy based on our core competencies,
operational excellence and the growth prospects of each of our businesses:
- We believe our energy delivery business will continue to be a significant
and steady source of earnings and cash flows. The primary goals for our
energy delivery companies, ComEd and PECO, are to continue to deliver
reliable service, to continue to improve customer satisfaction and to
maintain our productive regulatory relationships.
- We believe our generation and power marketing business will be our primary
growth vehicle in the near term. We intend to develop a national
generation portfolio with fuel and dispatch diversity, to realize cost
savings and operational benefits of owning and operating substantial
generating capacity and to optimize the value of our low-cost generating
capacity through our power marketing expertise.
- Our enterprises business will continue to focus on the development of
complementary businesses, including infrastructure services,
communications, retail energy sales, energy services and related
investments.
S-3
ENERGY DELIVERY
Energy Delivery consists of our regulated energy delivery operations
conducted by ComEd and PECO.
ComEd delivers electricity to 3.5 million residential, commercial,
industrial and wholesale customers in northern Illinois. ComEd's service
territory has an estimated population of 8.0 million, including 3.0 million in
the City of Chicago. ComEd is a public utility under the Illinois Public
Utilities Act and is subject to regulation by the Illinois Commerce Commission
and the Federal Energy Regulatory Commission (FERC) with respect to rates,
charges, transmission rates and other aspects of its business.
PECO delivers electricity to 1.5 million residential, commercial, industrial
and wholesale customers and natural gas to 425,000 residential, commercial and
industrial customers in southeastern Pennsylvania. PECO's electricity delivery
territory has a population of 3.6 million, including 1.6 million in the City of
Philadelphia, and its natural gas delivery territory has a population of
1.9 million adjacent to the City of Philadelphia. PECO is a public utility under
the Pennsylvania Public Utility Code and is subject to regulation by the
Pennsylvania Public Utility Commission and FERC as to electric distribution
rates, retail gas rates, transmission rates and certain other aspects of its
business.
ComEd has entered into a power purchase agreement whereby Exelon Generation
will supply all of ComEd's load requirements through 2004 and all available
energy from ComEd's former nuclear stations from 2005 through 2006. PECO also
has entered into a power purchase agreement whereby Exelon Generation will
supply all of PECO's load requirements through 2010.
GENERATION
Exelon Generation combines the generating resources and wholesale power
marketing operations of PECO and ComEd prior to our restructuring to separate
our regulated and unregulated businesses. In addition to the power purchase
agreements with ComEd and PECO, Exelon Generation has contracted with Exelon
Energy, our competitive retail generation supplier, to meet its supply
commitments pursuant to its retail generation sales agreements.
The generating resources of Exelon Generation consist of ownership interests
in generating facilities and long-term contracts for capacity, totaling
approximately 33,500 MW in the aggregate. Exelon Generation also owns a 49.9%
interest in Sithe, with an option to purchase the remaining 50.1% interest
between December 2002 and December 2005. Sithe develops, owns and operates
generating facilities. Sithe's net capacity is 10,032 MW, including projects
under construction or in advanced development. In addition, Exelon Generation
owns a 50% interest in AmerGen, a joint venture with British Energy plc.
AmerGen's net capacity is 2,378 MW.
Exelon Generation's wholesale power marketing group, Power Team, is one of
the largest wholesale power marketers in North America. Power Team manages the
output of Exelon Generation's resources to meet the load requirements of ComEd
and PECO and the supply commitments of Exelon Energy. Power Team also enters
into bilateral arrangements for the purchase, sale and delivery of energy and
participates in the developing wholesale spot markets for electricity.
ENTERPRISES
Enterprises combines the competitive businesses formerly held by PECO and
Unicom. Enterprises consists primarily of Exelon Infrastructure Service, Inc.,
our infrastructure services business; Exelon Services, our energy services
business; Exelon Energy, our competitive retail energy sales business; Exelon
Thermal, a district cooling company; and Exelon Communications, which manages
our communications investments. Enterprises also invests in new entrepreneurial
companies seeking opportunities arising from deregulation.
S-4
USE OF PROCEEDS
We intend to use the proceeds from the sale of the senior notes, after
deducting underwriting compensation and estimated fees and expenses, to repay a
portion of a $1.25 billion term loan which matures on October 12, 2001. The
proceeds of the term loan were used to fund the cash portion of the
consideration paid by us in the merger and our acquisition of our interest in
Sithe. The average interest rate on the term loan is approximately 7.6%.
CAPITALIZATION
The following table shows our short-term debt and capitalization (1) on a
consolidated basis and (2) on a consolidated basis as adjusted to reflect this
offering and the use of the proceeds from this offering as set forth under "Use
of Proceeds" above. This table should be read in conjunction with the
consolidated financial statements and related notes of Exelon for the year ended
December 31, 2000, incorporated by reference in the prospectus. See "Where You
Can Find More Information" in the accompanying prospectus.
AS OF DECEMBER 31, 2000
---------------------------
AS ADJUSTED
ACTUAL FOR OFFERING(A)
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($ IN MILLIONS)
Short-term debt(b).................................... $ 2,281 $ 1,785
Capitalization:
Long-term debt:
Transition bonds(c)............................... $ 6,982 $ 6,982
Other long-term debt.............................. 5,976 6,476
Preferred securities of subsidiaries................ 630 630
Shareholders' equity................................ 7,215 7,215
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Total capitalization............................ $20,803 $21,303
======= =======
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(a) Reflects payment of $496 million of short-term indebtedness from the
proceeds of this offering.
(b) Includes current maturities of long-term debt of $908 million, of which
$467 million are transition bonds.
(c) Transition bonds represent transition notes and bonds issued by subsidiaries
of ComEd and PECO to securitize portions of their respective stranded cost
recovery. Includes unamortized discount of $109 million.
S-5
SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
The following financial information about Exelon is only a summary. Exelon
acquired Unicom on October 20, 2000 in a business combination accounted for
under the purchase method of accounting. The results of Unicom are included in
Exelon's financial results since the acquisition date. You should read the
following together with the historical consolidated financial statements of
Exelon and the related notes incorporated by reference in the prospectus. See
"Where You Can Find More Information" in the accompanying prospectus.
YEAR ENDED DECEMBER 31,
------------------------------------------
1998 1999 2000
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($ IN MILLIONS)
INCOME STATEMENT DATA
Operating revenues........................................ $5,325 $5,478 $7,499
Operating income.......................................... 1,268 1,373 1,527
Net income................................................ 500 570 586
CASH FLOW DATA
EBITDA(a)................................................. $2,033 $1,731 $2,134
Cash interest paid(b)..................................... 385 350 519
Capital expenditures...................................... 415 491 752
Cash flow from operations................................. 1,486 883 1,096
AS OF DECEMBER 31,
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1999 2000
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($ IN MILLIONS)
BALANCE SHEET DATA
Property, plant and equipment, net........................ $ 5,004 $12,936
Total assets.............................................. 13,087 34,597
Long-term debt(c)......................................... 5,969 12,958
Preferred securities of subsidiaries...................... 321 630
Shareholders' equity...................................... 1,773 7,215
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(a) EBITDA is defined as operating income plus depreciation and amortization as
reported in the consolidated statements of cash flows. EBITDA is not a
measure of performance under generally accepted accounting principles
(GAAP). While EBITDA should not be considered as a substitute for net
income, cash flows from operating activities and other income or cash flow
statement data prepared in accordance with GAAP, or as a measure of
profitability or liquidity, management understands that EBITDA is
customarily used as a measure in evaluating companies.
(b) Includes cash interest paid of none, $107 million and $307 million in
connection with transition bonds for 1998, 1999 and 2000, respectively.
(c) Excludes current maturities of $128 million and $908 million in 1999 and
2000, respectively.
S-6
SELECTED UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
We present below selected unaudited pro forma combined financial information
for the years ended December 31, 1999 and December 31, 2000. The selected pro
forma financial information gives effect to the merger as if it had occurred at
the beginning of the periods presented. Merger-related costs of $367 million
($220 million, net of income taxes) have been excluded from the pro forma
information below. The pro forma information also gives effect to the
December 1999 sale by ComEd of its fossil generating assets as if it had
occurred at the beginning of 1999.
This information does not purport to represent what the results of
operations of Exelon would actually have been had the merger occurred at
January 1, 1999 or January 1, 2000 or to project Exelon's results of operations
for any future period or date. The data set forth below should be read together
with the historical financial statements and notes of Exelon incorporated by
reference into the prospectus. See "Where You Can Find More Information" in the
accompanying prospectus.
YEAR ENDED DECEMBER 31,
-------------------------
1999 2000
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($ IN MILLIONS)
INCOME STATEMENT DATA
Operating revenues........................................ $12,225 $13,508
Operating income.......................................... 3,086 2,987
Net income................................................ 1,156 1,216
CASH FLOW DATA
EBITDA(a)................................................. $ 4,180 $ 4,554
Cash interest paid........................................ 948 947
Capital expenditures...................................... 1,948 1,923
Cash flow from operations................................. 2,243 1,278
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(a) EBITDA is defined as operating income plus depreciation and amortization as
reported in the consolidated statements of cash flows. EBITDA is not a
measure of performance under GAAP. While EBITDA should not be considered as
a substitute for net income, cash flows from operating activities and other
income or cash flow statement data prepared in accordance with GAAP, or as a
measure of profitability or liquidity, management understands that EBITDA is
customarily used as a measure in evaluating companies.
S-7
RECENT DEVELOPMENTS
Our first quarter 2001 revenues were $3,823 million compared to revenues for
the prior year period of $1,353 million, which represent the results of PECO and
do not reflect the effects of the October 20, 2000 merger with Unicom. Pro forma
first quarter 2000 revenues, assuming the merger occurred on January 1, 2000,
were $2,987 million. The higher 2001 revenues are due primarily to increases in
wholesale and unregulated revenues, resulting in part from a 98.8% capacity
factor for the nuclear units.
Our first quarter 2001 earnings before interest and income taxes were
$941 million, of which approximately three-fourths were contributed by Energy
Delivery. The balance, partially offset by a loss in Enterprises, was
contributed by Exelon Generation.
We reported earnings of $399 million for the first quarter of 2001.
Operating earnings of $387 million exclude a $12 million after-tax benefit from
the implementation of a new accounting standard on accounting for derivatives
(FASB 133).
The selected unaudited financial information presented below represents our
actual results for the quarter ended March 31, 2000; our pro forma results for
the quarter ended March 31, 2000, assuming the merger with Unicom occurred on
January 1, 2000; and our actual results for the quarter ended March 31, 2001.
THREE MONTH PERIOD ENDED
MARCH 31,
-------------------------------
2000
-------------------- 2001
ACTUAL PRO FORMA ACTUAL
-------- --------- --------
($ IN MILLIONS)
INCOME STATEMENT DATA
Revenues........................................ $1,353 $2,987 $3,823
Earnings before interest and income taxes....... 365 725 941
Net income...................................... 191 344 399
S-8
DESCRIPTION OF THE SENIOR NOTES
We will issue the senior notes under the indenture, dated as of May 1, 2001,
between Exelon and Chase Manhattan Trust Company, N.A., as trustee. The senior
notes constitute senior debt securities, as described in the accompanying
prospectus, and will contain all of the terms described in the accompanying
prospectus under the heading "Description of Debt Securities." The senior notes
will also contain the additional covenants and provisions regarding events of
default as described below.
GENERAL
The indenture provides for issuance from time to time of debentures, notes
(including the senior notes issued in this offering) and other evidences of our
indebtedness in an unlimited amount. We may issue additional securities under
the indenture from time to time.
The senior notes will be unsecured and unsubordinated and will rank equally
with all of our other unsecured and unsubordinated indebtedness and other
obligations.
Interest on the senior notes accrues at the rate of 6 3/4% per year.
Interest will accrue from May 8, 2001 or from the most recent interest payment
date to which interest has been paid or provided for. Interest is payable twice
a year to holders of record at the close of business on the April 15 or
October 15 immediately preceding the interest payment date. Interest payment
dates will be May 1 and November 1 of each year beginning on November 1, 2001.
The senior notes will mature on May 1, 2011.
We will issue the senior notes only in registered form in denominations of
$1,000 and multiples thereof. The senior notes initially will be issued in
book-entry form only.
REDEMPTION AT OUR OPTION
We may redeem the senior notes in whole or in part, at our option at any
time, at a redemption price equal to the greater of (1) 100% of the principal
amount of the senior notes being redeemed or (2) the sum of the present values
of the remaining scheduled payments of principal and interest thereon (exclusive
of interest accrued to the date of redemption) discounted to the redemption date
on a semiannual basis (assuming a 360-day year consisting of twelve 30-day
months) at the Treasury Rate (as defined below) plus 25 basis points, plus
accrued interest on the principal amount being redeemed to the redemption date.
"Comparable Treasury Issue" means the United States Treasury security or
securities selected by an Independent Investment Banker (as defined below) as
having an actual or interpolated maturity comparable to the remaining term of
the senior notes being redeemed that would be utilized, at the time of selection
and in accordance with customary financial practice, in pricing new issues of
corporate debt securities of comparable maturity to the remaining term of such
senior notes.
"Comparable Treasury Price" means, with respect to any redemption date,
(1) the average of the Reference Treasury Dealer Quotations (as defined below)
for such redemption date, after excluding the highest and lowest such Reference
Treasury Dealer Quotations, or (2) if the trustee obtains fewer than four such
Reference Treasury Dealer Quotations, the average of all such quotations.
"Independent Investment Banker" means one of the Reference Treasury Dealers
(as defined below) appointed by the trustee after consultation with us.
"Reference Treasury Dealer" means each of Credit Suisse First Boston
Corporation, Salomon Smith Barney Inc., Banc One Capital Markets, Inc., their
respective successors, and two other primary U.S. Government securities dealers
in The City of New York (a "Primary Treasury Dealer") selected by us. If any
Reference Treasury Dealer shall cease to be a Primary Treasury Dealer, we will
substitute another Primary Treasury Dealer for that dealer.
S-9
"Reference Treasury Dealer Quotations" means, with respect to each Reference
Treasury Dealer and any redemption date, the average, as determined by the
trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the trustee by such Reference Treasury Dealer at 3:30 p.m. New York
time on the third business day preceding such redemption date.
"Treasury Rate" means, with respect to any redemption date, the rate per
annum equal to the semiannual equivalent yield to maturity or interpolated (on a
day count basis) of the Comparable Treasury Issue, assuming a price for the
Comparable Treasury Issue (expressed as a percentage of its principal amount)
equal to the Comparable Treasury Price for such redemption date.
We will mail notice of any redemption at least 30 days but not more than
60 days before the redemption date to each holder of senior notes to be
redeemed.
Unless we default in payment of the redemption price, on and after the
redemption date interest will cease to accrue on the senior notes or portions
thereof called for redemption.
ADDITIONAL NOTES
The senior notes are initially being offered in the principal amount of
$500 million. We may, without the consent of the holders, increase such
principal amount in the future, on the same terms and conditions and with the
same CUSIP number(s) as the senior notes being offered hereby.
ADDITIONAL COVENANTS
LIMITATION UPON LIENS ON STOCK OF CERTAIN SUBSIDIARIES
For so long as any senior notes remain outstanding, we will not create or
incur or allow any of our subsidiaries to create or incur any pledge or security
interest on (1) any of the capital stock of, or other equity interests in, PECO,
ComEd or Exelon Generation and (2) any of the capital stock of, or other equity
interests in, our subsidiaries which directly hold the capital stock of or other
equity interests in PECO, ComEd or Exelon Generation, in each case held by us or
one of our subsidiaries on the issue date of the senior notes.
LIMITATION UPON MERGERS, CONSOLIDATIONS, AND SALES OF ASSETS
The indenture provides that we will not consolidate with or merge into, or
transfer all or substantially all of our assets to, another company, unless:
- that company is organized under the laws of the United States or a state
or is organized under the laws of a foreign jurisdiction and consents to
the jurisdiction of the courts of the United States or a state;
- that company assumes by supplemental indenture all of our obligations
under the indenture and the senior notes; and
- immediately prior to and after giving effect to the transaction, no
default exists under the indenture.
The successor shall be substituted for us as if it had been an original
party to the indenture and the senior notes. Thereafter, the successor may
exercise our rights and powers under the indenture, the senior notes, and all of
our obligations under those documents will terminate.
EVENTS OF DEFAULT
In addition to the events of default described in the accompanying
prospectus under the heading "Description of Debt Securities--Events of
Default," an event of default under the senior notes will
S-10
include our failure to pay principal at maturity or acceleration following a
default in an aggregate amount of $50 million or more with respect to any of our
Indebtedness, or the acceleration of any of our Indebtedness aggregating
$50 million or more which default is not cured, waived or postponed pursuant to
an agreement with the holders of the Indebtedness within 30 days after written
notice as provided in the indenture governing the senior notes, or the
acceleration is not rescinded or annulled within 30 days after written notice as
provided in the indenture governing the senior notes.
As used in the immediately preceding paragraph, "Indebtedness" means the
following obligations of Exelon Corporation:
- all obligations for borrowed money;
- all obligations evidenced by bonds, debentures, notes or similar
instruments, or upon which interest payments are customarily made;
- all obligations under conditional sale or other title retention agreements
relating to property purchased by us to the extent of the value of the
property (other than customary reservations or retentions of title under
agreements with suppliers entered into in the ordinary course of our
business); and
- all obligations issued or assumed as the deferred purchase price of
property or services purchased by us which would appear as liabilities on
our balance sheet.
RATINGS
Moody's Investors Service, Standard and Poor's Rating Service, and Fitch
currently rate our senior unsecured debt Baa2, BBB+ and BBB+, respectively.
A rating reflects only the views of a rating agency and is not a
recommendation to buy, sell or hold the senior notes. Any rating can be revised
upward or downward or withdrawn at any time by a rating agency if it decides the
circumstances warrant that change. Each rating should be evaluated independently
of any other rating.
S-11
REGARDING THE TRUSTEE
Chase Manhattan Trust Company, N.A. will act as trustee and registrar for
debt securities issued under the indenture and, initially, will also act as
transfer agent and paying agent with respect to the debt securities.
(Sections 3.1, 3.2) The holders of a majority of the senior notes may remove the
trustee with or without cause, at any time, and appoint a successor trustee.
(Section 6.11) The trustee, in its individual or any other capacity, may make
loans to, accept deposits from, and perform services for us or our affiliates,
and may otherwise deal with us or our affiliates, as if it were not the trustee.
An affiliate of the trustee is a participating lender with respect to our
existing 364 Day Credit Agreement and acts as issuing and paying agent for
commercial paper programs for us and ComEd. Mutual fund accounts are also
established with J.P. Morgan Chase for us and certain of our affiliates.
S-12
UNDERWRITING
Under the terms and subject to the conditions contained in an underwriting
agreement dated May 3, 2001, we have agreed to sell to the underwriters named
below, for whom Credit Suisse First Boston Corporation and Salomon Smith
Barney Inc. are acting as joint book-running managers, and, together with Banc
One Capital Markets, Inc., are acting as representatives, the following
respective principal amounts of the senior notes:
PRINCIPAL
UNDERWRITER AMOUNT
----------- ------------
Credit Suisse First Boston Corporation...................... $125,000,000
Salomon Smith Barney Inc.................................... 125,000,000
Banc One Capital Markets, Inc............................... 125,000,000
First Union Securities, Inc................................. 60,000,000
Lehman Brothers Inc......................................... 25,000,000
ABN AMRO Incorporated....................................... 10,000,000
Barclays Capital Inc........................................ 10,000,000
BNY Capital Markets, Inc.................................... 10,000,000
Loop Capital Market, LLC.................................... 10,000,000
------------
Total................................................... $500,000,000
============
The underwriting agreement provides that the underwriters are obligated to
purchase all of the senior notes if any are purchased. The underwriting
agreement also provides that if an underwriter defaults, the purchase
commitments of non-defaulting underwriters may be increased or the offering of
senior notes may be terminated.
The underwriters propose to offer the senior notes initially at the public
offering price on the cover page of this prospectus supplement and to selling
group members at that price less a selling concession of 0.40% of the principal
amount per senior note. The underwriters and selling group members may allow a
discount of 0.25% of the principal amount per senior note on sales to other
broker/dealers. After the initial public offering, the representatives may
change the public offering price and concession and discount to broker/dealers.
We estimate that our out-of-pocket expenses for this offering will be
approximately $250,000.
The senior notes are a new issue of securities with no established trading
market. One or more of the underwriters intends to make a secondary market for
the senior notes. However, they are not obligated to do so and may discontinue
making a secondary market for the senior notes at any time without notice. No
assurance can be given as to how liquid the trading market for the senior notes
will be.
We intend to use the net proceeds from the sale of the senior notes to repay
indebtedness owed by us to lenders under a term loan, for which Bank One, N.A.,
Credit Suisse First Boston Corporation and Citibank, N.A., affiliates of the
representatives for the underwriters, served as administrative agent,
documentation agent and syndication agent, respectively, and also are lenders
thereunder. Accordingly, the offering is being made in compliance with the
requirements of Rule 2710(c)(8) of the Conduct Rules of the National Association
of Securities Dealers, Inc.
John W. Rogers, Jr., a member of our board of directors, also serves on the
board of directors of Bank One Corporation.
We have agreed to indemnify the underwriters against liabilities under the
Securities Act of 1933, or contribute to payments which the underwriters may be
required to make in that respect.
S-13
The underwriters and/or their affiliates have in the past and may in the
future provide investment and commercial banking and other related services to
us and our subsidiaries in the ordinary course of business, for which the
underwriters and/or their affiliates have received or may receive customary fees
and reimbursement of their out-of-pocket expenses. Affiliates of the
representatives serve as administrative, documentation and syndication agents
under our term loan and Credit Suisse First Boston Corporation serves as the
dealer for our, and certain of our subsidiaries', commercial paper programs.
In connection with the offering, underwriters may engage in stabilizing
transactions, over-allotment transactions, syndicate covering transactions and
penalty bids in accordance with Regulation M under the Securities Exchange Act
of 1934.
- Stabilizing transactions permit bids to purchase the underlying security
so long as the stabilizing bids do not exceed a specified maximum.
- Over-allotment involves sales by the underwriters of senior notes in
excess of the principal amount of the senior notes the underwriters are
obligated to purchase, which creates a syndicate short position.
- Syndicate covering transactions involve purchases of the senior notes in
the open market after the distribution has been completed in order to
cover syndicate short positions.
- Penalty bids permit the representatives to reclaim a selling concession
from a syndicate member when the senior notes originally sold by such
syndicate member are purchased in a stabilizing transaction or a syndicate
covering transaction to cover syndicate short positions.
These stabilizing transactions, syndicate covering transactions and penalty
bids may have the effect of raising or maintaining the market price of the
senior notes or preventing or retarding a decline in the market price of the
senior notes. As a result, the price of the senior notes may be higher than the
price that might otherwise exist in the open market. These transactions, if
commenced, may be discontinued at any time.
A prospectus in electronic format may be made available on the web sites
maintained by one or more of the underwriters participating in this offering.
The representatives may agree to allocate securities to underwriters for sale to
their online brokerage account holders. Internet distributions will be allocated
by the underwriters that will make internet distributions on the same basis as
other allocations.
LEGAL MATTERS
The validity of the senior notes will be passed upon for us by Ballard Spahr
Andrews & Ingersoll, LLP, Philadelphia, Pennsylvania. Certain legal matters
relating to the senior notes will be passed upon for the underwriters by
Winston & Strawn, Chicago, Illinois. Winston & Strawn provides legal services to
Exelon and its subsidiaries from time to time.
S-14
PROSPECTUS
$1,500,000,000
Exelon Corporation
Debt Securities
---------
Exelon Corporation may offer from time to time, together or separately, one
or more series of its unsecured debt securities. These debt securities will rank
equally in terms of payment with all of our other unsubordinated and unsecured
indebtedness.
When a particular series of debt securities is offered, we will prepare and
issue a supplement to this prospectus setting forth the particular terms of the
offered debt securities. You should read this prospectus and any prospectus
supplement carefully before you make any decision to invest in the debt
securities. This prospectus may not be used to consummate sales of the
securities offered by this prospectus unless accompanied by a prospectus
supplement.
The aggregate initial public offering price of all debt securities which may
be sold under this prospectus will not exceed $1,500,000,000.
------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities nor passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.
------------------------
The date of this prospectus is May 1, 2001
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that Exelon filed with
the Securities and Exchange Commission using a "shelf" registration process.
Under this shelf process, we may, from time to time, sell debt securities with
different terms and provisions in one or more offerings of one or more series.
The aggregate principal amount of debt securities which we may offer under this
prospectus is $1,500,000,000. Each time we sell debt securities, we will provide
a prospectus supplement that will contain specific information about the terms
of that offering. The prospectus supplement may also add, update or change
information contained in this prospectus. You should read both this prospectus
and any prospectus supplement together with the additional information described
under the heading "Where You Can Find More Information."
FORWARD-LOOKING STATEMENTS
This prospectus, any accompanying prospectus supplement, and the additional
information described under the heading Where You Can Find More Information may
contain forward-looking statements within the meaning of the safe harbor of the
Private Securities Litigation Reform Act of 1995. These statements are subject
to risks and uncertainties and are based on the beliefs and assumptions of our
management, based on information currently available to our management. When we
use words such as "believes," "expects," "anticipates," "intends," "plans,"
"estimates," "should," or similar expressions, we are making forward-looking
statements.
Forward-looking statements are not guarantees of performance. They involve
risks, uncertainties, and assumptions. Our future results may differ materially
from those expressed in these forward-looking statements. Many of the factors
that will determine these results are beyond our ability to control or predict.
These factors include, but are not limited to:
- the ongoing restructuring of the electric industry;
- the outcome of regulatory proceedings relating to restructuring;
- regulatory, tax, and environmental legislation;
- our ability to successfully compete outside our traditional regulated
markets;
- regional economic conditions, which could affect customer growth;
- the cost of debt and equity capital;
- weather variations affecting customer usage;
- the degree to which and the speed with which competition changes the
utility industry;
- technological developments in the electric industry;
- successfully managing market risk; and
- other uncertainties, all of which are difficult to predict and many of
which are beyond our control.
2
WHERE YOU CAN FIND MORE INFORMATION
AVAILABLE INFORMATION
Exelon is a Pennsylvania corporation that files annual, quarterly and
special reports, proxy statements and other information with the Securities and
Exchange Commission. You may read and copy any reports, statements or other
information that we file with the SEC at the SEC's public reference rooms at the
following locations:
Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison Street
Washington, D.C. 20549 New York, NY 10048 Suite 1400
Chicago, IL 60661-2511
INCORPORATION BY REFERENCE
Please call the SEC at 1-800-SEC-0330 for additional information on the
public reference rooms. Our SEC filings are also available to the public from
commercial document retrieval services and at the Internet worldwide web site
maintained by the SEC at "http://www.sec.gov." Reports, proxy statements and
other information about Exelon may also be inspected at the offices of the New
York Stock Exchange, which is located at 20 Broad Street, New York, New York
10005.
The SEC allows Exelon to "incorporate by reference" information into this
prospectus, which means that we can disclose important information to you by
referring you to other documents filed separately with the SEC. The information
incorporated by reference is considered part of this prospectus, except for any
information superseded by information contained directly in this prospectus or
in later filed documents incorporated by reference in any supplement to this
prospectus.
This prospectus incorporates by reference the documents that Exelon has
filed with the SEC. These documents contain important business and financial
information about Exelon that is not included in or delivered with this
prospectus. We incorporate by reference the documents listed below and any
future filings we make with the SEC (file no. 001-16169) under Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until we sell all of
the debt securities.
- Annual report on Form 10-K for the year ended December 31, 2000;
- Amended current report on Form 8-K/A filed on November 15, 2000; and
- Current reports on Form 8-K filed on March 16, 2001, April 4, 2001, and
April 27, 2001.
You may request a copy of these filings, other than exhibits not
specifically incorporated by reference therein, which will be provided to you
without charge, by writing or telephoning:
Director, Investor Relations
Exelon Corporation
37th Floor
10 South Dearborn Street
Post Office Box 805379
Chicago, IL 60680-5379
Telephone: (312) 394-8354
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not authorized
anyone else to provide you with different information. We are not making an
offer of these debt securities in any state where the offer is not permitted.
You should not assume that the information in this prospectus or any prospectus
supplement is accurate as of any date other than the date on the front of those
documents.
3
EXELON CORPORATION
Exelon (NYSE: EXC) is a leading provider of energy services in the United
States. As the result of a merger between PECO Energy Company and Unicom
Corporation, Exelon, together with our affiliates, has become one of the
nation's largest electric utilities. We are a utility services holding company
engaged, through our subsidiaries, in the production, purchase, transmission,
distribution and sale of electricity to 5 million retail customers and in the
wholesale market, and the distribution and sale of natural gas to 425,000 retail
customers. We are the largest nuclear operator in the United States. We also
provide power marketing, deregulated energy, telecommunications and
infrastructure services.
We, through our subsidiaries, including PECO Energy Company and Commonwealth
Edison Company, operate in three business segments:
- ENERGY DELIVERY, consisting of the retail electricity distribution and
transmission businesses of ComEd in northern Illinois and PECO in
southeastern Pennsylvania and the natural gas distribution business of
PECO in the Pennsylvania counties surrounding the City of Philadelphia.
- GENERATION, consisting of electric generating facilities, power marketing
operations and equity interests in Sithe Energies, Inc. and AmerGen Energy
Company, LLC.
- ENTERPRISES, consisting of competitive retail energy sales, energy and
infrastructure services, communications and related investments.
During January 2001, we undertook a restructuring to separate our generation
and other competitive businesses from our regulated energy delivery business. As
part of the restructuring, the non-regulated operations and related assets of
ComEd and PECO were transferred to separate subsidiaries. Restructuring will
streamline the process for managing, operating and tracking financial
performance of each business segment.
Our executive offices are located at 10 South Dearborn Street, 37th Floor,
Chicago, Illinois 60680-5379 and our telephone number is (312) 394-4321.
4
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the historical ratio of our earnings to fixed
charges for each of the periods indicated.
YEARS ENDED DECEMBER 31,
--------------------------------------------------------------------
1996 1997 1998 1999 2000
---- -------- -------- -------- --------
3.29 2.71 3.60 3.52 2.64
The ratios of earnings to fixed charges represent, on a pre-tax basis, the
number of times earnings cover fixed charges. Earnings consist of net income
plus fixed charges and taxes based on our income. 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. For the purposes of calculating these ratios, income from
continuing operations (1) for 2000 does not include the extraordinary charge
against income of $6 million ($4 million net of income taxes) or the cumulative
effect of a change in accounting principle which increased income $40 million
($24 million net of income taxes), (2) for 1999 does not include the
extraordinary charge against income of $62 million ($37 million net of income
taxes), (3) for 1998 does not include the extraordinary charge against income of
$33 million ($20 million net of income taxes) and (4) for 1997 does not include
the extraordinary charge against income of $3.1 billion ($1.8 billion net of
income taxes). The ratio of earnings to fixed charges reflects operations of
Unicom Corporation (the former parent of ComEd) since October 20, 2000, the date
of the merger.
The following table sets forth the pro forma ratio of our earnings to fixed
charges for each of the periods indicated. The pro forma ratios give effect to
our merger with Unicom Corporation as if it occurred on January 1, 1999 and
2000, respectively.
YEARS ENDED
DECEMBER 31,
-----------------------
1999 2000
---- --------
2.99 2.93
USE OF PROCEEDS
The net proceeds from the sale of the debt securities will be added to our
general funds and will be used for the repayment of outstanding indebtedness and
for general corporate purposes, all as more specifically set forth in a
prospectus supplement.
DESCRIPTION OF DEBT SECURITIES
The debt securities will be our direct, unsecured obligations and may be
issued from time to time in one or more offerings of one or more series. The
debt securities will be issued under an Indenture to be entered into between us
and Chase Manhattan Trust Company, N.A., as trustee. The form of Indenture is
filed as an exhibit to the registration statement of which this prospectus is a
part. Selected provisions of the Indenture have been summarized below. The
summary is not complete and many of the terms contained in the following summary
may be modified in the accompanying prospectus supplement. You should read the
Indenture for provisions that may be important to you. In the summary below, we
include references to section numbers of the Indenture so that you can easily
locate these provisions and, when appropriate, we also included references to
sections of the Trust Indenture Act.
5
GENERAL PROVISIONS OF THE INDENTURE
The debt securities will be our direct, unsecured obligations and will rank
equally with all of our other unsecured and unsubordinated indebtedness.
Because we are a holding company that conducts all of our operations through
our subsidiaries, holders of debt securities will generally have a junior
position to claims of creditors of those subsidiaries, including trade
creditors, debt holders, secured creditors, taxing authorities, guarantee
holders and any preferred stockholders other than, in each case, where we are
the creditor or stockholder. Our subsidiaries have ongoing corporate debt
programs used to finance their business activities. As of December 31, 2000, our
subsidiaries had approximately $13.5 billion of outstanding debt. We do not have
any preferred stock outstanding, but our subsidiary PECO has outstanding
preferred stock with an aggregate value of $174 million. ComEd, another of our
subsidiaries, has less than 1% of its shares of common stock held by
non-affiliates. Finance subsidiaries of each of PECO and ComEd have preferred
stock outstanding, with an aggregate value of $128 million and $328 million,
respectively. If distributions are not timely made on any of this preferred
stock, PECO or ComEd, as the case may be, may not pay dividends on its common
stock, which may adversely affect our ability to make payment on these debt
securities.
The Indenture provides that any debt securities proposed to be sold by this
prospectus and the accompanying prospectus supplement, as well as other of our
unsecured debt securities, may be issued under the Indenture in one or more
series, in each case as authorized by us from time to time. The particular terms
of any series of debt securities and any modifications of or additions to the
general terms of the debt securities described in this prospectus will be
described in the prospectus supplement for that series. Accordingly, for a
description of the terms of any series of debt securities, you should refer to
both the prospectus supplement relating to that series and the description of
debt securities, set forth in this prospectus.
The applicable prospectus supplement for a series of debt securities that we
issue will describe, among other things, the following terms of the offered debt
securities:
- the title;
- any limit on the aggregate principal amount;
- whether issued in the form of one or more global securities and whether
all or a portion of the principal amount of the debt securities is
represented thereby;
- the price or prices at which the debt securities will be issued;
- the date or dates on which principal is payable which may range from nine
months to 30 years for medium-term debt securities and more than 30 years
for long-term debt securities;
- interest rates (which may be fixed or floating rates), and the dates from
which interest, if any, will accrue, and the dates when interest is
payable;
- the right, if any, to extend the interest payment periods and the duration
of the extensions;
- additional covenants for the benefit of the holders of debt securities;
- our rights or obligations to redeem or purchase the debt securities;
- any sinking fund provisions;
- the terms applicable to any debt securities issued at a discount from
their stated principal amount;
6
- the portion of the principal amount payable upon acceleration of maturity
as a result of a default on our obligations, if other than the entire
principal amount of the debt securities when issued;
- whether and under what circumstances we will pay additional amounts on our
debt securities to any holder who is not a United States person in respect
of any tax, assessment or governmental charge attributable to that person
and, if so, whether we will have the option to redeem those debt
securities rather than pay those additional amounts; and
- any other specific terms of any debt securities.
If applicable, the prospectus supplement will also include a discussion of
federal income tax considerations relevant to the debt securities being offered.
We may issue debt securities that provide for less than the entire principal
amount to be payable upon declaration of acceleration of the maturity of those
debt securities, which are commonly referred to as "original issue discount
securities." Federal income tax and other considerations pertaining to any
original issue discount securities will be discussed in the applicable
prospectus supplement.
We are not restricted by the Indenture from incurring indebtedness and you
are not protected from a highly leveraged or similar transaction involving us.
You should refer to the prospectus supplement for information with respect to
any deletions from, modifications of or additions to the events of default or
the covenants that are described below, including any addition of a covenant or
other provision providing event risk or similar protection.
DENOMINATIONS, REGISTRATION AND TRANSFER
Debt securities of a series may be issuable solely as registered securities
(registered in our books in the name of the holder thereof). The Indenture also
provides that debt securities of a series may be issuable in global form. See
"Book-Entry Debt Securities." Unless otherwise provided in the prospectus
supplement, debt securities denominated (other than global securities, which may
be of any denomination) are issuable in United States dollars in denominations
of $1,000 or any integral multiples of $1,000. (Section 2.7 of the Indenture).
Debt securities will be exchangeable for other debt securities of the same
series and maturity. (Section 2.8 of the Indenture).
Debt securities of a series may be presented for registration of transfer,
and debt securities of a series may be presented for exchange, (1) at each
office or agency required to be maintained by us for payment of that series as
described in "Payment and Paying Agents", and (2) at each other office or agency
that we may designate from time to time for that purpose. No service charge will
be made for any transfer of debt securities, but we may require payment of any
tax or other governmental charge payable in connection therewith. (Section 2.8
of the Indenture).
We will not be required to:
- issue, register the transfer of or exchange debt securities during a
period beginning at the opening of business 15 days preceding the first
mailing of notice of redemption of debt securities of that series to be
redeemed; or
- register the transfer of or exchange any debt security, or portion
thereof, called for redemption, except the unredeemed portion of any debt
security being redeemed in part.
(Section 2.8 of the Indenture).
7
PAYMENT AND PAYING AGENTS
Principal, premium, if any, and interest, if any, on debt securities will be
payable at any office or agency to be maintained by us in New York, New York,
except that at our option, interest may be paid (1) by check mailed to the
address of the person entitled thereto as that address appears in our security
register or (2) by wire transfer to an account maintained by the person entitled
thereto as specified in our security register. (Section 3.1 of the Indenture).
Payment of any installment of interest on debt securities will be made to the
person in whose name the debt security is registered at the close of business on
the regular record date for interest. (Section 2.7 of the Indenture).
We may from time to time designate additional offices or agencies, approve a
change in the location of any office or agency and, except as provided above,
rescind the designation of any office or agency.
EVENTS OF DEFAULT
Unless otherwise provided for in the prospectus supplement, we will be
subject to an "event of default" under the Indenture if any of the following
occurs:
- failure to pay interest for 30 days after the date payment is due and
payable; PROVIDED that if we extend an interest payment period in
accordance with the terms of the debt securities, the extension will not
be a failure to pay interest;
- failure to pay principal or premium, if any, on any debt security when
due, either at maturity, upon any redemption, by declaration or otherwise;
- failure to make any sinking fund payments when due;
- failure to perform other covenants under the Indenture for 60 days after
the trustee has notified us that performance was required;
- bankruptcy, insolvency or reorganization of our company; or
- any other event of default provided in the applicable resolution of our
Board of Directors under which we issue a series of debt securities.
(Section 5.1 of the Indenture).
An event of default for a particular series of debt securities does not
necessarily constitute an event of default for any other series of debt
securities issued under the Indenture. If an event of default relating to the
payment of interest, principal or any sinking fund installment involving any
series of debt securities has occurred and is continuing, the trustee or the
holders of not less than 25% in aggregate principal amount of outstanding debt
securities of each affected series may declare the entire principal amount of
all the debt securities of that series (or, if the debt securities of that
series are original issue discount securities, that portion of the principal
amount as may be specified in the terms thereof) to be due and payable
immediately. (Section 5.1 of the Indenture).
Where an event of default has occurred and is continuing with respect to the
outstanding debt securities of a series, the trustee is under no obligation to
exercise any of its rights or powers under the Indenture at the request, order
or direction of the holders of the outstanding debt securities of that series,
unless those holders have offered the trustee reasonable indemnity against the
expenses and liabilities that it might incur in compliance with the request that
the trustee take action in response to an event of default. Subject to these
provisions for the indemnification of the trustee, the holders of a majority in
principal amount of the outstanding debt securities of a series will have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the trustee, or exercising any trust or power conferred on
the trustee with respect to the debt securities of that series. (Section 5.9 of
the Indenture).
8
The holders of a majority in principal amount of the outstanding debt
securities of a series may, on behalf of the holders of all debt securities of
that series, waive any past default under the Indenture with respect to that
series and its consequences, except a default (1) in payment of the principal of
(or premium, if any) or interest, or any additional amounts payable in respect
of any debt security of that series or (2) in respect of a covenant or provision
that cannot be modified or amended without the consent of the holder of each
affected outstanding debt security of that series. (Section 5.10 of the
Indenture)
The Indenture imposes limitations on suits brought by holders of debt
securities against us. Except for actions for payment of overdue principal or
interest, no holder of debt securities of any series may institute any action
against us under the Indenture unless:
- the holder has previously given to the trustee written notice of default
and continuance of that default;
- the holders of at least 25% in principal amount of the affected
outstanding debt securities have requested that the trustee institute the
action;
- the requesting holders have offered the trustee reasonable indemnity for
expenses and liabilities that may be incurred by bringing the action;
- the trustee has not instituted the action within 60 days of the request;
and
- the trustee has not received inconsistent direction by the holders of a
majority in principal amount of the outstanding debt securities of that
series.
(Sections 5.6 and 5.7 of the Indenture).
We will be required to file annually with the trustee a certificate, signed
by an officer of our company, stating whether or not the officer knows of any
default by us in the performance, observance or fulfillment of any condition or
covenant of the Indenture. (Section 3.5 of the Indenture). The Indenture
provides that the trustee may withhold notice of a default (except payment
defaults) to the holders of debt securities of the series to which the default
applies if the trustee considers it in the interests of those holders of those
debt securities to do so. (Section 5.11 of the Indenture).
COVENANTS
The Indenture provides that we comply with the following covenants:
- punctual payment of principal and interest on the debt securities;
- if the debt securities are no longer in book-entry form, maintain an
office in New York, New York where debt securities may be presented for
payment, exchange and transfer;
- to appoint a trustee to fill any vacancy;
- to issue a certificate to the trustee on January 31 each year indicating
whether we have complied with all covenants and conditions in the
Indenture;
- maintain our corporate existence; and
- pay our taxes and other assessments and claims as they become due, unless
they are being contested in good faith.
MERGER OR CONSOLIDATION
The Indenture provides that we may not consolidate with or merge with or
into any other corporation or other person or convey or transfer our properties
or assets in their entirety or substantially in their entirety to any
corporation or other person, unless we are the continuing
9
corporation or the other corporation or other person is organized under the laws
of the United States or any state or is organized under the laws of a foreign
jurisdiction and consents to the jurisdiction of the United States or a state
and assumes by supplemental indenture all of our obligations under the Indenture
and the debt securities issued thereunder and immediately after the transaction
no default exists.
MODIFICATION OR WAIVER
The Indenture provides that we and the trustee may modify and amend the
Indenture and enter into supplemental indentures without the consent of any
holders of debt securities to:
- evidence the assumption by a successor corporation of our obligations;
- add covenants for the protection of the holders of debt securities;
- cure any ambiguity or correct any inconsistency in the Indenture, PROVIDED
that this action does not adversely affect the interests of holders of any
series of debt securities in any material respect; and
- evidence and provide for the acceptance of appointment by a successor
trustee.
(Section 8.1 of the Indenture).
The Indenture also provides that we and the trustee may, with the consent of
the holders, add, eliminate or modify in any way the provisions of the Indenture
or modify in any manner the rights of the holders of the debt securities.
Consent of the holders means holders of not less than a majority in aggregate
principal amount of debt securities of all affected series then outstanding,
voting as one class. (Section 8.2 of the Indenture). We cannot do this, however,
for those matters requiring the consent of each holder as described below.
We and the trustee may not without the consent of the holder of each
outstanding debt security affected thereby:
- extend the final maturity of any debt security;
- reduce the principal amount or premium, if any;
- reduce the rate or extend the time of payment of interest;
- reduce any amount payable on redemption;
- reduce the amount of the principal of any debt security issued with an
original issue discount that is payable upon acceleration or provable in
bankruptcy;
- impair the right to sue for the enforcement of any payment on any debt
security when due; or
- reduce the percentage of holders of debt securities of any series whose
consent is required for any modification of the Indenture.
In determining whether the holders of the requisite principal amount of
outstanding debt securities have given any request, demand, authorization,
direction, notice, consent or waiver under the Indenture, (1) the principal
amount of an original issue discount security that will be deemed to be
outstanding will be the amount of the principal thereof that would then be due
and payable upon acceleration of the maturity thereof and (2) debt securities
owned by us or any other obligor upon the debt securities or any affiliate of
ours or of any other obligor will be disregarded. (Section 7.4 of the
Indenture).
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SATISFACTION AND DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
We can discharge or defease our obligations under the Indenture as stated
below or as provided in the prospectus supplement.
We may discharge obligations to holders of any series of debt securities
that have not already been delivered to the trustee for cancellation and that
have either become due and payable or are to become due and payable, or are
scheduled for redemption, within one year. We may discharge these obligations by
irrevocably depositing with the trustee cash or U.S. "Government Obligations"
(as defined below), as trust funds, in an amount certified to be enough to pay
when due, whether at maturity, upon redemption or otherwise, the principal of
and interest on the debt securities and any mandatory sinking fund payments.
(Section 9.1 of the Indenture).
We may also discharge any and all of our obligations to holders of any
series of debt securities at any time, referred to as "defeasance." We may also
be released from the obligations imposed by any covenants of any outstanding
series of debt securities and provisions of the Indenture, and we may avoid
complying with those covenants without creating an event of default under the
Indenture, referred to as "covenant defeasance." We may effect defeasance and
covenant defeasance only if, among other things:
- we irrevocably deposit with the trustee cash or U.S. Government
Obligations, as trust funds, in an amount certified to be enough to pay at
maturity, or upon redemption, the principal, and interest on all
outstanding debt securities of that series; and
- we deliver to the trustee an opinion of counsel from a nationally
recognized law firm to the effect that (1) in the case of covenant
defeasance, the holders of the series of debt securities will not
recognize income, gain or loss for U.S. federal income tax purposes as a
result of that defeasance, and will be subject to tax in the same manner
and at the same time as if no covenant defeasance had occurred and (2) in
the case of defeasance, either we have received from, or there has been
published by, the Internal Revenue Service a ruling or there has been a
change in applicable U.S. federal income tax law, and based thereon, the
holders of the series of debt securities will not recognize income, gain
or loss for U.S. federal income tax purposes as a result of that
defeasance, and will be subject to tax in the same manner as if no
defeasance had occurred.
(Section 9.1 of the Indenture).
Although we may discharge or decrease our obligations under the Indenture as
described in the two preceding paragraphs, we may not avoid, among other things,
the rights and obligations of the trustee under the Indenture, to register the
transfer or exchange of any series of debt securities, to replace any temporary,
mutilated, destroyed, lost or stolen series of debt securities or to maintain an
office or agency in respect of any series of debt securities. (Section 9.1 of
the Indenture).
If we effect covenant defeasance with respect to any debt securities and
those debt securities are declared due and payable because of the occurrence of
any event of default other than the event of default resulting from a failure to
comply with any covenant in the Indenture after the notice served therefor has
elapsed, the amount of Government Obligations and funds on deposit with the
trustee will be sufficient to pay amounts due on those debt securities at the
time of their stated maturity but may not be sufficient to pay amounts due on
those debt securities at the time of the acceleration resulting from that event
of default. In that case, we would remain liable to make payment of those
amounts due at the time of acceleration. (Section 9.1 of the Indenture).
If the trustee or any paying agent is prevented by a court or governmental
authority from applying any money deposited with the trustee in accordance with
the Indenture, then our obligations under the Indenture and the debt securities
shall be revived and reinstated as though no deposit had occurred
11
pursuant to the Indenture. Thereafter, our obligation will continue until such
time as the trustee or paying agent is permitted to apply all money in
accordance with the Indenture. Any payment of principal of (or premium, if any)
or interest that we make on any debt security following the reinstatement of our
obligations will be subrogated to the rights of the holders of those debt
securities to receive such payment from the money held by the trustee or paying
agent.
As used above, "Government Obligations" means securities that are (1) direct
obligations of the United States or (2) obligations of a person controlled or
supervised by and acting as an agency or instrumentality of the United States,
the payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States, which are not callable or redeemable at the
option of the issuer thereof. (Section 9.1 of the Indenture).
BOOK-ENTRY DEBT SECURITIES
We may issue the debt securities of a series in whole or in part in the form
of one or more fully registered debt global securities and in either temporary
or permanent form and we refer to each of these as a "global security". Unless
otherwise provided in the prospectus supplement, debt securities that are
represented by a global security will be issued in denominations of $1,000 and
any integral multiple thereof, and will be issued in registered form only.
Payments of principal of (and premium, if any) and interest, if any, on debt
securities represented by a global security will be made by us to the trustee,
and then by the trustee to the depository.
We will deposit any registered global securities with a depository or with a
nominee for a depository identified in the applicable prospectus supplement and
registered in the name of that depository or nominee. We anticipate that any
global securities will be deposited with, or on behalf of, The Depository Trust
Company, New York, New York, that these global securities will be registered in
the name of DTC's nominee, and that the following provisions will apply to the
depository arrangements with respect to any global securities:
- ownership of beneficial interests in a global security will be limited to
persons that have accounts with DTC or its nominee for that global
security, these persons being referred to as "participants," or persons
that may hold interests through participants;
- upon the issuance of a global security, DTC or its nominee will credit, on
its book-entry registration and transfer system, the participants'
accounts with the respective principal amounts of the debt securities
represented by the global security beneficially owned by the participants;
- any dealers, underwriters, or agents participating in the distribution of
the debt securities will designate the accounts to be credited; and
- ownership of beneficial interest in a global security will be shown on,
and the transfer of that ownership interest will be effected only through,
records maintained by DTC or its nominee for that global security for
interests of participants, and on the records of participants for
interests of persons holding through participants.
The laws of some states may require that specified purchasers of securities
take physical delivery of the securities in definitive form. These laws may
limit the ability of those persons to own, transfer or pledge beneficial
interests in registered global securities. Additional or differing terms of the
depository arrangements will be described in the prospectus supplement.
So long as DTC or its nominee is the registered owner of a global security,
DTC or its nominee, as the case may be, will be considered the sole holder of
the debt securities represented by that global
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security for all purposes under the Indenture. Except as stated below, owners of
beneficial interests in a global security:
- will not be entitled to have the debt securities represented by a global
security registered in their names;
- will not receive or be entitled to receive physical delivery of the debt
securities in definitive form; and
- will not be considered the owners or holders of the debt securities under
the Indenture.
Accordingly, each person owning a beneficial interest in a global security
must rely on the procedures of DTC for the global security and, if the person is
not a participant, on the procedures of a participant through which the person
owns its interest, to exercise any rights of a holder under the Indenture.
Neither we, any underwriter or agent, the trustee nor the paying agent will
have any responsibility or liability for any aspect of the records relating to
or payments made on account of beneficial interests in a global security, or for
maintaining, supervising or reviewing any records relating to those beneficial
interests.
We will issue individual debt securities in certificated form in exchange
for the relevant global securities if (1) DTC is at any time unwilling, unable
or ineligible to continue as depository and a successor depository is not
appointed by us within 90 days following notice to us, (2) we determine, in our
sole discretion, not to have any debt securities represented by one or more
global securities, or (3) an event of default under the Indenture has occurred
and is continuing with respect to that series of debt securities. If debt
securities are issued in certificated form, an owner of a beneficial interest in
a global security will be entitled to physical delivery of individual debt
securities in certificated form of like tenor and rank, equal in principal
amount to that beneficial interest and to have those debt securities in
certificated form registered in its name. Unless otherwise provided in the
prospectus supplement, debt securities so issued in certificated form will be
issued in denominations of $1,000 or any integral multiple thereof and will be
issued in registered form.
The following is based on information furnished by DTC and we assume no
responsibility for its content:
DTC will act as securities depository for the debt securities. The debt
securities will be issued as one or more fully registered securities registered
in the name of Cede & Co. (DTC's partnership nominee).
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 Securities Exchange
Act of 1934. DTC holds securities that its participants ("Direct Participants")
deposit with DTC. DTC also facilitates the settlement among Direct Participants
of securities transactions, such as transfers and pledges, in deposited
securities through electronic computerized book-entry changes in Direct
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.
DTC is owned by a number of its Direct Participants and by the New York
Stock Exchange, Inc., the American Stock Exchange, LLC 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
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directly or indirectly ("Indirect Participants"). The rules applicable to DTC
and its Direct and Indirect Participants are on file with the SEC.
Purchases of debt securities under the DTC system must be made by or through
Direct Participants, who will receive a credit for the debt securities on DTC's
records. The ownership interest of each actual purchaser of each debt security
("Beneficial Owner") is in turn recorded on the Direct and Indirect
Participants' records. A Beneficial Owner does not receive written confirmation
from DTC of its purchase, but such Beneficial Owner is expected to receive a
written confirmation providing details of the transaction, as well as periodic
statements of its holdings, from the Direct or Indirect Participant through
which such Beneficial Owner entered into the transaction. Transfers of ownership
interests in debt securities are accomplished by entries made on the books of
Participants acting on behalf of Beneficial Owners. Beneficial Owners do not
receive certificates representing their ownership interests in debt securities,
except in the event that use of the book-entry system for the debt securities is
discontinued.
To facilitate subsequent transfers, the debt securities are registered in
the name of DTC's partnership nominee, Cede & Co., or such other name as may be
requested by an authorized representative of DTC. The deposit of the debt
securities with DTC and their registration in the name of Cede & Co. or such
other nominee effects no change in beneficial ownership. DTC has no knowledge of
the actual Beneficial Owners of the debt securities; DTC's records reflect only
the identity of the Direct Participants to whose accounts debt securities are
credited, which may or may not be the Beneficial Owners. The Participants remain
responsible for keeping account of their holdings on behalf of their customers.
Delivery 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 are 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 DTC. If less than all of the debt
securities within an issue are being redeemed, DTC's practice is to determine by
lot the amount of the interest of each Direct Participant in such issue to be
redeemed.
Neither DTC nor Cede & Co. (or other nominee) consents or votes with respect
to the debt securities. Under its usual procedures, DTC mails a proxy (an
"Omnibus Proxy") to the issuer 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 debt securities are credited on the record
date (identified on a list attached to the Omnibus Proxy).
Payments of principal of (and premium, if any) and interest on the debt
securities will be made to Cede & Co. or other nominee. DTC's practice is to
credit Direct Participants' accounts on the payable date in accordance with
their respective holdings as shown on DTC's records unless DTC has reason to
believe that it will not receive payment on the payable date. Payments by
Participants to Beneficial Owners will be governed by standing instructions and
customary practices, as is the case with securities held for the accounts of
customers or registered in street name, and will be the responsibility of such
Participant and not of DTC, the paying agent or us, subject to any statutory or
regulatory requirements as may be in effect from time to time. Payment of
principal (and premium, if any) and interest to DTC will be the responsibility
of us or the paying agent, disbursement of such payments to Direct Participants
will be the responsibility of DTC, and disbursement of such payments to the
Beneficial Owners will be the responsibility of Direct and Indirect
Participants.
DTC may discontinue providing its services as securities depository with
respect to the debt securities at any time by giving reasonable notice to us or
the paying agent. Under such circumstances,
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in the event that a successor securities depository is not appointed, debt
security certificates are required to be printed and delivered.
We may decide to discontinue use of the system of book-entry transfers
through DTC (or a successor securities depository). In that event, debt security
certificates will be printed and delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources (including DTC) that we believe are reliable, but
we take no responsibility for the accuracy thereof.
Unless stated otherwise in the prospectus supplement, the underwriters or
agents with respect to a series of debt securities issued as global securities
will be Direct Participants in DTC.
INFORMATION ABOUT THE TRUSTEE
The Indenture provides that there may be more than one trustee under the
Indenture, each for one or more series of debt securities. If there are
different trustees for different series of debt securities, each trustee will be
a trustee under the Indenture separate and apart from the trust administered by
any other trustee under the Indenture. Except as otherwise indicated in this
prospectus or any prospectus supplement, any action permitted to be taken by a
trustee may be taken by that trustee only on the one or more series of debt
securities for which it is the trustee under the Indenture. All payments of
principal of, premium, if any, and interest on, and all registration, transfer,
exchange, authentication and delivery of, the debt securities of a series will
be made by the trustee for that series at an office designated by the trustee.
The trustee may resign at any time and if the trustee resigns, we will
appoint a successor trustee. We may remove the trustee if the trustee fails to
satisfy the eligibility requirements of the Trust Indenture Act, fails to comply
with the Trust Indenture Act, is incapable of acting or if the trustee becomes
bankrupt or insolvent and, upon removal, we will appoint a successor trustee.
The holders of a majority in aggregate principal amount of the debt securities
of each series may remove the trustee for that series at any time and, upon
removal, we will appoint a successor trustee. (Section 6.11 of the Indenture).
If the trustee becomes a creditor of Exelon, the Indenture places
limitations on the rights of the trustee to obtain payment of claims directly or
from property received in respect of that claim as security or otherwise. The
trustee may engage in other transactions. If the trustee acquires any
conflicting interest relating to any duties concerning the debt securities,
however, it must eliminate the conflict or resign as trustee. (Section 6.9 of
the Indenture).
The Indenture provides that if an event of default occurs and is not cured
or waived, the trustee must use the same degree of care and skill as a prudent
person would use in the conduct of his or her own affairs in the exercise of the
trustee's power. (Section 6.1 of the Indenture). The trustee will be under no
obligation to exercise any of its rights or powers under the Indenture at the
request of any of the holders of the debt securities, unless that trustee has
been offered security and indemnity satisfactory to that trustee. (Section 6.2
of the Indenture).
We maintain ordinary banking relationships with Chase Manhattan Trust
Company, N.A., including credit facilities and lines of credit.
GOVERNING LAW
The Indenture is governed by Pennsylvania law.
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PLAN OF DISTRIBUTION
We may sell the debt securities to or through underwriters, dealers, or
agents or directly to one or more other purchasers.
The prospectus supplement sets forth the terms of the offering of the
particular series or issue of debt securities to which that prospectus
supplement relates, including, as applicable:
- the name or names of any underwriters or agents with whom we have entered
into arrangements with respect to the sale of those debt securities;
- the initial public offering or purchase price of those debt securities;
- any underwriting discounts, commissions and other items constituting
underwriters' compensation from us and any other discounts, concessions or
commissions allowed or reallowed or paid by any underwriters to other
dealers;
- any commissions paid to any agents;
- the net proceeds to us; and
- the securities exchanges, if any, on which those debt securities will be
listed.
The obligations of the underwriters to purchase debt securities will be
subject to conditions precedent and each of the underwriters will be obligated
to purchase all of the debt securities of that series or issue allocated to it
if any of those debt securities are purchased. Any initial public offering price
and any discounts or concessions allowed or reallowed or paid to dealers may be
changed from time to time.
The debt securities may be offered and sold by us directly or through agents
that we designate from time to time. Any agent involved in the offer or sale of
the debt securities for which this prospectus is delivered will be named in, and
any commissions payable by us to that agent will be set forth in, the applicable
prospectus supplement. Each agent will be acting on a best efforts basis for the
period of its appointment.
Any underwriters, dealers or agents participating in the distribution of the
debt securities may be deemed to be underwriters, and any discounts or
commissions received by them on the sale or resale of debt securities may be
deemed to be underwriting discounts and commissions, under the Securities Act of
1933, as amended. Underwriters, dealers and agents may be entitled, under
agreements entered into with us, to indemnification by us against some civil
liabilities, including liabilities under the Securities Act.
VALIDITY OF DEBT SECURITIES
The validity of the debt securities will be passed upon for us by Ballard
Spahr Andrews & Ingersoll, LLP, Philadelphia, Pennsylvania.
EXPERTS
The financial statements incorporated in this Prospectus by reference to the
Annual Report on Form 10-K for the year ended December 31, 2000 have been so
incorporated in reliance on the report (which contains an explanatory paragraph
relating to the Company's acquisition of Unicom Corporation as described in Note
1 to the financial statements) of PricewaterhouseCoopers LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
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