Exhibit 4.2
DECLARATION OF TRUST
OF
POTOMAC ELECTRIC POWER COMPANY TRUST I
Dated as of April 24, 1998
TABLE OF CONTENTS
ARTICLE I DEFINITIONS Page
SECTION 1.1 Definitions 1
ARTICLE II ORGANIZATION
SECTION 2.1 Name 3
SECTION 2.2 Office 3
SECTION 2.3 Purpose 3
SECTION 2.4 Authority 4
SECTION 2.5 Title to Property of the Trust 4
SECTION 2.6 Powers of the Trustees 4
SECTION 2.7 Filing of Certificate of Trust 5
SECTION 2.8 Duration of Trust 5
SECTION 2.9 Responsibilities of the Sponsor 5
SECTION 2.10 Declaration Binding on Securities Holders 6
ARTICLE III TRUSTEES
SECTION 3.1 Trustees 6
SECTION 3.2 Regular Trustees 7
SECTION 3.3 Delaware Trustee 7
SECTION 3.4 Institutional Trustee 7
SECTION 3.5 Not Responsible for Recitals or Sufficiency of Declaration. 7
ARTICLE IV LIMITATION OF LIABILITY OF HOLDERS OF
SECURITIES, TRUSTEES OR OTHERS
SECTION 4.1 Exculpation 8
SECTION 4.2 Fiduciary Duty 8
SECTION 4.3 Indemnification 9
SECTION 4.4 Outside Businesses 13
ARTICLE V AMENDMENTS, TERMINATION, MISCELLANEOUS
SECTION 5.1 Amendments 13
SECTION 5.2 Termination of Trust 14
SECTION 5.3 Governing Law 14
SECTION 5.4 Headings 14
SECTION 5.5 Successors and Assigns 14
SECTION 5.6 Partial Enforceability 14
SECTION 5.7 Counterparts 15
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DECLARATION OF TRUST
OF
POTOMAC ELECTRIC POWER COMPANY TRUST I
April 24, 1998
DECLARATION OF TRUST ("Declaration") dated and effective as of April 24,
1998 by the Trustees (as defined herein), the Sponsor (as defined herein), and
by the holders, from time to time, of undivided beneficial interests in the
Trust to be issued pursuant to this Declaration;
WHEREAS, the Trustees and the Sponsor desire to establish a trust (the
"Trust") pursuant to the Delaware Business Trust Act for the purpose of issuing
and selling the Preferred Securities (as defined herein) and investing the
proceeds thereof in certain Debentures of the Debenture Issuer (as both terms
are defined herein); and
NOW, THEREFORE, it being the intention of the parties hereto that the Trust
constitute a business trust under the Business Trust Act and that this
Declaration constitute the governing instrument of such business trust, the
Trustees declare that all assets contributed to the Trust will be held in trust
for the exclusive benefit of the holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the Trust issued
hereunder, subject to the provisions of this Declaration.
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions.
Unless the context otherwise requires:
(a) capitalized terms used in this Declaration but not defined in the
preamble above have the respective meanings assigned to them in
this Section 1.1;
(b) a term defined anywhere in this Declaration has the same meaning
throughout;
(c) all references to "the Declaration" or "this Declaration" are to
this Declaration of Trust as modified, supplemented or amended
from time to time;
(d) all references in this Declaration to Articles and Sections are
to Articles and Sections of this Declaration unless otherwise
specified; and
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(e) a reference to the singular includes the plural and vice versa.
"Affiliate" has the same meaning as given to that term in Rule 405 of the
Securities Act or any successor rule thereunder.
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware Code, 12
Del. Code Section 3801 et seq., as it may be amended from time to time, or any
successor legislation.
"Commission" means the United States Securities and Exchange Commission.
"Common Security" means a security representing an undivided beneficial
interest in the assets of the Trust with such terms as may be set out in any
amendment to this Declaration.
"Company Indemnified Person" means (a) any Regular Trustee; (b) any
Affiliate of any Regular Trustee; (c) any officers, directors, shareholders,
members, partners, employees, representatives or agents of any Regular Trustee;
or (d) any employee or agent of the Trust or its Affiliates.
"Covered Person" means (a) any officer, director, shareholder, partner,
member, representative, employee or agent of (i) the Trust or (ii) the Trust's
Affiliates and (b) any holder of Securities.
"Debenture Issuer" means the Parent in its capacity as the issuer of the
Debentures under the Indenture.
"Debentures" means the series of Debentures to be issued by the Debenture
Issuer and acquired by the Trust.
"Debenture Trustee" means The Bank of New York, as trustee under the
Indenture until a successor is appointed thereunder, and thereafter means such
successor trustee.
"Delaware Trustee" has the meaning set forth in Section 3.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time or any successor legislation.
"Fiduciary Indemnified Person" has the meaning set forth in Section 4.3(b).
"Indemnified Person" means a Company Indemnified Person or a Fiduciary
Indemnified Person.
"Indenture" means the indenture to be entered into between the Debenture
Issuer and the Debenture Trustee and any indenture supplemental thereto pursuant
to which the Debentures are to be issued.
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"Institutional Trustee" has the meaning set forth in Section 3.4.
"Parent" means Potomac Electric Power Company, a District of Columbia and
Virginia corporation, or any successor entity.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"Preferred Security" means a security representing an undivided beneficial
interest in the assets of the Trust with such terms as may be set out in any
amendment to this Declaration.
"Regular Trustee" means any Trustee other than the Delaware Trustee and the
Institutional Trustee.
"Securities" means the Common Securities and the Preferred Securities.
"Securities Act" means the Securities Act of 1933, as amended from time to
time, or any successor legislation.
"Sponsor" means the Parent in its capacity as sponsor of the Trust.
"Trustee" or "Trustees" means each Person who has signed this Declaration
as a trustee, so long as such Person shall continue in office in accordance with
the terms hereof, and all other Persons who may from time to time be duly
appointed, qualified and serving as Trustees in accordance with the provisions
hereof, and references herein to a Trustee or the Trustees shall refer to such
Person or Persons solely in their capacity as trustees hereunder.
ARTICLE II
ORGANIZATION
SECTION 2.1 Name.
The Trust created by this Declaration is named "Potomac Electric Power
Company Trust I." The activities of the Trust may be conducted under the name
of the Trust or any other lawful name deemed advisable by the Regular Trustees.
SECTION 2.2 Office.
The address of the principal office of the Trust is c/o Potomac Electric
Power Company, 1900 Pennsylvania Avenue, N.W., Washington, D.C. 20068. At any
time, the Regular Trustees may designate another principal office.
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SECTION 2.3 Purpose.
The exclusive purposes and functions of the Trust are to issue and sell the
Securities and use the proceeds from such sale to acquire the Debentures and to
engage in only those other activities necessary or incidental thereto. The
Trust shall not borrow money, issue debt or reinvest proceeds derived from
investments, pledge any of its assets, or otherwise undertake (or permit to be
undertaken) any activity that would cause the Trust not to be classified for
United States federal income tax purposes as a grantor trust.
SECTION 2.4 Authority.
Subject to the limitations provided in this Declaration, the Regular
Trustees shall have exclusive and complete authority to carry out the purposes
of the Trust. An action taken by the Regular Trustees in accordance with their
powers shall constitute the act of and serve to bind the Trust. In dealing with
the Regular Trustees acting on behalf of the Trust, no person shall be required
to inquire into the authority of the Regular Trustees to bind the Trust. Persons
dealing with the Trust are entitled to rely conclusively on the power and
authority of the Regular Trustees as set forth in this Declaration.
SECTION 2.5 Title to Property of the Trust.
Legal title to all assets of the Trust shall be vested in the Trust.
SECTION 2.6 Powers of the Trustees.
The Regular Trustees shall have the exclusive power and authority to cause
the Trust to engage in the following activities:
(a) to issue the Preferred Securities and the Common Securities in
accordance with this Declaration, provided, however, that the
Trust may issue no more than one series of Preferred Securities
and no more than one series of Common Securities, and, provided
further, that there shall be no interests in the Trust other than
the Securities and the issuance of the Securities shall be
limited to the simultaneous issuance of both Preferred Securities
and Common Securities;
(b) in connection with the issue and sale of the Preferred
Securities, at the direction of the Sponsor, to:
(i) execute and file with the Commission under the Securities
Act one or more registration statements on Form S-3
prepared by the Sponsor, including any and all amendments
thereto in relation to the Preferred Securities;
(ii) execute and file any documents prepared by the Sponsor, or
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take any acts as determined by the Sponsor to be necessary
in order to qualify or register all or part of the Preferred
Securities in any State in which the Sponsor has determined
to qualify or register such Preferred Securities for sale;
(iii)execute and file an application, prepared by the Sponsor, to
the New York Stock Exchange or any other national stock
exchange or the Nasdaq Stock Market's National Market for
listing or quotation upon notice of issuance of any
Preferred Securities;
(iv) execute and file with the Commission a registration
statement on Form 8-A, including any amendments thereto,
prepared by the Sponsor relating to the registration of the
Preferred Securities under Section 12(b) or Section 12(g) of
the Exchange Act; and
(v) execute and enter into an underwriting agreement and pricing
agreement providing for the sale of the Preferred
Securities.
(c) to employ or otherwise engage employees and agents (who may be
designated as officers with titles) and managers, contractors,
advisors, and consultants and provide for reasonable compensation
for such services;
(d) to incur expenses which are necessary or incidental to carry out
any of the purposes of this Declaration; and
(e) to execute all documents or instruments, perform all duties and
powers, and do all things for and on behalf of the Trust in all
matters necessary or incidental to the foregoing.
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SECTION 2.7 Filing of Certificate of Trust.
On or after the date of execution of this Declaration, the Trustees shall
cause the filing of the Certificate of Trust for the Trust in the form attached
hereto as Exhibit A with the Secretary of State of the State of Delaware.
SECTION 2.8 Duration of Trust.
The Trust, absent termination pursuant to the provisions of Section 5.2,
shall have existence for fifty (50) years from the date hereof.
SECTION 2.9 Responsibilities of the Sponsor.
In connection with the issue and sale of the Preferred Securities, the
Sponsor shall have the exclusive right and responsibility to engage in the
following activities:
(a) to prepare for filing by the Trust with the Commission under the
Securities Act one or more registration statements on Form S-3 in
relation to the Preferred Securities, including any amendments
thereto;
(b) to determine the States in which to take appropriate action to
qualify or register for sale all or part of the Preferred
Securities and to do any and all such acts, other than actions
which must be taken by the Trust, and advise the Trust of actions
it must take, and prepare for execution and filing any documents
to be executed and filed by the Trust, as the Sponsor deems
necessary or advisable in order to comply with the applicable
laws of any such States;
(c) to prepare for filing by the Trust an application to the New York
Stock Exchange or any other national stock exchange or the Nasdaq
National Market for listing or quotation upon notice of issuance
of any Preferred Securities;
(d) to prepare for filing by the Trust with the Commission a
registration statement on Form 8-A relating to the registration
of the class of Preferred Securities under Section 12(b) or
Section 12(g) of the Exchange Act, including any amendments
thereto; and
(e) to negotiate the terms of an underwriting agreement and pricing
agreement providing for the sale of the Preferred Securities.
SECTION 2.10 Declaration Binding on Securities Holders.
Every Person by virtue of having become a holder of a Security or any
interest therein
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in accordance with the terms of this Declaration, shall be deemed to have
expressly assented and agreed to the terms of, and shall be bound by, this
Declaration.
ARTICLE III
TRUSTEES
SECTION 3.1 Trustees.
The number of Trustees initially shall be four (4), and thereafter the
number of Trustees shall be such number as shall be fixed from time to time by a
written instrument signed by the Sponsor. The Sponsor is entitled to appoint or
remove without cause any Trustee at any time; provided, however, that the number
of Trustees shall in no event be less than two (2); provided further that one
Trustee, in the case of a natural person, shall be a person who is a resident of
the State of Delaware or if not a natural person, shall be entity that has its
principal place of business in the State of Delaware (the "Delaware Trustee");
provided further that there shall be at least one trustee who is an employee or
officer of, or is affiliated with, the Parent (a "Regular Trustee").
SECTION 3.2 Regular Trustees.
The initial Regular Trustees shall be Dennis R. Wraase, Anthony J. Kamerick
and Ellen Sheriff Rogers.
(a) Except as expressly set forth in this Declaration, any power of
the Regular Trustees may be exercised by, or with the consent of,
any one such Regular Trustee;
(b) unless otherwise determined by the Regular Trustees, and except
as otherwise required by the Business Trust Act, any Regular
Trustee is authorized to execute on behalf of the Trust any
documents which the Regular Trustees have the power and authority
to cause the Trust to execute pursuant to Section 2.6; and
(c) a Regular Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age
of 21 his or her power for the purposes of signing any documents
which the Regular Trustees have power and authority to cause the
Trust to execute pursuant to Section 2.6.
SECTION 3.3 Delaware Trustee.
The initial Delaware Trustee shall be The Bank of New York (Delaware).
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Notwithstanding any other provision of this Declaration, the Delaware
Trustee shall not be entitled to exercise any of the powers, nor shall the
Delaware Trustee have any of the duties and responsibilities, of the Regular
Trustees described in this Declaration. The Delaware Trustee shall be a Trustee
for the sole and limited purpose of fulfilling the requirements of Section 3807
of the Business Trust Act. Notwithstanding anything herein to the contrary, the
Delaware Trustee shall not be liable for the acts or omissions to act of the
Trust or of the Regular Trustees, except such acts as the Delaware Trustee is
expressly obligated or authorized to undertake under this Declaration or the
Business Trust Act and except for the gross negligence or willful misconduct of
the Delaware Trustee.
SECTION 3.4 Institutional Trustee.
Prior to the issuance of the Preferred Securities and Common Securities,
the Sponsor shall appoint another trustee (the "Institutional Trustee") meeting
the requirements of an eligible trustee of the Trust Indenture Act of 1939, as
amended, by the execution of an amendment to this Declaration executed by the
Regular Trustees, the Sponsor, the Institutional Trustee and the Delaware
Trustee.
SECTION 3.5 Not Responsible for Recitals or Sufficiency of Declaration.
The recitals contained in this Declaration shall be taken as the statements
of the Sponsor, and the Trustees do not assume any responsibility for their
correctness. The Trustees make no representations as to the value or condition
of the property of the Trust or any part thereof. The Trustees make no
representations as to the validity or sufficiency of this Declaration.
ARTICLE IV
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 4.1 Exculpation.
(a) No Indemnified Person shall be liable, responsible or accountable
in damages or otherwise to the Trust or any Covered Person for
any loss, damage or claim incurred by reason of any act or
omission performed or omitted by such Indemnified Person in good
faith on behalf of the Trust and in a manner such Indemnified
Person reasonably believed to be within the scope of the
authority conferred on such Indemnified Person by this
Declaration or by law, except that an Indemnified Person shall be
liable for any such loss, damage or claim incurred by reason of
such Indemnified Person's negligence or willful misconduct with
respect to such acts or omissions; and
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(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Trust and upon such information,
opinions, reports or statements presented to the Trust by any
Person as to matters the Indemnified Person reasonably believes
are within such other Person's professional or expert competence
and who has been selected with reasonable care by or on behalf of
the Trust, including information, opinions, reports or statements
as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount
of assets from which distributions to holders of Securities might
properly be paid.
SECTION 4.2 Fiduciary Duty.
(a) To the extent that, at law or in equity, an Indemnified Person
has duties (including fiduciary duties) and liabilities relating
thereto to the Trust or to any Covered Person, an Indemnified
Person acting under this Declaration shall not be liable to the
Trust or to any Covered Person for its good faith reliance on the
provisions of this Declaration. The provisions of this
Declaration, to the extent that they restrict the duties and
liabilities of an Indemnified Person otherwise existing at law or
in equity, are agreed by the parties hereto to replace such other
duties and liabilities of such Indemnified Person;
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises between
Covered Persons; or
(ii) whenever this Declaration or any other agreement
contemplated herein or therein provides that an Indemnified
Person shall act in a manner that is, or provides terms that
are, fair and reasonable to the Trust or any holder of
Securities, the Indemnified Person shall resolve such
conflict of interest, take such action or provide such
terms, considering in each case the relative interest of
each party (including its own interest) to such conflict,
agreement, transaction or situation and the benefits and
burdens relating to such interests, any customary or
accepted industry practices, and any applicable generally
accepted accounting practices or principles. In the absence
of bad faith by the Indemnified Person, the resolution,
action or term so made, taken or provided by the Indemnified
Person shall not constitute a breach of this Declaration or
any other agreement contemplated herein or of any duty or
obligation of the Indemnified Person at law or in equity or
otherwise; and
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(c) Whenever in this Declaration an Indemnified Person is permitted
or required to make a decision:
(i) in its "discretion" or under a grant of similar authority,
the Indemnified Person shall be entitled to consider such
interests and factors as it desires, including its own
interests, and shall have no duty or obligation to give any
consideration to any interest of or factors affecting the
Trust or any other Person; or
(ii) in its "good faith" or under another express standard, the
Indemnified Person shall act under such express standard and
shall not be subject to any other or different standard
imposed by this Declaration or by applicable law.
SECTION 4.3 Indemnification.
(a) (i) The Debenture Issuer shall indemnify, to the full extent
permitted by law, any Company Indemnified Person who was or
is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of
the Trust) by reason of the fact that he is or was a
Company Indemnified Person against expenses (including
attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be
in or not opposed to the best interests of the Trust, and,
with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create
a presumption that the Company Indemnified Person did not
act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of
the Trust, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his
conduct was unlawful.
(ii) The Debenture Issuer shall indemnify, to the full extent
permitted by law, any Company Indemnified Person who was or
is a party or is threatened to be made a party to any
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threatened, pending or completed action or suit by or in
the right of the Trust to procure a judgment in its favor
by reason of the fact that he is or was a Company
Indemnified Person against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection
with the defense or settlement of such action or suit if he
acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the Trust
and except that no such indemnification shall be made in
respect of any claim, issue or matter as to which such
Company Indemnified Person shall have been adjudged to be
liable to the Trust unless and only to the extent that the
Court of Chancery of Delaware or the court in which such
action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of
all the circumstances of the case, such person is fairly
and reasonably entitled to indemnity for such expenses
which such Court of Chancery or such other court shall deem
proper.
(iii) To the extent that a Company Indemnified Person shall be
successful on the merits or otherwise (including dismissal
of an action without prejudice or the settlement of an
action without admission of liability) in defense of any
action, suit or proceeding referred to in paragraphs (i)
and (ii) of this Section 4.3(a), or in defense of any
claim, issue or matter therein, he shall be indemnified, to
the full extent permitted by law, against expenses
(including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
(iv) Any indemnification under paragraphs (i) and (ii) of this
Section 4.3(a) (unless ordered by a court) shall be made by
the Debenture Issuer only as authorized in the specific
case upon a determination that indemnification of the
Company Indemnified Person is proper in the circumstances
because he has met the applicable standard of conduct set
forth in paragraphs (i) and (ii). Such determination shall
be made (1) by the Regular Trustees by a majority vote of a
quorum consisting of such Regular Trustees who were not
parties to such action, suit or proceeding, (2) if such a
quorum is not obtainable, or, even if obtainable, if a
quorum of disinterested Regular Trustees so directs, by
independent legal counsel in a written opinion, or (3) by
the holder of the Common Security.
(v) Expenses (including attorneys' fees) incurred by a Company
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Indemnified Person in defending a civil, criminal,
administrative or investigative action, suit or proceeding
referred to in paragraphs (i) and (ii) of this Section
4.3(a) shall be paid by the Debenture Issuer in advance of
the final disposition of such action, suit or proceeding
upon receipt of an undertaking by or on behalf of such
Company Indemnified Person to repay such amount if it shall
ultimately be determined that he is not entitled to be
indemnified by the Debenture Issuer as authorized in this
Section 4.3(a). Notwithstanding the foregoing, no advance
shall be made by the Debenture Issuer if a determination is
reasonably and promptly made (i) by the Regular Trustees by
a majority vote of a quorum of disinterested Regular
Trustees, (ii) if such a quorum is not obtainable, or, even
if obtainable, if a quorum of disinterested Regular
Trustees so directs, by independent legal counsel in a
written opinion or (iii) the holder of the Common Security
that, based upon the facts known to the Regular Trustees,
counsel or the holder of the Common Security at the time
such determination is made, such Company Indemnified Person
acted in bad faith or in a manner that such person did not
believe to be in or not opposed to the best interests of
the Trust, or, with respect to any criminal proceeding,
that such Company Indemnified Person believed or had
reasonable cause to believe his conduct was unlawful. In
no event shall any advance be made in instances where the
Regular Trustees, independent legal counsel or holder of
the Common Security reasonably determine that such person
deliberately breached his duty to the Trust or its Common
or Preferred Security Holders.
(vi) The indemnification and advancement of expenses provided
by, or granted pursuant to, the other paragraphs of this
Section 4.3(a) shall not be deemed exclusive of any other
rights to which those seeking indemnification and
advancement of expenses may be entitled under any
agreement, vote of stockholders or disinterested directors
of the Debenture Issuer or holders of the Preferred
Security or otherwise, both as to action in his official
capacity and as to action in another capacity while holding
such office. All rights to indemnification under this
Section 4.3(a) shall be deemed to be provided by a contract
between the Debenture Issuer and each Company Indemnified
Person who serves in such capacity at any time while this
Section 4.3(a) is in effect. Any repeal or modification of
this Section 4.3(a) shall not affect any rights or
obligations then existing.
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(vii) The Debenture Issuer or the Trust may purchase and
maintain insurance on behalf of any person who is or was a
Company Indemnified Person against any liability asserted
against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the
Debenture Issuer would have the power to indemnify him
against such liability under the provisions of this Section
4.3(a).
(viii)For purposes of this Section 4.3(a), references to "the
Trust" shall include, in addition to the resulting or
surviving entity, any constituent entity (including any
constituent of a constituent) absorbed in a consolidation
or merger, so that any person who is or was a director,
trustee, officer or employee of such constituent entity, or
is or was serving at the request of such constituent entity
as a director, trustee, officer, employee or agent of
another entity, shall stand in the same position under the
provisions of this Section 4.3(a) with respect to the
resulting or surviving entity as he would have with respect
to such constituent entity if its separate existence had
continued.
(ix) The indemnification and advancement of expenses provided
by, or granted pursuant to, this Section 4.3(a) shall,
unless otherwise provided when authorized or ratified,
continue as to a person who has ceased to be a Company
Indemnified Person and shall inure to the benefit of the
heirs, executors and administrators of such a person.
(b) The Debenture Issuer agrees to indemnify (i) the Delaware
Trustee, (ii) any Affiliate of the Delaware Trustee, and (iii)
any officers, directors, shareholders, members, partners,
employees, representatives, nominees, custodians or agents of the
Delaware Trustee (each of the Persons in (i) through (iii) being
referred to as a "Fiduciary Indemnified Person") for, and to hold
each Fiduciary Indemnified Person harmless against, any loss,
liability or expense incurred without negligence or bad faith on
its part, arising out of or in connection with the acceptance or
administration of the trust or trusts hereunder, including the
costs and expenses (including reasonable legal fees and expenses)
of defending itself against, or investigating, any claim or
liability in connection with the exercise or performance of any
of its powers or duties hereunder. The obligation to indemnify as
set forth in this Section 4.3(b) shall survive the termination of
this Declaration.
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SECTION 4.4 Outside Businesses.
Any Covered Person, the Sponsor and the Delaware Trustee may engage in or
possess an interest in other business ventures of any nature or description,
independently or with others, similar or dissimilar to the business of the
Trust, and the Trust and the holders of Securities shall have no rights by
virtue of this Declaration in and to such independent ventures or the income or
profits derived therefrom and the pursuit of any such venture, even if
competitive with the business of the Trust, shall not be deemed wrongful or
improper. No Covered Person, the Sponsor or the Delaware Trustee shall be
obligated to present any particular investment or other opportunity to the Trust
even if such opportunity is of a character that, if presented to the Trust,
could be taken by the Trust, and any Covered Person, the Sponsor and the
Delaware Trustee shall have the right to take for its own account (individually
or as a partner or fiduciary) or to recommend to others any such particular
investment or other opportunity. Any Covered Person and the Delaware Trustee may
engage or be interested in any financial or other transaction with the Sponsor
or any Affiliate of the Sponsor, or may act as depositary for, trustee or agent
for or may act on any committee or body of holders of, securities or other
obligations of the Sponsor or its Affiliates.
ARTICLE V
AMENDMENTS, TERMINATION, MISCELLANEOUS
SECTION 5.1 Amendments.
At any time before the issue of any Securities, this Declaration may be
amended by, and only by, a written instrument executed by all of the Regular
Trustees and the Sponsor.
SECTION 5.2 Termination of Trust.
(a) The Trust shall terminate and be of no further force or effect:
(i) upon the bankruptcy of the Sponsor;
(ii) upon the filing of a certificate of dissolution or its
equivalent with respect to the Sponsor or the revocation of
the Sponsor's charter or of the Trust's certificate of
trust;
(iii)upon the entry of a decree of judicial dissolution of the
Sponsor or the Trust;
(iv) before the issue of any Securities, with the consent of all
of the Regular Trustees and the Sponsor; and
(b) As soon as is practicable after the occurrence of an event
referred to in Section 5.2(a), the Trustees shall file a
certificate of cancellation with the Secretary of State of the
State of Delaware.
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SECTION 5.3 Governing Law.
This Declaration and the rights of the parties hereunder shall be governed
by and interpreted in accordance with the laws of the State of Delaware and all
rights and remedies shall be governed by such laws without regard to principles
of conflict of laws.
SECTION 5.4 Headings.
Headings contained in this Declaration are inserted for convenience of
reference only and do not affect the interpretation of this Declaration or any
provision hereof.
SECTION 5.5 Successors and Assigns.
Whenever in this Declaration any of the parties hereto is named or referred
to, the successors and assigns of such party shall be deemed to be included, and
all covenants and agreements in this Declaration by the Sponsor and the Trustees
shall bind and inure to the benefit of their respective successors and assigns,
whether so expressed.
SECTION 5.6 Partial Enforceability.
If any provision of this Declaration, or the application of such provision
to any Person or circumstance, shall be held invalid, the remainder of this
Declaration, or the application of such provision to persons or circumstances
other than those to which it is held invalid, shall not be affected thereby.
SECTION 5.7 Counterparts.
This Declaration may contain more than one counterpart of the signature
page and this Declaration may be executed by the affixing of the signature of
each of the Trustees to one of such counterpart signature pages. All of such
counterpart signature pages shall be read as though one, and they shall have the
same force and effect as though all of the signers had signed a single signature
page.
IN WITNESS WHEREOF, the undersigned has caused these presents to be
executed as of the day and year first above written.
/s/ Dennis R. Wraase
----------------------------
Name: Dennis R. Wraase
Title: Trustee
/s/ Anthony J. Kamerick
---------------------------
Name: Anthony J. Kamerick
Title: Trustee
/s/ Ellen Sheriff Rogers
----------------------------
Name: Ellen Sheriff Rogers
Title: Trustee
15
The Bank of New York (Delaware),
as Trustee
By:/s/ Mary Jane Morrissey
------------------------
Name: Mary Jane Morrissey
Title: Authorized Signatory
Potomac Electric Power Company,
as Sponsor
By:/s/ Dennis R. Wraase
------------------------
Name: Dennis R. Wraase
Title: Senior Vice President and
Chief Financial Officer
16
EXHIBIT A
CERTIFICATE OF TRUST
OF
POTOMAC ELECTRIC POWER COMPANY TRUST I
This Certificate of Trust of Potomac Electric Power Company Trust I dated
April 24, 1998, is hereby duly executed and filed by the undersigned, as
trustees of Potomac Electric Power Company Trust I, for the purpose of forming a
business trust under the Delaware Business Trust Act, 12 Del. Code Section 3801
et. seq. The undersigned hereby certify as follows:
1. Name. The name of the business trust formed hereby (the "Trust") is
----
"Potomac Electric Power Company Trust I."
2. Delaware Trustee. The name and business address of the trustee of the
----------------
Trust which has its principal place of business in the State of Delaware, as
required by 12 Del. Code Sec. 3807 (a), is The Bank of New York (Delaware),
White Clay Center, Route 273, Newark, Delaware 19711.
3. Effective Date. This Certificate of Trust shall be effective as of
--------------
the date of its filing.
IN WITNESS WHEREOF, the undersigned, being the trustees of the Trust at the
time of filing of this Certificate of Trust, have executed this Certificate of
Trust as of the date first above written.
____________________________________
Name: Dennis R. Wraase
Title: Trustee
____________________________________
Name: Anthony J. Kamerick
Title: Trustee
____________________________________
Name: Ellen Sheriff Rogers
Title: Trustee
The Bank of New York (Delaware),
as Trustee
By:__________________________________
Name:
Title:
17