Document:

Exhibit 4.4
                                                                  EXECUTION COPY

                             SUPPLEMENTAL INDENTURE

                SUPPLEMENTAL INDENTURE (this "Supplemental Indenture") dated as
           of November 10, 1999, among each of the parties hereto listed as a
           "New Subsidiary Guarantor" on the signature pages hereof (each, a
           "New Subsidiary Guarantor"), each a subsidiary of The LTV
           Corporation (the "Company"), the Company and U.S. Bank Trust
           National Association, as trustee under the indenture referred to
           below (the "Trustee").

                             W I T N E S S E T H :

         WHEREAS the Company and certain of its subsidiaries (the "Existing
Subsidiary Guarantors") have heretofore executed and delivered to the Trustee
an Indenture (the "Indenture") dated as of November 5, 1999, providing for the
issuance on the date thereof of an aggregate principal amount of $275,000,000
of 11:% Senior Notes due 2009 (the "Securities");

         WHEREAS Section 4.16 of the Indenture provides that under certain
circumstances the Company is required to cause certain of its subsidiaries to
execute and deliver to the Trustee a supplemental indenture pursuant to which
such subsidiary becomes a Subsidiary Guarantor and, if applicable, an Acquired
Subsidiary Guarantor (each as defined in the Indenture), and thereby
unconditionally guarantee all the Company's obligations under the Securities
pursuant to a Subsidiary Guaranty set forth in the Indenture on the terms and
conditions set forth herein; and

         WHEREAS pursuant to Section 9.01 of the Indenture, the Trustee and the
Company are authorized to execute and deliver this Supplemental Indenture, with
the New Subsidiary Guarantors;

         NOW THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the
New Subsidiary Guarantors, the Company and the Trustee mutually covenant and
agree for the equal and ratable benefit of the holders of the Securities as
follows:

         1. Agreement to Guarantee. Each New Subsidiary Guarantor hereby
agrees, jointly and severally with all other Subsidiary Guarantors, to

<PAGE>

unconditionally guarantee the Company's obligations under the Securities as an
Acquired Subsidiary Guarantor (as defined in the Indenture) on the terms and
subject to the conditions set forth in Article 10 and Article 11 of the
Indenture and to be bound by all other applicable provisions of the Indenture
as an Acquired Subsidiary Guarantor.

         2. Ratification of Indenture; Supplemental Indentures Part of
Indenture. Except as expressly amended hereby, the Indenture is in all respects
ratified and confirmed and all the terms, conditions and provisions thereof
shall remain in full force and effect. This Supplemental Indenture shall form a
part of the Indenture for all purposes, and every holder of Securities
heretofore or hereafter authenticated and delivered shall be bound hereby.

         3. Governing Law. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT
GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT
THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

         4. Trustee Makes No Representation. The Trustee makes no
representation as to the validity or sufficiency of this Supplemental
Indenture.

         5. Counterparts. The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.

         6. Effect of Headings. The Section headings herein are for convenience
only and shall not effect the construction thereof.

                                       2

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed as of the date first above written.

                                NEW SUBSIDIARY GUARANTORS

                                   COPPERWELD CORPORATION

                                     by
                                        ---------------------------------------
                                        Name:
                                        Title:

                                   COPPERWELD BIMETALLICS PRODUCTS
                                     COMPANY

                                     by
                                        ---------------------------------------
                                        Name:
                                        Title:

                                   METALLON MATERIALS ACQUISITION CORPORATION

                                     by
                                        ---------------------------------------
                                        Name:
                                        Title:

                                   COPPERWELD MARKETING AND SALES  COMPANY

                                     by
                                        ---------------------------------------
                                        Name:
                                        Title:

                                       3

<PAGE>

                                   COPPERWELD TUBING PRODUCTS COMPANY

                                     by
                                        ---------------------------------------
                                        Name:
                                        Title:

                                   COPPERWELD EQUIPMENT COMPANY

                                     by
                                        ---------------------------------------
                                        Name:
                                        Title:

                                   MIAMI ACQUISITION CORPORATION

                                     by
                                        ---------------------------------------
                                        Name:
                                        Title:

                                    SOUTHERN CROSS INVESTMENT COMPANY

                                     by
                                        ---------------------------------------
                                        Name:
                                        Title:

                                   TAC ACQUISITION CORPORATION

                                     by
                                        ---------------------------------------
                                        Name:
                                        Title:

                                       4

<PAGE>

                                THE COMPANY

                                   THE LTV CORPORATION

                                     by
                                        ---------------------------------------
                                        Name:
                                        Title:

                                THE TRUSTEE

                                   U.S. BANK TRUST NATIONAL ASSOCIATION,
                                   as Trustee

                                     by
                                        ---------------------------------------
                                        Name:
                                        Title:

                                       5Exhibit 4.1

================================================================================

                          PECO ENERGY TRANSITION TRUST

                           SECOND AMENDED AND RESTATED
                                 TRUST AGREEMENT

                             as of __________, 2000

                                      AMONG

          GEORGE SHICORA and THOMAS R. MILLER, as BENEFICIARY TRUSTEES,

       FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION, as ISSUER TRUSTEE,
                    DELAWARE TRUSTEE AND INDEPENDENT TRUSTEE

                                       and

                              PECO ENERGY COMPANY,
                              as GRANTOR and OWNER

================================================================================

<PAGE>

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>

                                                                                                    Page
                                                                                                    ----
<S>                                                                                                <C>

                                    ARTICLE I
                                  DEFINITIONS

1.01.  Capitalized Terms...............................................................................1

                                   ARTICLE II
                                  ORGANIZATION

2.01.  Name............................................................................................5
2.02.  Office..........................................................................................5
2.03.  Purposes and Powers.............................................................................5
2.04.  Appointment of the Trustees; Initial Trust Property.............................................6
2.05.  Declaration of Trust............................................................................6
2.06.  Other Expenses, Liabilities of Trust............................................................7
2.07.  Situs of Trust..................................................................................7
2.08.  Additional Capital Contributions................................................................7
2.09.  Assignment of Right to Distributions or Payments; Transfers.....................................7

                                   ARTICLE III
                            COMPLIANCE WITH THE CODE

3.01.  Trust to be Treated as a Division For Tax Purposes..............................................8

                                   ARTICLE IV
                           SEPARATE EXISTENCE OF TRUST

4.01.  Maintenance of Separate Existence...............................................................8
4.02.  Merger and Other Transactions..................................................................12
4.03.  Transactions with Affiliates...................................................................13
4.04.  Insolvency.....................................................................................13
4.05.  Rating Confirmation............................................................................13

</TABLE>

                                       i

<PAGE>

<TABLE>
<CAPTION>
<S>                                                                                                   <C>

                                    ARTICLE V
                    INVESTMENT AND APPLICATION OF TRUST FUNDS

5.01.  Investment of Trust Funds......................................................................13
5.02.  Application of Funds...........................................................................14

                                   ARTICLE VI
                      AUTHORITY AND DUTIES OF THE TRUSTEES

6.01.  General Authority..............................................................................14
6.02.  Specific Authority; Special Authority of Beneficiary Trustees..................................14
6.03.  Accounting and Reports to the Grantor, any Owner,
       the Internal Revenue Service and Others........................................................15
6.04.  Signature of Returns...........................................................................16
6.05.  Right to Receive Instructions..................................................................16
6.06.  No Duties Except as Specified in this Agreement or in Instructions.............................16
6.07.  No Action Except Under Specified Documents or Instructions.....................................17
6.08.  No Action Contrary to Agreement, Trust Related Agreements or Applicable Law....................17

                                   ARTICLE VII
                            CONCERNING THE TRUSTEES

7.01.  Acceptance of Trusts and Duties................................................................17
7.02.  Furnishing of Documents........................................................................18
7.03.  Reliance; Advice of Counsel....................................................................18
7.04.  Not Acting in Individual Capacity..............................................................18

                                  ARTICLE VIII
                            COMPENSATION OF TRUSTEES

8.01.  Issuer Trustee's Fees and Expenses.............................................................19
8.02.  Beneficiary Trustees' Fees and Expenses........................................................19
8.03.  Fees of Separate Independent Trustee and Delaware Trustee......................................19

                                   ARTICLE IX
                          INDEMNIFICATION OF TRUSTEES

9.01.  Scope of Indemnification.......................................................................19

</TABLE>

                                       ii

<PAGE>

<TABLE>
<CAPTION>
<S>                                                                                                 <C>

                                    ARTICLE X
                              TERMINATION OF TRUST

10.01.  Dissolution of Trust..........................................................................20
10.02.  No Termination by Grantor or Owner............................................................20
10.03.  Cancellation of Certificate of Trust..........................................................20

                                   ARTICLE XI
                   SUCCESSOR TRUSTEES AND ADDITIONAL TRUSTEES

11.01.  Resignation of Trustee; Appointment of Successor..............................................20

                                   ARTICLE XII
                                  MISCELLANEOUS

12.01.  Supplements and Amendments....................................................................21
12.02.  No Legal Title to Trust Property in Grantor and Owner.........................................22
12.03.  Limitations on Rights of Others...............................................................22
12.04.  Notices.......................................................................................22
12.05.  Severability..................................................................................23
12.06.  Separate Counterparts.........................................................................23
12.07.  Successors and Assigns........................................................................23
12.08.  Headings......................................................................................23
12.09.  Governing Law.................................................................................24

</TABLE>

Exhibit 1 Issuer Trustee Fee Schedule
Exhibit 2 Certificate of Trust

                                       iii

<PAGE>

                  SECOND AMENDED AND RESTATED TRUST AGREEMENT dated as of
________, 2000 among PECO Energy Company, a Pennsylvania corporation, as Grantor
and Owner, First Union Trust Company, National Association, a national banking
corporation, as Issuer Trustee, Delaware Trustee and Independent Trustee, and
George Shicora, an individual, and Thomas R. Miller, an individual, as
Beneficiary Trustees.

                  A Certificate of Trust of the Trust was filed with the
Secretary of State of the State of Delaware on June 23, 1998.

                  The Grantor, the Beneficiary Trustees and the Issuer Trustee
are parties to that certain Amended and Restated Trust Agreement dated as of
February 19, 1999 (the "Prior Trust Agreement") and now desire to amend and
restate the Prior Trust Agreement as set forth below.

                  NOW, THEREFORE, the parties hereto, intending to be legally
bound hereby, agree to amend and restate the Prior Trust Agreement in its
entirety as follows.

                                    ARTICLE I

                                   DEFINITIONS

                  1.01. Capitalized Terms. For all purposes of this Agreement,
the following terms shall have the meanings set forth below:

                  "Agreement" means this Second Amended and Restated Trust
Agreement, as it may be amended from time to time.

                  "Affiliate" shall mean, with reference to any specified
Person, any other Person controlling or controlled by or under common control
with such specified Person; provided, that, for purposes of this Agreement when
used with respect to the Grantor's or any Owner's direct or indirect
subsidiaries, any limited partners thereof shall also be deemed "Affiliates."
For the purposes of this definition, "control," when used with reference to any
specified Person, shall mean the power to direct the management and policies of
such specified Person, directly or indirectly, whether through the ownership of
voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.

                  "Affiliated Entity" means the Grantor, any Owner, any of their
respective direct or indirect subsidiaries or any Affiliate of any of the
foregoing other than the Trust.

                  "Beneficiary Trustee" means any Trustee other than the Issuer
Trustee, the Independent Trustee or the Delaware Trustee.

<PAGE>

                  "Bond Trustee" means The Bank of New York, as Bond Trustee
under the Indenture, and its successors.

                  "Business Day" means any day other than a Saturday, Sunday, or
a day on which banking institutions in the City of Philadelphia, the City of New
York, the City of Charlotte or the State of Delaware are required by law or
executive order to remain closed.

                  "Business Trust Act" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. C. ss. 3801, et seq., and any successor statute, as
amended from time to time.

                  "Code" means the Internal Revenue Code of 1986, as amended.

                  "Competition Act" means the Pennsylvania Electricity
Generation Customer Choice and Competition Act, Chapter 28 of Title 66 of the
Pennsylvania Consolidated Statutes, 66 Pa.C.S. ss. 2801, et seq.

                  "Delaware Trustee" means a Trustee who is a natural person and
who is a resident of the State of Delaware, or, in all other cases, a trustee
which has its principal place of business in the State of Delaware.

                  "Eligible Investments" shall be the investments so designated
from time to time by any Beneficiary Trustee.

                  "Fiscal Year" means the calendar year from each January 1 to
the following December 31.

                  "GAAP" means generally accepted accounting principles in
effect from time to time.

                  "Grantor" means PECO Energy Company.

                  "Indenture" means the Indenture, dated as of March 1, 1999,
between the Trust and the Bond Trustee as the same may be amended, supplemented
or otherwise modified from time to time.

                  "Independent Trustee" means a Trustee that is not and has not
been for at least three years from the date of his or her or its appointment (i)
a direct or indirect legal or beneficial owner of the Trust or PECO Energy or
any of their respective Affiliates, (ii) a relative, supplier, employee,
officer, director, manager, contractor or material creditor of the Trust or PECO
Energy or any of their respective Affiliates or (iii) a Person who controls PECO
Energy or its Affiliates.

                  "Insolvency Event" means the Significant Events described in
(a)(i) and (a)(ii) of that definition.

                                       2

<PAGE>

                  "Issuer Trustee" means First Union Trust Company, National
Association or any other Issuer Trustee designated by the Grantor or any Owner
from time to time.

                  "Liability" means any claim, damage, judgment, amount paid in
settlement, fine, penalty, punitive damages, or cost or expense of any nature
(including, without limitation, attorneys' fees and disbursements).

                  "Moody's" means Moody's Investor Service.

                  "Owner" means the Grantor and its successors and permitted
assigns as a beneficial owner (within the meaning of the Business Trust Act) of
the Trust. All references in this Agreement to "any Owner" means each of the
Grantor's successors and permitted assigns as a beneficial owner of the Trust,
and not the Grantor itself.

                  "PECO Energy" means PECO Energy Company, a Pennsylvania
corporation, its successors and permitted assigns.

                  "Periodic Filings" means any filings or submissions that the
Trust is required to make with any state or federal regulatory agency or under
the Code.

                  "Person" means any individual, corporation, limited liability
company, partnership, joint venture, association, joint stock company, trust,
unincorporated organization, governmental authority or any other entity of
similar nature.

                  "Proceeding" means any threatened, pending or completed
action, suit, appeal or other proceeding of any nature, whether civil, criminal,
administrative or investigative, whether formal or informal, and whether brought
by or in the right of the Trust, the Grantor, any Owner or otherwise.

                  "Series" has the meaning assigned to that term in the
Indenture.

                  "Significant Event" means (a) with respect to the Trust, that
the Trust (i) shall fail to or admit in writing its inability to pay its debts
generally as they become due, or shall commence a voluntary case or other
Proceeding under any applicable bankruptcy, insolvency, reorganization, debt
arrangement, dissolution or other similar law now or hereafter in effect, or
shall consent to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator (or other similar
official) for the Trust or for any substantial part of its property, or shall
make any general assignment for the benefit of creditors, or shall take any
trust, corporate or partnership action authorizing the taking of any of the
foregoing actions or (ii) a case or other Proceeding shall be commenced without
the application or consent of the Trust, in any court, seeking the liquidation,
reorganization, debt arrangement, dissolution, winding up, or compensation or
readjustment of debts of the Trust, the appointment of a trustee, receiver,
custodian, liquidator, assignee, sequestrator, or the like for the Trust or any
substantial part of its assets, or any similar action with respect to the Trust

                                       3

<PAGE>

under any law (foreign or domestic) relating to bankruptcy, insolvency,
reorganization, winding up or composition or adjustment of debts and such case
or Proceeding shall continue undismissed or unstayed and in effect for a period
of 90 days; or any of the actions sought in such petition or Proceeding,
including the entering of an order for relief in respect of the Trust or the
appointment of any trustee, receiver, custodian, liquidator, assignee,
sequestrator or the like for the Trust or any substantial portion of the Trust's
property shall be granted or otherwise occur (each of (i) and (ii) an
"Insolvency Event");

                       (b) The Trust shall become subject to the registration
requirements of the Investment Company Act; or

                       (c) Any Event of Default as set forth in the Indenture
shall have occurred.

                  "Supplemental Indenture" means any Supplemental Indenture with
respect to a Series of Transition Bonds as defined in such Supplemental
Indenture or that amends the Indenture.

                  "Transition Bonds" means the transition bonds issued from time
to time by the Trust pursuant to the Indenture and any Supplemental Indenture.

                  "Transfer" means the sale, transfer or other assignment of all
of the Grantor's right, title and interest in all or a portion of its beneficial
interest in the Trust.

                  "Trust" means the Delaware statutory business trust continued
under this Agreement.

                  "Trustees" means the trustees of the Trust, which, as provided
herein, shall mean the Beneficiary Trustees, the Independent Trustee, the
Delaware Trustee and the Issuer Trustee collectively, not in their respective
individual capacities but solely as trustees under this Agreement, and any
successor trustees hereunder whether designated as Issuer Trustee, Independent
Trustee, Delaware Trustee or a Beneficiary Trustee.

                  "Trust Property" means all right, title and interest in and to
any property contributed to the Trust by the Grantor or any Owner or otherwise
acquired by the Trust, including, without limitation, all distributions or
payments thereon or proceeds thereof.

                  "Trust Related Agreements" means any instrument or agreement
executed in connection with or relating to the Trust or the Transition Bonds,
including, but not limited to, the Amended and Restated Master Servicing
Agreement between the Trust and PECO Energy, as Servicer thereunder (the "Master
Servicing Agreement"), the Amended and Restated Intangible Transition Property
Sale Agreement between the Trust and PECO Energy, as Seller thereunder (the
"Sale Agreement"), the Indenture and any supplemental indentures, any bill of
sale and a Custody Agreement for a short-term money management account between
the Trust

                                       4

<PAGE>

and The Bank of New York, as custodian, as each may be supplemented or amended
from time to time.

                  Each of the terms used herein and not defined herein shall
have the meanings given to such terms in the Trust Related Agreements, even
after the termination of such agreements.

                                   ARTICLE II

                                  ORGANIZATION

                  2.01. Name. The Trust continued hereby shall be known as "PECO
Energy Transition Trust," in which name the Trustees shall conduct the business
of the Trust, make and execute contracts, and sue and be sued.

                  2.02. Office. The initial office of the Trust shall be in care
of the Issuer Trustee, One Rodney Square, 920 King Street, 1st Floor,
Wilmington, Delaware 19801 (telephone number 302-888-7532) or at such other
address as the Trustees may designate by notice to the Grantor, any Owner and
the Bond Trustee, provided that any other office will comply with the provisions
of 4.01(c) and (e).

                  2.03. Purposes and Powers; Intent. (a) The Trust has been
created for the purpose of purchasing and owning Intangible Transition Property,
issuing Transition Bonds from time to time, pledging its interest in Intangible
Transition Property and other Collateral to the Bond Trustee under the Indenture
in order to secure the Transition Bonds and performing activities that are
necessary, suitable or convenient to accomplish these purposes, including, but
not limited to, entering into any hedge or swap arrangement with respect to the
Transition Bonds.

                       (b) The Grantor has determined that each of (i) the
creation and ownership of the Trust by the Grantor and (ii) the limited purposes
of the Trust is in the best interests of the Grantor and its creditors and
represents a prudent and advisable course of action that does not impair the
rights and interests of the Grantor's creditors. The Grantor has determined that
the transactions contemplated by this Agreement and the Trust Related Agreements
are in the best interests of the Grantor and its creditors and represent a
prudent and advisable course of action that does not impair the rights and
interests of the Grantor's creditors. Such determinations are memorialized in
the corporate records of the Grantor. The Grantor did not create the Trust with
the intent to hinder, delay, or defraud the Grantor's creditors, and any
transfer to the Trust will not render the Grantor insolvent or incapable of
conducting its business in the manner and to the extent presently conducted.

                       (c) The Trust shall not have the power to (i) incur any
debt other than the Transition Bonds and certain costs and expenses associated
therewith (including day-

                                       5
<PAGE>

to-day expenses incurred by the Trust) and debt in connection with any credit
enhancement required for any Series of Transition Bonds or (ii) engage in any
business or activity other than the business and activities enumerated in
Section 2.03 (other than in accordance with Section 6.02(a)).

                       (d) The Trust's existence is not dependent on its being a
subsidiary of the Grantor or being affiliated with any Affiliated Entity, and
the Trust's business operations could be maintained even if it were not a
subsidiary of the Grantor or affiliated with any other Affiliated Entity. The
Grantor will not transfer additional Intangible Transition Property to the Trust
for the purpose of mitigating losses on the Intangible Transition Property that
has previously been transferred to the Trust.

                       (e) The Trust has determined that the transactions
contemplated by the Trust Related Agreements are in the best interests of the
Trust and its creditors and represent a prudent and advisable course of action
that does not impair the rights and interests of the Trust's creditors.

                  2.04. Appointment of the Trustees; Initial Trust Property. (a)
The Trust shall have no fewer than one and no more than three trustees (if the
Delaware Trustee, Issuer Trustee and Independent Trustee are the same entity) or
five trustees (if the Delaware Trustee, Issuer Trustee and Independent Trustee
are different entities) appointed from time to time by the Grantor or, in the
event of a Transfer, by the Owner or Owners. The Grantor or, in the event of a
Transfer, the Owners may at any time increase the number of Trustees, subject to
the provisions of Sections 2.04(b), 3.01, 4.01 and 4.03. The Grantor has
appointed First Union Trust Company, National Association as Issuer Trustee,
Delaware Trustee and Independent Trustee, and George Shicora and Thomas R.
Miller as Beneficiary Trustees of the Trust, which Trustees shall have all the
rights, powers and duties set forth herein.

                       (b) The Trust shall at all times have an Issuer Trustee
which shall be a Person meeting the qualifications of Section 11.01(c) of this
Agreement. In addition, the Trust shall at all times have at least one Trustee
which qualifies as a Delaware Trustee and at least one Trustee which qualifies
as an Independent Trustee. The Issuer Trustee, the Delaware Trustee and the
Independent Trustee may, and will initially, be the same entity.

                       (c) The Trustees acknowledge receipt in trust from the
Grantor, as of June 23, 1998, of the sum of $5,000, constituting the initial
Trust Property.

                  2.05. Declaration of Trust. The Trustees hereby declare that
they will hold the Trust Property in trust upon and subject to the conditions
set forth herein for the use and benefit of the Grantor or, in the event of a
Transfer, any Owner, subject to the obligations of the Trust under the Trust
Related Agreements. It is the intention of the parties hereto that the Trust
constitutes a business trust under the Business Trust Act and that this
Agreement constitutes the governing instrument of the Trust. On June 23, 1998,
the Trustees filed a

                                       6

<PAGE>

Certificate of Trust with the Delaware Secretary of State in accordance with the
provisions of the Business Trust Act in substantially the form attached hereto
as Exhibit 2.

                  2.06. Other Expenses, Liabilities of Trust. None of the
Grantor, the Trustees or any Owner shall be liable for any liabilities or
obligations of the Trust, including but not limited to, the indemnification
obligations under Article IX.

                  2.07. Situs of Trust. The Trust will be located and
administered in the State of Delaware. All bank accounts maintained by the
Trustees on behalf of the Trust shall be located in the State of Delaware. The
Trust shall not have any employees in any state other than in the State of
Delaware; provided, however, that nothing shall restrict or prohibit the Issuer
Trustee from having employees within or without the State of Delaware. Payments
will be received by the Trust only in the State of Delaware and payments will be
made by the Trust only from the State of Delaware.

                  2.08. Additional Capital Contributions. The assets of the
Trust are expected to generate a return sufficient to satisfy all obligations of
the Trust under this Agreement and the Trust Related Agreements and any other
obligations of the Trust. It is expected that no capital contributions to the
Trust will be necessary after the purchase of the initial Intangible
Transitional Property, except for capital contributions in connection with the
issuance of additional Series of Transition Bonds. In accordance with the
private letter ruling received by the Grantor from the Internal Revenue Service
dated December 19, 1997 (the "Private Letter Ruling"), on or prior to the date
of issuance of each Series of Transition Bonds, the Grantor or, in the event of
a Transfer, any Owner, shall make an additional contribution to the Trust in an
amount equal to at least 0.50% of the initial principal amount of such Series or
such greater amount as agreed to by the Grantor in connection with the issuance
by the Trust of any Series of Transition Bonds. No capital contribution by the
Grantor or any Owner, as the case may be, to the Trust will be made for the
purpose of mitigating losses on Transition Property that has previously been
transferred to the Trust, and all capital contributions shall be made in
accordance with all applicable corporate business trust procedures and
requirements, including proper record keeping by the Grantor and the Trust. Each
capital contribution will be acknowledged by a written receipt signed by any of
the Trustees. The Trustees acknowledge and agree that, notwithstanding anything
in this Agreement to the contrary, such additional contribution will be managed
by an investment manager selected by the Grantor or, in the event of a Transfer,
the Owner or Owners who shall invest such amounts only in Eligible Investments
(as defined in the Indenture), and all income earned thereon shall be allocated
or paid by the Bond Trustee in accordance with the provisions of the Indenture.

                  2.09. Assignment of Right to Distributions or Payments;
Transfers. The Grantor and any Owner may assign all or any part of their
respective rights to receive distributions or payments hereunder, but such
assignment shall effect no change in the ownership of the Trust. No Transfer of
a beneficial interest in the Trust shall be made by the Grantor, except to an
Affiliate or in connection with the sale or disposition of all or

                                       7

<PAGE>

substantially all of the Grantor's electric generating business, whether by
operation of law or otherwise, and only if prior notice of such assignment is
provided to Moody's.

                                   ARTICLE III

                            COMPLIANCE WITH THE CODE

                  3.01. Trust to be Treated as a Division For Tax Purposes. The
Trust shall comply with the applicable provisions of the Code and the applicable
Treasury regulations thereunder in the manner necessary to effect the intention
of the parties that the Trust be treated as a division of PECO Energy for
federal income tax purposes pursuant to Treasury regulation ss. 301.7701-1 et
seq. and that the Trust be accorded such treatment until its termination
pursuant to Section 10.01 hereof and shall take, or refrain from taking, any
action required by the Code or Treasury regulations thereunder in order to
maintain such status of the Trust. In addition, the Trust may not claim any
credit on, or make any deduction from the principal and interest payable in
respect of, the Transition Bonds (other than amounts properly withheld under the
Code), or assert any claim against any present or former Transition Bondholder
because of the payment of taxes levied or assessed upon the Trust.

                                   ARTICLE IV

                           SEPARATE EXISTENCE OF TRUST

                  4.01. Maintenance of Separate Existence. The Trust shall take
all steps necessary to continue the identity of the Trust as a separate legal
entity and to make it apparent to third Persons that the Trust is an entity with
assets and liabilities distinct from those of the Grantor, any Owner, the
Trustees, Affiliates of the Grantor or any Owner or any other Person, and that,
except for financial reporting purposes (to the extent required by generally
accepted accounting principles) and for state and federal income and franchise
tax purposes, it is not a division of any of the Affiliated Entities or any
other Person. In that regard, and without limiting the foregoing in any manner,
the Trust shall:

                       (a) be managed by the Trustees who shall independently
manage the daily operations and business affairs of the Trust in accordance with
the terms of this Agreement and, except as otherwise provided herein, neither
the Trustees nor the Trust shall be controlled in making such decisions by the
Grantor, any Owner, any Affiliated Entity or any other Person;

                       (b) maintain at least one Independent Trustee, one Issuer
Trustee and one Delaware Trustee (who may be the same Person);

<PAGE>

                       (c) if the office of the Trust is not in the care of the
Issuer Trustee, as provided by 2.02, maintain office space separate and clearly
delineated from the office space of any Affiliated Entity, owned by the Trust or
evidenced by a written lease or sublease (even if located in an office owned or
leased by, or shared with, an Affiliated Entity);

                       (d) maintain the assets of the Trust in such a manner
that it is not costly or difficult to segregate, identify or ascertain its
individual assets from those of any other Person, including any Affiliated
Entity;

                       (e) if the office of the Trust is not in the care of the
Issuer Trustee, as provided by 2.02, maintain a separate telephone number which
will be answered only in its own name;

                       (f) conduct all intercompany transactions with Affiliated
Entities on an arm's-length basis and in accordance with Section 4.03;

                       (g) not guarantee, become obligated for or pay the debts
of any Affiliated Entity or hold the credit of the Trust out as being available
to satisfy the obligations of any Affiliated Entity or other Person (nor
indemnify any Person for losses resulting therefrom), nor have any of the
Trust's obligations guaranteed by any Affiliated Entity or hold the Trust out as
responsible for the debts of any Affiliated Entity or other Person or for the
decisions or actions with respect to the business and affairs of any Affiliated
Entity, nor seek or obtain credit or incur any obligation to any third-party
based upon the creditworthiness or assets of any Affiliated Entity or any other
Person (i.e. other than based on the assets of the Trust) nor allow any
Affiliated Entity to do such things based on the credit of the Trust;

                       (h) except as expressly otherwise permitted hereunder or
under any of the Trust Related Agreements, not permit the commingling or pooling
of the Trust's funds or other assets with the funds or other assets of any
Affiliated Entity;

                       (i) maintain separate deposit and other bank accounts and
funds to which no Affiliated Entity has any access, which accounts shall be
maintained in the name and tax identification number of the Trust;

                       (j) maintain full books of accounts and records
(financial or other) and financial statements separate from those of the
Affiliated Entities or any other Person, prepared and maintained in accordance
with GAAP (including, but not limited to, all resolutions, records, agreements
or instruments underlying or regarding the transactions contemplated by the
Trust Related Agreements or otherwise) and will be audited annually by an
independent accounting firm which shall provide such audit to the Bond Trustee;

                       (k) compensate (either directly or through reimbursement
of the Trust's allocable share of any shared expenses) all employees,
consultants and agents and Affiliated Entities, to the extent applicable, for
services provided to the Trust by such

                                       9

<PAGE>

employees, consultants and agents or Affiliated Entities, in each case, from the
Trust's own funds and maintain a sufficient number of employees in light of its
contemplated operations;

                       (l) pay from its own bank accounts for accounting and
payroll services, rent, lease and other expenses (or the Trust's allocable share
of any such amounts provided by one or more other Affiliated Entity) and not
have such operating expenses (or the Trust's allocable share thereof) paid by
any Affiliated Entities, provided, that the Grantor shall be permitted to pay
the initial organization expenses of the Trust and certain of the expenses
related to the transactions contemplated by the Trust Related Agreements
incurred on or prior to the closing date for such transactions;

                       (m) maintain adequate capitalization to conduct its
business and affairs considering the Trust's size and the nature of its business
and intended purposes and, after giving effect to the transactions contemplated
by the Related Trust Agreements, refrain from engaging in a business for which
its remaining property represents an unreasonably small capital;

                       (n) conduct all of the Trust's business (whether in
writing or orally) solely in the name of the Trust through its Trustees,
employees and agents and hold the Trust out as an entity separate from any
Affiliated Entity;

                       (o) not make or declare any distributions of cash or
property to the Grantor or any Owner except in accordance with appropriate trust
formalities and only consistent with sound business judgment to the extent that
it is permitted pursuant to the Trust Related Agreements and not violative of
any applicable law and only if no Significant Event or potential Significant
Event then exists or would result therefrom;

                       (p) otherwise practice and adhere to all trust procedures
and formalities, such as the holding of regularly scheduled meetings of the
Trustees, to the extent required by such formalities and by this Agreement, the
State of Delaware and all other appropriate constituent documents;

                       (q) not appoint an Affiliated Entity or any employee of
an Affiliated Entity as an agent of the Trust, except as otherwise permitted in
the Trust Related Agreements (although such Persons can qualify as Beneficiary
Trustees);

                       (r) not acquire obligations or securities of or make
loans or advances to or pledge its assets for the benefit of the Grantor, any
Owner or any Affiliate of such parties;

                       (s) not permit the Grantor, any Owner or any Affiliated
Entity to acquire obligations of or make loans or advances to the Trust;

                                       10

<PAGE>

                       (t) not permit the Grantor, any Owner or any Affiliated
Entity to guarantee, pay or become liable for the debts of the Trust or permit
any such entity to hold out its creditworthiness as being available to pay the
liabilities and expenses of the Trust nor, except for the indemnities in this
Agreement and the Trust Related Agreements, indemnify any Person for losses
resulting therefrom;

                       (u) maintain separate minutes of the actions of the
Trustees, including of the transactions contemplated by the Trust Related
Agreements;

                       (v) cause (i) all written and oral communications,
including, without limitation, letters, invoices, purchase orders, and
contracts, of the Trust to be made solely in the name of the Trust, (ii) the
Trust to have its own tax identification number, stationery, checks and business
forms, separate from those of any Affiliated Entity, (iii) all Affiliated
Entities not to use the stationery or business forms of the Trust, and for the
Trust not to use the stationery or business forms of any Affiliated Entity, and
(iv) all Affiliated Entities not to conduct business in the name of the Trust,
and the Trust not to conduct business in the name of any Affiliated Entity;

                       (w) direct creditors of the Trust to send invoices and
other statements of account of the Trust directly to the Trust and not to any
Affiliated Entity and to cause the Affiliated Entities not to direct their
creditors to send invoices and other statements of accounts to the Trust;

                       (x) cause the Grantor or, in the event of a Transfer, any
Owner to maintain as official records all resolutions, agreements, and other
instruments underlying or regarding the transactions contemplated by the Trust
Related Agreements;

                       (y) disclose, and cause the Grantor to disclose, in its
financial statements the effects of all transactions between the Grantor and the
Trust in accordance with generally accepted accounting principles, and in a
manner which makes it clear that the assets of the Trust (including the
Transition Property) are not assets of any Affiliated Entity and are not
available to pay creditors of any Affiliated Entity;

                       (z) treat and cause the Grantor to treat the transfer of
Intangible Transition Property from the Grantor to the Trust as a sale under the
Competition Act;

                       (aa) if in accordance with GAAP, the assets and
liabilities of the Trust are included in the consolidated financial statements
of the Grantor, including if the Trust is treated as a division of PECO Energy,
cause the Grantor to prominently and clearly disclose, whether in a footnote or
in the notes to such financial statements, that (i) the Trust is a separate
legal entity, (ii) the assets of the Trust are not available to pay the debts of
the Grantor or any other Affiliated Entity and (iii) neither the Grantor nor any
other Affiliated Entity is liable or responsible for the debts of the Trust;

                                       11

<PAGE>

                       (bb) except as described herein with respect to tax
reporting and financial reporting, describe and cause each Affiliated Entity to
describe the Trust, and hold the Trust out as a separate legal entity and not as
a division or department of any Affiliated Entity, and promptly correct any
known misunderstandings regarding its identity separate from any Affiliated
Entity or any Person;

                       (cc) treat the Transition Bonds as debt obligations of
the Trust;

                       (dd) maintain its valid existence in good standing under
the laws of the State of Delaware and maintain its qualification to do business
under the laws of such other jurisdictions as its operations require;

                       (ee) comply with all laws applicable to the transactions
contemplated by this Agreement and the Trust Related Agreements; and

                       (ff) cause PECO Energy to observe in all material
respects all corporate procedures and formalities required by its constituent
documents and the laws of its state of formation and all other appropriate
jurisdictions.

                4.02. Merger and Other Transactions. As long as the Transition
Bonds are outstanding and subject to Section 4.05, the Trust may not consolidate
with, merge or convert into another entity or sell all or substantially all of
its assets to another entity and dissolve, unless: (i) the entity formed by or
surviving such consolidation, merger or conversion or to whom substantially all
of such assets are sold is organized under the laws of the United States, any
state thereof or the District of Columbia, (ii) such entity expressly assumes
all obligations and succeeds to all rights of the Trust under the Sale Agreement
and the Master Servicing Agreement pursuant to an assignment and assumption
agreement executed and delivered to the Bond Trustee, in form satisfactory to
the Bond Trustee, (iii) no Default or Event of Default will have occurred and be
continuing immediately after such consolidation, merger, conversion or sale of
assets, (iv) the Rating Agency Condition (as defined in the Indenture) will have
been satisfied with respect to such transaction by each Rating Agency (as
defined in the Indenture), except Moody's (to which notice will be sent), (v)
the Trust has received an opinion of counsel to the effect that such
consolidation, merger, conversion or sale of assets would have no material
adverse tax consequence to the Trust or any Transition Bondholder and such
consolidation, merger, conversion or sale of assets complies with the Indenture
and all conditions precedent therein provided relating to such transaction, (vi)
none of the Intangible Transition Property, any qualified rate orders or PECO
Energy's or the Trust's rights under the Competition Act or any qualified rate
orders are impaired and (vii) any action that is necessary to maintain the lien
and security interest created by the Indenture will have been taken. Further,
the Trust may not sell, transfer, exchange or otherwise dispose of any of its
assets, except as expressly permitted by the Indenture, any Supplemental
Indenture, the Master Servicing Agreement or the Sale Agreement.

                                       12

<PAGE>

                4.03. Transactions with Affiliates. The Trust will not enter
into, or be a party to, any transaction with any of its Affiliates, except (i)
the transactions contemplated by the Trust Related Agreements and (ii) any other
transactions (including, without limitation, the lease of office space or
computer equipment or software by the Trust from an Affiliate of the Trust and
the sharing of employees and employee resources and benefits) (A) in the
ordinary course of business or as otherwise permitted hereunder, (B) pursuant to
the reasonable requirements and purposes of the Trust's business, (C) upon fair
and reasonable terms (and, to the extent material, pursuant to written
agreements) that are on terms and conditions available at the time to the Trust
for comparable transactions with unaffiliated Persons and (D) not inconsistent
with the terms of Section 4.01. Unless such transactions are in the ordinary
course of business in which case any of the Trustees, acting singly or
collectively, may take all actions necessary to effectuate such transactions,
they will require the approval of a majority of the Trustees, which majority
must include the Independent Trustee.

                4.04. Insolvency. As of the date hereof, neither the Grantor nor
the Trust intends to file a voluntary petition for relief under the Bankruptcy
Code or any similar law. None of the Grantor nor any Owner will cause the Trust
to file a voluntary petition for relief under the Bankruptcy Code or similar
law. The Trustees shall not file a bankruptcy or insolvency petition or
otherwise institute insolvency or bankruptcy proceedings without the prior
written consent of all of the Trustees, including the Independent Trustee.
Further, as of the date hereof, after giving effect to the transactions
contemplated by the Trust Related Agreements, the Issuer is solvent and expects
to remain solvent, believes it will be able to pay its debts as they become due
and such belief is reasonable, is able to pay its debts as they mature and does
not intend to incur, or believe that it will incur, indebtedness that it will
not be able to repay at maturity.

                4.05. Rating Confirmation. Notwithstanding anything to the
contrary contained in this Agreement, as long as the Transition Bonds are
outstanding, the Trust may not engage in any dissolution, liquidation,
consolidation, merger or sale of all or substantially all of its assets without
having first obtained confirmation from Moody's Investor Service, Inc. and
Standard & Poor's Rating Services that such event will not result in either a
downgrade or withdrawal of the then current rating of the Transition Bonds.

                                    ARTICLE V

                    INVESTMENT AND APPLICATION OF TRUST FUNDS

                5.01. Investment of Trust Funds. The provisions of this Article
V apply only to funds or Trust Property that have been released from the lien of
the Indenture and are permitted to be held or applied by the Trust. Unless
otherwise directed in writing by the Beneficiary Trustees, funds or Trust
Property released by the Bond Trustee to the Trust or funds in the possession of
the Trust shall be invested and reinvested by the Trustees (or by an

                                       13

<PAGE>

independent investment manager appointed in writing by the Beneficiary Trustees)
in Eligible Investments.

                  5.02. Application of Funds. Income with respect to and
proceeds of any funds or Trust Property held by the Trustees shall be
transferred as determined by the Beneficiary Trustees from time to time.

                                   ARTICLE VI

                      AUTHORITY AND DUTIES OF THE TRUSTEES

                6.01. General Authority. The Trustees are authorized to take all
actions required to be taken by them pursuant to the terms of this Agreement and
the Trust Related Agreements. The Trustees are further authorized, but shall not
be obligated, to take such further actions as are permitted but not required
under the terms of this Agreement and the Trust Related Agreements.

                6.02. Specific Authority; Special Authority of Beneficiary
Trustees. (a) Notwithstanding any other provision in this Agreement to the
contrary and without the need for any additional consent of any Person, the
Trustees, acting singly or collectively, are hereby authorized and directed to
take the following action on behalf of the Trust: (i) execute, deliver and
perform any agreements related to the issuance and sale of Transition Bonds,
including the Trust Related Agreements, as necessary, (ii) execute and deliver
all certificates and other documents required by any such agreements and (iii)
issue and deliver one or more series of Transition Bonds in accordance with the
provisions of such agreements and any qualified rate orders and qualify and
register the Transition Bonds for sale in various states. The Trustees, acting
singly or collectively, are authorized to take all actions necessary or
incidental to the day-to-day operations of the Trust. Except as otherwise
specifically provided, all non-day-to-day matters shall be determined by a
majority of the then current Trustees; provided that, such majority must include
the Independent Trustee (which may also be the Issuer Trustee) for all actions
specified in Sections 4.02 and 4.03 and any matter that would, if approved by
the Trustees, cause the Trust to deviate from the provisions of Sections
2.03(a), 2.03(c), 2.04(b), 4.01 and 12.01 of this Agreement (or any provisions
that by the terms hereof require the consent of the Independent Trustee),
subject to the provisions of Section 6.05. For purposes of determining a
majority under this Agreement, each Person that is serving as a Trustee shall be
counted as a single Trustee, even if such Person holds multiple Trustee
positions (i.e., the vote of one Person that acts as Delaware Trustee, Issuer
Trustee and Independent Trustee shall be counted only once).

                       (b) The Grantor and the Trustees hereby authorize and
direct the Beneficiary Trustees, acting singly or collectively, (i) to file with
the Securities and Exchange Commission (the "Commission") and execute, in each
case on behalf of the Trust, one or more Registration Statements on either Form
S-3 or Form S-1 (collectively, the "1933 Act Registration

                                       14

<PAGE>

Statements"), including any pre-effective or post-effective amendments to such
1933 Act Registration Statements (including the prospectus supplement, the
prospectus and the exhibits contained therein), relating to the registration
under the Securities Act of 1933, as amended, of each Series of Transition
Bonds, (ii) to file and execute on behalf of the Trust such applications,
reports, surety bonds, irrevocable consents, appointments of attorney for
service of process and other papers and documents as shall be necessary or
desirable to register each Series of Transition Bonds under the securities or
"Blue Sky" laws of such jurisdictions as the Trust may deem necessary or
desirable and (iii) to do or cause to be done all such other acts or things and
to execute and deliver all such instruments and documents that any such
Beneficiary Trustee shall deem necessary or appropriate to carry out the intent
of the foregoing. In the event that any filing referred to above is required by
the rules and regulations of the Commission or state securities or "Blue Sky"
laws, to be executed on behalf of the Trust by the Issuer Trustee, then the
Issuer Trustee, not in its individual capacity, but solely in its capacity as
trustee of the Trust, is hereby authorized and directed to join in any such
filing and to execute on behalf of the Trust any and all of the foregoing. In
connection with all of the foregoing, the Trust hereby constitutes and appoints
each of the Beneficiary Trustees as its true and lawful attorney-in-fact and
agent, with full power of substitution and resubstitution, for the Trust or in
the Trust's name, place and stead, in any and all capacities, to sign any and
all amendments (including post-effective amendments) to the 1933 Act
Registration Statements and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done in connection therewith,
as fully to all intents and purposes as the Trust might or could do in person,
hereby ratifying and confirming all that said attorney-in-fact and agent, or his
respective substitute or substitutes, shall do or cause to be done by virtue
hereof.

                       (c) Meetings of the Trustees for the purpose of
establishing a majority under this Article VI or otherwise may be called at any
time by any of the Trustees upon two days written or oral notice, stating the
time, place and purpose of the meeting, to all Trustees prior to the time of the
meeting. In addition, any action required or permitted to be taken at a meeting
of the Trustees may be taken without a meeting upon the written consent of the
Trustees who would be necessary to authorize the action at a meeting at which
all Trustees were present and voting or upon the unanimous written consent of
the Trustees. The Issuer Trustee shall maintain the minutes of all meetings of
the Trustees. Any meeting may be held by means of conference telephone or
similar communications equipment by which all persons participating in the
meeting can hear one another. Attendance, whether by telephone or in person, at
any meeting of the Trustees shall constitute a waiver of notice of such meeting.

                  6.03. Accounting and Reports to the Grantor, any Owner, the
Internal Revenue Service and Others. The Grantor shall designate, from time to
time, a Trustee which shall, on behalf of the Trust, (i) maintain or cause to be
maintained the books of the Trust on a calendar year basis on the accrual method
of accounting, (ii) deliver to the Grantor and any Owner, within 90 days of the
end of each Fiscal Year, or more often, as may be required by the Code and the
regulations thereunder, a copy of the annual financial statement

                                       15

<PAGE>

of the Trust for such Fiscal Year and a statement in such form and containing
such information as may be required by such regulations, and as is necessary and
appropriate to enable the Grantor and any Owner to prepare its federal and state
income tax returns, (iii) file such tax returns relating to the Trust, cause the
Trust to pay all taxes incurred by it pursuant to the terms of any tax sharing
agreement entered into by the Trust and the Grantor and take all actions
necessary for the Trust to qualify or continue to qualify as a division of PECO
Energy or its designated affiliate for federal income tax purposes, (iv) cause
such tax returns to be signed by the Trust in the manner required by law, and
(v) cause to be mailed to the Grantor and any Owner copies of all such reports
and tax returns of the Trust.

                  6.04. Signature of Returns. The Trustee designated in Section
6.03 shall sign on behalf of the Trust the tax returns and other periodic
filings of the Trust, unless applicable law requires the Owner to sign such
documents, in which case, so long as the Grantor is the Owner and applicable law
allows the Grantor to sign any such document, the Grantor shall sign such
document. At any time that the Grantor is not the Owner, or is otherwise not
allowed by law to sign any such document, then the party required by law to sign
such document shall sign.

                  6.05. Right to Receive Instructions. In the event that the
Trustees are unable to decide between alternative courses of action for whatever
reason, or are unsure as to the application of any provision of this Agreement
or any Trust Related Agreement, or such provision is ambiguous as to its
application, or is, or appears to be, in conflict with any other applicable
provision, or in the event that this Agreement or any Trust Related Agreement
permits any determination by the Trustees or is silent or is incomplete as to
the course of action which the Trustees are required to take with respect to a
particular set of facts, any one or more of the Trustees may give notice of such
circumstances (in such form as shall be appropriate under the circumstances) to
the Grantor or, in the event of a Transfer, to the Owner and request
instructions from independent, appropriate legal or other counsel to the
Trustees in accordance with Section 7.03 of this Agreement.

                  6.06. No Duties Except as Specified in this Agreement or in
Instructions. The Trustees shall not have any duty or obligation to manage, make
any payment in respect of, register, record, sell, dispose of or otherwise deal
with the Trust Property, or to otherwise take or refrain from taking any action
under, or in connection with, any document contemplated hereby to which the
Trustees are a party, except as expressly provided by the terms of this
Agreement or the Trust Related Agreements and no implied duties or obligations
shall be read into this Agreement or the Trust Related Agreements against the
Trustees. The Trustees nevertheless agree that, in the event that claims are
made against any of the Trustees in their individual capacities that are not
related to the ownership or the administration of the Trust Property or the
transactions contemplated by the Trust Related Agreements, the Trustee against
whom such claims were made shall, at its own cost and expense, promptly take all
action as may be necessary to discharge any liens on any part of the Trust
Property resulting from those claims.

                                       16

<PAGE>

                  6.07. No Action Except Under Specified Documents or
Instructions. The Trustees shall not manage, control, use, sell, dispose of or
otherwise deal with any part of the Trust Property except in accordance with the
powers granted to and the authority conferred upon the Trustees pursuant to this
Agreement and the Trust Related Agreements.

                  6.08 No Action Contrary to Agreement, Trust Related Agreements
or Applicable Law. The Trustees shall not be required to take or refrain from
taking any action under this Agreement or the Trust Related Agreements if the
Trustees shall reasonably determine or shall have been advised by counsel that
such action (i) is contrary to the terms of this Agreement or the Trust Related
Agreements or is otherwise contrary to applicable law or (ii) is likely to
result in liability on the part of the Trustees to risk or advance their own
funds.

                                   ARTICLE VII

                             CONCERNING THE TRUSTEES

                  7.01. Acceptance of Trusts and Duties. The Trustees accept the
trusts hereby created and agree to perform their respective duties hereunder
with respect to the same but only upon the terms of this Agreement. The Trustees
shall not be personally liable under any circumstances except (i) for their own
willful misconduct or gross negligence, (ii) for liabilities arising from the
failure by any of the Trustees to perform obligations expressly undertaken by
them in Article VI, or (iii) for taxes, fees or other charges on, based on or
measured by any fees, commissions or compensation received by the Trustees in
connection with any of the transactions contemplated by this Agreement or the
Trust Related Agreements. In particular, but not by way of limitation:

                       (a) The Trustees shall not be personally liable for any
error of judgment made in good faith by any of the Trustees;

                       (b) The Trustees shall not be personally liable with
respect to any action taken or omitted to be taken by the Trustees in good faith
in accordance with the instructions delivered pursuant to Section 6.05;

                       (c) No provision of this Agreement shall require the
Trustees to expend or risk their personal funds or otherwise incur any financial
Liability in the performance of any of their rights or powers hereunder, if the
Trustees shall have reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or Liability is not reasonably
assured or provided to them;

                       (d) Under no circumstance shall the Trustees be
personally liable for any indebtedness of the Trust under any Trust Related
Agreement; and

                                       17

<PAGE>

                       (e) The Trustees shall not be personally responsible for
or in respect of the validity or sufficiency of this Agreement or for the due
execution hereof by the Grantor, or for the form, character, genuineness,
sufficiency, value or validity of any Collateral, or for or in respect of the
validity or sufficiency of the Trust Related Agreements.

                  7.02. Furnishing of Documents. The Trustees shall furnish to
the Grantor and any Owner, promptly upon receipt thereof, duplicates or copies
of all material reports, notices, requests, demands, certificates, financial
statements and any other instruments furnished to the Trustees by any party
pursuant to the Trust Related Agreements (other than documents originated by or
otherwise furnished by the Grantor or any Owner).

                  7.03. Reliance; Advice of Counsel. (a) The Trustees shall
incur no Liability to anyone in acting upon any signature, instrument, notice,
resolution, request, consent, order, certificate, report, opinion, bond or other
document or paper believed by them to be genuine and believed by them to be
signed by the proper party or parties. The Trustees may accept a certified copy
of a resolution of the board of directors or other governing body of any
corporate party as conclusive evidence that such resolution has been duly
adopted by such body and that the same is in full force and effect. As to any
fact or matter the manner of ascertainment of which is not specifically
prescribed herein, the Trustees may for all purposes hereof rely on a
certificate, signed by the president or any vice president or by the treasurer
or any assistant treasurer or the secretary or any assistant secretary of the
relevant party, as to such fact or matter, and such certificate shall constitute
full protection to the Trustees for any action taken or omitted to be taken by
them in good faith in reliance thereon.

                       (b) In the exercise or administration of the trusts
hereunder and in the performance of their respective duties and obligations
under any of the Trust Related Agreements, the Trustees (i) may act directly or,
at the expense of the Trust in the case of the Issuer Trustee, through agents or
attorneys pursuant to agreements entered into with any of them, and the Trustees
shall not be liable for the default or misconduct of such agents or attorneys if
such agents or attorneys shall have been selected by the Trustees with
reasonable care and (ii) may, at the expense of the Trust in the case of the
Issuer Trustee, consult with counsel, accountants and other skilled persons to
be selected with reasonable care and employed by them, and the Trustees shall
not be liable for anything done, suffered or omitted in good faith by it in
accordance with the advice or opinion of any such counsel, accountants or other
skilled persons.

                  7.04. Not Acting in Individual Capacity. Except as expressly
provided in this Article VII, in accepting the trusts hereby created the
Trustees each act solely as trustees hereunder and not in their respective
individual capacities, and all Persons having any claim against the Trustees by
reason of the transactions contemplated by this Agreement or the Trust Related
Agreements shall look only to the Trust Property for payment or satisfaction
thereof.

                                       18

<PAGE>

                                  ARTICLE VIII

                            COMPENSATION OF TRUSTEES

                  8.01. Issuer Trustee's Fees and Expenses. The Issuer Trustee
shall receive compensation for its services hereunder as set forth on the fee
schedule attached hereto as Exhibit 1. The Issuer Trustee shall be entitled to
be reimbursed from the Trust Property for its reasonable expenses hereunder,
including, without limitation, its travel, telephone, facsimile, postage,
overnight courier and other related expenses, as well as the reasonable
compensation, expenses and disbursements of such agents, representatives,
experts and counsel as the Issuer Trustee may employ in connection with the
exercise and performance of its rights and duties under this Agreement and the
Trust Related Agreements.

                  8.02. Beneficiary Trustees' Fees and Expenses. The Beneficiary
Trustees shall not be compensated by the Trust for their services performed for
or on behalf of the Trust.

                  8.03. Fees of Separate Independent Trustee and Delaware
Trustee. At such time as the Issuer Trustee, the Independent Trustee and the
Delaware Trustee are not the same Person, the Trust shall pay such fees to each
of the Independent Trustee and Delaware Trustee as the majority of the Trustees
shall approve.

                                   ARTICLE IX

                           INDEMNIFICATION OF TRUSTEES

                  9.01. Scope of Indemnification. To the fullest extent
permitted by law, the Trust shall indemnify the Trustees and their agents,
employees and directors against any Liability incurred in connection with any
Proceeding in which the Trustees may be involved as a party or otherwise by
reason of the fact that such Trustee is or was serving in its capacity as a
Trustee, unless such Liability is based on or arises in connection with the
Trustee's or such other indemnified parties' own wilful misconduct or gross
negligence, the failure to perform the obligations expressly undertaken by them
in Article VI, or taxes, fees or other charges on, based on or measured by any
fees, commissions or compensation received by the Trustees in connection with
any of the transactions contemplated by this Agreement or the Trust Related
Agreements. This indemnification clause shall survive the termination of this
Agreement.

                                       19

<PAGE>

                                    ARTICLE X

                              TERMINATION OF TRUST

                  10.01. Dissolution of Trust. (a) The Trust shall dissolve and,
after satisfaction of the creditors of the Trust as required by applicable law,
property held by the Trust will be distributed to the Grantor or, in the event
of a Transfer, to any Owner thirty years from the date of its creation or
sooner, at the option and expense, and upon written instruction of the Grantor,
but in no event before payment in full of all Series of Transition Bonds.

                       (b) The bankruptcy of either the Grantor or any Owner or
both shall not operate to terminate this Agreement, to dissolve, terminate or
annul the Trust, to entitle the Grantor's or any Owner's legal representatives
to claim an accounting or to take any action or Proceeding in any court for a
partition or winding up of the Trust Property, nor otherwise affect the rights,
obligations and liabilities of the parties hereto.

                  10.02. No Termination by Grantor or Owner. Except as provided
in Section 10.01, neither the Grantor nor any Owner shall be entitled to
dissolve or terminate or revoke the Trust established hereunder.

                  10.03. Cancellation of Certificate of Trust. Upon completion
of the winding up of the affairs of the Trust after dissolution of the Trust in
accordance with Section 10.01 or otherwise, the Certificate of Trust shall be
canceled by a Beneficiary Trustee's executing and filing a Certificate of
Cancellation with the Secretary of State of Delaware.

                                   ARTICLE XI

                   SUCCESSOR TRUSTEES AND ADDITIONAL TRUSTEES

                  11.01. Resignation of Trustee; Appointment of Successor. (a)
The Trustees may resign at any time without cause by giving at least 90 days'
prior written notice to the Grantor and any Owner, such resignation to be
effective upon the acceptance of appointment by a successor Trustee under
Section 11.01(b). In addition, the Grantor or, in the event of a Transfer, any
Owner may at any time remove any of the Trustees with or without cause by an
instrument in writing delivered to the Trustee, such removal to be effective
upon the acceptance of appointment by a successor Trustee under Section
11.01(b); except that, neither the Grantor nor any Owner may remove the
Independent Trustee (i) without cause, (ii) after an Event of Default under the
Indenture or (iii) if the removal of one or more Trustees would cause the breach
of Section 2.04(b). In case of the resignation or removal of a Trustee, the
Grantor or, in the event of a Transfer, any Owner may appoint a successor
Trustee by an instrument signed by the Grantor or any Owner, as applicable,
subject to Section 2.04(b). If the last remaining Trustee of the Trust resigns
or is removed or the Issuer Trustee, the

                                       20

<PAGE>

Independent Trustee or the Delaware Trustee resigns or is removed and a
successor Trustee shall not have been appointed within 30 days after the giving
of written notice of such resignation or the delivery of the written instrument
with respect to such removal, such Trustee, the Grantor or any Owner may apply
to any court of competent jurisdiction to appoint a successor Trustee in
compliance with Section 2.04(b) to act until such time, if any, as a successor
Trustee shall have been appointed as provided above. Any successor Trustee so
appointed by such court shall immediately and without further act be superseded
by any successor Trustee appointed as above provided. In the event of removal of
a Trustee, the Trustee so removed shall be entitled to compensation and
reimbursement for expenses incurred through the date of such removal.

                       (b) Any successor Trustee, however appointed, shall
execute and deliver to the predecessor Trustee and the Trust an instrument
accepting such appointment, and thereupon such successor Trustee, without
further acts, shall become vested with all the estates, properties, rights,
powers, duties and trusts of the predecessor Trustee in the trusts hereunder
with like effect as if originally named as a Trustee herein; but nevertheless,
upon the written request of such successor Trustee, such predecessor Trustee
shall execute and deliver an instrument transferring to such successor Trustee,
upon the trusts herein expressed, all the estates, properties, rights, powers,
duties and trusts of such predecessor Trustee, and such predecessor Trustee
shall duly assign, transfer, deliver and pay over to such successor Trustee all
moneys or other property then held or subsequently received by such predecessor
Trustee upon the trusts herein expressed.

                       (c) Any successor Issuer Trustee, however appointed,
shall be a bank or trust company incorporated and doing business within the
United States of America and having a combined capital and surplus of at least
$50,000,000. Any corporation into which the Issuer Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Issuer Trustee shall
be a party, or any corporation to which substantially all the corporate trust
business of the Issuer Trustee may be transferred, shall, subject to the terms
of this Agreement, be the Issuer Trustee of the Trust under this Agreement
without further act or consent of any Person.

                       ARTICLE XII

                       MISCELLANEOUS

                  12.01. Supplements and Amendments. This Agreement may be
amended only by a written instrument signed by the Grantor, any Owner and a
majority of the Trustees (which majority shall include the Independent Trustee)
at the time of such amendment. No such amendment may be made unless the Rating
Agency Condition is satisfied with respect to each of the Rating Agencies other
than Moody's (to which notice will be sent) in connection herewith.

                                       21

<PAGE>

                  12.02. No Legal Title to Trust Property in Grantor and Owner.
Neither the Grantor nor any Owner shall have legal title to or ownership of any
part of the Trust Property. No transfer, by operation of law or otherwise, of
any right, title and interest of the Grantor or any Owner in and to their
undivided beneficial interest in the Trust Property hereunder shall operate to
terminate this Agreement or the trusts hereunder, to dissolve, terminate or
annul the Trust or to entitle any successor transferee to an accounting or to
the transfer to it of legal title to any part of the Trust Property.

                  12.03. Limitations on Rights of Others. Nothing in this
Agreement, whether express or implied, shall be construed to give to any Person
other than the Trust, the Grantor and any Owner any legal or equitable right,
remedy or claim in the Trust Property or except for the Grantor and any Owner,
under or in respect of this Agreement or any covenants, conditions or provisions
contained herein.

                  12.04. Notices. Unless otherwise expressly specified or
permitted by the terms hereof, all notices shall be in writing and delivered by
hand or mailed by certified mail, postage prepaid, if to the Trustees, addressed
to:

               First Union Trust Company,         One Rodney Square
                 National Association             920 King Street, 1st Floor
                                                  Wilmington, DE 19801

                 George Shicora                   c/o First Union Trust Company,
                                                  National Association
                                                  One Rodney Square
                                                  920 King Street, 1st Floor
                                                  Wilmington, DE 19801

                 Thomas R. Miller                c/o First Union Trust Company,
                                                  National Association
                                                  One Rodney Square
                                                  920 King Street, 1st Floor
                                                  Wilmington, DE 19801

or to such other addresses as the Trustees may have set forth in a written
notice to the Grantor, any Owner and the Bond Trustee; and if to the Grantor,
addressed to: PECO Energy Company, 2301 Market Street, S21-1, Philadelphia, PA
19101 or to such other address as the Grantor may have set forth in a written
notice to the Trustees and the Bond Trustee; and if to Moody's, addressed to:
ABS Monitoring Department, 99 Church Street, New York, NY 10007. All notices to
any Owner shall be sent care of the Grantor to the Grantor's address set forth
above or to such other address as such Owner may have set forth in a written
notice to the Grantor, the Trustees and the Bond Trustee. Whenever any notice in
writing is required to be given by the Trustees hereunder, such notice shall be
deemed given and such requirement satisfied 72 hours after such notice is mailed
by certified mail, postage prepaid, addressed as

                                       22

<PAGE>

provided above; any notice given by the Grantor or any Owner to the Trustees
shall be effective upon receipt. All notices required under this Agreement to be
delivered to Moody's shall be given by one or both of the Beneficiary Trustees.

                  12.05. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

                  12.06. Separate Counterparts. This Agreement may be executed
by the parties hereto in separate counterparts, each of which when so executed
and delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.

                  12.07. Successors and Assigns. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, the
Trustees and their respective successors and assigns and the Grantor, any Owner
and their respective successors and permitted assigns, all as herein provided;
provided, that Moody's receives prior notice of any such succession or
assignment. Any request, notice, direction, consent, waiver or other instrument
or action by the Grantor and any Owner shall bind its successors and permitted
assigns.

                  12.08. Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof. Any reference to any Article or
Section contained in this Agreement shall refer to such Article or Section as
set forth in this Agreement, notwithstanding failure to use the term "hereof,"
"hereto" or "herein" in connection with such reference.

                                       23

<PAGE>

                  12.09. Governing Law. This Agreement shall in all respects be
governed by, and construed in accordance with, the laws of the State of Delaware
(without regard to conflict of laws principles), including all matters of
construction, validity and performance.

                  IN WITNESS WHEREOF, the parties hereto have duly executed or
caused this Agreement to be duly executed by their respective officers hereunto
duly authorized, as of the day and year first above written.

                              PECO ENERGY COMPANY,
                              as Grantor and Owner

                              By:__________________________
                              Name:________________________
                              Title:_________________________

                              FIRST UNION TRUST COMPANY, NATIONAL
                              ASSOCIATION, not in its individual
                              capacity but solely as Issuer
                              Trustee, Delaware Trustee and
                              Independent Trustee

                              By:___________________________
                              Name:________________________
                              Title:_________________________

                              GEORGE SHICORA, not in his individual
                              capacity but solely as
                              a Beneficiary Trustee

                              -------------------------------

                              THOMAS R. MILLER, not in his
                              individual capacity but solely
                              as a Beneficiary Trustee

                              -------------------------------

                                       24

<PAGE>

                                    EXHIBIT 1

                           ISSUER TRUSTEE FEE SCHEDULE

For services performed pursuant to the Second Amended and Restated Trust
Agreement to which this Exhibit 1 is attached, the Issuer Trustee shall be
entitled to the following fees:

         -- $1,500.00 upon the Trust's issuance of each series of Transition
            Bonds (calculated on a per series basis), other than the initial
            series of Transition Bonds for which no fee shall be paid; and

         -- $8,500.00 at the end of each calendar year as an annual
            administrative maintenance fee.

In addition to the foregoing fees and the out-of-pocket expenses described in
Section 8.01 of the Second Amended and Restated Trust Agreement, the Issuer
Trustee may receive a special administrative maintenance fee from time to time
in such amounts as the Grantor, any Owner and the Trustees shall mutually agree
upon in writing in the event the Issuer Trustee determines, in good faith, that
the Trust requires special administrative attention due to extraordinary
circumstances.

This Issuer Trustee Fee Schedule may be revised or amended only by a written
instrument signed by the Grantor, any Owner and the Trustees.

                                   Exhibit 1

<PAGE>

                                    EXHIBIT 2

                              CERTIFICATE OF TRUST

                         OF PECO ENERGY TRANSITION TRUST

                  THIS Certificate of Trust of PECO Energy Transition Trust (the
"Trust"), dated as of June 23, 1998, is being fully executed and filed by the
undersigned, as trustees, to form a business trust under the Delaware Business
Trust Act (12 Del. C. ss. 3801, et seq.).

                  1. Name. The name of the business trust formed hereby is PECO
Energy Transition Trust.

                  2. Delaware Trustee. The name and business address of the
trustee of the Trust with its principal place of business in the State of
Delaware are First Union Trust Company, National Association, One Rodney Square,
920 King Street, First Floor, Wilmington, Delaware 19801, Attention: Corporate
Trust Administration.

                  3. Effective Date. This Certificate of Trust shall be
effective as of its filing with the Secretary of State of the State of Delaware.

                  IN WITNESS WHEREOF, the undersigned, being the trustees of the
Trust, have executed this Certificate of Trust as of the date first-above
written.

DIANA MOY KELLY, not in her                FIRST UNION TRUST COMPANY,
individual capacity, but solely as         NATIONAL ASSOCIATION, not in its
trustee of the Trust                       individual capacity, but solely
                                           as trustee of the Trust

 /s/ Diana Moy Kelly                       By: /s/ Edward L. Truitt, Jr.
---------------------                          --------------------------
                                           Name:    Edward L. Truitt, Jr.
                                           Title:   Assistant Vice President

GEORGE SHICORA, not in his
individual capacity, but solely as
trustee of the Trust

 /s/ George Shicora
--------------------

                                   Exhibit 2

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00002-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00002-of-00352.parquet"}]]