PECO ENERGY CAPITAL, L.P.
PECO ENERGY COMPANY
UNDERWRITING AGREEMENT
June , 1994
Goldman, Sachs & Co.
Smith Barney Inc.
Dean Witter Reynolds Inc.
A.G. Edwards & Sons, Inc.
Kidder, Peabody & Co. Incorporated
PaineWebber Incorporated
Prudential Securities Incorporated
As Representatives of the Several
Underwriters Named in Schedule I
c/o Goldman, Sachs & Co.
85 Broad Street, 22nd Floor
New York, NY 10004
Dear Sirs:
PECO Energy Capital, L.P., a limited partnership organized
under the laws of Delaware (the "Company"), and PECO Energy
Company, a Pennsylvania corporation, as guarantor and provider of
certain undertakings (the "Guarantor"), propose, subject to the
terms and conditions stated herein, that the Company issue and sell
to the Underwriters named in Schedule I hereto (the "Underwriters")
an aggregate of _______ of the Company's ___% Cumulative Monthly
Income Preferred Securities, Series A (liquidation preference $25
per share) (the "Series A Preferred Securities"), guaranteed by the
Guarantor on a limited basis as to the payment of accumulated and
unpaid monthly distributions and as to payments on liquidation or
redemption and benefiting from certain additional undertakings of
the Guarantor pursuant to a certain Payment and Guaranty Agreement
entered into by the Guarantor dated ___ 1994. Such guarantee and
undertakings are herein referred to collectively as the
"Guarantee"; the Guarantee and Series A Preferred Securities are
herein referred to collectively as the "Securities". Concurrently
with the issuance of the Series A Preferred Securities, the Company
will loan the proceeds thereof to the Guarantor and to evidence
such loan the Guarantor will issue and deliver to the Company the
Guarantor's ___% Deferrable Interest Subordinated Debentures, Series A due
2043 (the "Subordinated Debentures").
1. Each of the Company and the Guarantor jointly and
severally represents and warrants to, and agrees with, each of the
Underwriters that:
(a) A registration statement on Form S-3 (File Nos. 33-53785
and 33-53785-01) in respect of the Securities has been filed with the
Securities and Exchange Commission (the "Commission"); such
registration statement and any post-effective amendment thereto,
each in the form heretofore delivered to you, and, excluding
exhibits thereto but including all documents incorporated by
reference in the prospectus included therein, to you for each of
the other Underwriters, have been declared effective by the
Commission in such form; no other document with respect to such
registration statement or document incorporated by reference
therein has heretofore been filed with the Commission; and no stop
order suspending the effectiveness of such registration statement
has been issued and no proceeding for that purpose has been
initiated or threatened by the Commission (any preliminary
prospectus included in such registration statement or filed with
the Commission pursuant to Rule 424(b) of the rules and regulations
of the Commission under the Securities Act of 1933, as amended (the
"Act"), being hereinafter called a "Preliminary Prospectus"; the
various parts of such registration statement, including all
exhibits thereto and the documents incorporated by reference in the
prospectus contained in the registration statement at the time such
part of the registration statement became effective, each as
amended at the time such part of the registration statement became
effective, being hereinafter called the "Registration Statement";
such final prospectus, in the form first filed pursuant to Rule
424(b) under the Act, being hereinafter called the "Prospectus";
any reference herein to any Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to Item 12 of Form S-3
under the Act, as of the date of such Preliminary Prospectus or
Prospectus, as the case may be; and any reference to any amendment
or supplement to the Registration Statement, any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and
include any documents filed after the effective date of the
Registration Statement or the date of such Preliminary Prospectus
or Prospectus, as the case may be, under the Securities and
Exchange Act of 1934, as amended (the "Exchange Act"), and
incorporated by reference in such Registration Statement,
Preliminary Prospectus or Prospectus, as the case may be);
(b) No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission, and each
Preliminary Prospectus, at the time of filing thereof, conformed in
all material respects to the requirements of the Act and the rules
and regulations of the Commission thereunder, and did not contain
an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which
they were made, not misleading, provided, however, that this
representation and warranty shall not apply to any statement or
omission made in reliance upon and in conformity with information
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regarding any Underwriter or the arrangements with respect to the
underwriting of the offering of the Securities contemplated hereby
furnished in writing to the Company or the Guarantor by an
Underwriter through you expressly for use therein;
(c) The Registration Statement conforms, and the
Prospectus and any further amendments or supplements to the
Registration Statement or the Prospectus will conform, in all
material respects to the requirements of the Act and the rules and
regulations of the Commission thereunder; the Registration
Statement does not and will not, as of the applicable effective
date as to the Registration Statement and any amendment thereto,
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make
the statements therein not misleading; and the Prospectus does not
and will not, as of the applicable filing date as to the Prospectus
and any amendment or supplement thereto, contain an untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided,
however, that this representation and warranty shall not apply to
any statements or omissions made in reliance upon and in conformity
with information regarding any Underwriter or the arrangements with
respect to the underwriting of the offering of the Securities
contemplated hereby furnished in writing to the Company or the
Guarantor by an Underwriter through you expressly for use therein;
(d) The documents incorporated by reference in the
Registration Statement and the Prospectus, when they became
effective or were filed (or, if an amendment with respect to any
such document was filed or became effective, when such amendment
was filed or became effective) with the Commission, as the case may
be, conformed in all material respects to the requirements of the
Exchange Act and the rules and regulations thereunder, and any
further documents so filed and incorporated by reference will, when
they become effective or are filed with the Commission, as the case
may be, conform in all material respects to the requirements of the
Exchange Act and the rules and regulations thereunder; none of such
documents, when it became effective or was filed (or, if an
amendment with respect to any such documents was filed or became
effective, when such amendment was filed or became effective)
contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under
which they were made, not misleading; and no such further document,
when it becomes effective or is filed, will contain an untrue
statement of a material fact or will omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made,
not misleading;
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(e) Coopers & Lybrand are independent certified public
accountants as required by the Act and the rules and regulations of
the Commission thereunder;
(f) The Company is a validly existing limited
partnership in good standing under the laws of the State of
Delaware. The Company has all requisite power and authority to
issue the Series A Preferred Securities and lend the proceeds
thereof to the Guarantor as described in the Prospectus;
(g) The Company has no subsidiaries;
(h) The Guarantor is a validly existing corporation in
good standing under the laws of the Commonwealth of Pennsylvania.
Each of the Guarantor's subsidiaries ("Subsidiaries") which
constitutes a "gas utility company" or an "electric utility
company," as defined in the Public Utility Holding Company Act of
1935, as amended (a "Utility Subsidiary"), is a validly existing
corporation under the laws of its jurisdiction of incorporation.
The Guarantor and each Utility Subsidiary have all requisite power
and authority to own and occupy their respective properties and
carry on their respective businesses as presently conducted and as
described in the Prospectus and are duly qualified as foreign
corporations to do business and in good standing in every
jurisdiction in which the nature of the business conducted or
property owned by them makes such qualification necessary and in
which the failure to so qualify would have a materially adverse
effect on the Guarantor;
(i) The Guarantee has been duly authorized and executed
by the Guarantor, and when issued and delivered will constitute a
legal, valid and binding obligation of the Guarantor, enforceable in
accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditor's rights
and to general equity principles;
(j) The Subordinated Debentures have been duly
authorized and when issued and delivered to the Company will
constitute the legal, valid and binding obligations of the
Guarantor, enforceable in accordance with their terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or
affecting creditor's rights and to general equity principles;
(k) The Series A Preferred Securities have been duly
authorized by the Company and will conform to the description
thereof in the Prospectus; and when the Series A Preferred
Securities are executed and delivered to the Underwriters and are
paid for by the Underwriters in accordance with the terms of this
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Agreement, the Series A Preferred Securities will be duly issued,
fully paid and non-assessable, and free of preemptive rights;
(l) The issue and sale of the Securities by the Company,
the issue of the Subordinated Debentures by the Guarantor, the
compliance by the Company and the Guarantor with all of the
provisions of this Agreement, the execution, delivery and
performance by the Guarantor of the Guarantee, and the consummation
of the transactions herein and therein contemplated will not
conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Guarantor, the Company or any
other Subsidiary is a party or by which the Guarantor, the Company
or any other Subsidiary is bound or to which any of the property or
assets of the Guarantor, the Company or any other Subsidiary is
subject, which breach, violation or default would be material to
the issue and sale of the Securities or would have a material
adverse effect on the general affairs, management, prospectus,
financial position, stockholders' equity (or partnership net worth,
as applicable) or results of operations of the Company or the
Guarantor and its Subsidiaries taken as a whole, nor will such
action result in any violation of the provisions of the Articles of
Incorporation or Bylaws of the Guarantor or the Certificate of
Limited Partnership or Limited Partnership Agreement of the Company
or any statute, order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Guarantor,
the Company or any other Subsidiary or any of their properties;
(m) Except (i) for the orders of the Commission making
the Registration Statement effective, (ii) for the Notice of
Registration of a Securities Certificate issued by the Guarantor in
respect of the issuance of its Subordinated Debentures and
Guarantee in connection with the issuance of an aggregate principal
amount of up to $350,000,000 (liquidation value) of preferred
interests by a special purpose subsidiary of the Guarantor
permitting the Company to issue the Series A Preferred Securities
as contemplated by this Agreement, (iii) for permits and similar
authorizations required under the securities or "Blue Sky" laws of
any jurisdiction, (iv) for an application filed with the
Pennsylvania Public Utilities Commission under Section 1102(a)(4)
(the "Section 1102 Application") of the Pennsylvania Public Utility
Code, as amended, for authorization to acquire an interest in PECO
Energy Capital Corp., the general partner of the Company, and/or
the Company, (v) for an application for the qualification of an
indenture (the "Indenture") between the Guarantor and Meridian
Trust Company, as trustee, under the Trust Indenture Act of 1939,
as amended (the "Trust Indenture Act"), and (vi) to the extent, if
any, required pursuant to the undertakings set forth under Item 17
of Part II of the Registration Statement, no consent, approval,
authorization or other order of any governmental authority is
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legally required for the execution, delivery and performance of
this Agreement by the Company and Guarantor and the consummation of
the transactions contemplated hereby;
(n) This Agreement has been duly authorized, executed
and delivered by the Company and by the Guarantor; and
(o) All of the issued general partner interests of the
Company have been duly and validly authorized and issued and are
fully paid and non-assessable and are owned by the Guarantor or a
wholly-owned subsidiary of the Guarantor and free of preemptive
rights.
2. (a) Subject to the terms and conditions herein set
forth, the Company agrees to issue and sell to each of the
Underwriters, and each of the Underwriters agrees, severally and
not jointly, to purchase from the Company, at a purchase price per
Series A Preferred Security of $25.00, the number of Series A
Preferred Securities set forth opposite the name of such
Underwriter in Schedule I hereto. The Guarantor hereby guarantees
the timely performance by the Company of its obligation to issue
and sell the Series A Preferred Securities as aforesaid.
(b) The Guarantor agrees to execute and deliver to the
Company the Guarantee concurrently with the issue and sale of the
Series A Preferred Securities as contemplated herein.
(c) As compensation to the Underwriters for their
commitments hereunder, and in light of the fact that the proceeds
of the sale of the Series A Preferred Securities will be loaned by
the Company to the Guarantor, the Guarantor, agrees to pay at
the Time of Delivery (as defined in Section 4 hereof) to Goldman,
Sachs & Co., for the accounts of the several Underwriters, an
amount equal to $___ per Series A Preferred Security; provided,
however, that such compensation will be an amount equal to $.__ per
Series A Preferred Security for Series A Preferred Securities sold
to certain institutions. The Underwriters shall inform the
Guarantor in writing at the Time of Delivery of the number of
Series A Preferred Securities sold to such institutions.
3. Upon the authorization by you of the release of the
Series A Preferred Securities, the several Underwriters propose to
offer the Series A Preferred Securities for sale upon the terms and
conditions set forth in the Prospectus.
4. (a) Certificates, on original issuance, will be issued
in the form of one or more global certificates registered in the
name of Depository Trust Company or its nominee for the accounts
of the Underwriters representing the Series A Preferred Securities.
Such certificates shall be delivered by or on behalf of the
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Company to Depository Trust Company for the account of each
Underwriter, against payment by such Underwriter or on its behalf of
the purchase price therefor by certified or official bank check or
checks, payable to the order of the Company in Philadelphia Clearing
House (next day) funds, all at the office of the Guarantor or, in the
case of delivery of the said certificates at such other place or
places as shall be agreed upon by the Guarantor and Goldman, Sachs &
Co. The time and date of such delivery and payment shall be 9:30
a.m., Philadelphia time, on ________, 1994, or at such other time and
date as you and the Company may agree upon in writing. Such time and
date for delivery of the Series A Preferred Securities is herein
called (the "Time of Delivery") and the date thereof is herein called
(the "Closing Date"). Such certificates will be made available for
checking and packaging at least twenty-four hours prior to the Time of
Delivery at the office of The Depository Trust Company, 55 Water
Street, New York, New York 10004.
(b) At the Time of Delivery, the Guarantor will pay, or
cause to be paid, the commission payable to the Underwriters under
Section 2 hereof by certified or official bank check or checks,
payable to the order of Goldman, Sachs & Co. in New York Clearing
House (next day) funds.
5. Each of the Company and the Guarantor jointly and
severally agrees with each of the Underwriters:
(a) To complete the Prospectus in a form approved by you
and to file the Prospectus pursuant to Rule 424(b) under the Act
not later than the Commission's close of business on the second
business day following the execution and delivery of this
Agreement; to furnish you, without charge, three signed copies of
the Registration Statement (or copies thereof), including exhibits,
and, during the period mentioned in paragraph (d) below, as many
copies of the Prospectus and any supplements and amendments thereto
as you may reasonably request.
(b) Other than pursuant to filings under the Exchange
Act incorporated in the Registration Statement and the Prospectus
by reference, before amending or supplementing the Registration
Statement or the Prospectus, to furnish to you a copy of each such
proposed amendment or supplement and not to file any such proposed
amendment or supplement to which you reasonably object in writing.
(c) As soon as the Company and the Guarantor are advised
thereof, to promptly advise you orally, and (if requested by you)
to confirm such advice in writing, (i) when any amendment to the
Registration Statement has become effective or any amendment or
supplement to the Prospectus has been filed, (ii) when any stop
order has been issued under the Act with respect to the
Registration Statement or any proceedings therefor have been
7
instituted or are threatened; and to make every reasonable effort
to secure the prompt removal of any stop order, if issued, (iii) of
the suspension of the Securities for offering or sale in any
jurisdiction, and (iv) of the happening of any event during the
period mentioned in subparagraph (d) below which in the judgment of
the Company and the Guarantor makes any statement made in the
Registration Statement or the Prospectus untrue and which requires
the making of any changes in the Registration Statement or the
Prospectus in order to make the statements therein not misleading.
(d) If, during such period after the first date of the
public offering of the Securities (not exceeding nine months) as in
the opinion of your counsel the Prospectus is required by law to be
delivered in connection with sales by an Underwriter or dealer, any
event shall occur as a result of which it is necessary to amend or
supplement the Prospectus in order to make the statements therein,
in the light of the circumstances when the Prospectus is delivered
to a purchaser, not misleading, or if it is necessary to amend or
supplement the Prospectus to comply with law, forthwith to prepare
and duly file with the Commission an appropriate supplement or
amendment thereto, and furnish, at its own expense, to you such
reasonable number of copies thereof as you shall reasonably
request. If any Underwriter is required to deliver a Prospectus
after the expiration of the aforesaid period, the Company and
Guarantor will, if requested by such Underwriter and in each case
at the expense of such Underwriter, furnish Prospectuses and
supplements and amendments thereto, as aforesaid, or furnish a
reasonable quantity of a supplemented prospectus or of supplements
to the Prospectus complying with Section 10(a)(3) of the Act.
(e) To cooperate with you and Counsel for the
Underwriters to qualify the Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions as you shall
reasonably request, provided that neither the Company nor the
Guarantor shall be required to qualify as a foreign corporation in
any jurisdiction where it is not now so qualified or to take any
action which would subject it to general service of process in any
jurisdiction where it is not now so subject, and to pay all
expenses (including fees and disbursements of counsel) in
connection therewith as well as all fees payable in connection with
the review (if any) of the offering of the Securities by the
National Association of Securities Dealers, Inc.
(f) In the case of the Guarantor, to make generally
available to the Guarantor's security holders a consolidated
earnings statement (which need not be audited) for the first full
twelve consecutive months ended after the date deemed to be the
effective date of the Registration Statement pursuant to Rule 158
promulgated under the Securities Act, or successor provision of
law, rule or regulation, as soon as is reasonably practicable after
8
the end of such period, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act.
(g) During the period beginning from the date hereof and
continuing to and including the earlier of (i) the date, after the
Time of Delivery, on which the distribution of the Securities
ceases, as determined by Goldman, Sachs & Co. or (ii) the date
which is 30 days after the Time of Delivery, not to offer, sell,
contract to sell or otherwise dispose of any Securities, any
preferred stock or any other securities (including any undertakings
relating to any securities substantially similar to the Series A
Preferred Securities) of the Company or the Guarantor which are
substantially similar to the Series A Preferred Securities or the
Guarantee, any securities convertible into or exchangeable for
Series A Preferred Securities, the Guarantee, preferred stock or
such substantially similar securities of either the Company or the
Guarantor (other than pursuant to employee stock option plans of
the Guarantor existing, or on the conversion of convertible
securities outstanding, on the date of this Agreement), without the
prior written consent of Goldman, Sachs & Co.
(h) To furnish to the holders of the Series A Preferred
Securities as soon as practicable after the end of each fiscal year
an annual report (including a balance sheet and statements of
income, stockholders' equity and cash flows of the Guarantor and
its consolidated Subsidiaries certified by independent public
accounts) and, as soon as practicable after the end of each of the
first three quarters of each fiscal year (beginning with the fiscal
quarter ending after the effective date of the Registration
Statement), consolidated summary financial information of the
Guarantor and its Subsidiaries for such quarter in reasonable
detail.
(i) During a period of five years from the effective
date of the Registration Statement, to furnish to the
representatives of the Underwriters copies of all reports or other
communications (financial or other) furnished to all stockholders
of the Company or the Guarantor, and deliver to you (i) as soon as
they are available, copies of any reports and financial statements
furnished to or filed with the Commission or any national
securities exchange on which any class of securities of the
Guarantor or the Company is listed; and (ii) such additional
information concerning the business and financial condition of the
Guarantor and the Company as you may from time to time reasonably
request (such financial statements to be on a consolidated basis to
the extent the accounts of the Guarantor and its Subsidiaries are
consolidated in reports furnished to its stockholders generally or
to the Commission).
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(j) To use its best efforts to list, subject to notice
of issuance, the Series A Preferred Securities on the New York
Stock Exchange, subject to the Underwriters making the required
distribution of Series A Preferred Securities.
6. The Company and the Guarantor jointly and severally
covenant and agree with the several Underwriters that the Company
and the Guarantor will pay or cause to be paid the following: (i)
the fees, disbursements and expenses of the Company's and the
Guarantor's counsel and accountants in connection with the
registration of the Securities under the Act and other expenses in
connection with the preparation, printing and filing of the
Registration Statement, any Preliminary Prospectus and the
Prospectus and amendments and supplements thereto and the mailing
and delivering of copies thereof to the Underwriters and dealers;
(ii) the cost of printing or producing any Agreement among the
Underwriters, this Agreement, the Blue Sky and Legal Investment
Memoranda, if any, and any other documents in connection with the
offering, purchase, sale and delivery of the Securities; (iii) all
expenses in connection with the qualification of the Securities for
offering and sale under state securities and insurance securities
laws as provided in Section 5(e) hereof, including the fees and
disbursements of counsel for the Underwriters in connection with
such qualification and in connection with the Blue Sky and Legal
Investment Memoranda; (iv) any fees charged by securities rating
services for rating the Securities; (v) the cost of preparing
definitive certificates for the Series A Preferred Securities; (vi)
the cost and charges of any transfer agent or registrar; (vii) the
cost of qualifying the Securities with The Depository Trust
Company; (viii) listing fees; and (ix) all other costs and expenses
incident to the performance of its obligations hereunder which are
not otherwise specifically provided for in this Section. It is
understood, however, that, except as provided in this Section,
Section 8 and Section 11 hereof, the Underwriters will pay all of
their own costs and expenses, including the fees of their counsel,
transfer taxes on resale of any of the Series A Preferred
Securities by them, and any advertising expenses in connection with
offers they may make.
7. (a) The several obligations of the Underwriters
hereunder are subject to the following conditions:
(i) At the Time of Delivery, there shall be in
full force and effect a Notice of Registration of a Securities
Certificate of the Guarantor in respect to the issuance of its
Subordinated Debentures and Guarantee(s) in connection with the
issuance of an aggregate principal amount of up to $350,000,000
(liquidation value) of preferred interests by a special purpose
subsidiary of the Guarantor permitting the issuance of the Series
A Preferred Securities and the transactions relating thereto
substantially in accordance with the terms and conditions herein
set forth and containing no provision unacceptable to you, it being
10
understood that the Notice in effect as of the date of this
Agreement (a copy of which has been delivered to you) does not
contain any such unacceptable provision, and that no subsequent
Notice shall be deemed to contain any such unacceptable provision,
unless you, within 24 hours after receiving a copy thereof from the
Guarantor, shall give notice to the Guarantor to the effect that
such Notice contains an unacceptable provision.
(ii) At the Time of Delivery, approval shall
have been given by the Pennsylvania Public Utilities Commission of
the Section 1102 Application, and such approval shall be in full
force and effect.
(iii) At the Time of Delivery:
(A) no stop order suspending the effectiveness
of the Registration Statement shall be in effect, and no
proceedings for that purpose shall be pending before, or
threatened by, the Commission;
(B) the Indenture shall have become and be
qualified under the Trust Indenture Act.
(C) subsequent to the date of the most recent
financial statements incorporated by reference in the
Prospectus as of the date of this Agreement, there shall
have been no material adverse change or development which
it is reasonable to believe will result in
a prospective material adverse change in the financial
condition, business or results of operations of the
Company or the Guarantor and its Subsidiaries, considered
as a whole, except as set forth in the Registration
Statement and the Prospectus, including the documents
incorporated by reference therein, as of the effective
date of this Agreement;
(D) the Company and the Guarantor shall have
performed all agreements contained herein to be performed
by them at or prior to such date, including delivery of
the Securities; and
(E) the representations and warranties of the
Company and the Guarantor contained herein shall be true
and correct in all material respects.
(iv) At the Time of Delivery and simultaneously with
the issuance and sale of the Series A Preferred Securities, you
shall be furnished with each of the following opinions or letters:
(A) a favorable opinion, dated the Closing
Date, of Ballard Spahr Andrews & Ingersoll (Counsel
for the Company and the Guarantor) in form and
substance reasonably satisfactory to you;
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(B) a favorable opinion, dated the Closing
Date, of Richards, Layton & Finger (Delaware
Counsel for the Company and the Guarantor) in form
and substance reasonably satisfactory to you;
(C) a favorable opinion, dated the Closing
Date, of corporate counsel for the Guarantor in form
and substance reasonably satisfactory to you; and
(D) a favorable opinion, dated the Closing
Date, of Drinker Biddle & Reath (Counsel for the
Underwriters), in form and substance reasonably
satisfactory to you.
(v) At the time that this Agreement is signed and
at the Closing Date, Coopers & Lybrand shall have furnished to you
a letter or letters, dated the respective date of delivery thereof,
in form and substance reasonably satisfactory to you.
(vi) At the Time of Delivery, the Series A
Preferred Securities shall have been duly approved for listing,
subject to notice of issuance, on the New York Stock Exchange;
(vii) The Guarantor shall have furnished or
caused to be furnished to you at the Time of Delivery certificates
of officers of the Guarantor satisfactory to you as to the accuracy
of the representations and warranties of the Company and the
Guarantor herein at and as of the Time of Delivery, as to the
performance by the Company and the Guarantor of all of their
obligations hereunder to be performed at or prior to the Time of
Delivery, as to the matters set forth in this subsection (a) of
this Section 7 and as to such other matters as you may reasonably
request; and
(viii) after the execution and delivery of this
Agreement and prior to the Time of Delivery (A) trading generally
shall not have been suspended or materially limited on or by, as
the case may be, the New York Stock Exchange or the National
Association of Securities Dealers, Inc., (B) trading of any
security issued by the Company or the Guarantor shall not have been
suspended on any exchange or in any other over-the-counter market,
(C) there shall not have occurred any downgrading and no notice
shall have been given of "Credit Watch with Negative Implications"
in the rating accorded the Series A Preferred Securities by Moody's
Investors Services, Inc. or Standard & Poor's Corporation, (D) a
general moratorium on commercial banking activities in New York or
Pennsylvania shall not have been declared by either Federal or New
York State or Pennsylvania authorities, and (E) there shall not
have occurred any outbreak or escalation of hostilities or any
calamity or crisis of comparable magnitude that, in your judgment,
is material and adverse and, in the case of any of the events
specified in clauses (A) through (E), singly or together with any
other such event makes it, in your reasonable judgment,
impracticable or inadvisable to market the Series A Preferred
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Securities on the terms and in the manner contemplated in the
Prospectus.
(b) The obligations of the Company and Guarantor to
deliver the Securities are subject to the following conditions:
(i) At the Time of Delivery, no stop order
suspending the effectiveness of the Registration Statement shall be
in effect and no proceedings for that purpose shall be pending
before, or threatened by, the Commission.
(ii) At the Time of Delivery, there shall be in
full force and effect a Notice of Registration of a Securities
Certificate of the Guarantor in respect of the issuance of its
Subordinated Debentures and Guarantee(s) in connection with the
issuance of an aggregate principal amount of up to $350,000,000
(liquidation value) of preferred interests by a special purpose
subsidiary of the Guarantor permitting the issuance of the Series
A Preferred Securities and the transactions relating thereto
substantially in accordance with the terms and conditions herein
set forth and containing no provision unacceptable to the
Guarantor, it being understood that the Notice in effect as of the
date of this Agreement does not contain any such unacceptable
provision, and that no subsequent Notice shall be deemed to contain
any such unacceptable provision, unless the Guarantor, within 24
hours after receiving a copy thereof, shall have given notice to
you to the effect that such Notice contains an unacceptable
provision;
(iii) At the Time of Delivery, approval shall have
been given by the Pennsylvania Public Utilities Commission of the
Section 1102 Application, and such approval shall be in full force
and effect; and
(iv) At the Time of Delivery, the Company shall
receive payment for the Series A Preferred Securities.
8. (a) The Company and the Guarantor agree jointly and
severally to indemnify and hold harmless each Underwriter and each
person, if any, who controls any Underwriter within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act from and
against any and all losses, claims, damages, liabilities and
expenses based upon (x) any untrue statement or alleged untrue
statement of a material fact contained in the Registration
Statement (including the Prospectus contained therein and including
any amendment or supplement to any thereof) or any omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
13
misleading or, (y) to the extent not covered by clause (x), any
untrue statement of a material fact contained in any Preliminary
Prospectus, the Prospectus or any amendment or supplement thereto
or any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading all in light of the circumstances
under which they were made, except in either case insofar as such
losses, claims, damages, liabilities or expenses are caused by (i)
any such untrue statement or omission or alleged untrue statement
or omission based upon information furnished in writing to the
Company or Guarantor by any Underwriter expressly for use therein,
or (ii) the failure of any Underwriter to send to any purchaser to
whom it had sent a Preliminary Prospectus an amended prospectus as
shall have been furnished by the Company or the Guarantor for such
purpose (excluding documents incorporated therein by reference), if
required by the Act, to the extent that the amended prospectus
would have cured the defect in the Preliminary Prospectus giving
rise to such losses, claims, damages or liabilities, or (iii) any
use of the Prospectus by any Underwriter after the expiration of
that period, if any, during which the Underwriter is required by
law to deliver a prospectus, unless the Company and Guarantor shall
have been advised in writing of such intended use.
(b) Each Underwriter agrees to indemnify and hold
harmless the Company and its controlling persons and partners and
the Guarantor and its controlling persons, directors, and officers
to the same extent as the foregoing indemnity from the Company and
Guarantor to each Underwriter, but only with respect to any untrue
statement or omission or alleged untrue statement or omission based
upon information furnished in writing to the Company or the
Guarantor by such Underwriter expressly for use in such
Registration Statement or Preliminary Prospectus or Prospectus. In
case any action shall be brought against the Company or Guarantor
or any such controlling person, partner, director or officer in
respect of which he or it may seek indemnity or reimbursement from
any Underwriter on account of the agreement of such Underwriter
contained in this subsection (b), the Underwriter shall have the
rights and duties given to the Company and Guarantor, and the
Company and Guarantor and any such controlling person, partner,
director, or officer shall have the rights and duties given to the
Underwriter, by subsection (c) below.
(c) Each Underwriter agrees that, promptly upon the
receipt of notice of the commencement of any action or proceeding
(including any governmental action) against such Underwriter or
against any person so controlling such Underwriter in respect of
which indemnity or reimbursement may be sought from the Company or
Guarantor on account of its agreement in the next preceding
subsection (a), timely notice will be given to the Company and the
Guarantor of the commencement thereof. Thereupon the Company and
the Guarantor shall be entitled to participate in (and, to the
14
extent that it shall desire, including the selection of counsel
reasonably satisfactory to such Underwriter or controlling person,
to direct) the defense thereof and shall in any event be liable to
pay all fees and expenses thereof. Any Underwriter or any such
controlling person shall have the right to employ separate counsel,
but if the Company or Guarantor has selected counsel in any such
case, such employment by an Underwriter or controlling person shall
be at its expense unless (i) the employment of such separate
counsel has been authorized in writing by the Company and Guarantor
and the Company and Guarantor shall have agreed to pay such expense
or (ii) the Underwriter or controlling person shall have been
advised by its counsel that there may be one or more legal defenses
available to it which are different from or additional to those
available to the Company or the Guarantor and in the reasonable
judgment of such counsel it is advisable for such indemnified party
to employ separate counsel. It is understood that the Company and
Guarantor shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the fees and
expenses of more than one separate firm (in addition to any local
counsel) for all Underwriters and controlling persons, and that all
such fees and expenses shall be reimbursed as they are incurred.
Such counsel shall be designated in writing by Goldman, Sachs & Co.
and consented to by the Company and Guarantor, which consent shall
not be unreasonably withheld. The Company and Guarantor shall not
be liable for any settlement of any such action or proceeding
effected without its written consent, but if settled with its
written consent, or if there be a final judgment for the plaintiff
in any such action or proceeding, the Company and Guarantor agree
jointly and severally to indemnify and hold harmless each
Underwriter and each such controlling person, if any, from and
against any loss or liability by reason of such settlement or
judgment. The Company and Guarantor shall not, without the prior
written consent of any such Underwriter or controlling person,
effect any settlement of any pending or threatened proceeding in
respect of which any such Underwriter or controlling person is or
could have been a party and indemnity could have been sought
hereunder by any such Underwriter or controlling person, unless
such settlement includes an unconditional release of any such
Underwriter or controlling person from all liability on claims that
are the subject matter of such proceeding.
(d) In order to provide for just and equitable
contribution in circumstances in which any indemnity provision
provided for in this Section 8 is for any reason held to be
unenforceable by the indemnified parties although applicable in
accordance with its terms (including the requirements of subsection
(c) of this Section 8), each indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of the
losses, liabilities, claims, damages and expenses of the nature
contemplated in said indemnity provision in such proportion as is
15
equitable and as shall reflect both the relative benefit received
by the Company and the Guarantor on the one hand and the
Underwriter or Underwriters, as the case may be, on the other hand
from the offering of the Securities, and the relative fault, if
any, of the Company and Guarantor on the one hand and of the
Underwriter or Underwriters, as the case may be, on the other hand
in connection with the statements or omissions which resulted in
such losses, liabilities, claims, damages or expenses, as well as
any other relevant equitable considerations. The relative benefit
received by the Company and Guarantor on the one hand and the
Underwriter or Underwriters, as the case may be, on the other hand
in connection with the offering of the Securities shall be deemed
to be in the same proportion as the total net proceeds from the
offering of the Securities (before deducting expenses) received by
the Company and the Guarantor bear to the total commissions,
concessions and discounts received by the Underwriter or
Underwriters, as the case may be. The relative fault shall be
determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information
supplied by the Company or the Guarantor on the one hand or the
Underwriter or Underwriters, as the case may be, on the other hand
and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
The Company, the Guarantor and the Underwriters agree that it would
not be just and equitable if contribution pursuant to this
subsection (d) were determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any
other method of allocation which does not take account of the
equitable considerations referred to hereinabove. The amount paid
or payable by an indemnified party as a result of the losses,
liabilities, claims, damages and expenses referred to hereinabove
shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating
or defending any such action or claim. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f)
of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. No
Underwriter or person controlling such Underwriter shall be
obligated to make contribution hereunder which in the aggregate
exceeds the total public offering price of the Securities purchased
by such Underwriter under this Agreement, less the aggregate amount
of any damages which such Underwriter and its controlling persons
have otherwise been required to pay in respect of the same claim or
any substantially similar claim. The Underwriters' obligations to
contribute are several in proportion to their respective purchasing
obligations and not joint.
9. If any one or more of the Underwriters shall default in
its obligation to purchase the amount of Series A Preferred
Securities set forth opposite its name in Schedule I, in accordance
16
with the terms hereof, and the aggregate number of Series A
Preferred Securities which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase is not more
than one-eleventh of the aggregate number of Series A Preferred
Securities to be purchased on such date, the other Underwriters
shall be obligated severally in the proportions that the number of
Series A Preferred Securities set forth opposite their respective
names in Schedule I bears to the aggregate number of Series A
Preferred Securities set forth opposite the names of all such
non-defaulting Underwriters, or in such other proportions as you
may specify, to purchase the Series A Preferred Securities which
such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase on such date; provided that in no event shall
the number of Series A Preferred Securities that any Underwriter
has agreed to purchase as set forth in Schedule I be increased
pursuant to this Section 9 by an amount in excess of one-tenth of
such number of Series A Preferred Securities without the written
consent of such Underwriter. If any Underwriter or Underwriters
shall fail or refuse to purchase any Series A Preferred Securities
and the aggregate number of Series A Preferred Securities which
such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase exceeds one-eleventh of the aggregate number of
Series A Preferred Securities to be purchased by all Underwriters
hereunder and arrangements satisfactory to you, the Company and
Guarantor for the purchase of such Series A Preferred Securities
are not made within 48 hours after such default, this Agreement
will terminate without liability on the part of any non-defaulting
Underwriter or the Company and Guarantor for the purchase or sale
of any Series A Preferred Securities under this Agreement. Any
action taken under this Section 9 shall not relieve any defaulting
Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
10. The respective indemnities, agreements, representations,
warranties and other statements of the Company, the Guarantor and
the several Underwriters, as set forth in this Agreement or made by
or on behalf of them, respectively, pursuant to this Agreement,
shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by
or on behalf of any Underwriter or any controlling person of any
Underwriter, or the Company, the Guarantor or any officer or
director or controlling person of the Company or the Guarantor, and
shall survive delivery of and payment for the Series A Preferred
Securities.
11. If this Agreement shall be terminated pursuant to Section
9 hereof, the Company and the Guarantor shall not then be under any
liability to any Underwriter except as provided in Section 6 and
Section 8 hereof; but if, for any other reason, any Securities are
not delivered by or on behalf of the Company or the Guarantor as
provided herein, the Company and the Guarantor jointly and
17
severally will reimburse the Underwriters through you for all out-
of-pocket expenses approved in writing by you, including fees and
disbursements of counsel, reasonably incurred by the Underwriters
in making preparations for the purchase, sale and delivery of the
Securities not so delivered, but the Company and the Guarantor
shall then be under no further liability to any Underwriter except
as provided in Section 6 and Section 8 hereof.
12. In all dealings hereunder, you shall act on behalf of
each of the Underwriters, and the parties hereto shall be entitled
to act and rely upon any statement, request, notice or agreement on
behalf of any Underwriter made or given by you jointly or by
Goldman, Sachs & Co. on behalf of you as the Underwriters.
All statements requests, notices and agreements hereunder
shall be in writing, and if to the Underwriters shall be delivered
or sent by mail, telex or facsimile transmission to the
Underwriters in care of Goldman, Sachs & Co., at 85 Broad Street,
New York, New York 10004, Attention: Registration Department:
and if to the Company or the Guarantor shall be delivered or sent
by mail, telex or facsimile transmission to the address of the
Guarantor set forth in the Registration Statement, Attention:
Secretary; provided, however, that any notice to an Underwriter
pursuant to Section 8(c) hereof shall be delivered or sent by mail,
telex or facsimile transmission to such Underwriter at its address
set forth in its Underwriters' Questionnaire, or telex constituting
such Questionnaire, which address will be supplied to the Company
or the Guarantor by you upon request. Any such statements,
requests, notices or agreements shall take effect upon receipt
thereof.
13. This Agreement shall be binding upon, and inure solely to
the benefit of, the Underwriters, the Company, the Guarantor and,
to the extent provided in Section 8 and Section 10 hereof, the
officers and directors of the Company and the Guarantor and each
person who controls the Company, the Guarantor or any Underwriter,
and their respective heirs, executors, administrators, successors
and assigns, and no other person shall acquire or have any right
under or by virtue of this Agreement. No purchaser of any of the
Series A Preferred Securities from any Underwriter shall be deemed
a successor or assign by reason merely of such purchase.
14. Time shall be of the essence of this Agreement. As used
herein, the term "business day" shall mean any day when the
Commission's office in Washington, D.C. is open for business.
15. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
16. This Agreement may be executed by any one or more of the
parties hereto in any number of counterparts, each of which shall
be deemed to be an original, but all such respective counterparts
shall together constitute one and the same instrument.
18
If the foregoing is in accordance with your understanding,
please sign and return to us five counterparts hereof, and upon the
acceptance hereof by you, on behalf of each of the Underwriters,
this letter and such acceptance hereof shall constitute a binding
agreement between each of the Underwriters, on the one hand, and
the Company and the Guarantor on the other. It is understood that
your acceptance of this letter on behalf of each of the
Underwriters is pursuant to the authority set forth in a form of
Agreement among Underwriters, the form of which shall be submitted
to the Company and the Guarantor for examination upon request, but
without warranty on your part as to the authority of the signers
thereof.
Very truly yours,
PECO Energy Capital, L.P.,
By: PECO Energy Capital Corp.,
General Partner
By:
------------------------------
PECO Energy Company
By:
------------------------------
Accepted, June __, 1994
Goldman, Sachs & Co.
Smith Barney Inc.
Dean Witter Reynolds Inc.
A.G. Edwards & Sons, Inc.
Kidder, Peabody & Co. Incorporated
PaineWebber Incorporated
Prudential Securities Incorporated
Acting severally on behalf of themselves.
By Goldman, Sachs & Co.
By:
--------------------------------------
19
SCHEDULE I
Number of
Series A Preferred
Securities
Underwriters To Be Purchased
------------ ---------------
Goldman, Sachs & Co. . . . . . . . . . . ________
Smith Barney Inc. . . . . . . . . . . . ________
Dean Witter Reynolds Inc.. . . . . . . . ________
A.G. Edwards & Sons, Inc.. . . . . . . . ________
Kidder, Peabody & Co. Incorporated . . . ________
PaineWebber Incorporated.. . . . . . . . ________
Prudential Securities Incorporated.. . . ________
Total. . . . . . . . . . . . . . . .
20