1
Exhibit 1-C
DELMARVA POWER & LIGHT COMPANY
$-----------
MEDIUM-TERM NOTES, SERIES __
AND
FIRST MORTGAGE BONDS
(SECURED MEDIUM-TERM NOTES)
DISTRIBUTION AGREEMENT
____________, 199_
Dear Sirs:
Delmarva Power & Light Company, a Delaware and Virginia corporation
(the "Company"), proposes to issue and sell from time to time its Medium Term
Notes, Series D (the "Notes") and First Mortgage Bonds, which may be designated
as "Secured Medium-Term Notes" (the "Bonds") (collectively, the "Securities"),
in an aggregate amount up to $250,000,000 and agrees with each of you
(individually, an "Agent", and collectively, the "Agents") as set forth in this
Agreement.
Subject to the terms and conditions stated herein and to the
reservation by the Company of the right to sell Securities directly on its own
behalf, the Company hereby (i) appoints each Agent as an agent of the Company
for the purpose of soliciting and receiving offers to purchase Securities from
the Company pursuant to Section 2(a) hereof and (ii) agrees that, except as
otherwise contemplated herein, whenever it determines to sell Securities
directly to any Agent, as principal, it will enter into a separate agreement
(each a "Terms Agreement") in accordance with Section 2(b) hereof.
The Notes will be issued under an Indenture, dated as of November 1,
1988, as it may be supplemented and amended (the "Note Indenture"), between the
Company and Manufacturers Hanover Trust Company, as Trustee (the "Note
Trustee"). The Bonds will be issued under the Company's Mortgage and Deed of
Trust, dated as of October 1, 1943, to the New York Trust Company (to which the
Chemical Bank is successor), as trustee (the "Bond Trustee"), as heretofore
supplemented and amended and to be further supplemented and amended by one or
more Supplemental Indentures (collectively, the "Supplemental Indenture") with
respect to the Bonds (collectively,
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the "Mortgage"). The Note Indenture and Mortgage are sometimes hereinafter
referred to individually as an "Indenture" and collectively as the "Indentures."
The Note Trustee and the Bond Trustee are sometimes hereinafter referred to
individually as a "Trustee" and collectively as the "Trustees." The Securities
shall have the maturity ranges, interest rates, if any, redemption provisions
and other terms set forth in the Prospectus referred to below as it may be
amended or supplemented from time to time. The Securities will be issued, and
the terms and rights thereof established, from time to time by the Company in
accordance with the Indentures.
1. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, each Agent that:
(a) A registration statement on Form S-3 in respect of the
Securities has been filed with the Securities and Exchange Commission
(the "Commission") under the Securities Act of 1933, as amended (the
"Act"), in the form heretofore delivered or to be delivered to such
Agent, excluding exhibits to such registration statement but including
all documents currently incorporated by reference in the prospectus
included therein, and such registration statement in such form has been
declared effective by the Commission and, to the best of the Company's
knowledge, no stop order suspending the effectiveness of such
registration statement has been issued and no proceeding for that
purpose has been initiated or threatened by the Commission (any
preliminary prospectus included in such registration statement being
hereinafter called a "Preliminary Prospectus"; such registration
statement, including all exhibits thereto but excluding the Forms T-1,
as amended at the time it became effective, being hereinafter called
the "Registration Statement"; the prospectus (including, if applicable,
any prospectus supplement) relating to the Securities, in the form in
which it has most recently been filed with the Commission on or prior
to the date of this Agreement, 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 the applicable form under
the Act, as of the date of such Preliminary Prospectus or Prospectus,
as the case may be; any reference to any amendment or supplement to any
Preliminary Prospectus or the Prospectus, including any supplement to
the Prospectus that sets forth only the terms of a particular issue of
the Securities (a "Pricing Supplement"), shall be deemed to refer to
and include any documents filed after the date of such Preliminary
Prospectus or Prospectus, as the case may be, under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and incorporated
therein by reference; and any reference to the Prospectus as amended or
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supplemented shall be deemed to refer to and include the Prospectus as
amended or supplemented (including by the applicable Pricing Supplement
filed in accordance with Section 4(a) hereof) in relation to Securities
sold pursuant to this Agreement, in the form filed with the Commission
pursuant to Rule 424(b) under the Act and in accordance with Section
4(a) hereof, including any documents incorporated by reference therein
as of the date of such filing);
(b) The documents incorporated by reference in the Prospectus,
when they became effective or were filed with the Commission, as the
case may be, conformed in all material respects to the requirements of
the Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder, and none of such documents
contained an 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 not misleading; and any further documents so filed
and incorporated by reference in the Prospectus, or any amendment or
supplement thereto, when such documents become effective or are filed
with the Commission, as the case may be, will conform in all material
respects to the requirements of the Act or the Exchange Act, as
applicable, and the rules and regulations of the Commission thereunder
and will 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; provided, however, that
this representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information
furnished in writing to the Company by any Agent expressly for use in
the Prospectus as amended or supplemented to relate to a particular
issuance of Securities;
(c) The Registration Statement and the Prospectus conform, and
any amendments or supplements thereto will conform, in all material
respects to the requirements of the Act and the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act"), and the rules and
regulations of the Commission thereunder and do not and will not, as of
the applicable effective date in the case of the Registration Statement
and any amendment thereto and as of the applicable filing date in the
case of the Prospectus and any supplement 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; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon
and in conformity with information furnished in writing to the Company
by any Agent expressly for use in the Prospectus as
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amended or supplemented to relate to a particular issuance of
Securities;
(d) There has not been any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole,
otherwise than as set forth or contemplated in the Prospectus.
(e) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
jurisdictions of its incorporation, with power and authority (corporate
and other) to own its properties and conduct its business as described
in the Prospectus;
(f) The Company has an authorized capitalization as set forth
in the financial statements incorporated by reference in the
Prospectus, and all of the outstanding shares of capital stock of the
Company have been duly and validly authorized and issued and are fully
paid and non-assessable;
(g) The Securities have been duly authorized, and, when issued
and delivered pursuant to this Agreement and any Terms Agreement, will
have been duly executed, authenticated, issued and delivered and will
constitute valid and legally binding obligations of the Company
entitled to the benefits provided by the Indentures, which will be
substantially in the forms filed as exhibits to the Registration
Statement; each Indenture has been duly authorized and qualified under
the Trust Indenture Act and constitutes a valid and legally binding
instrument, enforceable in accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization and other laws
of general applicability relating to or affecting creditors' rights and
to general equity principles; and each Indenture conforms and the
Securities of any particular issuance of Securities will conform to the
descriptions thereof in the Prospectus as amended or supplemented to
relate to such issuance of Securities;
(h) The issue and sale of the Securities, the compliance by
the Company with all of the provisions of the Securities, the
Indentures, this Agreement, the Administrative Procedure (as defined in
Section 2 hereof) and any Terms Agreement, and the consummation of the
transactions herein and therein contemplated will not conflict with or
result in a breach of any of the terms or provisions of, or constitute
a default under, any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument to which the Company is a party or by
which the Company is bound or to which any of the
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property or assets of the Company is subject, nor will such action
result in any violation of the provisions of the Restated Certificate
and Articles of Incorporation or the By-Laws, as amended, of the
Company or any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or any
of its properties; and no consent, approval, authorization, order,
registration or qualification of or with any court or governmental
agency or body is required for the solicitation of offers to purchase
Securities and the issue and sale of the Securities or the consummation
by the Company of the other transactions contemplated by this
Agreement, any Terms Agreement or the Indentures, except such as have
been, or will have been prior to the Commencement Date (as defined in
Section 3 hereof), obtained under the Act, the Trust Indenture Act and
the laws of the State of Delaware and Commonwealth of Virginia
governing the regulation of public utilities and such consents,
approvals, authorizations, registrations or qualifications as may be
required under state securities or Blue Sky laws in connection with the
solicitation by such Agent of offers to purchase Securities from the
Company and with purchases of Securities by such Agent as principal, as
the case may be, in each case in the manner contemplated hereby;
(i) Other than as set forth or contemplated in the Prospectus,
there are no legal or governmental proceedings pending to which the
Company or any of its subsidiaries is a party or to which any property
of the Company or any of its subsidiaries is subject, which, if
determined adversely to the Company or any of its subsidiaries, would
individually or in the aggregate have a material adverse effect on the
consolidated financial position, stockholders' equity or results of
operations of the Company and its subsidiaries, and, to the best of the
Company's knowledge, no such proceedings are threatened or contemplated
by governmental authorities or threatened by others;
(j) Immediately after any sale of Securities by the Company
hereunder or under any Terms Agreement, the aggregate amount of
Securities which shall have been issued and sold by the Company
hereunder or under any Terms Agreement will not exceed the amount of
Securities registered under the Act; and
(k) This Agreement has been, and any Terms Agreement will have
been, duly authorized and entered into by the Company.
2. Obligations of the Agents and the Company. (a) On the basis of the
representations and warranties and subject to the terms and conditions herein
set forth, each of the Agents hereby severally and not jointly agrees, as agent
of the Company, to use its best
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efforts to solicit and receive offers to purchase the Securities from the
Company upon the terms and conditions set forth in the Prospectus as amended or
supplemented from time to time. So long as this Agreement shall remain in effect
with respect to any Agent, the Company shall not, without the consent of such
Agent, solicit or accept offers to purchase, or sell, any debt securities with a
maturity at the time of original issuance of 9 months to 40 years except
pursuant to this Agreement, any Terms Agreement or a private placement not
constituting a public offering under the Act, or except in connection with a
firm commitment underwriting pursuant to an underwriting agreement that does not
provide for a continuous offering of medium-term debt securities. However, the
Company reserves the right to sell, and may solicit and accept offers to
purchase, Securities directly on its own behalf, and, in the case of any such
sale not resulting from a solicitation made by any Agent, no commission will be
payable with respect to such sale. These provisions shall not limit Section 4(f)
hereof or any similar provision included in any Terms Agreement.
Procedural details relating to the issue and delivery of Securities,
the solicitation of offers to purchase Securities and the payment therefor shall
be as set forth in the Administrative Procedure attached hereto as Annex II as
it may be amended from time to time by written agreement between the Agents and
the Company (the "Administrative Procedure"). The provisions of the
Administrative Procedure shall apply to all transactions contemplated hereunder
other than those made pursuant to a written Terms Agreement. Each Agent and the
Company agree to perform the respective duties and obligations specifically
provided to be performed by each of them in the Administrative Procedure. The
Company will furnish to each Trustee a copy of the Administrative Procedure as
from time to time in effect.
The Company reserves the right, in its sole discretion, to instruct the
Agents to suspend at any time, for any period of time or permanently, the
solicitation of offers to purchase the Securities. As soon as practicable, but
in any event not later than one business day, after receipt of notice from the
Company, the Agents will suspend solicitation of offers to purchase Securities
from the Company until such time as the Company has advised the Agents that such
solicitation may be resumed.
The Company agrees to pay each Agent a commission, at the time of
settlement of any sale of a Security by the Company as a result of a
solicitation made by such Agent, in an amount equal to the following applicable
percentage of the principal amount of such Security sold (except that the
Company and such Agent may agree in writing to a higher commission for
maturities in excess of 30 years):
COMMISSION
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(PERCENTAGE OF
AGGREGATE
PRINCIPAL AMOUNT
RANGE OF MATURITIES OF SECURITIES SOLD)
From 9 months to less than 1 year.......................................
From 1 year to less than 18 months......................................
From 18 months to less than 2 years.....................................
From 2 years to less than 3 years.......................................
From 3 years to less than 4 years.......................................
From 4 years to less than 5 years.......................................
From 5 years to less than 6 years.......................................
From 6 years to less than 7 years.......................................
From 7 years to less than 10 years......................................
From 10 years to less than 15 years.....................................
From 15 years to less than 20 years.....................................
20 years and more.......................................................
(b) Each sale of Securities to any Agent as principal shall be
made in accordance with the terms of this Agreement and a Terms Agreement which
will provide for the sale of such Securities to, and the purchase thereof by,
such Agent. A Terms Agreement may be either (i) a written agreement between
either or both Agents and the Company, which may be substantially in the form of
Annex I hereto, or (ii) an oral agreement between either Agent and the Company
confirmed in writing by such Agent. Each Terms Agreement shall contain the
information specified in the Administrative Procedure under the caption,
"Communication of Sale Information to Company by Agent", and may specify certain
terms of the reoffering of the Securities. Each Terms Agreement may also specify
any requirements for opinions of counsel, accountants' letters and officers'
certificates pursuant to Section 4 hereof. The commitment of any Agent to
purchase Securities as principal pursuant to any Terms Agreement shall be deemed
to have been made on the basis of the representations and warranties of the
Company herein contained and shall be subject to the terms and conditions herein
set forth.
Each Terms Agreement shall specify the time and date and place of
delivery of and payment for such Securities. Unless otherwise specified in a
Terms Agreement, the procedural details relating to the issue and delivery of
such Securities and payment therefor shall be as set forth in the Administrative
Procedure.
Each time and date of delivery of and payment for Securities to be
purchased by an Agent as principal, whether set forth in a Terms Agreement or in
accordance with the Administrative Procedure, is referred to herein as a "Time
of Delivery".
Unless otherwise specified in a Terms Agreement, an Agent purchasing
Securities as principal may resell such Securities to
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dealers. Any such sales may be at a discount, which shall not exceed the amount
set forth in the Pricing Supplement relating to such Securities.
3. Commencement. The documents required to be delivered pursuant to
Section 6 hereof on the Commencement Date (as defined below) shall be delivered
to the Agents at the offices of Xxxx & Priest, 00 Xxxx 00xx Xxxxxx, Xxx Xxxx,
Xxx Xxxx, at or before 12:00 noon, New York City time, on the date of this
Agreement, which date and time of such delivery may be postponed by agreement
between the Agents and the Company but in no event shall be later than the day
prior to the date on which solicitation of offers to purchase Securities is
commenced or on which any Terms Agreement is executed (such time and date being
referred to herein as the "Commencement Date").
4. Covenants of the Company. The Company covenants and agrees
with each Agent:
(a) (i) To make no amendment or supplement to the Registration
Statement or the Prospectus (A) prior to the Commencement Date, to
which any Agent shall reasonably object after reasonable notice thereof
or (B) after the date of any Terms Agreement by an Agent to purchase
Securities as principal and prior to the related Time of Delivery, to
which any Agent party to such Terms Agreement or so purchasing as
principal shall reasonably object after reasonable notice thereof; (ii)
to prepare, with respect to any Securities to be sold through or to
such Agent pursuant to this Agreement, a Pricing Supplement with
respect to such Securities in a form previously approved by such Agent
and to file such Pricing Supplement pursuant to Rule 424(b) under the
Act; (iii) to make no amendment or supplement to the Registration
Statement or Prospectus, other than any Pricing Supplement, at any time
prior to having afforded each Agent a reasonable opportunity to review
and comment on it; (iv) to file promptly all reports and any definitive
proxy or information statements required to be filed by the Company
with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Exchange Act for so long as the delivery of a prospectus is
required in connection with the offering or sale of the Securities, and
during such same period to advise such Agent, promptly after the
Company receives notice thereof, of the time when any amendment to the
Registration Statement has been filed or has become effective or any
supplement to the Prospectus or any amended Prospectus (other than any
Pricing Supplement that relates to Securities not purchased through or
by such Agent) has been filed with the Commission, of the issuance by
the Commission of any stop order or of any order preventing or
suspending the use of any prospectus relating to the Securities, of the
suspension of the
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qualification of the Securities for offering or sale in any
jurisdiction, of the initiation or threatening of any proceeding for
any such purpose, or of any request by the Commission for the amendment
or supplement of the Registration Statement or Prospectus or for
additional information; and (v) in the event of the issuance of any
such stop order or of any such order preventing or suspending the use
of any such prospectus or suspending any such qualification, to use
promptly its best efforts to obtain its withdrawal;
(b) Promptly, from time to time, to take such action as such
Agent reasonably may request to qualify the Securities for offering and
sale under the securities laws of such jurisdictions as such Agent may
request and to comply with such laws so as to permit the continuance of
sales and dealings therein for as long as may be necessary to complete
the distribution or sale of the Securities; provided, however, that in
connection therewith the Company shall not be required to qualify as a
foreign corporation or to file a general consent to service of process
in any jurisdiction;
(c) To furnish such Agent with copies of the Registration
Statement and each amendment thereto, and with copies of the Prospectus
as amended or supplemented, other than any Pricing Supplement (except
as provided in the Administrative Procedure), in the form in which it
is filed with the Commission pursuant to Rule 424(b) under the Act,
both in such quantities as such Agent may reasonably request from time
to time; and, if the delivery of a prospectus is required at any time
in connection with the offering or sale of the Securities (including
Securities purchased from the Company by such Agent as principal) and
if at such time any event shall have occurred 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 in order to make the statements therein, in the light of the
circumstances under which they were made when such Prospectus is
delivered, not misleading, or, if for any other reason it shall be
necessary during such same period to amend or supplement the Prospectus
or to file under the Exchange Act any document incorporated by
reference in the Prospectus in order to comply with the Act, the
Exchange Act or the Trust Indenture Act, to notify such Agent and
request such Agent, in its capacity as agent of the Company, to suspend
solicitation of offers to purchase Securities from the Company (and, if
so notified, such Agent shall cease such solicitations as soon as
practicable, but in any event not later than one business day later);
and if the Company shall decide to amend or supplement the Registration
Statement or the Prospectus as then amended or supplemented, to so
advise such Agent promptly by telephone
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(with confirmation in writing) and to prepare and cause to be
filed promptly with the Commission an amendment or supplement to the
Registration Statement or the Prospectus as then amended or
supplemented that will correct such statement or omission or effect
such compliance; provided, however, that if during such same period
such Agent continues to own Securities purchased from the Company by
such Agent as principal or such Agent is otherwise required to deliver
a prospectus in respect of transactions in the Securities, the Company
shall promptly prepare and file with the Commission such an amendment
or supplement;
(d) To make generally available to its security holders as
soon as practicable, but in any event not later than eighteen months
after (i) the effective date of the Registration Statement, (ii) the
effective date of each post-effective amendment to the Registration
Statement, and (iii) the date of each filing by the Company with the
Commission of an Annual Report on Form 10-K that is incorporated by
reference in the Registration Statement, an earnings statement of the
Company and its subsidiaries (which need not be audited) complying with
Section 11(a) of the Act and the rules and regulations of the
Commission thereunder (including, at the option of the Company, Rule
158);
(e) So long as any Securities are outstanding, to furnish to
such Agent copies of all reports or other communications (financial or
other) furnished to stockholders, and deliver to such Agent (i) as soon
as they are available, copies of any reports and financial statements
furnished to or filed with the Commission or any national securities
exchange on which any class of securities of the Company is listed; and
(ii) such additional information concerning the business and financial
condition of the Company as such Agent may from time to time reasonably
request (such financial statements to be on a consolidated basis to the
extent the accounts of the Company and its subsidiaries are
consolidated in reports furnished to its stockholders generally or to
the Commission);
(f) That, between the date of any Terms Agreement with an
Agent and the related Time of Delivery, the Company will not, without
the prior written consent of such Agent, offer, sell, contract to sell
or otherwise dispose of any debt securities of the Company
substantially similar to the Securities (other than (i) Securities that
are to be sold pursuant to such Terms Agreement, (ii) Securities
previously agreed to be sold by the Company and (iii) commercial paper
issued in the ordinary course of business), except as may otherwise be
provided in such Terms Agreement;
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(g) That each acceptance by the Company of an offer to
purchase Securities hereunder (including any purchase by such Agent as
principal pursuant to a Terms Agreement) shall be deemed to be an
affirmation to such Agent that the representations and warranties of
the Company contained in or made pursuant to this Agreement are true
and correct as of the date of such acceptance as though made at and as
of such date, and an undertaking that such representations and
warranties will be true and correct as of the settlement date for the
Securities relating to such acceptance or as of the Time of Delivery
relating to such purchase pursuant to a Terms Agreement, as the case
may be, as though made at and as of such date (except that such
representations and warranties shall be deemed to relate to the
Registration Statement and the Prospectus as amended and supplemented
relating to such Securities);
(h) That reasonably in advance of each time the Registration
Statement or the Prospectus shall be amended or supplemented (other
than by a Pricing Supplement) and each time a document filed under the
Act or the Exchange Act is incorporated by reference into the
Prospectus, and each time the Company sells Securities to such Agent as
principal pursuant to a Terms Agreement and such Terms Agreement
specifies the delivery of an opinion or opinions by Xxxx & Priest,
counsel to the Agents, as a condition to the purchase of Securities
pursuant to such Terms Agreement, the Company shall furnish to such
counsel such papers and information as they may reasonably request to
enable them to furnish to such Agent the opinion or opinions referred
to in Section 6(b) hereof;
(i) That each time the Registration Statement or the
Prospectus shall be amended or supplemented (other than by a Pricing
Supplement), each time a document filed under the Act or the Exchange
Act is incorporated by reference into the Prospectus, and each time the
Company sells Securities to such Agent as principal pursuant to a Terms
Agreement and such Terms Agreement specifies the delivery of an opinion
under this Section 4(i) as a condition to the purchase of Securities
pursuant to such Terms Agreement, the Company shall furnish or cause to
be furnished forthwith to such Agent a written opinion of Xxxx X.
Xxxxxxxx, General Counsel for the Company, or other counsel for the
Company satisfactory to such Agent, dated the date of such amendment,
supplement, incorporation or Time of Delivery relating to such purchase
pursuant to a Terms Agreement, as the case may be, in form satisfactory
to such Agent, to the effect that such Agent may rely on the opinion of
such counsel referred to in Section 6(c) hereof which was last
furnished to such Agent to the same extent as though it were dated the
date of such letter authorizing reliance (except
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that the statements in such last opinion shall be deemed to relate to
the Registration Statement and the Prospectus as amended and
supplemented to such date) or, in lieu of such opinion, an opinion of
the same tenor as the opinion of such counsel referred to in Section
6(c) hereof but modified to relate to the Registration Statement and
the Prospectus as amended and supplemented to such date;
(j) That each time the Registration Statement or the
Prospectus shall be amended or supplemented and each time that a
document filed under the Act or the Exchange Act is incorporated by
reference into the Prospectus, in either case to set forth financial
information included in or derived from the Company's consolidated
financial statements or accounting records, and each time the Company
sells Securities to such Agent as principal pursuant to a Terms
Agreement and such Terms Agreement specifies the delivery of a letter
under this Section 4(j) as a condition to the purchase of Securities
pursuant to such Terms Agreement, the Company shall cause the
independent certified public accountants who have certified the
financial statements of the Company and its subsidiaries included or
incorporated by reference in the Registration Statement forthwith to
furnish such Agent a letter, dated the date of such amendment,
supplement, incorporation or Time of Delivery relating to such purchase
pursuant to a Terms Agreement, as the case may be, in form satisfactory
to such Agent, of the same tenor as the letter referred to in Section
6(d) hereof but modified to relate to the Registration Statement and
the Prospectus as amended or supplemented to the date of such letter,
with such changes as may be necessary to reflect changes in the
financial statements and other information derived from the accounting
records of the Company, to the extent such financial statements and
other information are available as of a date not more than five
business days prior to the date of such letter; provided, however,
that, with respect to any financial information or other matter, such
letter may reconfirm as true and correct at such date as though made at
and as of such date, rather than repeat, statements with respect to
such financial information or other matter made in the letter referred
to in Section 6(d) hereof which was last furnished to such Agent;
(k) That each time the Registration Statement or the
Prospectus shall be amended or supplemented (other than by a Pricing
Supplement), each time a document filed under the Act or the Exchange
Act is incorporated by reference into the Prospectus, and each time the
Company sells Securities to such Agent as principal and the applicable
Terms Agreement specifies the delivery of a certificate under this
Section 4(k) as a condition to the purchase of Securities pursuant to
such Terms
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Agreement, the Company shall furnish or cause to be furnished forthwith
to such Agent a certificate, dated the date of such supplement,
amendment, incorporation or Time of Delivery relating to such purchase
pursuant to a Terms Agreement, as the case may be, in such form and
executed by such officers of the Company as shall be satisfactory to
such Agent, to the effect that the statements contained in the
certificate referred to in Section 6(f) hereof which was last furnished
to such Agent are true and correct at such date as though made at and
as of such date (except that such statements shall be deemed to relate
to the Registration Statement and the Prospectus as amended and
supplemented to such date) or, in lieu of such certificate,
certificates of the same tenor as the certificates referred to in said
Section 6(f) but modified to relate to the Registration Statement and
the Prospectus as amended and supplemented to such date.
5. Payment of Expenses. The Company covenants and agrees with each
Agent that the Company will pay or cause to be paid the following: (i) the fees
and expenses of the Company's counsel and accountants in connection with the
registration of the Securities under the Act and all other expenses in
connection with the preparation, printing and filing of the Registration
Statement, any Preliminary Prospectus, the Prospectus and any Pricing Supplement
and all other amendments and supplements thereto and the mailing and delivering
of copies thereof to such Agent; (ii) the fees and expenses of counsel for the
Agents in connection with the establishment of the program contemplated hereby,
any opinions to be rendered by such counsel hereunder and the continuing advice
and services of such counsel in connection with the transactions contemplated
hereunder; (iii) the cost of printing, preparing by word processor or
reproducing this Agreement, any Terms Agreement, any Indenture, any Blue Sky and
Legal Investment Memoranda and any other documents in connection with the
offering, purchase, sale and delivery of the Securities; (iv) all expenses in
connection with the qualification of the Securities for offering and sale under
state securities laws as provided in Section 4(b) hereof, including fees and
disbursements of counsel for the Agents in connection with such qualification
and in connection with the Blue Sky and legal investment surveys; (v) any fees
charged by securities rating services for rating the Securities; (vi) any filing
fees incident to any required review by the National Association of Securities
Dealers, Inc. of the terms of the sale of the Securities; (vii) the cost of
preparing the Securities; (viii) the fees and expenses of any Trustee and any
agent of any Trustee and any transfer or paying agent of the Company and the
fees and disbursements of counsel for any Trustee or such agent in connection
with any Indenture and the Securities; (ix) any advertising expenses connected
with the solicitation of offers to purchase and the sale of Securities so long
as such advertising expenses have been approved by the Company;
14
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(x) the out-of-pocket expenses of the Agents incurred in connection with the
implementation of the program for the offer and sale of the Securities; and (xi)
all other costs and expenses incident to the performance of the Company's
obligations hereunder which are not otherwise specifically provided for in this
Section. Except as provided in Sections 7 and 8 hereof, each Agent shall pay all
other expenses it incurs.
6. Conditions of Agents' Obligations. The obligation of any Agent, as
agent of the Company, at any time ("Solicitation Time") to solicit offers to
purchase the Securities and the obligation of any offeree to purchase Securities
or of any Agent to purchase Securities as principal, pursuant to any Terms
Agreement, shall in each case be subject, in such offeree's or Agent's
discretion, to the condition that all representations and warranties and other
statements of the Company herein (and, in the case of an obligation of an Agent
under a Terms Agreement, contained in or incorporated in such Terms Agreement by
reference) are true and correct at and as of the Commencement Date and any
applicable date referred to in Section 4(k) hereof that is on or prior to such
Solicitation Time or Time of Delivery, as the case may be, and at and as of such
Solicitation Time or Time of Delivery, as the case may be, the condition that on
or prior to such Solicitation Time or Time of Delivery, as the case may be, the
Company shall have performed all of its obligations hereunder theretofore to be
performed, and the following additional conditions:
(a) (i) With respect to any Securities sold at or prior to
such Solicitation Time or Time of Delivery, as the case may be, the
Prospectus as amended or supplemented (including the Pricing
Supplement) with respect to such Securities shall have been filed with
the Commission pursuant to Rule 424(b) under the Act within the
applicable time period prescribed for such filing by the rules and
regulations under the Act and in accordance with Section 4(a) hereof;
(ii) no stop order suspending the effectiveness of the Registration
Statement shall have been issued and shall remain in effect and no
proceeding for that purpose shall have been initiated or threatened by
the Commission; and (iii) all requests for additional information on
the part of the Commission shall have been complied with to the
reasonable satisfaction of such Agent;
(b) Xxxx & Priest, counsel to the Agents, shall have furnished
to such Agent (i) such opinion or opinions, dated the Commencement
Date, with respect to the incorporation of the Company, the validity of
each Indenture, the Securities, the Registration Statement, the
Prospectus as amended or supplemented and other related matters as such
Agent may reasonably request, and (ii) if and to the extent requested
by
15
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such Agent, with respect to each applicable date referred to in Section
4(h) hereof that is on or prior to such Solicitation Time or Time of
Delivery, as the case may be, a letter, dated such applicable date, to
the effect that such Agent may rely on the opinion or opinions which
were last furnished to such Agent pursuant to this Section 6(b) to the
same extent as though it or they were dated the date of such letter
authorizing reliance (except that the statements in such letter shall
be deemed to relate to the Registration Statement and the Prospectus as
amended and supplemented to such date) or, in any case, in lieu of such
a letter, an opinion or opinions of the same tenor as the opinion or
opinions referred to in clause (i) but modified to relate to the
Registration Statement and the Prospectus as amended and supplemented
to such date; and in each case such counsel shall have received such
papers and information as they may reasonably request to enable them to
pass upon such matters;
(c) Xxxx X. Xxxxxxxx, General Counsel for the Company, or
other counsel for the Company satisfactory to such Agent, shall have
furnished to such Agent his written opinions, dated the Commencement
Date and each applicable date referred to in Section 4(i) hereof that
is on or prior to such Solicitation Time or Time of Delivery, as the
case may be, in form and substance satisfactory to such Agent, to the
effect that:
(i) the Company has been duly organized and is
validly existing as a corporation in good standing under the
laws of Delaware and Virginia with all corporate power and
other authority, including franchises, necessary to own or
lease its properties and conduct its business as described in
the Registration Statement and Prospectus as amended or
supplemented and to issue and sell the Securities; and each of
the Subsidiaries has been duly organized and is validly
existing as a corporation in good standing under the laws of
its jurisdiction and is duly qualified to do business as a
foreign corporation and is in good standing under the laws of
any jurisdiction in which the conduct of its business or the
ownership or leasing of its properties requires such
qualification, with all corporate and other authority and
franchises necessary to own or lease its properties and
conduct its business as described in the Registration
Statement and Prospectus;
(ii) the Company is duly qualified to do business as
a foreign corporation in good standing in Maryland, New
Jersey, Ohio and Pennsylvania, being all of the jurisdictions
in which the conduct of its business or its ownership or
leasing of properties requires such qualifi-
16
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cation; and the Company owns all of the stock of its
subsidiaries, free and clear of any lien, pledge or other
encumbrance;
(iii) except as otherwise set forth in the Prospectus
as amended or supplemented, and except with respect to the
location of certain poles, wires, and other facilities within
public highways or over or under public or navigable waters
(the status of which does not in any case threaten to affect
materially the Company's ability to conduct its present
business), the Company has such valid franchises, certificates
of convenience and necessity, operating rights, licenses,
permits, consents, approvals, authorizations and/or orders of
governmental bodies, political subdivisions or regulatory
authorities, free from materially burdensome restrictions, as
are necessary for the acquisition, construction and ownership
of the properties owned or leased by it and the maintenance
and operation of the properties now operated by it and the
conduct of the business now carried on by it as described in
the Registration Statement and the Prospectus as amended or
supplemented, and to the best of the knowledge of such
counsel, the Company is not in default or violation of any
such franchises, certificates of convenience and necessity,
operating rights, licenses, permits, consents, approvals,
authorizations, and/or orders of governmental bodies,
political subdivisions or regulatory authorities to an extent
which would materially affect the conduct of such business,
and the Company is not, to any material extent, in violation
of any applicable Federal, state or other laws and
regulations;
(iv) each of the Note Indenture and the Mortgage has
been, and, at the date of issuance of each series of the
Bonds, the Supplemental Indenture with respect to such series
will have been, duly authorized, executed and delivered and
is, and will be, as the case may be, a valid instrument
legally binding upon the Company and enforceable in accordance
with its terms, except as remedies may be limited by
bankruptcy, insolvency or other laws of general application
affecting the enforcement of creditors' rights generally or
principles of equity;
(v) the Mortgage, including each supplement thereto,
has been duly recorded as a mortgage upon the property covered
thereby in such a manner as is necessary to maintain the lien
thereof; and with respect to security interests in personal
property and fixtures covered by the Mortgage, financing
statements have been duly filed, to the extent required, under
the provisions of the Delaware,
17
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Maryland, New Jersey, Pennsylvania and Virginia Uniform
Commercial Codes (certain of which contain requirements for
the filing of continuation statements at specified intervals
in order to preserve the security);
(vi) substantially all the utility plant and real
property owned by the Company at the date of the Supplemental
Indenture are adequately described in the Mortgage so as to
constitute the Mortgage a lien thereon as security for the
Bonds, subject to no liens, encumbrances, or rights of others,
other than those specified or referred to in the Prospectus
under the heading "Description of the New Bonds-Security";
(vii) at the date of issuance of each series of the
Bonds, substantially all the utility plant and real property
owned by the Company will be adequately described in the
Mortgage so as to constitute the Mortgage a lien thereon as
security for the Bonds, subject to no liens, encumbrances, or
rights of others, other than those specified or referred to in
the Prospectus as amended or supplemented under the heading
"Description of The New Bonds-Security";
(viii) the Notes have been duly authorized and, with
respect to the Notes of each issue, when the terms thereof
have been duly established in accordance with a Company Order
or pursuant to such procedures acceptable to the Note Trustee
as may be specified in a Company Order, when they have been
duly executed by the proper officers of the Company,
authenticated by the Trustee and delivered by the Company, and
when payment therefor has been received by the Company, they
will have been validly issued and will be valid and binding
obligations of the Company enforceable in accordance with
their terms and entitled to the benefits provided by the Note
Indenture, subject to the limitations set forth in paragraph
(iv) above;
(ix) at the date of issuance of each series of the
Bonds, the Bonds of such series will have been duly authorized
and, when duly executed by the proper officers of the Company,
authenticated by the Trustee and delivered by the Company, and
when payment therefor has been received by the Company, they
will have been validly issued and will be valid and binding
obligations of the Company enforceable in accordance with
their terms and entitled to the lien of, and benefits provided
by, the Mortgage, subject to the limitations set forth in
paragraph (iv) above;
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(x) the terms of the Note Indenture and the Mortgage
conform, and at the date of issuance of each issue of the
Notes or series of the Bonds, the Notes of such issue or the
Bonds of such series, as the case may be, will conform, as to
legal matters, to the description thereof and the statements
concerning them in the Registration Statement and the
Prospectus as amended or supplemented; the summary of certain
terms and provisions of the Note Indenture and the Mortgage
appearing in the Registration Statement and the Prospectus as
amended or supplemented fairly presents, and at each such date
of issuance, the summary of certain terms and provisions of
the Notes of such issue or the Bonds of such series, as the
case may be, appearing in the Registration Statement and the
Prospectus as amended or supplemented will fairly present, the
information called for by the Act and the rules and
regulations of the Commission thereunder; and the Note
Indenture and the Mortgage have been duly qualified under the
Trust Indenture Act of 1939;
(xi) the Delaware Public Service Commission and the
Virginia State Corporation Commission have issued orders (to
be identified by date and docket number) authorizing the
issuance and sale of the Securities and authorizing generally
the transactions relating thereto (including permitting the
Company to enter into this Agreement and perform its
obligations hereunder); neither of such orders contains any
condition inconsistent with the provisions hereof nor, to the
best knowledge of such counsel, has either of such orders been
rescinded, modified or stayed; and no further action is
required to be taken by, and no further authorization, consent
or approval is required to be obtained from, any governmental
authority having jurisdiction in connection with the
authorization, issuance and sale of the Securities (other than
in connection with state securities or blue sky laws as to
which counsel need express no opinion);
(xii) the statements in the Prospectus as amended or
supplemented that are stated therein to have been made on the
authority of such counsel as an expert have been reviewed by
such counsel and, as to matters of law and legal conclusions,
are correct and fairly present the information required to be
shown;
(xiii) such counsel does not know of any legal or
governmental proceedings required to be described in the
Registration Statement or the Prospectus as amended or
supplemented which are not described as required, or of any
contracts or documents of the Company or any of its
19
-19-
subsidiaries of a character required to be described in the
Registration Statement or Prospectus as amended or
supplemented, incorporated by reference into the Prospectus as
amended or supplemented or filed as exhibits to the
Registration Statement by the Act or by the rules and
regulations of the Commission thereunder which have not been
described, incorporated by reference or filed as required;
(xiv) the performance of this Agreement and of any
Terms Agreement and the consummation of the transactions
herein or therein contemplated and the fulfillment of the
terms hereof or thereof will not result in a breach or
violation of any of the terms or provisions of, or constitute
a default under, the Restated Certificate and Articles of
Incorporation, as amended, or By-Laws, as amended, of the
Company, or any statute, or any indenture, mortgage, deed of
trust, note agreement or other agreement or instrument known
to such counsel to which the Company or any of its
subsidiaries is a party or by which any of them is bound or to
which any of their property is subject, or any order, rule or
regulation known to such counsel applicable to the Company or
to any of its subsidiaries or any of their property of any
court or other governmental body;
(xv) this Agreement has been, and when executed any
Terms Agreement shall have been, duly authorized and entered
into by the Company; and this Agreement is, and when executed
and delivered any Terms Agreement shall be, valid and binding
on the Company, except that rights to indemnity hereunder and
thereunder may be limited under securities laws.
(xvi) The documents incorporated by reference in the
Prospectus as amended or supplemented, when they became
effective or were filed with the Commission, as the case may
be, complied as to form in all material respects with the
requirements of the Act or the Exchange Act, as applicable,
and the rules and regulations of the Commission thereunder;
and such counsel has no reason to believe that any of such
documents, when they became effective or were so filed, as the
case may be, contained an untrue statement of a material fact
or omitted to state a material fact necessary in order to make
the statements therein, in the light of the circumstances
under which they were made when such documents were so filed,
not misleading, except that such counsel need express no
opinion as to the financial statements and other financial
data included therein; and
20
-20-
(xvii) the Registration Statement has become
effective under the Act, and, to the best of the knowledge of
such counsel, no stop order with respect thereto has been
issued and is continuing, no order directed to the adequacy or
accuracy of any Incorporated Document has been issued by the
Commission and no proceeding for any such purpose has been
initiated or is pending or, to the best knowledge of such
counsel, contemplated by the Commission; the Registration
Statement at the time it became effective complied, and the
Prospectus as amended or supplemented complies, as to form, in
all material respects, with the requirements of the Act and
the Trust Indenture Act and the rules and regulations
thereunder; such counsel has no reason to believe that (i) the
Registration Statement, at the time the Registration Statement
became effective and at the Solicitation Time, contained or
contains any statement of a material fact or omitted or omits
to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, or
(ii) the Prospectus, at the time the Prospectus Supplement was
filed with the Commission pursuant to Rule 424(b), or any
amendment or supplement thereto, as of its date, contained or
contains any untrue statement of a material fact or omitted or
omits 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,
except that in each case such counsel need express no opinion
as to the financial statements and other financial data
included therein.
(d) The independent certified public accountants who have
certified the financial statements of the Company and its subsidiaries
included or incorporated by reference in the Registration Statement
shall have furnished to such Agent a letter, dated the Commencement
Date and each applicable date referred to in Section 4(j) hereof that
is on or prior to such Solicitation Time or Time of Delivery, as the
case may be, in form and substance satisfactory to such Agent to the
effect set forth in Annex III hereto;
(e) There shall not have occurred any:
(i) change, or any development involving a
prospective change, in the condition, financial or otherwise,
or in the earnings, business or operations, of the Company and
its subsidiaries, taken as a whole, from that set forth in the
Prospectus, as amended or supplemented at such Solicitation
Time or Time of Delivery, as the case may be, that, in such
Agent's judgment, is material and adverse and that makes it,
in such Agent's
21
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judgment, impracticable to market the Securities on the terms
and in the manner contemplated by the Prospectus, as so
amended or supplemented;
(ii) (A) suspension or material limitation of trading
generally on or by, as the case may be, the New York Stock
Exchange, the American Stock Exchange, the National
Association of Securities Dealers, Inc., the Chicago Board
Options Exchange, the Chicago Mercantile Exchange or the
Chicago Board of Trade, (B) suspension of trading of any
securities of the Company on any exchange or in any
over-the-counter market, (C) declaration of a general
moratorium on commercial banking activities in New York by
either Federal or New York State authorities or (D) any
outbreak or escalation of hostilities or any change in
financial markets or any calamity or crisis that, in such
Agent's judgment, is material and adverse and, in the case of
any of the events described in clauses (A) through (D), such
event, singly or together with any other such event, makes it,
in such Agent's judgment, impracticable to market the
Securities on the terms and in the manner contemplated by the
Prospectus, as amended or supplemented at such Solicitation
Time or Time of Delivery, as the case may be; and
(iii) downgrading in the rating accorded any of the
Company's securities by any "nationally recognized statistical
rating organization," as such term is defined for purposes of
Rule 436(g)(2) under the Securities Act;
except, in each case, as disclosed to such Agent in writing by the
Company prior to such Solicitation Time, or unless in each case
described in (ii) above, the relevant event shall have occurred and
been known to such Agent prior to such Solicitation Time, as the case
may be.
(f) The Company shall have furnished or caused to be furnished
to such Agent certificates of officers of the Company dated the
Commencement Date and each applicable date referred to in Section 4(k)
hereof that is on or prior to such Solicitation Time or Time of
Delivery, as the case may be, in such form and executed by such
officers of the Company as shall be satisfactory to such Agent, as to
the accuracy of the representations and warranties of the Company
herein at and as of the Commencement Date or such applicable date, as
the case may be, as to the performance by the Company of all of its
obligations hereunder to be performed at or prior to the Commencement
Date or such applicable date, as the case may be, as to the matters set
forth in subsections (a) and (e) of this
22
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Section 6, and as to such other matters as such Agent may
reasonably request.
7. Indemnification. (a) The Company will indemnify and hold harmless
each Agent, and each person, if any, who controls such Agent within the meaning
of the Act, against any losses, claims, damages or liabilities, joint or
several, to which such Agent may become subject, under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement, the Prospectus, the Prospectus as amended or
supplemented or any other prospectus relating to the Securities, or any
amendment 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 not misleading, and will
reimburse such Agent for any legal or other expenses reasonably incurred by it
in connection with investigating or defending any such action or claim as such
expenses are incurred; provided, however, that the Company shall 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 an untrue statement or alleged untrue statement
or omission or alleged omission made in any Preliminary Prospectus, the
Registration Statement, the Prospectus, the Prospectus as amended or
supplemented or any other prospectus relating to the Securities, or any such
amendment or supplement, in reliance upon and in conformity with written
information furnished to the Company by such Agent expressly for use therein,
and provided, further, that the indemnity agreement contained in this paragraph
in respect of any Preliminary Prospectus shall not inure to the benefit of
either Agent on account of any such losses, claims, damages or liabilities
arising from the sale of the Securities to any offeree if such Agent failed to
send or give a copy of the Prospectus as amended or supplemented (excluding
documents incorporated therein by reference), if any amendments or supplements
thereto shall have been furnished, at or prior to the time of written
confirmation of the sale involved, to such offeree with or prior to the written
confirmation of such sale.
(b) Each Agent will indemnify and hold harmless the Company against any
losses, claims, damages or liabilities to which the Company may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement, the Prospectus, the
Prospectus as amended or supplemented or any other prospectus relating to the
Securities, or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission
23
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to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, in each case to the extent, but only
to the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in any Preliminary Prospectus, the
Registration Statement, the Prospectus, the Prospectus as amended or
supplemented or any other prospectus relating to the Securities, or any such
amendment or supplement, in reliance upon and in conformity with written
information furnished to the Company by such Agent expressly for use therein;
and will reimburse the Company for any legal or other expenses reasonably
incurred by the Company in connection with investigating or defending any such
action or claim as such expenses are incurred.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to either paragraph (a) or (b) above, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the reasonable fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any indemnified party shall have the right
to retain its own counsel, but the fees and expenses of such counsel shall be at
the expense of such indemnified party unless (i) the indemnifying party and the
indemnified party shall have mutually agreed to the retention of such counsel or
(ii) the named parties to any such proceeding (including any impleaded parties)
include both the indemnifying party and the indemnified party and representation
of both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them; provided, however, that the
indemnifying party shall only be responsible for the fees of such counsel to the
extent they are reasonably incurred. It is understood that the indemnifying
party shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all such indemnified parties and that all such fees
and expenses, to the extent they are reasonable, shall be reimbursed as they are
incurred. Such firm shall be designated in writing by the Agents, in the case of
parties indemnified pursuant to paragraph (a) above, and by the Company, in the
case of parties indemnified pursuant to paragraph (b) above. The indemnifying
party shall not be liable for any settlement of any proceeding effected without
its written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from
00
-00-
00
-00-
and against any loss or liability by reason of such settlement or judgment. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened 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 proceeding.
(d) If the indemnification provided for in this Section 7 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and each Agent on the
other from the offering of the Securities to which such loss, claim, damage or
liability (or action in respect thereof) relates. If, however, the allocation
provided by the immediately preceding sentence is not permitted by applicable
law, then each indemnifying party shall contribute to such amount paid or
payable by such indemnified party 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 each Agent on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and each Agent on the other shall be deemed to be in the same
proportion as the total net proceeds from the sale of Securities (before
deducting expenses) received by the Company bear to the total commissions or
discounts received by such Agent in respect thereof. 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 required to be stated therein or necessary in order to make the
statements therein not misleading relates to information supplied by the Company
on the one hand or by any Agent on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and each Agent agree that it would not be
just and equitable if contribution pursuant to this subsection (d) were
determined by per capita allocation (even if all Agents were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this
subsection (d). The amount paid or payable by an indemnified party as a result
of the losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in
26
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this subsection (d) shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (d), an Agent shall not be
required to contribute any amount in excess of the amount by which the total
public offering price at which the Securities purchased by or through it were
sold exceeds the amount of any damages which such Agent 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
obligations of each of the Agents under this subsection (d) to contribute are
several in proportion to the respective purchases made by or through it to which
such loss, claim, damage or liability (or action in respect thereof) relates and
are not joint.
(e) The obligations of the Company under this Section 7 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls any
Agent within the meaning of the Act; and the obligations of each Agent under
this Section 7 shall be in addition to any liability which such Agent may
otherwise have and shall extend, upon the same terms and conditions, to each
officer and director of the Company and to each person, if any, who controls the
Company within the meaning of the Act.
8. Nonperformance. Each Agent, in soliciting offers to purchase Securities from
the Company and in performing the other obligations of such Agent hereunder
(other than in respect of any purchase by an Agent as principal, pursuant to a
Terms Agreement or otherwise), is acting solely as agent for the Company and not
as principal. Each Agent will make reasonable efforts to assist the Company in
obtaining performance by each purchaser whose offer to purchase Securities from
the Company was solicited by such Agent and has been accepted by the Company,
but such Agent shall not have any liability to the Company in the event such
purchase is not consummated for any reason. If the Company shall default on its
obligation to deliver Securities to a purchaser whose offer it has accepted, the
Company shall (i) hold each Agent harmless against any loss, claim or damage
arising from or as a result of such default by the Company and (ii)
notwithstanding such default, pay to the Agent that solicited such offer any
commission to which it would be entitled in connection with such sale.
9. Survival of Agreement. The respective indemnities, agreements,
representations, warranties and other statements by any Agent and the Company
set forth in or made pursuant to this Agreement shall remain in full force and
effect regardless of any
27
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investigation (or any statement as to the results thereof) made by or on behalf
of any Agent or any controlling person of any Agent or the Company, or any
officer or director or any controlling person of the Company, and shall survive
each delivery of and payment for any of the Securities.
10. Suspension or Termination. The provisions of this Agreement
relating to the solicitation of offers to purchase Securities from the Company
may be suspended or terminated at any time by the Company as to any Agent or by
any Agent as to such Agent upon the giving of written notice of such suspension
or termination to such Agent or the Company, as the case may be. In the event of
such suspension or termination with respect to any Agent, (i) this Agreement
shall remain in full force and effect with respect to any Agent as to which such
suspension or termination has not occurred, (ii) this Agreement shall remain in
full force and effect with respect to the rights and obligations of any party
which have previously accrued or which relate to Securities which are already
issued, agreed to be issued or the subject of a pending offer at the time of
such suspension or termination and (iii) in any event, this Agreement shall
remain in full force and effect insofar as the fourth paragraph of Section 2(a),
Section 4(d), Section 4(e), Section 5, Section 7, Section 8 and Section 9 hereof
are concerned.
11. Notices. Except as otherwise specifically provided herein or in the
Administrative Procedure, all statements, requests, notices and advices
hereunder shall be in writing, or by telephone if promptly confirmed in writing,
and if to _____________________, shall be sufficient in all respects when
delivered or sent by facsimile transmission or registered mail to
______________________________________________________________, Attention:
_________________________________, Facsimile Transmission No. _____________, and
if to ___________________________, shall be sufficient in all respects when
delivered or sent by facsimile transmission or registered mail to
__________________________________, Facsimile Transmission No.
_______________________, Attention: _______________________________, and if to
the Company shall be sufficient in all respects when delivered or sent by
facsimile transmission or registered mail to Delmarva Power & Light Company, 000
Xxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, Facsimile Transmission No. (302)
429-3665, Attention: Treasurer.
12. Benefit of Agreement. This Agreement and any Terms Agreement shall
be binding upon, and inure solely to the benefit of, each Agent and the Company,
and to the extent provided in Section 7, Section 8 and Section 9 hereof, the
officers and directors of the Company and any person who controls any Agent or
the Company, and their respective personal representatives, successors and
assigns, and no other person shall acquire or have any right under or by
28
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virtue of this Agreement or any Terms Agreement. No purchaser of any of the
Securities through or from any Agent hereunder shall be deemed a successor or
assign by reason of such purchase.
13. Definition of Business Day. Time shall be of the essence in this
Agreement and any Terms Agreement. As used herein, the term "business day" shall
mean any day when the office of the Commission in Washington, D.C. and banks
located in the City of New York are normally open for business.
14. GOVERNING LAW. THIS AGREEMENT AND ANY TERMS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO THE CONFLICT OF LAW PROVISIONS THEREOF.
15. Execution in Counterparts. This Agreement and any written Terms
Agreement may be executed by any one or more of the parties hereto and thereto
in any number of counterparts, each of which shall be an original, but all of
such respective counterparts shall together constitute one and the same
instrument.
If the foregoing is in accordance with your understanding, please sign
and return to us two counterparts hereof, whereupon this letter and the
acceptance by each of you thereof shall constitute
29
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a binding agreement between the Company and each of you in accordance with its
terms.
Very truly yours,
DELMARVA POWER & LIGHT COMPANY
By:______________________________
Title:___________________________
Accepted in New York, New York, as of the date hereof:
[AGENT]
By:______________________________
Title:___________________________
[AGENT]
By:______________________________
Title:___________________________
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ANNEX I
DELMARVA POWER & LIGHT COMPANY
MEDIUM TERM NOTES, SERIES __
TERMS AGREEMENT
___________, 199_
[Agent]
Dear Sirs:
Delmarva Power & Light Company (the "Company") proposes, subject to the
terms and conditions stated herein and in the Distribution Agreement, dated
__________, 199_ (the "Distribution Agreement"), between the Company, on the one
hand, and _____________________________________________________(the "Agents") on
the other, to issue and sell to _________________________ the securities
specified in the Schedule hereto (the "Purchased Securities"). Each of the
provisions of the Distribution Agreement not specifically related to the
solicitation by the Agents, as agents of the Company, of offers to purchase
Securities is incorporated herein by reference in its entirety, and shall be
deemed to be part of this Agreement to the same extent as if such provisions had
been set forth in full herein. Nothing contained herein or in the Distribution
Agreement shall make any party hereto an agent of the Company or make such party
subject to the provisions therein relating to the solicitation of offers to
purchase securities from the Company, solely by virtue of its execution of this
Agreement. Each of the representations and warranties set forth in the
Distribution Agreement shall be deemed to have been made at and as of the date
of this Agreement, except that each representation and warranty in Section 1 of
the Distribution Agreement which makes reference to the Prospectus shall be
deemed to be a representation and warranty as of the date of the Distribution
Agreement in relation to the Prospectus (as therein defined), and also a
representation and warranty as of the date of this Agreement in relation to the
Prospectus as amended and supplemented to relate to the Purchased Securities.
An amendment to the Registration Statement, or a supplement to the
Prospectus, as the case may be, relating to the Purchased Securities, in the
form heretofore delivered to you is now proposed to be filed with the
Commission.
Subject to the terms and conditions set forth herein and in the
Distribution Agreement incorporated herein by reference, the Company agrees to
issue and sell to ____________________________ and
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______________________________________ agrees to purchase from the Company the
Purchased Securities, at the time and place, in the principal amount and at the
purchase price set forth in the Schedule hereto.
If the foregoing is in accordance with your understanding, please sign and
return to us two counterparts hereof, and upon acceptance hereof by you this
letter and such acceptance hereof, including those provisions of the
Distribution Agreement incorporated herein by reference, shall constitute a
binding agreement between you and the Company.
DELMARVA POWER & LIGHT COMPANY
By:______________________________
Title:___________________________
Accepted in New York, New York,
as of the date hereof:
[PURCHASING AGENT]
By:__________________________________
Title:_______________________________
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SCHEDULE TO ANNEX I
Title of Purchased Securities:
[ % Medium-Term Notes]
[ % First Mortgage Bonds, Series due ]
Aggregate Principal Amount:
$
[Price to Public: ]
Purchase Price:
% of the principal amount of [, plus accrued interest from
to
]
Method of and Specified Funds for Payment of Purchase Price:
[By certified or official bank check or checks, payable to the order of
the Company, in immediately available funds]
[By wire transfer to a bank account specified by the Company in
immediately available funds]
Indenture:
[Indenture, dated as of November 1, 1988, between the Company and Chase
Manhattan Bank (formerly known as Chemical Bank), successor to Manufacturers
Hanover Trust Co., as Trustee]
[Mortgage and Deed of Trust, dated as of October 1, 1943, to the New York
Trust Company (to which Chemical Bank is successor), as Trustee, as supplemented
and amended to and including the _____ Supplemental Indenture]
Time of Delivery:
Closing Location:
Maturity:
Interest Rate:
[ %]
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Interest Payment Dates:
[months and dates]
Redemption Provisions:
Documents to be Delivered:
The following documents referred to in the Distribution Agreement shall be
delivered as a condition to the Closing:
[(1) The opinion or opinions of counsel to the Agents referred
to in Section 4(h).]
[(2) The opinion of counsel to the Company referred to in
Section 4(i).]
[(3) The accountants' letter referred to in Section 4(j).]
[(4) The officers' certificate referred to in Section 4(k).]
Other Provisions (including Syndicate Provisions, if applicable):
34
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ANNEX II
DELMARVA POWER & LIGHT COMPANY
ADMINISTRATIVE PROCEDURE
This Administrative Procedure relates to the Securities defined in the
Distribution Agreement, dated _________, 199_ (the "Distribution Agreement"),
between Delmarva Power & Light Company (the "Company") and
____________________________________________ (together, the "Agents"), to which
this Administrative Procedure is attached as Annex II. Defined terms used herein
and not defined herein shall have the meanings given such terms in the
Distribution Agreement, the Prospectus as amended or supplemented or the
Indenture.
The procedures to be followed with respect to the settlement of sales of
Securities directly by the Company to purchasers solicited by an Agent, as
agent, are set forth below. Such procedures shall also be followed with respect
to sales of Securities by the Company to an Agent, as principal, unless the
Company and such Agent agree to follow different procedures pursuant to a
written Terms Agreement. An Agent, in relation to a purchase of a Security by a
purchaser solicited by such Agent, is referred to herein as the "Selling Agent"
and, in relation to a purchase of a Security by such Agent as principal as the
"Purchasing Agent".
The Company will advise each Agent in writing of those persons with whom
such Agent is to communicate regarding offers to purchase Securities and the
related settlement details.
Posting Rates by Company:
The Company and the Agents will discuss from time to time the rates of
interest per annum to be borne by and the maturity of Securities that may be
sold as a result of the solicitation of offers by an Agent. The Company may
establish a fixed set of interest rates and maturities for an offering period
("posting"). If the Company decides to change already posted rates, it will
promptly advise the Agents to suspend solicitation of offers until the new
posted rates have been established with the Agents.
Acceptance of Offers by Company:
Each Agent will promptly advise the Company by telephone or other
appropriate means of all reasonable offers to purchase Securities, other than
those rejected by such Agent. Each Agent may, in its discretion reasonably
exercised, reject any offer received by it in whole or in part. Each Agent also
may make offers to the Company to purchase Securities as a Purchasing Agent. The
35
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Company will have the sole right to accept offers to purchase Securities and may
reject any such offer in whole or in part.
The Company will promptly notify the Agent of its acceptance or rejection
of an offer to purchase Securities. If the Company accepts an offer to purchase
Securities, it will confirm such acceptance in writing to the Agent and the
Trustee.
Communication of Sale Information to Company by Agent:
After the acceptance of an offer by the Company, the Agent will
communicate the following details of the terms of such offer (the "Sale
Information") to the Company by telephone (confirmed in writing) or by facsimile
transmission or other acceptable written means:
(1) Principal amount of Securities to be purchased;
(2) If a Fixed Rate Security, the interest rate;
(3) Maturity Date;
(4) Issue Price;
(5) Selling Agent's commission or Purchasing Agent's discount, as the
case may be;
(6) Net proceeds to the Company;
(7) Settlement Date;
(8) If a redeemable Security, such of the following as are applicable:
(i) Redemption Commencement Date,
(ii) Initial Redemption Price (% of par), and
(iii) Amount (% of par) that the Redemption Price shall decline on
each anniversary of the Redemption Commencement Date;
[(9)If a Floating Rate Security, such of the following as are applicable:
(i) Interest Rate Basis,
(ii) Index Maturity,
(iii) Spread or Spread Multiplier,
(iv) Maximum Rate,
(v) Minimum Rate,
(vi) Initial Interest Rate,
(vii) Interest Reset Dates,
(viii) Calculation Dates,
(ix) Interest Determination Dates,
(x) Interest Payment Dates,
(xi) Regular Record Dates, and
(xii) Calculation Agent;]
(10) Name, address and taxpayer identification number of the registered
owner;
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(11) Denomination of certificates to be delivered at settlement;
(12) Whether such Security is a Book-Entry Security or a Certificated
Security; and
(13) Whether such Agent is acting as Selling Agent or Purchasing Agent.
Preparation of Pricing Supplement by Company:
If the Company accepts an offer to purchase a Security, it will prepare a
Pricing Supplement. The Company will arrange to have ten Pricing Supplements
filed with the Commission not later than the close of business of the Commission
on the fifth business day following the date on which such Pricing Supplement is
first used, and will promptly deliver copies of such Pricing Supplement to the
Agent no later than 11:00 a.m. on the day following the Trade Date via next day
mail or telecopy at the following locations:
Xxxxxx Xxxxxxx & Co. Incorporated:
Xxxxxx Xxxxxxx & Co. Incorporated
1221 Avenue of the Xxxxxxxx
0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Medium-Term Note Trading Desk, Xxxxxx Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Xxxxxxx Xxxxx & Co.:
Xxxxxxx Xxxxx & Co. - Tritech Services
0 Xxxxxxxxx Xxxxx
Xxxxxxxxx Xxxx 000
Xxxxxxxxxx, XX 00000
Attn: Final Prospectus Unit/Xxxxxxx Xxxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
also, for record keeping purposes, please send a
copy to:
Xxxxxxx Xxxxx & Co.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
Xxxxxxx Xxxxx World Headquarters
World Financial Center, Xxxxx Xxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000-0000
Attn: MTN Product Management
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
37
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Delivery of Confirmation and Prospectus to Purchaser by Selling Agent:
The Selling Agent will deliver to the purchaser of a Security a written
confirmation of the sale and delivery and payment instructions. In addition, the
Selling Agent will deliver to such purchaser or its agent the Prospectus as
amended or supplemented (including the Pricing Supplement) in relation to such
Security prior to or together with the earlier of the delivery to such purchaser
or its agent of (a) the confirmation of sale or (b) the Security.
Date of Settlement:
All offers solicited by a Selling Agent or made by a Purchasing Agent and
accepted by the Company will be settled on a date (the "Settlement Date") which
is the fifth business day after the date of acceptance of such offer, unless the
Company and the purchaser agree to settlement (a) on any other business day
after the acceptance of such offer or (b) with respect to an offer accepted by
the Company prior to 10:00 a.m., New York City time, on the date of such
acceptance.
Instruction from Company to Trustee for Preparation of Securities,
Preparation and Delivery of Securities by Trustee and Receipt of
Payment Therefor:
After receiving the Sale Information from the Agent, the Company will
communicate such Sale Information to the Note Trustee or the Bond Trustee, as
the case may be, by telephone (confirmed in writing) or by facsimile
transmission or other acceptable written means. The Note Trustee or the Bond
Trustee, as the case may be, will prepare each Security and appropriate receipts
that will serve as the documentary control of the transaction. Each Security
will be represented by either a Global Security (as defined below) delivered to
the Trustee, as agent for The Depository Trust Company ("DTC"), and recorded in
the book-entry system maintained by DTC (a "Book-Entry Security") or a
certificate delivered to the holder thereof or a person designated by such
holder (a "Certificated Security"). Except as set forth in the Prospectus, as
amended or supplemented, an owner of a Book-Entry Security will not be entitled
to receive a Certificated Security.
A. PROCEDURES FOR BOOK-ENTRY SECURITIES
In connection with the qualification of Book-Entry Securities for
eligibility in the book-entry system maintained by DTC, each Trustee will
perform the custodial, document control and administrative functions described
below, in accordance with its respective obligations under a Letter of
Representation from the
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Company and such Trustee to DTC, dated as of June 4, 1993 (the "Letter of
Representation"), and, in the case of the Note Trustee, a Medium-Term Note
Certificate Agreement between such Trustee and DTC dated December 2, 1988, and,
in the case of the Bond Trustee, a Medium-Term Note Certificate Agreement
between such Trustee and DTC, dated as of December 2, 1988, and its obligations
as a participant in DTC, including DTC's Same-Day Funds Settlement System
("SDFS").
On any Settlement Date for one or more Book-Entry Securities, the Company
will issue a single global security in fully registered form without coupons (a
"Global Security") representing up to U.S. $250,000,000 principal amount of all
such Securities that have the same Original Issue Date, Maturity Date and other
terms. Each Global Security will be dated and issued as of the date of its
authentication by the Trustee. Each Global Security will bear an "Interest
Accrual Date," which will be (i) with respect to an original Global Security (or
any portion thereof), its original issuance date and (ii) with respect to any
Global Security (or any portion thereof) issued subsequently upon exchange of a
Global Security, or in lieu of a destroyed, lost or stolen Global Security, the
most recent Interest Payment Date to which interest has been paid or duly
provided for on the predecessor Global Security or Securities (or if no such
payment or provision has been made, the original issuance date of the
predecessor Global Security), regardless of the date of authentication of such
subsequently issued Global Security. Book-Entry Securities may be payable only
in U.S. dollars. No Global Security will represent any Certificated Security.
Upon receipt of the Sale Information from the Company, the Trustee will
then assign a CUSIP number to the Global Security representing such Security and
will notify the Company and the Agent of such CUSIP number by telephone as soon
as practicable.
The Trustee will enter a pending deposit message through DTC's Participant
Terminal System providing the following settlement information to DTC, the Agent
and Standard & Poor's Corporation:
1. The Sale Information.
2. The Initial Interest Payment Date for such Security, the number
of days by which such date succeeds the related DTC Record Date
(which shall be the Record Date as defined in the Security)
and, if known, amount of interest payable on such Initial
Interest Payment Date.
3. The CUSIP number of the Global Security representing
such Security.
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4. Whether such Global Security will represent any other
Book-Entry Security (to the extent known at such time).
By 9:00 a.m. on the Settlement Date, the Trustee will complete and
authenticate the Global Security representing such Security. By 10:00 a.m. on
the Settlement Date, DTC will credit such Security to the Trustee's participant
account at DTC.
By 2:00 p.m. on the Settlement Date, the Trustee will enter an SDFS
deliver order through DTC's Participant Terminal System instructing DTC to (i)
debit such Security to the Trustee's participant account and credit such
Security to the Agent's participant account and (ii) debit the Agent's
settlement account and credit the Trustee's settlement account for an amount
equal to the price of such Security less the Agent's commission, if any. The
entry of such a deliver order shall constitute a representation and warranty by
the Trustee to DTC that (a) the Global Security representing such Book-Entry
Security has been issued and authenticated and (b) the Trustee is holding such
Global Security pursuant to the Medium-Term Note Certificate Agreement between
such Trustee and DTC.
Unless the Agent is the end purchaser of such Security, the Agent will
enter an SDFS deliver order through DTC's Participant Terminal System
instructing DTC (i) to debit such Security to the Agent's participant account
and credit such Security to the participant accounts of the Participants with
respect to such Security and (ii) to debit the settlement accounts of such
Participants and credit the settlement account of the Agent for an amount equal
to the price of such Security.
By 4:45 p.m. on the Settlement Date transfers of funds in accordance with
SDFS deliver orders described in the two preceding paragraphs will be settled in
accordance with SDFS operating procedures in effect on the Settlement Date.
By 5:00 p.m. on the Settlement Date, the Trustee will credit to the
account of the Company maintained with the Trustee in funds available for
immediate use in the amount transferred to the Trustee by the Agent.
Unless the Agent is the end purchaser of such Security, the Agent will
confirm the purchase of such Security to the purchaser either by transmitting to
the Participants with respect to such Security a confirmation order or orders
through DTC's institutional delivery system or by mailing a written confirmation
to such purchaser.
40
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If settlement of a Book-Entry Security is rescheduled or canceled, the
Trustee, after receiving notice from the Company or the Agent, will deliver to
DTC, through DTC's Participant Terminal System, a cancellation message to such
effect by no later than 2:00 P.M. on the Business Day immediately preceding the
scheduled Settlement Date.
The Company will instruct the Trustee by facsimile transmission or other
acceptable written means to authenticate and deliver the Certificated Securities
no later than 2:15 p.m., New York City time, on the Settlement Date. Such
instruction will be given by the Company prior to 3:00 p.m., New York City time,
on the business day prior to the Settlement Date unless the Settlement Date is
the date of acceptance by the Company of the offer to purchase Securities in
which case such instruction will be given by the Company by 11:00 a.m., New York
City time.
B. PROCEDURES FOR CERTIFICATED SECURITIES
In the case of a sale of Certificated Securities to a purchaser solicited
by an Agent, the Trustee will, by 2:15 p.m., New York City time, on the
Settlement Date, deliver the Securities to the Selling Agent for the benefit of
the purchaser of such Securities against delivery by the Selling Agent of a
receipt therefor. On the Settlement Date, the Selling Agent will deliver payment
for such Securities in immediately available funds to the Trustee in an amount
equal to the issue price of the Securities less the Selling Agent's commission;
provided that the Selling Agent reserves the right to withhold payment for which
it has not received funds from the purchaser.
In the case of a sale of Securities to a Purchasing Agent, the Trustee
will, by 2:15 p.m., New York City time, on the Settlement Date, deliver the
Securities to the Purchasing Agent against delivery of payment for such
Securities in immediately available funds to the Trustee in an amount equal to
the issue price of the Securities less the Purchasing Agent's discount.
In either case, promptly upon receipt of such funds from the Agent, the
Trustee will wire an amount equal thereto to, or upon the order of, the Company
in immediately available funds.
The Note Trustee or Bond Trustee, as the case may be, shall deliver
Certificated Securities to:
41
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Xxxxxx Xxxxxxx & Co. Incorporated:
Xxxxxx Xxxxxxx & Co. Incorporated
Bank of New York
Xxx Xxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Dealer's Clearance Department
Xxxxxxx Xxxxx & Co.:
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
Money Market Clearance - MTNs:
00 Xxxxxxx Xxxxxx
Ground Floor, Window C
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxxx
Failure to Settle:
A. PROCEDURES FOR BOOK-ENTRY SECURITIES
If the Trustee fails to enter an SDFS deliver order with respect to a
Book-Entry Security, the Trustee may deliver to DTC, through DTC's Participant
Terminal System, as soon as practicable a withdrawal message instructing DTC to
debit such Security to the Trustee's participant account, provided that the
Trustee's participant account contains a principal amount of the Global Security
representing such Security that is at least equal to the principal amount to be
debited. If a withdrawal message is processed with respect to all the Book-Entry
Securities represented by a Global Security, the Trustee will xxxx such Global
Security "canceled," make appropriate entries in the Trustee's records and send
such canceled Global Security to the Company. The CUSIP number assigned to such
Global Security shall, in accordance with the procedures of the CUSIP Service
Bureau of Standard & Poor's Corporation, be canceled and not immediately
reassigned. If a withdrawal message is processed with respect to one or more,
but not all, of the Book-Entry Securities represented by a Global Security, the
Trustee will exchange such Global Security for two Global Securities, one of
which shall represent such Book-Entry Security or Securities and shall be
canceled immediately after issuance and the other of which shall represent the
remaining Book-Entry Securities previously represented by the surrendered Global
Security and shall bear the CUSIP number of the surrendered Global Security.
If the purchase price for any Book-Entry Security is not timely paid to
the Participants with respect to such Security by the beneficial purchaser
thereof (or a person, including an indirect participant in DTC, acting on behalf
of such purchaser), such Participants and, in turn, the Agent may enter SDFS
deliver orders through DTC's Participant Terminal System reversing the orders
entered. Thereafter, the Trustee will deliver the withdrawal message and take
the related actions described in the preceding paragraph.
42
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Notwithstanding the foregoing, upon any failure to settle with respect to
a Book-Entry Security, DTC may take any actions in accordance with its SDFS
operating procedures then in effect.
In the event of a failure to settle with respect to one or more, but not
all, of the Book-Entry Securities to have been represented by a Global Security,
the Trustee will provide for the authentication and issuance of a Global
Security representing the Book-Entry Securities to be represented by such Global
Security and will make appropriate entries in its records.
B. PROCEDURES FOR CERTIFICATED SECURITIES
If a purchaser fails to make payment to the Selling Agent for a
Certificated Security, the Selling Agent will promptly notify the Trustee and
the Company thereof by telephone (confirmed in writing) or by facsimile
transmission or other acceptable written means. The Selling Agent will
immediately return the Certificated Security to the Trustee. Immediately upon
receipt of such Security by the Trustee, the Trustee will debit the account of
the Company in an amount equal to the amount previously credited thereto in
respect of such Security and will return such funds to the Selling Agent. The
Company will reimburse the Selling Agent on an equitable basis for its loss of
the use of funds at the then prevailing broker-loan rate during the period when
they were credited to the account of the Company.
The Trustee will cancel the Certificated Security in respect of which the
failure occurred, make appropriate entries in its records and, unless otherwise
instructed by the Company, destroy the Security.
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ANNEX III
ACCOUNTANTS' LETTER
Pursuant to Section 4(j) and Section 6(d), as the case may be, of the
Distribution Agreement, the Company's independent public accountants shall
furnish letters to the effect that:
(i) They are independent public accountants within the meaning of
the Act and the applicable published rules and regulations thereunder;
(ii) In their opinion, the consolidated financial statements of the
Company and subsidiary companies ("Companies") examined by them and incorporated
by reference in the Registration Statement comply as to form in all material
respects with the applicable accounting requirements of the Act and the Exchange
Act and the published rules and regulations thereunder;
(iii) On the basis of procedures performed specified by the American
Institute of Public Accountants for a review of interim financial information as
described in SAS No. 71 (but not an examination in accordance with generally
accepted auditing standards) on the unaudited interim consolidated financial
statements of the Company as set forth in the Company's Quarterly Reports on
Form 10-Q incorporated by reference in the Prospectus, if any, a reading of the
latest available unaudited interim consolidated financial statements, if any, of
the Company subsequent to the financial statements incorporated by reference in
the Prospectus and the minutes of meetings of the Board of Directors and
stockholders of the Company and inquiries of officers and other employees of the
Company responsible for accounting matters and other specified procedures,
nothing has come to their attention which causes them to believe that (A) the
unaudited consolidated financial statements incorporated by reference in the
Prospectus, if any, do not comply as to form in all material respects with the
applicable accounting requirements of the Exchange Act as it applies to Form
10-Q and the related published rules and regulations thereunder or that any
material modifications should be made to such unaudited consolidated financial
statements for them to be in conformity with generally accepted accounting
principles; (B) the unaudited interim consolidated financial statements, if any,
for periods subsequent to the financial statements incorporated by reference in
the Prospectus are not fairly stated on a basis substantially consistent with
that of the audited consolidated financial statements; (C) at a specified date
not more than three days prior to the date of such letter, there was any change
in the capital stock of the Companies or in their long-term debt, any increase
in their short-term debt
44
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or any decrease in their consolidated net assets, in each case as compared with
amounts shown in the most recent unaudited interim consolidated balance sheet
incorporated by reference in the Prospectus; or (D) for the period from the date
of the most recent audited or unaudited consolidated financial statements
incorporated by reference in the Prospectus to a subsequent date not more than
five days prior to the date of such letter, there were any decreases, as
compared with the corresponding period in the preceding year, in consolidated
operating revenues, operating income, net income, earnings applicable to common
stock and earnings per average share of common stock of the Company; except in
all instances for changes or decreases which the Prospectus discloses have
occurred or may occur or which (i) are described in such letter and (ii) as so
described, are determined by the Representative in its discretion, not to be
material; and
(iv) They have compared the dollar amounts (or percentages derived
from such dollar amounts), ratios and other financial information as agreed upon
contained in (A) the Prospectus, (B) the Company's latest Annual Report on Form
10-K incorporated by reference into the Prospectus, and (C) the Company's latest
Quarterly Report on Form 10-Q incorporated by reference into the Prospectus and
(D) the Company's Current Reports on Form 8-K incorporated by reference into the
Prospectus, (in each case to the extent that such dollar amounts, percentages,
ratios and other financial information are derived from the general accounting
records of the Company subject to the internal controls of the Company's
accounting system, or are derived directly from such records by analysis or
computation) with the results obtained from inquiries, a reading of such general
accounting records and other procedures specified in such letter, and have found
such dollar amounts, percentages, ratios and other financial information to be
in agreement with such results except as otherwise specified in such letter.
All references in this Annex III to the Prospectus shall be deemed to
refer to the Prospectus (including the documents incorporated by reference
therein) as defined in the Distribution Agreement as of the Commencement Date
referred to in Section 6(d) thereof and to the Prospectus as amended or
supplemented (including the documents incorporated by reference therein) as of
the date of the amendment, supplement, incorporation or the Time of Delivery
relating to the Terms Agreement requiring the delivery of such letter under
Section 4(j) thereof.
