$78,105,000
PECO ENERGY CAPITAL TRUST III
PECO ENERGY CAPITAL, L.P.
PECO ENERGY COMPANY
CAPITAL TRUST PASS-THROUGH SECURITIES
representing an equal number of
__% Cumulative Preferred Securities, Series D
of
PECO Energy Capital, L.P.
UNDERWRITING AGREEMENT
______, 1998
SALOMON BROTHERS INC
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
As Representatives of the Several Underwriters
c/o SALOMON BROTHERS INC
Seven World Trade Center
New York, NY 10048
Dear Sirs:
PECO Energy Capital Trust III, a statutory business trust
created under the laws of the state of Delaware (the "Trust"), 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 Trust issue and sell to the
Underwriters named in Schedule I hereto (the "Underwriters") an
aggregate of 78,105 Capital Trust Pass-through Securities (the
"Capital Securities"), representing an equal number of the
Company's __% Cumulative Preferred Securities, Series D
(liquidation preference $1,000.00 per share) (the "Series D
Preferred Securities") guaranteed by the Guarantor on a limited
basis as to the payment of accumulated and unpaid semiannual
distributions for the benefit of the holders of the Series D
Preferred Securities, and as to payments on liquidation or
redemption and benefiting from certain additional undertakings of
the Guarantor pursuant to a certain Payment and Guarantee Agreement
entered into by the Guarantor. The Guarantor's guarantee and
undertakings are herein referred to collectively as the
"Guarantee," and the Guarantee, the Capital Securities and the
Series D Preferred Securities are herein referred to collectively
as the "Securities." Concurrently with each issuance of the Series
D Preferred Securities to the Trust, the Company will lend the
proceeds thereof plus the Guarantor's Capital Contribution to the
Company to the Guarantor and to evidence each such loan the
Guarantor will issue and deliver to the Company the Guarantor's
% Subordinated Deferrable Interest Debentures, Series D due 2028
(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 No.
333-_____) 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, 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);
- 2 -
(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
regarding any Underwriter or the arrangements with respect to the
underwriting of the offering of the Securities contemplated hereby
furnished in writing to the Trust, 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 Trust, 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
- 3 -
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;
(e) Coopers & Lybrand L.L.P. are independent certified
public accountants as required by the Act and the rules and
regulations of the Commission thereunder;
(f) The Trust has been duly created and is validly
existing in good standing as a business trust under the Delaware
Business Trust Act, is and will be treated as a "grantor trust" for
Federal income tax purposes under existing law, has the trust power
and authority to conduct its business as presently conducted and as
described in the Prospectus, and will not be required to be
authorized to do business in any other jurisdiction. The Trust has
all requisite power and authority to issue the Capital Securities
and purchase the Series D Preferred Securities as described in the
Prospectus.
(g) 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 D Preferred Securities to the Trust and lend the
proceeds thereof to the Guarantor as described in the Prospectus;
(h) The Guarantor is a validly existing and subsisting
corporation 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;
- 4 -
(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 Capital Securities have been duly authorized by
the Trust and will conform to the description thereof in the
Prospectus; and when the Capital Securities are executed and
delivered to the Underwriters and are paid for by the Underwriters
in accordance with the terms of this Agreement, the Capital
Securities will be validly issued, fully paid and non-assessable
beneficial interests in the Trust, and not subject to any
preemptive rights;
(l) The Series D Preferred Securities have been duly
authorized by the Company and will conform to the description
thereof in the Prospectus; and when the Series D Preferred
Securities are executed and delivered to the Trust and are paid for
by the Trust in accordance with the terms of this Agreement, the
Series D Preferred Securities will be duly issued, fully paid and
non-assessable, and free of preemptive rights;
(m) The issue and sale of the Capital Securities by the
Trust, the issue of the Series D Preferred Securities by the
Company to the Trust, the issue of the Subordinated Debentures by
the Guarantor to the Company, 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 trust agreement, indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which the
Trust, the Guarantor, the Company or any other Subsidiary is a
party or by which the Trust, the Guarantor, the Company or any
other Subsidiary is bound or to which any of the property or assets
of the Trust, 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,
- 5 -
as applicable) or results of operations of the Trust, 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 Trust's
Certificate of Trust or the Amended and Restated Trust Agreement
(the "Trust Agreement") among the Company, as grantor, First Union
Trust Company, National Association (the "Trustee") and PECO Energy
Capital Corp., the sole general partner of the Company, for the
limited purpose stated therein 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 Trust, the Guarantor,
the Company or any other Subsidiary or any of their properties;
(n) Except (i) for the order of the Commission making
the Registration Statement effective, (ii) for the Notice of
Registration of a Securities Certificate by the Pennsylvania Public
Utility Commission in respect of the issuance of the Capital
Securities, (iii) for permits and similar authorizations required
under the securities or "Blue Sky" laws of any jurisdiction, (iv)
for an application for the qualification of the Third Supplemental
Indenture to the indenture (as supplemented, the "Indenture")
between the Guarantor and First Union National Bank, as trustee,
under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"), and 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 legally required for
the execution, delivery and performance of this Agreement by the
Trust, the Company and Guarantor and the consummation of the
transactions contemplated hereby;
(o) This Agreement has been duly authorized, executed
and delivered by the Company and by the Guarantor; and
(p) 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) (i) Subject to the terms and conditions herein set
forth, the Guarantor and the Company shall cause the Trust to issue
and sell to each of the Underwriters, and each of the Underwriters
agrees, severally and not jointly, to purchase from the Trust, at
a purchase price per Trust Receipt of $1,000.00, the number of
Capital Securities set forth opposite the name of such Underwriter
in Schedule I hereto.
(ii) The Guarantor hereby guarantees the timely
performance by the Trust of the issue and sale of the Capital
Securities.
- 6 -
(b) The Guarantor agrees to execute and deliver to the
Company the Guarantee concurrently with the issue and sale of the
Capital Securities.
(c) As compensation to the Underwriters for their
commitments hereunder, and in light of the fact that the proceeds
of the sale of the Capital Securities will be applied to the
purchase of the Series D Preferred Securities and the proceeds of
the sale of the Series D Preferred Securities will, in turn, be
lent by the Company to the Guarantor, the Guarantor agrees to pay
at the Time of Delivery (as defined in Section 4 hereof) to Salomon
Brothers Inc for the accounts of the several Underwriters, an
amount equal to $10 per Trust Receipt.
3. Upon the authorization by you of the release of the
Capital Securities, the several Underwriters propose to offer the
Capital 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 The Depository Trust Company or its nominee for the
accounts of the Underwriters representing the Capital Securities.
Such certificates shall be delivered by or on behalf of the Trust
to The 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 Trust 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
Salomon Brothers Inc. The time and date of such delivery and
payment shall be, with respect to the Capital Securities, 9:30
a.m., Philadelphia time, on _________, 1998, or at such other time
and date as you and the Trust may agree upon in writing. The time
and date for the delivery of the Capital Securities is herein
called the "Time of Delivery." 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 Salomon Brothers Inc in next day funds.
5. Each of the Company and the Guarantor jointly and
severally agrees with each of the Underwriters:
- 7 -
(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
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 Trust, 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
- 8 -
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 none of the Trust, 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
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
last Time of Delivery, on which the distribution of the Securities
ceases, as determined by Salomon Brothers Inc or (ii) the date
which is 30 days after the last 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 Capital
Securities or Series D Preferred Securities) of the Trust, the
Company or the Guarantor which are substantially similar to the
Capital Securities, the Series D Preferred Securities or the
Guarantee, any securities convertible into or exchangeable for
Capital Securities, the Series D Preferred Securities, the
Guarantee, preferred stock or such substantially similar securities
of the Trust, 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 Salomon
Brothers Inc
(h) 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 Guarantor, and deliver to you (i) as soon as they are
available, copies of any reports and financial statements furnished
- 9 -
to or filed with the Commission or any national securities exchange
on which a class of securities of the Guarantor, the Trust or the
Company is listed; and (ii) such additional information concerning
the business and financial condition of the Guarantor, the Trust
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).
(i) To use its best efforts to list, subject to notice
of issuance, the Capital Securities on the New York Stock Exchange,
subject to the Underwriters making the required distribution of the
Capital Securities.
6. The Company and the Guarantor jointly and severally
covenant and agree with the several Underwriters that the Trust,
the Company and the Guarantor will pay or cause to be paid the
following: (i) the fees, disbursements and expenses of the
Trust's, 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
certificates for the Capital Securities; (vi) the cost and charges
of any transfer agent or registrar; (vii) the cost of qualifying
the Capital Securities and the Series D Preferred 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 Capital Securities by them, and any advertising expenses
in connection with offers they may make.
7. (a) The several obligations of the Underwriters
hereunder, as to Capital Securities to be delivered at the Time of
Delivery, are subject to the following conditions:
- 10 -
(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 the Guarantee in connection with the
issuance of the Capital 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 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:
(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 material
adverse change in the financial condition, business or
results of operations of 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.
(iii) At the Time of Delivery and simultaneously
with each issuance and sale of the Capital Securities, you shall be
furnished with each of the following opinions or letters:
- 11 -
(A) a favorable opinion, dated at the Time of
Delivery, of Ballard Spahr Andrews & Ingersoll, LLP
(Special Counsel for the Company and the Guarantor)
in form and substance reasonably satisfactory to
you;
(B) a favorable opinion, dated at the Time of
Delivery, of Richards, Layton & Finger, P.A.
(Special Delaware Counsel for the Trust and the
Company) in form and substance reasonably
satisfactory to you;
(C) a favorable opinion, dated at the Time of
Delivery, of corporate counsel for the Guarantor in
form and substance reasonably satisfactory to you;
and
(D) a favorable opinion, dated at the Time of
Delivery, of Drinker Biddle & Reath LLP (Counsel
for the Underwriters), in form and substance
reasonably satisfactory to you.
(iv) At the time that this Agreement is signed and
at the Time of Delivery, Coopers & Lybrand L.L.P. shall have
furnished to you a letter or letters, dated the respective date of
delivery thereof, in form and substance reasonably satisfactory to
you.
(v) At the Time of Delivery, the Capital Securities
to be delivered at the Time of Delivery shall have been duly
approved for listing, subject to notice of issuance, on the New
York Stock Exchange.
(vi) 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 Trust, 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.
(vii) 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 Trust, 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
- 12 -
downgrading and no notice shall have been given of "Credit Watch
with Negative Implications" in the rating accorded the Capital
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 Capital
Securities to be delivered at the Time of Delivery on the terms and
in the manner contemplated in the Prospectus or to enforce
contracts for the resale of the Capital Securities by the
Underwriters.
(b) The obligations of the Company and Guarantor to
deliver or cause the Trust to deliver the Securities to be
delivered at the Time of Delivery 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 the Guarantee in connection with the
issuance of the Capital 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, the Trust shall
receive payment for the Capital Securities to be delivered at the
Time of Delivery.
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 Securities 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
- 13 -
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
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 within the time periods required by the Securities
Act and in such quantities as are required by each Underwriter for
such purpose (excluding documents incorporated therein by
reference), if required by the Securities 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) If any action, suit or proceeding shall be brought
against any Underwriter or any person controlling any Underwriter
in respect of which indemnity may be sought against the Guarantor
or the Company, such Underwriter or such controlling person shall
promptly notify the Company and the Guarantor and the Company and
the Guarantor shall assume the defense thereof, including the
employment of counsel and payment of all fees and expenses. Such
Underwriter or any such controlling person shall have the right to
employ separate counsel in any such action, suit or proceeding and
to participate in the defense thereof, but the fees and expenses of
such counsel shall be at the expense of such Underwriter or such
controlling person unless (i) the Company and Guarantor have agreed
in writing to any such fees and expenses, (ii) the Company and the
Guarantor have failed, within 30 days after the Company and the
Guarantor have been so notified, to assume the defense and employ
counsel, or (iii) the named parties to any such action, suit or
proceeding (including any impleaded parties) include both such
Underwriter or such controlling person and the Company or the
Guarantor and such Underwriter or such controlling person shall
have been advised by its counsel that representation of such
indemnified party and the Company or the Guarantor by the same
- 14 -
counsel would be inappropriate under applicable standards of
professional conduct (whether or not such representation by the
same counsel has been proposed) due to actual or potential
differing interests among them (in which case the Company and the
Guarantor shall not have the right to assume the defense of such
action, suit or proceeding on behalf of such Underwriter or such
controlling person). It is understood, however, that the Company
and the Guarantor shall, in connection with any one such action,
suit or proceeding or separate but substantially similar or related
actions, suits or proceedings in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of only one separate firm of attorneys
(in addition to any local counsel) at any time for all such
Underwriters and controlling persons not having actual or potential
differing interests with you or among themselves, which firm shall
be designated in writing by Salomon Brothers Inc, and that all such
fees and expenses shall be reimbursed as they become due. The
Company and the Guarantor shall not be liable for any settlement of
any such action, suit or proceeding effected without their written
consent, but if settled with such written consent, or if there be
a final judgment for the plaintiff in any such action, suit or
proceeding, the Company and the Guarantor agree to indemnify and
hold harmless any Underwriter, to the extent provided in the
preceding paragraph, and any such controlling person from and
against any loss, claim, damage, liability or expense by reason of
such settlement or judgment.
(c) Each Underwriter agrees, severally and not jointly,
to indemnify and hold harmless the Company, its directors, its
officers who sign the Registration Statement, and any person who
controls the Company within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, the Trust, the Trustee and its
controlling persons and directors and officers, 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 information relating to
such Underwriter furnished in writing by or on behalf of such
Underwriter through you expressly for use in the Registration
Statement, the Prospectus or any Preliminary Prospectus, or any
amendment or supplement thereto. If any action, suit or
proceeding shall be brought against the Company, the Trust or the
Guarantor or any of their directors, any such officer, or any such
controlling person, based on the Registration Statement, the
Prospectus or any Preliminary Prospectus, or any amendment or
supplement thereto, and in respect of which indemnity may be sought
against any Underwriter pursuant to this paragraph (c), such
Underwriter shall have the rights and duties given to the Company
and Guarantor by paragraph (b) above (except that if the Company
and Guarantor shall have assumed the defense thereof such
Underwriter shall not be required to do so, but may employ separate
counsel therein and participate in the defense thereof, but the
fees and expenses of such counsel shall be at such Underwriter's
- 15 -
expense), and the Company and Guarantor, its directors, any such
officer, and any such controlling person, shall have the rights and
duties given to the Underwriters by paragraph (b) above. The
foregoing indemnity agreement shall be in addition to any liability
which the Underwriters may otherwise have. The Underwriters shall
not be liable for any settlement of any such action, suit or
proceeding effected without their written consent, but if settled
with such written consent, of if there be a final judgment for the
plaintiff in any such action, suit or proceeding, the Underwriters
agree to indemnify and hold harmless the Company and the Guarantor
to the extent provided in the preceding paragraph, and any such
controlling person from and against any loss, claim, damage,
liability or expense by reason of such settlement or judgment.
(d) If the indemnification provided for in this Section
8 is for any reason held to be unenforceable by an indemnified
party although applicable in accordance with its terms (including
the terms of subsection (c) of this Section 8), an 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 such losses, claims, damages, liabilities or
expenses in such proportion as is equitable and as shall reflect
both the relative benefit received by the Trust, 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 Trust, 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 Trust, 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 Trust, 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 Trust, 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.
(e) The Company, the Guarantor and the Underwriters
agree that it would not be just and equitable if contribution
pursuant to this Section 8 were determined by a pro rata allocation
- 16 -
(even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take
account of the equitable considerations referred to in paragraph
(d) above. The amount paid or payable by an indemnified party as
a result of the losses, liabilities, claims, damages and expenses
referred to in paragraph (d) above shall be deemed to include,
subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or
claim. Notwithstanding the provisions of this Section 8, no
Underwriter shall be required to contribute any amount in excess of
the amount by which the total price of the Capital Securities
underwritten by it and distributed to the public exceeds the amount
of any damages which such Underwriter has otherwise been required
to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters'
obligations to contribute pursuant to this Section 8 are several in
proportion to the respective principal amounts of Capital
Securities set forth opposite their names in Schedule I hereto and
not joint.
(f) No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of
any pending or threatened action, suit or proceeding in respect of
which any indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the
subject matter of such action, suit or proceeding.
(g) Any losses, claims, damages, liabilities or expenses
for which an indemnified party is entitled to indemnification or
contribution under this Section 8 shall be paid by the indemnifying
party to the indemnified party as such losses, claims, damages,
liabilities or expenses become due. A successor to any Underwriter
or any person controlling any Underwriter, or to the Trust, the
Guarantor or the Company, their directors or officers, or any
person controlling the Trust, the Guarantor or the Company, shall
be entitled to the benefits of the indemnity, contribution and
reimbursement agreements contained in this Section 8.
9. If any one or more of the Underwriters shall default in
its obligation to purchase the amount of Capital Securities which
it has agreed to purchase hereunder at the Time of Delivery, in
accordance with the terms hereof, and the aggregate number of
Capital 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 Capital Securities to
be purchased on such date, the other Underwriters shall be
- 17 -
obligated severally in the proportions that the number of Capital
Securities which they have respectively agreed to purchase at the
Time of Delivery bears to the aggregate number of Capital
Securities which all such non-defaulting Underwriters have
collectively agreed to purchase at the Time of Delivery, or in such
other proportions as you may specify, to purchase the Capital
Securities which such defaulting Underwriter or Underwriters agreed
but failed or refused to purchase at the Time of Delivery; provided
that in no event shall the number of Capital Securities that any
Underwriter has agreed to purchase at a Time of Delivery be
increased pursuant to this Section 9 by an amount in excess of
one-tenth of such number of Capital Securities without the written
consent of such Underwriter. If any Underwriter or Underwriters
shall fail or refuse to purchase any Capital Securities and the
aggregate number of Capital Securities which such defaulting
Underwriter or Underwriters agreed but failed or refused to
purchase exceeds one-eleventh of the aggregate number of Capital
Securities to be purchased by all Underwriters hereunder at the
Time of Delivery and arrangements satisfactory to you, the Company
and Guarantor for the purchase of such Capital 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 Capital 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 Capital 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 Trust, the
Company or the Guarantor as provided herein, the Company and the
Guarantor jointly and 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
- 18 -
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 on behalf of 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 Salomon Brothers Inc, Seven World Trade
Center, New York, New York 10048, Attention: Manager, Investment
Banking Division; and if to the Trust, 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.
13. This Agreement shall be binding upon, and inure solely to
the benefit of, the Underwriters, the Trust, the Company, the
Guarantor and, to the extent provided in Section 8 and Section 10
hereof, the Trustee, the officers and directors of the Company and
the Guarantor and each person who controls the Trust, the Trustee,
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 Capital 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.
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
- 19 -
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, _______, 1998
Salomon Brothers Inc
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
By: Salomon Brothers Inc
By: ____________________________
- 20 -
SCHEDULE I
Number of
Capital Securities
Underwriters To Be Purchased
------------ ------------------
Salomon Brothers Inc ______
Merrill Lynch, Pierce, Fenner & Smith
Incorporated ______
TOTAL 78,105
======