Exhibit 1.1
Commonwealth Edison Company
First Mortgage 4.70% Bonds, Series 101, due 2015
UNDERWRITING AGREEMENT
March 31, 2003
To the Representatives named in
Schedule I hereto of the Underwriters
named in Schedule II hereto
Dear Sirs:
1. Introductory. Commonwealth Edison Company, an Illinois corporation (the
"Company"), proposes to issue and sell from time to time First Mortgage Bonds
(the "Mortgage Bonds"). The Mortgage Bonds will be issued by the Company under
its Mortgage, dated as of July 1, 1923, as amended and supplemented through the
date hereof and as further supplemented by the Supplemental Indenture dated as
of March 14, 2003 (the "Supplement") from the Company to BNY Midwest Trust
Company, as trustee (the "Trustee"), and ▇.▇. ▇▇▇▇▇▇▇ as co-trustee (the
"Co-Trustee"). As used herein, the term "Mortgage" refers to the Company's
Mortgage referred to above together with any and all amendments or supplements
thereto, including the Supplement. The Company proposes to sell to the
underwriters named in Schedule II hereto (the "Underwriters") for whom you are
acting as Representative or Representatives (the "Representatives") one series
of Mortgage Bonds in the aggregate principal amount and with the terms specified
in Part A of Schedule I hereto (such series referred to herein as the "Purchased
Bonds").
2. Representations and Warranties of the Company. The Company represents
and warrants to, and agrees with, the Underwriters that:
(a) The Company and ComEd Financing III, a Delaware statutory trust (the
"Trust"), have filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (Registration Nos. 333-99363
and 333-99363-01) relating to (i) debt securities, first mortgage bonds, which
include the Purchased Bonds, and cumulative preference stock of the Company and
(ii) trust preferred securities of the Trust and related guarantees of the
Company (collectively, the "Securities"), and the offering thereof from time to
time in accordance with Rule 415 under the Securities Act of 1933, as amended
(the "Act"), and have filed such amendments thereto as may have been required to
the date hereof. Such registration statement, as so amended, has been declared
effective by the Commission. Such registration statement and the prospectus
relating to the sale of the Securities by the Company constituting a part
thereof, including all documents incorporated therein by reference, as from time
to time amended or supplemented pursuant to the Act or the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), are referred to herein as the
"Registration Statement,"
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and the prospectus relating to the Securities, including all documents
incorporated therein by reference, as from time to time amended or supplemented
pursuant to the Act or the Exchange Act, including by the Prospectus Supplement
(as defined below), is referred to herein as the "Prospectus"; provided,
however, that a supplement to the Prospectus relating to an offering of
Securities, other than the Purchased Bonds, shall be deemed to have supplemented
the Prospectus only with respect to the offering of the other Securities to
which it relates. All documents filed by the Company with the Commission
pursuant to the Exchange Act and incorporated by reference in the Registration
Statement or the Prospectus, as aforesaid, are hereinafter referred to as the
"Incorporated Documents."
(b) The Registration Statement, the Prospectus and the Mortgage, at the
time the Registration Statement became effective complied, as of the date hereof
comply and as of the Closing Date (as hereinafter defined) will comply, in all
material respects with the applicable requirements of the Act, the Exchange Act
and the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), and
the rules and regulations of the Commission under such Acts; the Incorporated
Documents, as of their respective dates of filing with the Commission, complied
and will comply as to form in all material respects with the requirements of the
Exchange Act and the rules and regulations of the Commission thereunder; the
Registration Statement and any amendment thereof (including the filing of any
annual report on Form 10-K), at the time it became effective, 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 not misleading;
and the Prospectus, at the time the Registration Statement became effective did
not, as of the date hereof does not and as of the Closing Date will not, contain
an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that the representations and warranties in this Section 1(b) shall not apply to
(i) that part of the Registration Statement which constitutes the Statements of
Eligibility and Qualification (Forms T-1 and T-2) under the Trust Indenture Act
or (ii) statements in or omissions from the Registration Statement or the
Prospectus made in reliance upon and in conformity with the Provided Statements
(as defined below).
(c) PricewaterhouseCoopers LLP, the accountants who certified certain of
the financial statements included or incorporated by reference in the
Prospectus, are independent public accountants as required by the Act and the
rules and regulations of the Commission thereunder.
(d) The financial statements included or incorporated by reference in
the Prospectus present fairly in all material respects the financial position,
results of operations and cash flows of the Company at the respective dates and
for the respective periods specified and, except as otherwise stated in the
Prospectus, such financial statements have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis during
the periods involved. The Company has no material contingent obligation which is
not disclosed in the Prospectus.
(e) Except as set forth in or contemplated by the Prospectus, no
material transaction has been entered into by the Company otherwise than in the
ordinary course of business and no materially adverse change has occurred in the
condition, financial or otherwise,
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of the Company, in each case since the respective dates as of which information
is given in the Prospectus.
(f) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Illinois with
corporate power and authority to own its properties and conduct its business as
described in the Prospectus.
(g) Each significant subsidiary of the Company, as defined in Rule 1-02
of Regulation S-X of the Commission (each a "Significant Subsidiary"), has been
duly incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation; all of the issued and
outstanding capital stock of each Significant Subsidiary has been duly and
validly issued and is fully paid and non-assessable; and all of the capital
stock of each Significant Subsidiary is owned by the Company free and clear of
any pledge, lien, encumbrance, claim or equity.
(h) Neither the Company nor any Significant Subsidiary is in violation
of its articles or certificate of incorporation, or in default in the
performance or observance of any material obligation, agreement, covenant or
condition contained in any mortgage or any material contract, lease, note or
other instrument to which it is a party or by which it may be bound, or
materially in violation of any law, administrative regulation or administrative,
arbitration or court order to which it is subject or bound, except in each case
to such extent as may be set forth in the Prospectus; and the execution and
delivery of this Agreement, the incurrence of the obligations herein set forth
and the consummation of the transactions herein contemplated will not conflict
with or constitute a breach of, or default under, the articles of incorporation
or by-laws of the Company or any mortgage, contract, lease, note or other
instrument to which the Company or any Significant Subsidiary is a party or by
which it or any Significant Subsidiary may be bound, or any law, administrative
regulation or administrative, arbitration or court order to which it is subject
or bound.
(i) The Company has filed with the Illinois Commerce Commission (the
"ICC") a petition with respect to the issuance and sale of the Purchased Bonds
and the ICC has issued its order authorizing and approving such issuance and
sale. No consent of or approval by any other public board or body or
administrative agency, federal or state, is necessary to authorize the issuance
and sale of the Purchased Bonds, except as may be required under the blue sky
laws of any jurisdiction in connection with the purchase and distribution of the
Purchased Bonds by the Underwriters in the manner contemplated herein and in the
Prospectus.
(j) There is no pending or threatened suit or proceeding before any
court or governmental agency, authority or body or any arbitration involving the
Company or any of its Significant Subsidiaries required to be disclosed in the
Prospectus which is not adequately disclosed in the Prospectus.
(k) This Agreement has been duly authorized, executed and delivered by
the Company.
(l) The Mortgage has been duly authorized by the necessary corporate
action and duly qualified under the Trust Indenture Act; and the Mortgage has
been duly authorized
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and, assuming due authorization, execution and delivery of the Supplement by the
Trustee and due execution and delivery of the Supplement by the Co-Trustee, when
executed and delivered by the Company, will constitute a legal, valid and
binding instrument enforceable against the Company in accordance with its terms
(subject, as to the enforcement of remedies, to applicable bankruptcy,
reorganization, insolvency, fraudulent transfer, moratorium or other laws
affecting creditors' rights generally from time to time in effect and to general
principles of equity).
(m) The issuance and sale of the Purchased Bonds by the Company in
accordance with the terms of this Agreement have been duly authorized; the
Purchased Bonds, when executed and authenticated in accordance with the
provisions of the Mortgage and delivered to and paid for by the Underwriters,
will have been duly executed and delivered by the Company and will constitute
the legal, valid and binding obligations of the Company entitled to the benefits
of the Mortgage (subject, as to the enforcement of remedies, to applicable
bankruptcy, reorganization, insolvency, fraudulent transfer, moratorium or other
laws affecting creditors' rights generally from time to time in effect and to
general principles of equity), and the holders of the Purchased Bonds will be
entitled to the payment of principal and interest as therein provided; and the
statements under the headings "Description of the Bonds" in the Prospectus
Supplement (as defined below) and "Description of Bonds" in the Prospectus
fairly summarize the matters therein described.
(n) The franchise granted to the Company by the City Council of the City
of Chicago under an ordinance effective January 1, 1992, is valid and subsisting
and duly authorizes the Company to engage in the electric utility business
conducted by it in such City; and the several franchises of the Company outside
the City of Chicago are valid and subsisting and authorize the Company to carry
on its utility business in the several communities, capable of granting
franchises, located in the territory served by the Company outside the City of
Chicago (with immaterial exceptions).
(o) The Company has good and sufficient title to all property described
or referred to in the Mortgage and purported to be conveyed thereby, subject
only to the lien of the Mortgage and permitted liens as therein defined (except
as to property released from the lien of the Mortgage in connection with the
sale or other disposition thereof, and certain other exceptions which are not
material in the aggregate); the Mortgage has been duly filed for recordation in
such manner and in such places as is required by law in order to give
constructive notice of, establish, preserve and protect the lien of the
Mortgage; the Mortgage constitutes a valid, direct first mortgage lien on
substantially all property (including franchises) now owned by the Company,
except property expressly excepted by the terms of the Mortgage, subject to
permitted liens as defined therein; and the Mortgage will constitute a valid,
direct first mortgage lien on all property of the character of that now subject
to the lien of the Mortgage hereafter acquired by the Company, subject to
permitted liens as defined in the Mortgage, and to liens, if any, existing or
placed on such after-acquired property at the time of the acquisition thereof.
Any certificate signed by any officer of the Company and delivered to
you or to counsel for the Underwriters in connection with the offering of the
Purchased Bonds shall be deemed a representation and warranty by the Company to
each Underwriter as to the matters covered thereby.
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3. Purchase, Offering and Delivery -- Closing Date. Subject to the terms
and conditions herein set forth, the Company agrees to sell to each Underwriter,
and each Underwriter agrees, severally and not jointly, to purchase from the
Company at the purchase price set forth in Schedule I hereto, the principal
amount of the Purchased Bonds set forth opposite each Underwriter's name in
Schedule II hereto. It is understood that the Underwriters propose to offer the
Purchased Bonds for sale to the public as set forth in the Prospectus Supplement
(as hereinafter defined) relating to the Purchased Bonds. The time and date of
delivery and payment shall be the time and date specified in Schedule I hereto;
provided, however, that such time or date may be accelerated or extended by
agreement between the Company and the Representatives or as provided in Section
9 hereof. The time and date of such delivery and payment are herein referred to
as the "Closing Date." Delivery of the Purchased Bonds shall be made to the
Representatives for the respective accounts of the several Underwriters against
payment by the several Underwriters through the Representatives of the purchase
price thereof to or upon the order of the Company by wire transfer payable in
same-day funds to the account specified by the Company. Delivery of the
Purchased Bonds shall be made through the facilities of The Depository Trust
Company.
4. Agreements. The Company agrees with the several Underwriters that:
(a) Promptly following the execution of this Agreement, the Company will
cause the Prospectus, including as part thereof a prospectus supplement relating
to the Purchased Bonds (the "Prospectus Supplement"), to be filed with the
Commission pursuant to Rule 424 under the Act, and the Company will promptly
advise the Representatives when such filing has been made. Prior to such filing,
the Company will cooperate with the Representatives in the preparation of the
Prospectus Supplement to assure that the Representatives have no reasonable
objection to the form or content thereof when filed.
(b) The Company will promptly advise the Representatives (i) when any
amendment to the Registration Statement shall have become effective, (ii) of any
request by the Commission for any amendment of the Registration Statement or
amendment or supplement to the Prospectus or for any additional information,
(iii) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the institution or threatening of
any proceeding for that purpose and (iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Purchased Bonds for sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose. The Company will not file any amendment to the
Registration Statement or amendment or supplement to the Prospectus unless the
Company has furnished the Representatives a copy for their review prior to
filing and will not file any such proposed amendment or supplement without the
consent of the Representatives, which consent shall not be unreasonably
withheld. The Company will use its best efforts to prevent the issuance of any
such stop order and, if issued, to obtain as soon as possible the withdrawal
thereof.
(c) If, at any time when a prospectus relating to the Purchased Bonds is
required to be delivered under the Act, any event occurs as a result of which
the Prospectus as then amended or supplemented would include an untrue statement
of a material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or if it shall be necessary to amend or supplement
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the Registration Statement or the Prospectus to comply with the Act or the
Exchange Act or the rules and regulations of the Commission under such Acts, the
Company promptly will prepare and file with the Commission, subject to paragraph
(b) of this Section 4, an amendment or supplement that will correct such
statement or omission or an amendment or supplement that will effect such
compliance.
(d) The Company will furnish without charge to (i) each of the
Representatives and counsel for the Underwriters a signed copy of the
Registration Statement (but without exhibits incorporated by reference), as
originally filed, all amendments thereto filed prior to the Closing Date and all
Incorporated Documents (including exhibits, other than exhibits incorporated by
reference), (ii) each other Underwriter a conformed copy of the Registration
Statement (but without exhibits), as originally filed, all amendments thereto
(but without exhibits) and all Incorporated Documents (but without exhibits
other than the Company's latest Annual Report to shareholders) and (iii) each
Underwriter as many copies of the Prospectus, the Prospectus Supplement thereto
and, so long as delivery of a prospectus or supplement thereto by an Underwriter
or dealer may be required under the Act, any amendments thereof and supplements
thereto (but without Incorporated Documents or exhibits), as soon as available
and in such quantities as the Representatives may reasonably request.
(e) The Company will arrange, if necessary, for the qualification of the
Purchased Bonds for sale under the laws of such jurisdictions within the United
States as the Representatives may designate, provided, that in no event shall
the Company be obligated to qualify to do business in any jurisdiction where it
is not now so qualified or take any action that would subject it to service of
process in suits (other than those arising out of the offering or sale of the
Purchased Bonds) in any jurisdiction where it is not now so subject. The Company
will promptly advise the Representatives of the receipt by the Company of any
notification with respect to the qualification of the Purchased Bonds for sale
in any jurisdiction or the initiation or threatening of any proceeding for such
purpose.
(f) The Company agrees to pay the costs and expenses relating to the
following matters: (i) the preparation of the Prospectus, the issuance of the
Purchased Bonds and the fees of the Trustee or Co-Trustee; (ii) the preparation,
printing or reproduction of the Prospectus and each amendment or supplement
thereto; (iii) the printing (or reproduction) and delivery (including postage,
air freight charges and charges for counting and packaging) of such copies of
the Prospectus, and all amendments or supplements to it, as may be reasonably
requested for use in connection with the offering and sale of the Purchased
Bonds; (iv) the preparation, printing, authentication, issuance and delivery of
certificates for the Purchased Bonds, including any stamp or transfer taxes in
connection with the original issuance and sale of the Purchased Bonds; (v) the
printing (or reproduction) and delivery of this Agreement, any blue sky
memorandum and all other agreements or documents printed (or reproduced) and
delivered in connection with the offering of the Purchased Bonds; (vi) any
registration or qualification of the Purchased Bonds for offer and sale under
the securities or blue sky laws of the several states (including filing fees and
the reasonable fees and expenses of counsel for the Underwriters relating to
such registration and qualification); (vii) the transportation and other
expenses incurred by or on behalf of Company representatives in connection with
presentations to prospective purchasers of the Purchased Bonds; (viii) the fees
and expenses of the Company's accountants and counsel (including local and
special counsel); (ix) the fees and expenses of any
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rating agencies rating the Purchased Bonds and (x) all other costs and expenses
incident to the performance by the Company of its obligations hereunder.
(g) The Company will, if requested by the Representatives, use its best
efforts to cause the Purchased Bonds to be listed on the New York Stock
Exchange.
(h) During the period beginning from the date of this Agreement and
continuing to and including the later of (i) the termination of trading
restrictions on the Purchased Bonds, as notified to the Company by the
Representatives, and (ii) the Closing Date, the Company will not offer, sell,
contract to sell or otherwise dispose of any debt securities of the Company
which mature more than one year after the Closing Date and which are
substantially similar to the Purchased Bonds, without the prior written consent
of the Representatives; provided, however, that in no event shall the foregoing
period extend more than fifteen calendar days from the date of this Agreement.
5. Conditions to the Obligations of the Underwriters. The obligations of
the Underwriters to purchase and pay for the Purchased Bonds shall be subject to
the accuracy of the representations and warranties on the part of the Company
contained herein as of the date hereof and the Closing Date, to the accuracy of
the statements of the Company made in any certificates pursuant to the
provisions hereof, to the performance by the Company of its obligations
hereunder and to the following additional conditions:
(a) No stop order suspending the effectiveness of the Registration
Statement shall be in effect and no proceedings for that purpose shall then be
pending before, or threatened by, the Commission.
(b) The Company shall have furnished to the Representatives the opinion
of Sidley ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇, counsel for the Company, dated the Closing Date
and addressed to the Representatives, in form and substance satisfactory to each
of the Representatives and their counsel.
(c) The Representatives shall have received from Winston & ▇▇▇▇▇▇,
counsel for the Underwriters, such opinion or opinions, dated the Closing Date,
with respect to the issuance and sale of the Purchased Bonds, the Mortgage, the
Registration Statement, the Prospectus and other related matters as the
Representatives may reasonably require, and the Company shall have furnished to
such counsel such documents as they request for the purpose of enabling them to
pass upon such matters.
(d) The Company shall have furnished to the Representatives a
certificate of the Company, signed by the Treasurer or Assistant Treasurer of
the Company, dated the Closing Date, to the effect that the signer of such
certificate has carefully examined the Prospectus, any amendment or supplement
to the Prospectus and this Agreement and that:
(i) the representations and warranties of the Company in this
Agreement are true and correct in all material respects on and as of the
Closing Date with the same effect as if made on the Closing Date, and the
Company has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied hereunder at or prior
to the Closing Date;
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(ii) since the date of the most recent financial statements
included in the Prospectus (exclusive of any amendment or supplement
thereto), there has been no material adverse change in the financial
condition, business or properties of the Company and its subsidiaries,
taken as a whole, whether or not arising from transactions in the ordinary
course of business, except as set forth in or contemplated by the
Prospectus (exclusive of any amendment or supplement thereto); and
(iii) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose
have been initiated or, to his or her knowledge, threatened by the
Commission.
(e) On the date hereof and on the Closing Date, the Company shall
have requested and caused PricewaterhouseCoopers LLP to furnish to the
Representatives letters, dated respectively the date hereof and the Closing
Date, in form and substance satisfactory to the Representatives.
(f) Subsequent to the date of this Agreement, or if earlier, the
respective dates as of which information is given in the Registration Statement
and the Prospectus, there shall not have been (i) any change or decrease
specified in the letter referred to in paragraph (e) of this Section 5 or (ii)
any change, or any development involving a prospective change, in or affecting
the financial condition, business or properties of the Company and its
subsidiaries, taken as a whole, 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 amendment or supplement thereto) the effect of
which, in any case referred to in clause (i) or (ii) above, is, in the sole
judgment of the Representatives, so material and adverse as to make it
impractical or inadvisable to proceed with the public offering or delivery of
the Purchased Bonds as contemplated by the Prospectus (exclusive of any
amendment or supplement thereto).
(g) On the Closing Date, (i) the Purchased Bonds shall be rated A3
(stable) by ▇▇▇▇▇'▇ Investors Service, Inc. and A- (stable) by Standard & Poor's
Rating Services, and the Company shall have delivered to the Representatives
evidence satisfactory to the Representatives confirming that the Purchased Bonds
have such ratings, and (ii) subsequent to the date of this Agreement, there
shall not have occurred a downgrading in the rating assigned to the Purchased
Bonds or any of the Company's first mortgage bonds or commercial paper by any
"nationally recognized statistical rating agency", as that term is defined by
the Commission for purposes of Rule 436(g)(2) under the Act, and no such
securities rating agency shall have publicly announced that it has under
surveillance or review, with possible negative implications, its rating of the
Purchased Bonds or any of the Company's other debt securities.
(h) Prior to the Closing Date, the Company shall have furnished to
the Representatives such further information, certificates and documents as the
Representatives may reasonably request.
If any of the conditions specified in this Section 5 shall not
have been fulfilled in all material respects when and as provided in this
Agreement, or if any of the opinions or certificates mentioned above or
elsewhere in this Agreement shall not be in all material respects reasonably
satisfactory in form and substance to the Representatives and their counsel,
this
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Agreement and all obligations of the Underwriters hereunder may be canceled at,
or at any time prior to, the Closing Date by the Representatives. Notice of such
cancellation shall be given to the Company in writing or by telephone or
facsimile confirmed in writing.
The documents required to be delivered by this Section 5 will be
delivered at the office of counsel for the Company, at Sidley ▇▇▇▇▇▇ ▇▇▇▇▇ &
▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, on the
Closing Date.
6. Conditions of Company's Obligation. The obligation of the
Company to deliver the Purchased Bonds upon payment therefor shall be subject to
the following conditions:
On the Closing Date, the order of the ICC referred to in
subparagraph (i) of Section 2 hereof shall be in full force and effect
substantially in the form in which originally entered; the Mortgage shall be
qualified under the Trust Indenture Act as and to the extent required by such
Act; and no stop order suspending the effectiveness of the Registration
Statement shall be in effect and no proceedings for that purpose shall then be
pending before, or threatened by, the Commission.
In case any of the conditions specified above in this Section 6
shall not have been fulfilled, this Agreement may be terminated by the Company
by delivering written notice of termination to the Representatives. Any such
termination shall be without liability of any party to any other party except to
the extent provided in Sections 7 and 8 hereof.
7. Reimbursement of Underwriters' Expenses. If the sale of the
Purchased Bonds provided for herein is not consummated because any condition to
the obligations of the Underwriters or the Company set forth in Section 5 and
Section 6 hereof, respectively, 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 herein or comply with any
provisions 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 Purchased Bonds.
8. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each Underwriter, the directors, officers, employees
and agents of each Underwriter and each person who controls any Underwriter
within the meaning of either the Act or the Exchange Act against any and all
losses, claims, damages or liabilities, joint or several, to which they or any
of them may become subject under the Act, the Exchange Act or other federal or
state statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement as originally filed or in
any amendment thereof, or in any preliminary prospectus or the Prospectus, or in
any amendment thereof or supplement thereto, or arise out of or are based upon
the 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, and agrees to
reimburse each such indemnified party, as incurred, for any legal or other
expenses reasonably incurred by them in connection with investigating or
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defending any such loss, claim, damage, liability or action; provided, however,
that the Company will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon 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 by or on behalf of any Underwriter through the Representatives
specifically for inclusion therein; provided, further, that the foregoing
indemnity with respect to any untrue statement contained in or omission from any
preliminary prospectus shall not inure to the benefit of any Underwriter (or any
of the directors, officers, employees and agents of such Underwriter or any
person controlling such Underwriter) from whom the person asserting any such
loss, claim, damage or liability purchased any of the Purchased Bonds which are
the subject thereof if such person did not receive a copy of the Prospectus (or
the Prospectus as then amended or supplemented if the Company shall have
furnished any amendments or supplements thereto), excluding the Incorporated
Documents, at or prior to the confirmation of the sale of such Purchased Bonds
to such person in any case where such delivery is required by the Act and the
untrue statement or omission of a material fact contained in such preliminary
prospectus was corrected in the Prospectus (or the Prospectus as so amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto), and it is finally judicially determined that such delivery was
required to be made under the Act and was not so made. 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 and each of its directors, officers, employees and
agents, and each person who controls the Company within the meaning of either
the Act or the Exchange Act, 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 Representatives 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 (i) in the last paragraph of
the cover page of the Prospectus Supplement regarding the delivery of the
Purchased Bonds, and (ii) under the heading "Underwriting" in the Prospectus
Supplement, (A) the fourth paragraph related to Internet distributions; (B) the
first paragraph under the sub-heading "-Commissions and Discounts" related to
concessions and discounts; and (C) the paragraphs under the sub-heading "-Price
Stabilization and Short Positions" related to stabilization, over-allotments,
syndicate covering transactions and penalty bids (collectively, the "Provided
Statements"), constitute the only information furnished in writing by or on
behalf of the Underwriters for inclusion in the Registration Statement, any
preliminary prospectus or the Prospectus (or in any amendment or supplement
thereto).
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 8, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party (i)
will not relieve it from liability under paragraph (a) or (b) above unless and
to the extent it did not otherwise learn of such action and such failure results
in the forfeiture by the indemnifying party of substantial rights and defenses;
and (ii) will not, in any event, relieve the indemnifying party from any
obligations to any indemnified party other than the indemnification obligation
provided in paragraph (a) or (b) above. The indemnifying party shall
10
be entitled to appoint counsel of the indemnifying party's choice at the
indemnifying party's expense to represent the indemnified party in any action
for which indemnification is sought (in which case the indemnifying party shall
not thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth below);
provided, however, that such counsel shall be satisfactory to the indemnified
party. Notwithstanding the indemnifying party's election to appoint counsel to
represent the indemnified party in an action, the indemnified party shall have
the right to employ separate counsel (including local counsel), and the
indemnifying party shall bear the reasonable fees, costs and expenses of such
separate counsel if (i) the use of counsel chosen by the indemnifying party to
represent the indemnified party would present such counsel with a conflict of
interest; (ii) the actual or potential defendants in, or targets of, any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party; (iii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of the institution of such action; or (iv) the indemnifying party
shall authorize the indemnified party to employ separate counsel at the expense
of the indemnifying party. An indemnifying party will not, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action) unless such settlement, compromise or
consent (i) includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding and (ii) does
not include a statement as to, or an admission of, fault, culpability or a
failure to act by or on behalf of an indemnified party.
(d) In the event that the indemnity provided in paragraph (a) or (b)
of this Section 8 is unavailable or insufficient to hold harmless an indemnified
party under section (a) or (b) above, then the Company and the Underwriters
agree to contribute to the aggregate losses, claims, damages and liabilities
(including legal or other expenses reasonably incurred in connection with
investigating or defending same) (collectively "Losses") to which the Company
and one or more of the Underwriters may be subject in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and by the Underwriters on the other from the offering of the Purchased
Bonds. If the allocation provided by the immediately preceding sentence is
unavailable for any reason, the Company and the Underwriters shall contribute in
such proportion as is appropriate to reflect not only such relative benefits but
also the relative fault of the Company on the one hand and of the Underwriters
on the other in connection with the statements or omissions which resulted in
such Losses, as well as any other relevant equitable considerations. Benefits
received by the Company shall be deemed to be equal to the total net proceeds
from the offering (before deducting expenses) of the Purchased Bonds received by
it, and benefits received by the Underwriters shall be deemed to be equal to the
total purchase discounts and commissions with respect to the Purchased Bonds, in
each case set forth on the cover of the Prospectus. Relative fault shall be
determined by reference to, among other things, whether any untrue or any
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information provided by the Company on the
one hand or the Underwriters on the other, the intent of the
11
parties and their relative knowledge, information and opportunity to correct or
prevent such untrue statement or omission; provided, however, that in no case
shall any Underwriters (except as may be provided in any agreement among the
Underwriters relating to the offering of the Purchased Bonds) be responsible for
any amount in excess of the purchase discount or commission applicable to the
Purchased Bonds purchased by such Underwriters hereunder; provided, further,
that each Underwriter's obligation to contribute to Losses hereunder shall be
several and not joint. The Company and the Underwriters agree that it would not
be just and equitable if contribution were determined by pro rata allocation or
any other method of allocation which does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of this
paragraph (d), 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. For purposes of
this Section 8, each person who controls an Underwriter within the meaning of
either the Act or the Exchange Act and each director, officer, employee and
agent of an Underwriter shall have the same rights to contribution as such
Underwriter, and each person who controls the Company within the meaning of
either the Act or the Exchange Act and each officer, director, employee or agent
of the Company shall have the same rights to contribution as the Company,
subject in each case to the applicable terms and conditions of this paragraph
(d).
9. Default by an Underwriter. If any one or more Underwriters shall
fail to purchase and pay for any of the Purchased Bonds 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 remaining Underwriters shall be obligated severally to take up
and pay for (in the respective proportions which the amount of the Purchased
Bonds set forth opposite their names in Schedule II hereto bears to the
aggregate amount of the Purchased Bonds set forth opposite the names of all the
remaining Underwriters) the Purchased Bonds which the defaulting Underwriter or
Underwriters agreed but failed to purchase, provided, however, that in the event
that the aggregate principal amount of Purchased Bonds which the defaulting
Underwriter or Underwriters agreed but failed to purchase shall exceed 10% of
the aggregate principal amount of the Purchased Bonds set forth in Schedule II
hereto, the remaining Underwriters shall have the right to purchase all, but
shall not be under any obligation to purchase any, of the Purchased Bonds, and
if such nondefaulting Underwriters do not purchase all the Purchased Bonds, this
Agreement will terminate without liability to any nondefaulting Underwriter or
the Company. In the event of a default by any Underwriter as set forth in this
Section 9, the Closing Date shall be postponed for such period, not exceeding
five business days, as the Representatives shall determine in order that the
required changes in the Registration Statement and the Prospectus Supplement 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 or any nondefaulting Underwriter for damages occasioned by
its default hereunder.
10. Termination. This Agreement shall be subject to termination in the
absolute discretion of the Representatives, by notice given to the Company prior
to delivery of and payment for the Purchased Bonds, if at any time after the
date hereof and prior to the delivery of and payment for the Purchased Bonds (i)
trading in Exelon Corporation's common stock shall have been suspended by the
Commission or the New York Stock Exchange or trading in securities generally on
the New York Stock Exchange shall have been suspended or limited or
12
minimum prices shall have been established on such Exchange; (ii) a banking
moratorium shall have been declared either by federal or New York State
authorities; (iii) a major disruption of settlements of securities or clearance
services in the United States shall have occurred; 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 sole judgment of the
Representatives, impracticable or inadvisable to proceed with the offering or
delivery of the Purchased Bonds as contemplated by the Prospectus.
11. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
Company or its officers and of the Underwriters set forth in or made pursuant to
this Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of the Underwriters or the Company or any of
the officers, directors or controlling persons referred to in Section 8 hereof,
and will survive delivery of and payment for the Purchased Bonds. The provisions
of Sections 7 and 8 hereof shall survive the termination or cancellation of this
Agreement.
12. Notices. All communications hereunder will be in writing and
effective only on receipt, and, if sent to the Representatives, will be mailed,
delivered or telefaxed to them at the address specified in Schedule I hereto,
or, if sent to the Company, will be mailed, delivered or telefaxed to Exelon
Corporation, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇/▇▇/ ▇▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: Vice President and Treasurer (fax no.: (312)
▇▇▇-▇▇▇▇) and confirmed to the General Counsel of Exelon Corporation (fax no.:
(▇▇▇) ▇▇▇-▇▇▇▇).
13. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and assigns and
the officers and directors and controlling persons referred to in Section 8
hereof, and no other person will have any right or obligation hereunder. The
term "successors and assigns" as used in this Agreement shall not include any
purchaser, as such purchaser, of any of the Purchased Bonds from any of the
Underwriters.
14. Representation of the Underwriters. The Representatives represent
and warrant to the Company that they are authorized to act as the
representatives of the Underwriters in connection with this financing, and the
Representatives' execution and delivery of this Agreement and any action under
this Agreement taken by such Representatives will be binding upon all
Underwriters.
15. Interpretation When No Representatives. In the event no
Underwriters are named in Schedule II hereto, the term "Underwriters" shall be
deemed for all purposes of this Agreement to be the Representative or
Representatives named as such in Schedule I hereto, the principal amount of the
Purchased Bonds to be purchased by any such Underwriter shall be that set
opposite its name in Schedule I hereto and all references to the "Underwriters"
shall be deemed to be the Representative or Representatives named in Schedule I
hereto.
16. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same instrument.
13
17. Applicable Law. This Agreement will be governed by and construed
in accordance with the laws of the State of New York applicable to contracts
made and to be performed within the State of New York.
[Signature page follows]
14
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us the enclosed duplicate hereof, whereupon this
Agreement and your acceptance shall represent a binding agreement between the
Company and each of the several Underwriters.
Very truly yours,
COMMONWEALTH EDISON COMPANY
By: /s/ J. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------
Name: J. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President and Treasurer
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
ABN AMRO INCORPORATED
By: ▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ &
▇▇▇▇▇ INCORPORATED
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
-----------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President
For themselves and the other several
Underwriters named in Schedule II
hereto.
15
SCHEDULE I
Representatives: ABN AMRO Incorporated and ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
A. Purchased Bonds
Purchase Price and Description of the Purchased Bonds:
Principal Amount: $395,000,000
Purchase Price: 98.978%
Interest Rate: 4.70%
Initial Public Offering
Price: 99.653%
Dealer Discount: 0.40%
Reallowance to Dealers: 0.25%
Maturity: April 15, 2015
Sinking Fund Provisions: None
Redemption Provisions:
The Company may, at its option, redeem the Purchased Bonds in whole or in
part at any time at a redemption price equal to the greater of:
. 100% of the principal amount of the Purchased Bonds to be redeemed,
plus accrued interest on such Bonds to the redemption date, or
. as determined by the Quotation Agent, the sum of the present values
of the remaining scheduled payments of principal and interest on the
Purchased Bonds to be redeemed (not including any portion of
payments of interest accrued as of the redemption date) discounted
to the redemption date on a semi-annual basis at the Adjusted
Treasury Rate plus 25 basis points, plus accrued interest on such
Bonds to the redemption date.
Schedule I
The redemption price will be calculated assuming a 360-day year consisting of
twelve 30-day months.
B. Definitions
For purposes of Part A above, the following terms shall have the following
meanings:
"Adjusted Treasury Rate" means, with respect to any redemption date, the
rate per year equal to the semi-annual equivalent yield to maturity of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for the redemption date.
"Business Day" means any day that is not a day on which banking
institutions in New York City are authorized or required by law or regulation to
close.
"Comparable Treasury Issue" means the United States Treasury security
selected by the Quotation Agent as having a maturity comparable to the remaining
term of the Purchased Bonds that would be used, at the time of selection and in
accordance with customary financial practice, in pricing new issues of corporate
debt securities of comparable maturity to the remaining term of those Bonds.
"Comparable Treasury Price" means, with respect to any redemption date:
. the average of the Reference Treasury Dealer Quotations for that
redemption date, after excluding the highest and lowest of the
Reference Treasury Dealer Quotations; or
. if the trustee obtains fewer than three Reference Treasury Dealer
Quotations, the average of all Reference Treasury Dealer Quotations so
received.
"Quotation Agent" means the Reference Treasury Dealer appointed by the
Company.
"Reference Treasury Dealer" means (1) each of ABN AMRO Incorporated and
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated and their respective
successors, unless either of them ceases to be a primary U.S. Government
securities dealer in New York City (a "Primary Treasury Dealer"), in which case
the Company shall substitute another Primary Treasury Dealer; and (2) any other
Primary Treasury Dealer selected by the Company.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the trustee by that Reference Treasury Dealer at 5:00 p.m., New York
City time, on the third Business Day preceding that redemption date.
Schedule I
C. Other Provisions relating to the Purchased Bonds:
Time and Date of Delivery and Payment:
Time and Date --- 8:00 a.m., local time, Monday, April 7, 2003
Place of Delivery :
Delivery --- Sidley ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Office for Examination of Purchased Bonds:
Office of Sidley ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇
Bank One Plaza
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Specified Date pursuant to Section 3 of Underwriting Agreement:
April 7, 2003
Address for Notices to Representatives pursuant to Section 12 of Underwriting
Agreement:
c/o Merrill Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
Schedule I
SCHEDULE II
Principal Amount
Name of Underwriter of Purchased Bonds
------------------- ------------------
ABN AMRO Incorporated .................................... $ 128,375,000
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated ....... 128,375,000
Banc One Capital Markets, Inc. ........................... 29,625,000
Dresdner Kleinwort ▇▇▇▇▇▇▇▇▇▇▇ Securities LLC ............ 29,625,000
Barclays Capital Inc. .................................... 19,750,000
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. ................................ 19,750,000
Scotia Capital (USA) Inc. ................................ 19,750,000
Wachovia Securities, Inc. ................................ 19,750,000
Schedule II