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PECO ENERGY TRANSITION TRUST
PECO ENERGY COMPANY
UNDERWRITING AGREEMENT
[___]
To Salomon Smith Barney Inc., as
representative of the Underwriters
named in Schedule II hereto
Ladies and Gentlemen:
PECO Energy Transition Trust, a statutory business trust
created under the laws of the State of Delaware (the "Issuer") and PECO Energy
Company, a Pennsylvania corporation (the "Company") as grantor and owner of all
beneficial interest in the Issuer, propose, subject to the terms and conditions
stated herein, that the Issuer issue and sell to the underwriters named in
Schedule II hereto (the "Underwriters"), for whom Salomon Smith Barney Inc. (the
"Representative") is acting as representative, the principal amount of its
securities identified in Schedule I hereto (the "Securities").
Each of the capitalized terms used and not otherwise defined
herein shall have the meaning given to it in the Sale Agreement, dated as of
March 25, 1999, as amended and restated as of May 2, 2000 (the "Sale
Agreement"), between the Company, as seller, and the Issuer or, if not defined
therein, in the Master Servicing Agreement, dated as of March 25, 1999, as
amended and restated as of May 2, 2000 (the "Servicing Agreement"), between the
Company, as servicer, and the Issuer or, if not defined therein, in the
Indenture, dated as of March 25, 1999 (as amended and supplemented from time to
time, including by the supplemental indenture for the Securities, the
"Indenture"), between the Issuer and The Bank of New York (the "Bond Trustee")
or, if not defined therein, in the Second Amended and Restated Trust Agreement,
dated as of May 2, 2000 (the "Trust Agreement"), among the Company, First Union
Trust Company, National Association, as issuer trustee (the "Issuer Trustee"),
and George R. Shicora and Thomas R. Miller, as beneficiary trustees (each a
"Beneficiary Trustee").
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1. As of the date hereof, each of the Company and
the Issuer represents and warrants to each of the
Underwriters that:
(a) The Issuer and the Securities meet the requirements for
the use of Form S-3 under the Securities Act of 1933, as amended (the
"Act"), and 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 to the knowledge of the Company or the
Issuer 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 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);
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(b) Each Preliminary Prospectus, at the time of circulation
thereof by the Underwriters, conformed in all material respects to the
requirements of the Act and the rules and regulations of the Commission
thereunder, and as of the date thereof 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 Issuer or
the Company 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, the Exchange Act, the Trust Indenture Act of
1939 (the "Trust Indenture Act") and the respective 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; the Indenture complies in all material respects with the
requirements of the Trust Indenture Act and the rules thereunder; 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 Issuer or the Company 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
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4
became effective) with the Commission, as the case may be, conformed in
all material respects to the requirements of the Act, the Exchange Act,
the Trust Indenture 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 Act,
the Exchange Act, the Trust Indenture 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;
(e) PricewaterhouseCoopers LLP are independent certified
public accountants as required by the Act and the rules and regulations
of the Commission thereunder;
(f) The Issuer has been duly created and is validly existing
in good standing as a business trust under the Delaware Business Trust
Act, has the trust power and authority to conduct its business as
presently conducted and as described in the Prospectus, will not be
required to be authorized to do business in any other jurisdiction; and
the Issuer has all requisite business trust power and authority to
issue the Securities and purchase the Intangible Transition Property as
described in the Prospectus;
(g) The Company is a validly existing and subsisting
corporation under the laws of the Commonwealth of Pennsylvania; each of
the Company'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 Company 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
Company; and the Company has all requisite power
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and authority to sell the Intangible Transition Property to the Issuer
as described in the Prospectus;
(h) Each of the Basic Documents to which the Company or the
Issuer is a party has been duly authorized by the Company or the
Issuer, as applicable, and when executed and delivered by the Issuer or
the Company, as applicable, will constitute a legal, valid and binding
obligation of the Company or the Issuer, as applicable, 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;
(i) The Securities have been duly authorized by the Issuer and
will conform to the description thereof in the Prospectus; and when the
Securities are authenticated by the Bond Trustee and executed and
delivered to the Underwriters and are paid for by the Underwriters in
accordance with the terms of this Agreement, the Securities will
constitute the legal, valid and binding obligations of the Issuer,
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;
(j) The issue and sale of the Securities by the Issuer, the
sale of the Intangible Transition Property by the Company to the
Issuer, the execution, delivery and compliance by the Company and the
Issuer with all of the provisions of each of this Agreement and the
Basic Documents to which the Company or the Issuer, as applicable, is a
party, 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 Issuer or the Company is
a party or by which the Issuer or the Company is bound or to which any
of the property or assets of the Issuer or the Company is subject,
which conflict, 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, prospects, financial
position or results of operations of the Issuer or the Company or on
the stockholders' equity of the Company, nor will such action result in
any violation of the provisions of the Articles of Incorporation or
Bylaws of the Company or the Issuer's Certificate of Trust or the Trust
Agreement or any
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statute, order, rule or regulation of any court or governmental agency
or body having jurisdiction over the Issuer or the Company or any of
their properties;
(k) Except (i) for the order of the Commission making the
Registration Statement effective, (ii) for permits and similar
authorizations required under the securities or "Blue Sky" laws of any
jurisdiction, and to the extent, if any, required pursuant to the
undertakings set forth under Item 17 of Part II of the Registration
Statement, and (iii) the Qualified Rate Orders, 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 Issuer and the Company and the consummation of the transactions
contemplated hereby; and
(l) This Agreement has been duly authorized, executed and
delivered by the Company and the Issuer.
2. Subject to the terms and conditions and in reliance upon
the representations and warranties herein set forth, the Issuer agrees to sell
to each of the Underwriters, and each of the Underwriters agrees, severally and
not jointly, to purchase from the Issuer, at the purchase price set forth in
Schedule I hereto the principal amount of the Securities set forth opposite the
name of such Underwriter in Schedule II hereto.
3. Upon the authorization by you of the release of the
Securities, the several Underwriters propose to offer the Securities for sale
upon the terms and conditions set forth in the Prospectus.
4. The Securities, on original issuance, will be issued in the
form of one or more global bonds registered in the name of The Depository Trust
Company or its nominee for the accounts of the Underwriters representing the
Securities. The time and date of delivery and payment for the Securities shall
be 9:30 a.m., Philadelphia time on [___], or at such other time and date as you
and the Issuer may agree upon in writing. The time and date for such delivery is
herein called the "Time of Delivery." The Securities shall be delivered by or on
behalf of the Issuer 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 wire transfer of immediately available funds to an
account specified by the Issuer. The Securities will be made available to the
Representative 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.
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5. The Issuer agrees with each of the Underwriters, and the
Company agrees with each of the Underwriters to cause the Issuer:
(a) To use its best efforts to cause the Registration
Statement, if not effective at the Execution Time, and any amendment
thereto, to become effective; to complete the Prospectus in a form
approved by you, 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 and
to provide evidence satisfactory to you of such timely filing; and 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 and to furnish to the Representative copies of all
reports on Form SR required by Rule 463 under the Act.
(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 prior to filing and not to file any such
proposed amendment or supplement to which you reasonably object.
(c) As soon as the Company or the Issuer is advised thereof,
to promptly advise you orally, and (if requested by you) to confirm
such advice in writing, (i) when the Registration Statement, if not
effective at the Execution Time, and any amendment thereto, has become
effective, (ii) when the Prospectus, and any Supplement thereto, has
been filed with the Commission pursuant to Rule 424(b), (iii) when any
amendment to the Registration Statement has been filed or become
effective, (iv) of any request by the Commission for any amendment of
the Registration Statement or supplement to the Prospectus or for any
additional information, (v) 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, (vi) of the receipt by the Company or the Issuer of any
notification with respect to the suspension of the qualification of the
Securities for offering or sale in any jurisdiction, or the initiation
or threatening of any proceeding for that purpose and (vii) of the
happening of any event
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during the period mentioned in subparagraph (d) below which in the
judgment of the Company or the Issuer 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, at any time when a prospectus is required to be
delivered under the Act, 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.
(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, to
maintain such qualifications in effect so long as required for the
distribution of the Securities and to arrange for the determination of
the legality of the Securities for purchase by institutional investors;
provided that neither the Company nor the Issuer shall be obligated to
qualify to do business in any jurisdiction where it is not now so
qualified or to take any action that would subject it to general
service of process in any jurisdiction where it is not now so subject,
other than in suits arising out of the offering or sale of the
Securities, and to pay all expenses (including fees and disbursements
of counsel) in connection therewith.
(f) As soon as practicable, to make generally available to
holders of the Securities and to the Representative an earnings
statement or statements of the Issuer which will satisfy the provisions
of Section 11(a) of the Act and Rule 158 under the 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 the Representative or (ii) the date which is 30 days
after the last Time of Delivery, not to offer, sell or contract to
sell, or otherwise dispose of, directly or indirectly, or announce the
offering
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of, any "transition bonds" (as defined in the Statute) issued by a
trust or other special purpose vehicle without the prior written
consent of the Representative.
(h) During a period from the date of this Agreement until the
retirement of the Securities, or until such time as the Underwriters
shall cease to maintain a secondary market in the Securities, whichever
occurs first, to deliver to the Representative the annual statements of
compliance and the annual independent auditor's servicing reports of
the Company or the Servicer furnished to the Issuer or the Bond Trustee
pursuant to the Servicing Agreement or the Indenture, as applicable, as
soon as such statements and reports are furnished to the Issuer or the
Bond Trustee.
(i) So long as any of the Securities are outstanding, to
furnish to the Representative (i) as soon as available, a copy of each
report of the Issuer filed with the Commission under the Exchange Act,
or mailed to holders of the Securities, (ii) a copy of any filings of
the Company or the Servicer with the Pennsylvania Public Utility
Commission pursuant to the Qualified Rate Orders, including, but not
limited to, any Adjustment Requests and (iii) from time to time, any
information concerning the Company or the Issuer as the Representative
may reasonably request.
(j) To the extent, if any, that any rating necessary to
satisfy the condition set forth in Section 6(i) of this Agreement is
conditioned upon the furnishing of documents or the taking of other
actions by the Company or the Issuer on or after the Time of Delivery,
to furnish such documents and take such other actions.
6. The Company covenants and agrees with the several
Underwriters that the Company will pay or cause to be paid the following: (i)
the fees, disbursements and expenses of the Issuer's and the Company'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
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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 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) all other costs and expenses incident to the performance
of its obligations hereunder which are not otherwise specifically provided for
in this Section; and (ix) all fees, costs and expenses of the Underwriters,
including the reasonable fees and disbursements of their counsel and transfer
taxes on resale of any of the Securities by them.
7. The several obligations of the Underwriters hereunder are
subject to the accuracy of the representations and warranties on the part of
each of the Company and the Issuer contained herein as of the Execution Time and
the Time of Delivery, in the latter case, on and as of the Time of Delivery with
the same effect as if made at the Time of Delivery, and in the Sale Agreement
and the Servicing Agreement as of the Time of Delivery, to the accuracy of the
statements of each of the Company and the Issuer made in any certificates
pursuant to the provisions hereof, to the performance by each of the Company and
the Issuer of its obligations hereunder and to the following conditions:
(a) If the Registration Statement has not become effective
prior to the Execution Time, unless the Representative agrees in
writing to a later time, the Registration Statement will become
effective not later than (i) 6:00 PM New York City time, on the date of
determination of the public offering price, if such determination
occurred at or prior to 3:00 PM New York City time on such date, or
(ii) 9:30 AM on the business day following the day on which the public
offering price was determined, if such determination occurred after
3:00 PM New York City time on such date; if filing of the Prospectus,
or any supplement thereto, is required pursuant to Rule 424(b), the
Prospectus, and any such supplement, shall have been filed in the
manner and within the time period required by Rule 424(b); and no stop
order suspending the effectiveness of the Registration Statement shall
have been issued and no proceedings for that purpose shall have been
instituted or threatened.
(b) The Representative and the Issuer shall have received
opinions of counsel for the Company, portions of which may be delivered
by (i) Ballard Spahr
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Andrews & Ingersoll, LLP, outside counsel for the Company and (ii)
Richards, Layton & Finger, P.A., special Delaware counsel for the
Company, each dated the Time of Delivery, in form and substance
reasonably satisfactory to the Representative, to the effect that:
(i) the Company (a) has been duly incorporated and is
validly existing and subsisting as a corporation under the
laws of the jurisdiction in which it is chartered or
organized, (b) has all requisite corporate power and authority
to own its properties, conduct its business as presently
conducted and execute, deliver and perform its obligations
under this Agreement, the Trust Agreement, the Sale Agreement
and the Servicing Agreement, and (c) is duly qualified to do
business in all jurisdictions (and is in good standing under
the laws of all such jurisdictions) to the extent that such
qualification and good standing is or shall be necessary to
protect the validity and enforceability of this Agreement, the
Basic Documents to which the Company is a party and each other
instrument or agreement necessary or appropriate to the proper
administration of this Agreement and the transactions
contemplated hereby;
(ii) the Trust Agreement, the Sale Agreement and the
Servicing Agreement have been duly authorized, executed and
delivered by the Company, and constitute legal, valid and
binding agreements enforceable against the Company in
accordance with their terms (subject to applicable bankruptcy,
reorganization, fraudulent transfer, insolvency, moratorium or
other similar laws or equitable principles affecting
creditors' rights generally from time to time in effect);
(iii) to the knowledge of such counsel, there is no
pending or threatened action, suit or proceeding before any
court or governmental agency, authority or body or any
arbitrator involving the Company or any of its subsidiaries of
a character required to be disclosed in the Registration
Statement which is not adequately disclosed in the Prospectus,
and there is no franchise, contract or other document of a
char acter required to be described in the Registration
Statement or Prospectus, or to be filed as an exhibit, which
is not described or filed as required;
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(iv) this Agreement has been duly authorized,
executed and delivered by the Company;
(v) no consent, approval, authorization, filing with
or order of any court or governmental agency or body is
required in connection with the transactions contemplated
herein, except such as have been obtained under the Statute
and the Qualified Rate Orders and such as may be required
under the blue sky laws of any jurisdiction in connection with
the purchase and distribution of the Securities by the
Underwriters and such other approvals (specified in such
opinion) as have been obtained;
(vi) neither the execution and delivery of this
Agreement, the Trust Agreement, the Sale Agreement or the
Servicing Agreement, nor the issue and sale of the Securities,
nor the consummation of the transactions contemplated by this
Agreement, the Trust Agreement, the Sale Agreement or the
Servicing Agreement, nor the fulfillment of the terms of this
Agreement, the Trust Agreement, the Sale Agreement or the
Servicing Agreement by the Company, will (A) conflict with,
result in any breach of any of the terms or provisions of, or
constitute (with or without notice or lapse of time) a default
under the articles of incorporation, bylaws or other
organizational documents of the Company, or conflict with or
breach any of the material terms or provisions of, or
constitute (with or without notice or lapse of time) a default
under, any indenture, agreement or other instrument known to
such counsel after reasonable inquiry to which the Company or
the Issuer is a party or by which the Company or the Issuer is
bound, (B) result in the creation or imposition of any lien
upon any properties of the Company or the Issuer, pursuant to
the terms of any such indenture, agreement or other instrument
(other than as contemplated by the Basic Documents), or (C)
violate any law, rule or regulation or, to the knowledge of
such counsel, any order, promulgated by the United States, the
State of Delaware or the Commonwealth of Pennsylvania
applicable to the Company or the Issuer, of any court or of
any federal or state regulatory body, administrative agency or
other governmental instrumentality having jurisdiction over
the Company or the Issuer or any of their respective
properties; and
(vii) (A) each of the Qualified Rate Orders has
been duly authorized and adopted by the
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Pennsylvania Public Utility Commission and is in full force
and effect, (B) the Securities constitute "transition bonds"
under Section 2812 of the Statute, and (C) upon the issuance
of the Securities, the Securities are entitled to the
protections provided in the first sentence of Section
2812(c)(2) of the Statute.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the
States of Pennsylvania, New York and Delaware or the United States, to
the extent deemed proper and specified in such opinion, upon the
opinion of other counsel of good standing believed to be reliable and
who are satisfactory to counsel for the Underwriters and (B) as to
matters of fact, to the extent deemed proper, on certificates of
responsible officers of the Company, the Issuer Trustee and public
officials. References to the Prospectus in this paragraph (b) include
any supplements thereto at the Time of Delivery.
(c) The Representative shall have received the opinions of
counsel for the Issuer, portions of which may be delivered by (i)
Ballard Spahr Andrews & Ingersoll, LLP, outside counsel for the Issuer
and (ii) Richards, Layton & Finger, P.A., special Delaware counsel for
the Issuer, each dated as of the Time of Delivery, in form and
substance reasonably satisfactory to the Representative, to the effect
that:
(i) the Securities, the Indenture, the Sale
Agreement, the Servicing Agreement and the Trust Agreement
conform to the descriptions thereof contained in the
Prospectus;
(ii) the Issuer has been duly formed and is validly
existing as a statutory business Trust and is in good standing
under the laws of the State of Delaware, with full power and
authority to execute, deliver and perform its obligations
under this Agreement and the Securities;
(iii) the Indenture, the Sale Agreement and the
Servicing Agreement have been duly authorized, executed and
delivered, and constitute legal, valid and binding agreements
enforceable against the Issuer in accordance with their terms
(subject to applicable bankruptcy, reorganization, insolvency,
fraudulent transfer, moratorium or other similar laws or
equitable principles affecting creditors' rights generally
from time to time in effect); and the Securities have been
duly
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authorized and, when executed and authenticated in accordance
with the provisions of the Indenture and delivered to and paid
for by the Underwriters pursuant to this Agreement will
constitute legal, valid and binding obligations of the Issuer
entitled to the benefits of the Indenture and any related
Series Supplement (subject to applicable bankruptcy,
reorganization, insolvency, fraudulent transfer, moratorium or
other similar laws or equitable principles affecting
creditors' rights generally from time to time in effect);
(iv) the Sale Agreement, the Servicing Agreement and
the Trust Agreement are not required to be qualified under the
Trust Indenture Act;
(v) the Indenture has been duly qualified under the
Trust Indenture Act;
(vi) to the knowledge of such counsel, there is no
pending or threatened action, suit or proceeding before any
court or governmental agency, authority or body or any
arbitrator involving the Issuer or relating to the Securities,
the Qualified Rate Orders or the collection of Intangible
Transition Charges or the use and enjoyment of Intangible
Transition Property under the Statute, of a character required
to be disclosed in the Registration Statement which is not
adequately disclosed in the Prospectus, and there is no
franchise, contract or other document of a character required
to be described in the Registration Statement or Prospectus,
or to be filed as an exhibit, which is not described or filed
as required; and the statements included or incorporated in
the Prospectus under the headings "The Pennsylvania
Competition Act," "The Qualified Rate Orders And The
Intangible Transition Charges," "The Indenture," "The Sale
Agreement," "The Master Servicing Agreement," "The Transition
Bonds," "United States Taxation," "Material Commonwealth of
Pennsylvania Tax Matters" and "ERISA Considerations" fairly
summarize the matters described therein;
(vii) the Registration Statement has become effective
under the Act; any required filing of the Prospectus, any
Preliminary Prospectus, and any supplements thereto, pursuant
to Rule 424(b) has been made in the manner and within the time
period required by Rule 424(b); to the knowledge of such
counsel, no stop order suspending the effectiveness of the
Registration Statement has
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15
been issued, no proceedings for that purpose have been
instituted or threatened, and the Registration Statement and
the Prospectus (other than the financial statements and the
notes and schedules thereto and other financial and
statistical information contained therein and the Form T-1 as
to which such counsel need express no opinion) comply as to
form in all material respects with the applicable requirements
of the Act, the Exchange Act and the Trust Indenture Act and
the respective rules thereunder; and such counsel has no
reason to believe that at the Effective Date the Registration
Statement contained any untrue statement of a material fact or
omitted to state any 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 or that the Prospectus as of its date and at the
Time of Delivery included or includes any untrue statement of
a material fact or omitted or omits to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading (in
each case, other than the financial statements and the notes
and schedules thereto and other financial and statistical
information contained therein as to which such counsel need
express no opinion);
(viii) this Agreement has been duly authorized,
executed and delivered by the Issuer;
(ix) no consent, approval, authorization, filing with
or order of any court or governmental agency or body is
required for the issuance of the Securities except such as
have been obtained under the Statute and the Qualified Rate
Orders and such as may be required under the blue sky laws of
any jurisdiction in connection with the purchase and
distribution of the Securities by the Underwriters and such
other approvals (specified in such opinion) as have been
obtained;
(x) neither the execution and delivery of this
Agreement, the Sale Agreement, the Servicing Agreement or the
Indenture, nor the issue and sale of the Securities, nor the
consummation of the transactions contemplated by this
Agreement, the Sale Agreement, the Servicing Agreement or the
Indenture, nor the fulfillment of the terms of this Agreement,
the Sale Agreement, the Servicing Agreement or the Indenture,
by the Issuer will (A) conflict with, result in any breach of
any of the terms or provisions of, or constitute (with or
<PAGE>
16
without notice or lapse of time) a default under the Trust
Agreement, or conflict with or breach any of the material
terms or provisions of, or constitute (with or without notice
or lapse of time) a default under, any indenture, agreement or
other instrument known to such counsel and to which the Issuer
is a party or by which the Issuer, is bound, (B) result in the
creation or imposition of any lien upon any properties of the
Issuer, pursuant to the terms of any such indenture, agreement
or other instrument (other than as contemplated by the Basic
Documents), or (C) violate any law or any order, rule or
regulation promulgated by the United States, the State of
Delaware or the Commonwealth of Pennsylvania applicable to the
Issuer, of any court or of any federal or state regulatory
body, administrative agency or other governmental
instrumentality having jurisdiction over the Issuer or any of
its properties;
(xi) (A) to the extent that the provisions of Section
2812 of the Statute apply to the grant of a security interest
by the Issuer in the Collateral pursuant to the Indenture,
then upon the giving of value by the Bond Trustee to the
Issuer with respect to the Collateral, (I) the Indenture
creates in favor of the Bond Trustee a security interest in
the rights of the Issuer in the Collateral, (II) such security
interest is valid and enforceable against the Issuer and third
parties (subject to the rights of any third parties holding
security interests in such Collateral perfected in the manner
described in Section 2812 of the Statute), and has attached,
(III) such security interest is perfected, and (IV) such
perfected security interest ranks prior to any other security
interest created under Section 2812 of the Statute. (B) To the
extent that the provisions of Section 2812 of the Statute do
not apply to the grant of a security interest by the Issuer in
the Collateral pursuant to the Indenture, then upon the giving
of value by the Bond Trustee to the Issuer with respect to the
Collateral, (I) the Indenture creates in favor of the Bond
Trustee a security interest in the rights of the Issuer in the
Collateral, and such security interest is enforceable against
the Issuer with respect to such Collateral, (II) insofar as
perfection of such security interest can be accomplished only
by filing financing statements under the Uniform Commercial
Code in [list filing offices and jurisdictions], upon the
filing of such financing statements in such filing offices,
<PAGE>
17
the Bond Trustee will have a perfected security interest in
such Collateral, and (III) when so perfected, the Bond
Trustee's security interest in such Collateral as to which
perfection of such security interest can be accomplished only
by filing a financing statement will have priority over any
other security interest in such Collateral if such other
security interest, in order to achieve priority over the Bond
Trustee's security interest by the filing of one or more
financing statements, was required by law to have been
perfected by making such filings in the filing offices prior
to the effective date of [describe search reports and
effective date]; and
(xii) the Issuer is not and, after giving effect to
the offering and sale of the Securities and the application of
the proceeds thereof as described in the Prospectus, will not
be an "investment company" or under the "control" of an
"investment company" as such terms are defined under the
Investment Company Act of 1940, as amended.
(d) The Representative shall have received from Cravath,
Swaine & Moore, counsel for the Underwriters, such opinion or opinions,
dated the Time of Delivery, with respect to the issuance and sale of
the Securities, the Indenture, the Registration Statement, the
Prospectus (together with any supplement thereto) and other related
matters as the Representative may reasonably require, and each of the
Company and the Issuer shall have furnished to such counsel such
documents as they request for the purpose of enabling them to pass upon
such matters.
(e) The Representative shall have received a certificate of
the Company, signed by any Vice President of the Company, dated the
Time of Delivery, in form and substance reasonably satisfactory to the
Representative, to the effect that the signer of such certificate has
reviewed the Registration Statement, the Prospectus, any supplement to
the Prospectus and this Agreement and that:
(i) the representations and warranties of the Company
and the Issuer in this Agreement, the Sale Agreement and the
Servicing Agreement are true and correct in all material
respects on and as of the Time of Delivery with the same
effect as if made at the Time of Delivery, and the Company and
the Issuer have complied with all the agreements and satisfied
all the conditions on their respective
<PAGE>
18
parts to be performed or satisfied at or prior to the Time of
Delivery;
(ii) no stop order suspending the effective ness of
the Registration Statement has been issued and no proceedings
for that purpose have been instituted or, to the Company's
knowledge, threat ened; and
(iii) since the dates as of which information is
given in the Prospectus (exclusive of any supplement thereto),
there has been no material adverse change in the condition
(financial or other), earnings, business or properties of the
Company and its Subsidiaries taken as a whole (if such a
change would impair the investment quality of the Securities
or make it impractical or inadvisable to market the
Securities) or the Issuer, whether or not arising from
transactions in the ordinary course of business, except as set
forth in or contemplated in the Prospectus (exclusive of any
supplement thereto).
(f) At the Time of Delivery, the Representative shall have
received from PricewaterhouseCoopers LLP (i) a letter or letters (which
may refer to letters previously delivered to one or more of the
Representative), dated as of the Time of Delivery, in form and
substance satisfactory to the Representative, confirming that they are
independent accountants within the meaning of the Act and the Exchange
Act and the respective applicable published rules and regulations
thereunder and stating in effect that they have performed certain
specified procedures as a result of which they determined that certain
information of an accounting, financial or statistical nature (which is
limited to accounting, financial or statistical information derived
from the general accounting records of the Company and its
Subsidiaries) set forth in the Registration Statement and the
Prospectus, including information specified by the Underwriters and set
forth under the captions "Prospectus Summary," "PECO Energy's
Restructuring Plan," "The Qualified Rate Orders And The Intangible
Transition Charges," "The Seller and Servicer," and "The Transition
Bonds" in the Prospectus, agrees with the accounting records of the
Company and its Subsidiaries, excluding any questions of legal
interpretation, and (ii) the opinion or certificate, dated as of the
Time of Delivery, in form and substance satisfactory to the
Representative, satisfying the requirements of Section 2.10(7) of the
Indenture.
<PAGE>
19
References to the Prospectus in this clause (f) include any
supplement thereto at the date of the letter.
In addition, except as provided in Schedule I hereto, at the
Execution Time, the Representative shall have received from
PricewaterhouseCoopers LLP a letter or letters, dated as of the
Execution Time, in form and substance satisfactory to the
Representative, to the effect set forth above.
(g) Subsequent to the Execution Time or, if earlier, the dates
as of which information is given in the Registration Statement
(exclusive of any amendment thereof) and the Prospectus (exclusive of
any supplement thereto), and at or prior to the Time of Delivery, there
shall not have been any change, or any development involving a
prospective change, in or affecting either (i) the business or
properties or financial condition of the Company or the Issuer, or (ii)
the Intangible Transition Property, the Securities, the Qualified Rate
Orders or the Statute, the effect of which is, in the judgment of the
Representative, so material and adverse as to make it impractical or
inadvisable to proceed with the offering or delivery of the Securities
as contemplated by the Registration Statement (exclusive of any
amendment thereof) and the Prospectus (exclusive of any supplement
thereto).
(h) The Representative, the Company and the Issuer shall have
received on the Closing Date an opinion letter or letters of Ballard
Spahr Andrews & Ingersoll, counsel to the Company and the Issuer, dated
the Time of Delivery, in form and substance reasonably satisfactory to
the Representative, (i) with respect to the characterization of the
transfer of the Intangible Transition Property by the Company to the
Issuer as a "true sale" for bankruptcy purposes, (ii) to the effect
that a court would not order the substantive consolidation of the
assets and liabilities of the Issuer with those of the Company in the
event of a bankruptcy, reorganization or other insolvency proceeding
involving the Company and (iii) to the effect that upon the delivery of
the fully executed Sale Agreement to the Issuer and the payment of the
purchase price of the Intangible Transition Property by the Issuer to
the Seller pursuant to the Sale Agreement, then (A) the transfer of the
Intangible Transition Property by the Seller to the Issuer pursuant to
the Sale Agreement conveys the Seller's right, title and interest in
the Intangible Transition Property to the Issuer and will be treated as
an absolute transfer of all the Seller's right, title and
<PAGE>
20
interest in the Intangible Transition Property, other than for federal
and state tax purposes, (B) such transfer of the Intangible Transition
Property is perfected, (C) such transfer has priority over any other
assignment of the Intangible Transition Property, and (D) the
Intangible Transition Property is free and clear of all liens created
prior to its transfer to the Issuer pursuant to the Sale Agreement.
(i) At or prior to the Time of Delivery, the Representative
shall have received evidence, in form and substance reasonably
satisfactory to the Representative, that the Company has obtained a
release of the Intangible Transition Property from the lien of that
certain mortgage, dated May 1, 1923, as supplemented and amended to the
date hereof, between the Company and First Union Trust Company,
National Association (as successor to Fidelity Trust Company), as
trustee.
(j) The Securities shall have been rated in the highest
long-term rating category by each of the Rating Agencies or in such
other rating category as was specified in the Preliminary Prospectus.
(k) At or prior to the Time of Delivery, the Representative
shall have received evidence, in form and substance reasonably
satisfactory to the Representative, that appropriate filings have been
or are being made in accordance with the Statute and other applicable
law reflecting the grant of a security interest by the Issuer in the
Collateral to the Bond Trustee.
(l) At or prior to the Time of Delivery, the Representative
shall have received evidence of the Pennsylvania Public Utility
Commission's approval of the Qualified Rate Orders.
(m) Prior to the Time of Delivery, each of the Company and the
Issuer shall have furnished to the Representative such further
information, certificates, opinions and documents as the Representative
may reasonably request and as are customary for transactions of this
type.
(n) The Representative shall have received an opinion of
counsel to the Bond Trustee, dated the Time of Delivery, in form and
substance reasonably satisfactory to the Representative, to the effect
that:
(i) the Bond Trustee is a New York banking
association in good standing under the laws of the
State of New York;
<PAGE>
21
(ii) the Indenture has been duly authorized, executed
and delivered, and constitutes a legal, valid and binding
instrument enforceable against the Bond Trustee in accordance
with its terms (subject, as to enforcement of remedies, to
applicable bankruptcy, reorganization, insolvency, moratorium
or other similar laws or equitable principles affecting
creditors' rights generally from time to time in effect); and
(iii) the Securities have been duly authenticated by
the Bond Trustee.
(o) The Representative shall have received an opinion of
counsel to the Issuer Trustee, dated the Time of Delivery, in form and
substance reasonably satisfactory to the Representative, to the effect
that:
(i) the Issuer Trustee has been duly incorporated and
is validly existing as a national banking association in good
standing under the federal laws of the United States of
America, with full corporate trust power and authority to
enter into and perform its obligations under the Trust
Agreement; and
(ii) the Trust Agreement has been duly authorized,
executed and delivered by the Issuer, and constitutes a legal,
valid and binding instrument enforceable against the Issuer in
accordance with its terms (subject, as to enforcement of
remedies, to applicable bankruptcy, reorganization,
insolvency, moratorium or other laws affecting creditors'
rights generally from time to time in effect).
This Agreement and all obligations of the Underwriters
hereunder may be canceled at, or at any time prior to, the Time of Delivery by
the Representative if any of the conditions specified in this Section 7 shall
not have been fulfilled in all material respects when and as provided in this
Agreement. Notice of such cancelation shall be given to the Company in writing
or by telephone or telegraph confirmed in writing.
The documents required to be delivered by this Section 7 shall
be delivered at the office of Ballard Spahr Andrews & Ingersoll, LLP, counsel
for the Company, at 1735 Market Street, 51st Floor, Philadelphia, PA 19103-7599,
at the Time of Delivery.
8. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each
<PAGE>
22
Underwriter, the directors, officers, employees and agents of each Underwriter
and each person who controls any Underwriter within the meaning of either
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 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, in light of the circumstances under which they were
made, not misleading; provided, however, that the Company will not be liable in
any such case to the extent that any such losses, claims, damages, liabilities
or expenses are caused by (i) any such untrue statement or alleged untrue
statement or omission or alleged omission made therein in reliance upon and in
conformity with written information furnished to the Company or the Issuer by or
on behalf of any Underwriter through the Representative specifically for
inclusion 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 within the time periods required by the
Act and in such quantities are required by each Underwriter 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 shall have been advised in
writing of such intended use. This indemnity agreement will be in addition to
any liability which the Company may otherwise have.
(b) Each Underwriter severally and not jointly agrees to
indemnify and hold harmless the Company, each of its directors, each of its
officers who signs the Registration Statement, and each person who controls the
Company within the meaning of either the Act or the Exchange Act, the Issuer and
each of its controlling persons and trustees to the same extent as the foregoing
indemnity from the Company to each Underwriter, but only with reference to
written information relating to such Underwriter furnished to the Company by or
on behalf of such Underwriter through the Representative specifically for
inclusion in the documents referred to in the foregoing indemnity. This
indemnity agreement will be in addition to any liability which any Underwriter
may otherwise have. The Company acknowledges that the statements set forth in
the last paragraph of the cover page of the Prospectus Supplement and the
Prospectus and the information set forth under the
<PAGE>
23
heading "Underwriting the Series [___] Bonds" in the Prospectus Supplement and
"Plan of Distribution" in the Prospectus constitute the only information
furnished in writing by or on behalf of the several Underwriters for inclusion
in the documents referred to in the foregoing indemnity.
(c) 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 Company, such Underwriter or such
controlling person shall promptly notify the Company and the Company 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 has agreed in writing to any such fees and expenses, (ii)
the Company has failed, within 30 days after the Company has 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 and such Underwriter or
such controlling person shall have been advised by its counsel that
representation of such indemnified party and the Company by the same 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 or defenses among them (in which case
the Company 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 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 or defenses with you or among
themselves, which firm shall be designated in writing by the Representative, and
that all such fees and expenses shall be reimbursed as they become due. The
Company 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 agrees to indemnify and hold harmless
any Underwriter, to the extent provided in the preceding paragraph, and any such
controlling person
<PAGE>
24
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 (b)
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 Issuer and the Company 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 Issuer and
the Company 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 Issuer and the Company on the one hand and the Underwriters 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 Issuer and the Company 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 Issuer and the Company 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 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 (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 above. The amount paid
or payable by an indemnified party as a result of the losses, liabilities,
claims, damages and expenses referred to 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 Securities underwritten by it and
distributed to the
<PAGE>
25
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
Securities set forth opposite their names in Schedule I hereto and not joint.
(e) 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.
(f) 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 Issuer
or the Company, their directors or officers, or any person controlling the
Issuer 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 Underwriters shall fail to purchase and
pay for any of the Securities agreed to be purchased by such Underwriter or
Underwriters hereunder and such failure to purchase shall constitute a default
in the performance of its or their obligations under this Agreement, the
nondefaulting Underwriters shall be obligated severally to take up and pay for
(in the respective proportions which the amount of Securities set forth opposite
their names in Schedule II hereto bears to the aggregate amount of Securities
set forth opposite the names of all the remaining Underwriters) the Securities
which the defaulting Underwriter or Underwriters agreed but failed to purchase;
provided, however, that in the event that the aggregate amount of Securities
which the defaulting Underwriter or Underwriters agreed but failed to purchase
shall exceed 10% of the aggregate amount of Securities set forth in Schedule II
hereto, the nondefaulting Underwriters shall have the right to purchase all, but
shall not be under any obligation to purchase any, of the Securities, and if
such nondefaulting Underwriters do not purchase all the
<PAGE>
26
Securities, this Agreement will terminate without liability to any nondefaulting
Underwriter, the Issuer or the Company. In the event of a default by any
Underwriter as set forth in this Section 9, the Time of Delivery shall be
postponed for such period, not exceeding seven days, as the Representative shall
determine in order that the required changes in the Registration Statement and
the Prospectus or in any other documents or arrangements may be effected.
Nothing contained in this Agreement shall relieve any defaulting Underwriter of
its liability, if any, to the Company, the Issuer and any nondefaulting
Underwriter for damages occasioned by its default hereunder.
10. This Agreement shall be subject to termination in the
absolute discretion of the Representative, by notice given to the Company prior
to delivery of and payment for the Securities, if at any time prior to such time
(i) there shall have occurred any change, or any development involving a
prospective change, in or affecting either (A) the business, properties or
financial condition of the Company (if such a change or development would, in
the judgment of the Representative, impair the investment quality of the
Securities or make it impractical or inadvisable to market the Securities) or
the Issuer or (B) the Intangible Transition Property, the Securities, the
Qualified Rate Orders or the Statute, the effect of which, in the judgment of
the Representative, materially impairs the investment quality of the Securities
or makes it impractical or inadvisable to market the Securities, (ii) trading in
[the Company's] Common Stock shall have been suspended by the Commission or the
New York Stock Exchange (if such a suspension would, in the judgment of the
Representative, impair the investment quality of the Securities or make it
impractical or inadvisable to market the Securities) or trading in securities
generally on the New York Stock Exchange shall have been suspended or limited or
minimum prices shall have been established on such Exchange, (iii) a banking
moratorium shall have been declared by Federal, New York State or Pennsylvania
State authorities or (iv) there shall have occurred any outbreak or escalation
of hostilities, declaration by the United States of a national emergency or war
or other calamity or crisis the effect of which on financial markets is such as
to make it, in the judgment of the Representative, impracticable or inadvisable
to proceed with the offering or delivery of the Securities as contemplated by
the Final Prospectus (exclusive of any supplement thereto).
11. If the sale of the Securities provided for herein is not
consummated because any condition to the obligations of the Underwriters set
forth in Section 7 hereof is not satisfied, because of any termination pursuant
to Section 10 hereof or because of any refusal, inability or failure on the part
of the Company to perform any agreement
<PAGE>
27
herein or comply with any provision hereof other than by reason of a default by
any of the Underwriters, the Company will reimburse the Underwriters severally
upon demand for all out-of-pocket expenses (including reasonable fees and
disbursements of counsel) that shall have been incurred by them in connection
with the proposed purchase and sale of the Securities.
12. The respective agreements, representations, warranties,
indemnities and other statements of the Company, the Issuer and the several
Underwriters 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 or any officer, director or controlling person of the
Company, and shall survive delivery of and payment for the Securities. The
provisions of Sections 8 and 12 hereof shall survive the termination or
cancelation of this Agreement.
13. 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 on
any statement, request, notice or agreement on behalf of any Underwriter made or
given by you on behalf of the Underwriters.
All communications hereunder will be in writing and effective
only on receipt, and, if sent to the Representative, will be mailed, delivered
or telegraphed and confirmed to them, at the address specified in Schedule I
hereto; and if sent to the Company or the Issuer, will be mailed, delivered or
telegraphed and confirmed to the address of the Company set forth in the
Registration Statement, Attention: Secretary.
14. This Agreement shall be binding on and inure solely to the
benefit of the Underwriters, the Issuer, the Company and, to the extent provided
in Section 8 and Section 12 hereof, the officers and directors of the Company
and each person who controls the Issuer, the Company 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 Securities from any Underwriter shall be
deemed a successor or assign merely by reason of such purchase.
15. 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 and the term "Execution Time"
<PAGE>
28
shall mean the date and time that this Agreement is executed and delivered by
the parties hereto.
16. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
17. 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 counterparties shall together constitute
one and the same instrument.
<PAGE>
29
If the foregoing is in accordance with your understanding,
please sign and return to us 10 counterparts hereof, whereupon this letter and
your acceptance shall constitute a binding agreement between each of the
Underwriters, on the one hand, and the Company and the Issuer 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 for
examination upon request, but without warranty on your part as to the authority
of the signers thereof.
Very truly yours,
PECO Energy Company
By:
...........................
Name:
Title:
PECO Energy Transition Trust
By:
...........................
Name:
Title:
Accepted, [___]
Salomon Smith Barney Inc.
By: Salomon Smith Barney Inc.
By:
.....................
Name:
Title:
For itself and the other
several Underwriters, if any,
named in Schedule II to the
foregoing Agreement.
<PAGE>
SCHEDULE I
Underwriting Agreement dated [___]
Registration Statement No. 333-[___]
Representative:
Salomon Smith Barney Inc.
390 Greenwich Street
New York, NY 10013
Title, Purchase Price and Description of Securities:
Title: PECO Energy Transition Trust
$[___] Transition Bonds
Series [___]
Principal amount, Price to Public, Underwriting
Discounts and Commissions and Proceeds to Issuer:
<TABLE>
<CAPTION>
Total
Principal Underwriting
Amount of Price to Discounts and Proceeds to
Class Public Commissions Issuer
--------- -------- ------------- -----------
<S> <C> <C> <C> <C>
Per Class
A-1 Bond $ [___] $[___] $[___] $[___]
Per Class
A-2 Bond $ [___] $[___] $[___] $[___]
-------- ------ ------ ------
Total $ [___] $[___] $[___] $[___]
======== ====== ====== ======
</TABLE>
<PAGE>
2
Original Issue Discount: [___]
Redemption provisions: Optional Redemption and Mandatory
Redemption as set forth in
Article X of the Indenture
Other provisions:
Closing Date, Time and Location: [___], 9:30 a.m.,
Philadelphia time,
Philadelphia, PA
<PAGE>
SCHEDULE II
Principal Amount of Transition Bonds to be Purchased
<TABLE>
<CAPTION>
Underwriters Class A-1 Bonds Class A-2 Bonds Total
------------ --------------- --------------- -----
<S> <C> <C> <C>
Salomon Smith $ [___] $ [___] $ [___]
Barney Inc.
[___] $ [___] $ [___] $ [___]
[___] $ [___] $ [___] $ [___]
[___] $ [___] $ [___] $ [___]
[___] $ [___] $ [___] $ [___]
[___] $ [___] $ [___] $ [___]
[___] $ [___] $ [___] $ [___]
[___] $ [___] $ [___] $ [___]
[___] $ [___] $ [___] $ [___]
[___] $ [___] $ [___] $ [___]
[___] $ [___] $ [___] $ [___]
[___] $ [___] $ [___] $ [___]
[___] $ [___] $ [___] $ [___]
-------- -------- -------
Total................... $ [___] $ [___] $ [___]
======== ======== =======
</TABLE>
