POTOMAC ELECTRIC POWER COMPANY
Senior Notes
UNDERWRITING AGREEMENT
[Date]
To the Representatives named in
Schedule I hereto of the Underwriters
named in Schedule II hereto
Ladies and Gentlemen:
The undersigned Potomac Electric Power Company (the
"Company") hereby confirms its agreement with the several
underwriters named in Schedule II hereto (the "Underwriters") as
set forth below to sell its Senior Notes of the designation, with
the terms and in the amount, specified in Schedule I hereto (the
"Senior Notes"). If the firm or firms listed in Schedule I hereto
(the "Representatives") are the same as the firm or firms listed in
Schedule II hereto, then the terms "Underwriters" and
"Representatives," as used herein, shall each be deemed to refer to
such firm or firms.
SECTION I. Description of Senior Notes. The Company has
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authorized by appropriate corporate action and proposes to issue
and sell the Senior Notes, to be issued under an Indenture, dated
_______________, 1998, between the Company and The Bank of New
York, as trustee (the "Indenture Trustee"), and the indenture
supplemental thereto relating to the Senior Notes (herein
collectively called the "Senior Note Indenture"). The Senior Notes
will be secured by a corresponding series of First Mortgage Bonds
(the "First Mortgage Bonds") issued under the Company's Mortgage
and Deed of Trust dated July 1, 1936 to The Bank of New York, as
successor trustee (the "Trustee"), and the indentures supplemental
thereto including the supplemental indenture relating to the First
Mortgage Bonds (herein collectively called the "Mortgage Bond
Indenture"). Certain of the terms and provisions relating to the
Senior Notes, the First Mortgage Bonds, the Senior Note Indenture
and the Mortgage Bond Indenture are summarized in the Registration
Statement and Prospectus hereinafter referred to.
SECTION 2. Representations and Warranties of the Company.
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The Company represents and warrants to each of the Underwriters
that:
(a) The Company has filed with the Securities and
Exchange Commission (the "Commission") a registration
statement on Form S-3 (No. 333- )(the "Registration
Statement"), including a prospectus, for the registration of
the Senior Notes under the Securities Act of 1933, as amended
(the "1933 Act"), and the qualification of the Indenture
under the Trust Indenture Act of 1939 (the "1939 Act"), which
Registration Statement has been declared effective by the
Commission and which Indenture has been qualified under the
1939 Act. Such Registration Statement, as amended to the
date of this Agreement, including the documents incorporated
by reference, but excluding the Form T-1 Statement of
Eligibility and Qualification of the Indenture Trustee, and
the prospectus contained in
the Registration Statement as supplemented either
by a prospectus supplement, dated the date hereof,
relating to the terms and offering of the Senior
Notes to be filed pursuant to Rule 424 ("Rule 424") of the
rules and regulations of the Commission under the 1933 Act
(the "1933 Act Regulations") and/or by a term sheet or
abbreviated term sheet, if any, sent or given in reliance
upon Rule 434 of the 1933 Act Regulations and to be filed
pursuant to Rule 424 (including, in each case, the documents
incorporated by reference therein pursuant to Item 12 of
Form S-3 under the 0000 Xxx) is hereinafter called
the "Prospectus;" any reference herein to the terms
"amend," or "amendment" with respect to the Registration
Statement or the Prospectus shall be deemed to include
any document incorporated by reference therein after
the date hereof and prior to the termination of the
offering of the Senior Notes by the Underwriters;
provided, however, that any prospectus supplement, term sheet
or abbreviated term sheet filed with the Commission pursuant
to Rule 424 under the 1933 Act with respect to an offering of
senior notes other than the Senior Notes shall not be deemed
to be a supplement to, or a part of, the Prospectus. If any
revised prospectus shall be provided to the Underwriters by
the Company for use in connection with the offering of the
Senior Notes (whether or not such revised prospectus is
required to be filed by the Company pursuant to Rule 424(b)
of the 1933 Act Regulations), the term "Prospectus" shall
refer to such revised prospectus from and after the time it
is first provided to the Underwriters for such use.
(b) At the time the Registration Statement became
effective, the Registration Statement, the form of Senior
Note Indenture and the Mortgage Bond Indenture fully
complied, and at the Closing Date, as hereinafter
defined, the Registration Statement and the Prospectus,
as they may be amended or supplemented, and the Senior
Note Indenture and the Mortgage Bond Indenture will
fully comply, in all material respects with the
applicable provisions of the 1933 Act, the 1933 Act
Regulations, and the 1939 Act; on said dates the Registration
Statement did not, and the Registration Statement, as it may
be amended or supplemented, 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; when the Registration
Statement became effective, the prospectus included therein
did not, and at the Closing Date and on the date it is filed
with, or transmitted for filing to, the Commission pursuant
to Rule 424 the Prospectus, as it may be amended or
supplemented, will not, contain an untrue statement of
a material fact or omit to state a material fact
necessary in order to make the statements therein, in
the light of the circumstances under which they were
made, not misleading; provided that the foregoing
representations and warranties in this subparagraph
(b) shall not apply to statements or omissions made in
reliance upon and in conformity with information furnished
herein or in writing to the Company by the Representatives or
by or on behalf of any
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Underwriter through the Representatives expressly for use in
the Registration Statement or the Prospectus.
(c) The documents incorporated by reference in the
Registration Statement and the Prospectus pursuant to Item 12
of Form S-3 under the 1933 Act, when they were filed with the
Commission, complied in all material respects with the
applicable requirements of the 1933 Act and the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and the
rules and regulations of the Commission thereunder, and any
documents so filed and incorporated by reference subsequent
to the date hereof will, when they are filed with the
Commission, comply in all material respects with the
requirements of the 1934 Act and the rules and
regulations of the Commission thereunder; and none of
such documents when filed included or will include any
untrue statement of a material fact or omitted or will omit
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.
(d) The financial statements incorporated by reference
in the Registration Statement and the Prospectus present
fairly the financial condition and operations of the Company
and its consolidated subsidiaries at the respective dates or
for the respective periods to which they apply; such
financial statements have been prepared in accordance with
generally accepted accounting principles consistently applied
throughout the periods involved, except as set forth therein;
and the supporting schedules incorporated by reference in the
Registration Statement and the Prospectus present fairly the
information required to be stated therein and
PricewaterhouseCoopers LLP ("PWC"), who have examined certain
of the financial statements, are independent accountants as
required by the 1933 Act, and the rules and regulations of
the Commission.
(e) Except as reflected in, or contemplated by, the
Registration Statement and the Prospectus, since the
respective dates as of which information is given in the
Registration Statement and the Prospectus, and prior to the
Closing Date, (i) there has not been any material, adverse
change in the business, property or financial condition of
the Company and its subsidiaries considered as one enterprise
and (ii) there have been no transactions entered into by the
Company or any of its subsidiaries, other than those in the
ordinary course of business, which are material with respect
to the Company and its subsidiaries considered as one
enterprise. The Company has no material contingent
obligation which is not disclosed in or contemplated by the
Registration Statement and the Prospectus.
(f) The sale by the Company to the Underwriters,
severally, of the Senior Notes for the consideration herein
specified and upon the terms and conditions herein contained
will not result in a breach of any of the
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terms or provisions of or constitute a default under the
Company's Certificate of Incorporation or By-Laws, each as
amended, or any indenture or other agreement or instrument
which the Company has assumed or to which it is now a party
or any applicable law, administrative regulation or
administrative court decree.
(g) There are no contracts or documents of the Company
or any of its subsidiaries which are required to be filed as
exhibits to the Registration Statement by the 1933 Act or by
the 1933 Act Regulations which have not been so filed.
SECTION 3. Sale of the Senior Notes. On the basis of the
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representations and warranties herein contained and subject to the
terms and conditions herein set forth, the Company agrees to sell
to each of the Underwriters and each Underwriter agrees, severally
and not jointly, to purchase from the Company, at the purchase
price set forth in Schedule I hereto, the respective principal
amounts of Senior Notes set forth opposite the name of such
Underwriter in Schedule II hereto.
SECTION 4. Time and Place of Closing. Payment for the
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Senior Notes shall be made at the place, date and time specified in
Schedule I hereto (or such other place, date and time as the
Representatives and the Company may agree upon), against delivery
of the Senior Notes, at the office of The Bank of New York, 000
Xxxxxxx Xxxxxx, Xxx Xxxx, N.Y., to the Representatives for the
respective accounts of the several Underwriters. The date and time
of such delivery and payment are herein called the "Closing Date."
Payment for the Senior Notes shall be in immediately available
funds. Certificates for the Senior Notes shall be delivered to the
Representatives for the respective accounts of the several
Underwriters in such names and denominations as the Representatives
shall specify not later than the beginning of business on the third
full business day before the Closing Date. For the purpose of
expediting the checking of the certificates by the Representatives,
the Company agrees to make the certificates for the Senior Notes
available to the Representatives not later than 1:00 p.m., New York
Time, on the last full business day prior to the Closing Date at
said office of Bank of New York.
SECTION 5. Covenants of the Company. The Company agrees
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that:
(a) As soon as possible after the execution and
delivery of this Agreement, the Company will file the
Prospectus with the Commission pursuant to Rule 424 setting
forth, among other things, the necessary information with
respect to the terms of offering of the Senior Notes.
(b) The Company will give the Representatives notice
of its intention to file any amendment to the Registration
Statement or any amendment or supplement to the Prospectus,
will furnish the
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Representatives and counsel for the Underwriters copies of
any such amendment or supplement a reasonable time in advance
of filing, and will not file any such amendment or supplement
to which the Representatives or counsel for the Underwriters
shall reasonably object prior to such filing.
(c) The Company will promptly deliver to the
Representatives one fully executed copy of the Registration
Statement as originally filed with the Commission and of each
amendment or supplement thereto, heretofore or hereafter
made, including any post-effective amendment (in each case
including all exhibits filed therewith not previously
furnished to the Representatives) and signed copies of each
consent and certificate included therein or filed as an
exhibit thereto. The Company will also send to the
Representatives as soon as practicable after the date of this
Agreement and thereafter from time to time not later than
nine months after the date of this Agreement, as many copies
of the Prospectus (excluding documents incorporated by
reference under Item 12 of Form S-3) as the Representatives
may reasonably request for the purposes contemplated by the
1933 Act, the 1934 Act and the rules and regulations of the
Commission thereunder.
(d) The Company will pay or cause to be paid all
expenses in connection with (i) the preparation and filing by
it of the Registration Statement and Prospectus and the
preparation and delivery of this Agreement, (ii) the
preparation, rating, issue and delivery of the Senior Notes
to be sold by it as provided herein, (iii) the printing and
delivery to the Underwriters in reasonable quantities of
copies of the Registration Statement, each preliminary
prospectus and the Prospectus, (iv) all filing fees and fees
and disbursements not to exceed $5,000 of Winthrop, Stimson,
Xxxxxx & Xxxxxxx incurred in connection with the
qualification of the Senior Notes under securities laws and
the determination of the legality of the Senior Notes in
accordance with the provisions of Section 5(i), and (v) the
printing and delivery to the Underwriters of copies of the
Blue Sky Survey; and will pay all taxes, if any (but not
including any transfer taxes), on the issue of said Senior
Notes; provided, however, that the Underwriters shall pay all
of their own costs and expenses, including the fees and
expenses of their counsel (subject however to the provisions
of this subparagraph requiring the payment by the Company of
certain fees and expenses, not to exceed $5,000), any
transfer taxes on the Senior Notes which they may sell.
(e) If, during the period when delivery of the
Prospectus is required under the 1933 Act, any event relating
to or affecting the Company, or of which the Company shall be
advised in writing by the Representatives, shall occur which,
in the Company's opinion, should be set forth in an amendment
to the Prospectus, including an appropriate filing pursuant
to Section 13(a) or (c) or Section 14 of the 1934 Act, in
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order to make the Prospectus not misleading in the light of
the circumstances when it is delivered to a purchaser, or if
it is necessary to amend the Prospectus to comply with the
1933 Act, the Company will forthwith at its expense prepare
and file with the Commission (in form and substance
satisfactory to counsel for the Underwriters) and furnish to
the Representatives a reasonable number of copies of such
amendment or amendments to the Prospectus, including any
filing pursuant to Section 13(a) or (c) or Section 14 of the
1934 Act, which will amend the Prospectus so that as amended
it will comply with the 1933 Act and will not contain any
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 when the
Prospectus is delivered to a purchaser, not misleading. In
case any of the several Underwriters is required to deliver
a prospectus after the expiration of nine months after the
date of this Agreement, the Company, upon such Underwriter's
request, will furnish to such Underwriter, at the expense of
such Underwriter, a reasonable number of copies of the
Prospectus complying with Section 10(a) of the 1933 Act.
(f) The Company will advise the Representatives
promptly (confirming such advice in writing) (i) of the
filing of the Prospectus pursuant to Rule 424 and of any
amendment to the Prospectus or Registration Statement,
(ii) of the receipt of any comments from the Commission,
(iii) of any official request made by the Commission for
amendments to the Registration Statement or Prospectus
or for additional information with respect thereto or
(iv) of official notice of institution of proceedings for,
or the entry of, a stop order suspending the effectiveness
of the Registration Statement. The Company will make every
reasonable effort to prevent the issuance of any stop order
and, if such a stop order should be entered by the
Commission, will make every reasonable effort to obtain
the lifting or removal thereof as soon as possible.
(g) For a period of five years, the Company will (i)
furnish to the Representatives as soon as practicable after
the close of each fiscal year a consolidated balance sheet of
the Company as of the close of such fiscal year, in
reasonable detail, together with consolidated statements of
earnings and of cash flows, in reasonable detail, of the
Company, for such fiscal year, such consolidated balance
sheet, statements of earnings and of cash flows, to be
accompanied by an opinion thereon rendered by independent
accountants, who may be the regular auditors for the Company;
(ii) upon request, will furnish to the Representatives as
soon as practicable after the close of each of the first
three quarters of each fiscal year an interim earnings
statement of the Company for the twelve months ended with
the close of such quarter, which need not be audited,
similar to that furnished pursuant to clause (i) of this
this subparagraph; and
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(iii) will furnish to the Representatives copies of all such
financial statements as it shall file with the Commission or
any governmental agency substituted therefor, and from time
to time, copies of any reports or other communications which
it shall send to stockholders generally.
(h) The Company will make generally available to its
security holders, as soon as reasonably practicable, but in
any event not later than 16 months after the end of the
fiscal quarter in which the filing of the Prospectus pursuant
to Rule 424 occurs, an earning statement (in form complying
with the provisions of Section 11(a) of the 1933 Act and
Rule 158 of the 1933 Act Regulations, which need not be
certified by independent public accountants) covering a
period of twelve months beginning not later than the first
day of the Company's fiscal quarter next following the filing
of the Prospectus pursuant to Rule 424.
(i) The Company will use its best efforts to qualify
the Senior Notes for offer and sale under the applicable
securities and legal investment laws of such jurisdictions as
the Representatives may designate, and will file and make
such statements or reports as are or may be reasonably
required by the laws of such jurisdictions; provided,
however, that the Company shall not be required to qualify as
a foreign corporation or dealer in securities, or to file any
general consents to service of process under the laws of any
jurisdiction. The fees and disbursements of Winthrop,
Stimson, Xxxxxx & Xxxxxxx, who are acting as counsel for the
Underwriters for the purposes of this Agreement, shall be
paid by the Underwriters (subject however to provisions of
subparagraph (d) hereof requiring payment by the Company of
counsel fees and disbursements not to exceed $5,000),
provided, however, that if this Agreement is terminated in
accordance with the provisions of Section 6, 7 or 9, the
Company shall reimburse the Underwriters for the amount of
such fees and disbursements. The Company shall not be
required to pay any amount for any expenses of the
Underwriters except as provided in this Section 5. The
Company shall not in any event be liable to the Underwriters
for damages on account of the loss of anticipated profits.
(j) The Company, during the period when the Prospectus
is required to be delivered under the 1933 Act, will file
promptly all documents required to be filed with the
Commission pursuant to Section 13(a) or (c) or Section 14 of
the 1934 Act subsequent to the time of execution of this
Agreement.
(k) Between the date hereof and the Closing Date, the
Company will not, without prior written consent of the
Representatives, offer or sell, or enter into any agreement
to sell, any additional Senior Notes or First Mortgage Bonds
of the Company.
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(l) The Company will use the net proceeds received
from the sale of the Senior Notes in the manner specified in
the Prospectus under "Use of Proceeds".
SECTION 6. Conditions of Underwriters' Obligations. The
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several obligations of the Underwriters to purchase and pay for the
Senior Notes shall be subject to the accuracy of the
representations and warranties on the part of the Company, to the
substantial accuracy of the statements of Company officers made
pursuant to the provisions hereof, and to the following further
conditions:
(a) That, at the Closing Date, the Representatives
shall receive the signed opinions of the following counsel,
substantially in the respective forms attached hereto:
Winthrop, Stimson, Xxxxxx & Xxxxxxx, counsel for the
Underwriters, and Xxxxxxxxx & Xxxxxxx and Xxxxxxx X.
Xxxxxxxxx, Esq., each counsel for the Company.
(b) That no amendment to the Registration Statement or
Prospectus, filed subsequent to the execution of this
Agreement, shall be unsatisfactory in substance to the
Representatives or unsatisfactory in form to counsel for the
Underwriters.
(c) That, at or prior to 6:00 p.m., New York Time, on
the date hereof, or at such later time and date as the
Representatives may have from time to time consented to in
writing or by telephone, confirmed in writing, all orders of
the Public Service Commission of the District of Columbia
necessary to permit the issue, sale and delivery of the
Senior Notes shall be in effect; that at or prior to the
Closing Date the certificate of such Public Service
Commission permitting the issue of the Senior Notes shall
have been recorded on the books of the Company; that prior to
the Closing Date no stop order with respect to the
effectiveness of the Registration Statement shall have been
issued under the 1933 Act by the Commission and that at the
Closing Date no proceedings therefor shall be pending or
threatened; and that at the Closing Date the Prospectus shall
not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances which they were made, not misleading, other
than any statement contained in, or any matter omitted from,
the Prospectus in reliance upon, and in conformity with,
information furnished to the Company in writing by the
Representatives or by or on behalf of any of the several
Underwriters through the Representatives expressly for use in
the Registration Statement or the Prospectus.
(d) That, subsequent to the respective dates as of
which information is given in the Registration Statement and
Prospectus and prior to the Closing Date, no material and
adverse change in the condition
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of the Company and its subsidiaries, taken as a whole,
financial or otherwise, shall have taken place (other than as
referred to in or contemplated by the Registration Statement
and Prospectus) and that the Company shall, at the Closing
Date, deliver to the Representatives, a signed certificate of
its President or a Vice President and its Treasurer or an
Assistant Treasurer to the effect that (i) there has been no
material adverse change, (ii) the representations and
warranties in Section 2 are true and correct with the same
force and effect as though expressly made at and as of the
Closing Date, (iii) the Company has complied with all
agreements and satisfied all conditions on its part to be
performed or satisfied at or prior to Closing Date, and
(iv) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for
that purpose have been initiated or threatened by the
Commission.
(e) That at the Closing Date the Representatives shall
have received a letter from PWC in form and substance
satisfactory to the Representatives, dated the Closing Date,
confirming that they are independent accountants within the
meaning of the 1933 Act, the 1934 Act and published rules and
regulations thereunder and to the effect that (i) in their
opinion the audited consolidated financial statements
included in the Company's Annual Report to the Commission on
Form 10-K, incorporated by reference in the Registration
Statement (the "Form 10-K"), comply as to form in all
material respects with the applicable accounting requirements
of the 1933 Act, the 1934 Act and the published rules and
regulations of the Commission issued thereunder with respect
to Form 10-K and registration statements on Form S-3, and
(ii) on the basis of a reading of the unaudited consolidated
financial data included in the Company's Quarterly Reports to
the Commission on Form 10-Q, if any (the "Forms 10-Q"),
incorporated by reference in the Registration Statement, and
on the basis of the following procedures (but not on the
basis of an audit in accordance with generally accepted
auditing standards) to be performed by PWC: (A) a reading of
the minutes of the Board of Directors of the Company and the
Executive Committee thereof as set forth in the minute books
to a specified date not more than three business days prior
to the date of such letter, (B) a reading of the latest
available unaudited interim consolidated financial data (if
any), and (C) inquiries of certain officials of the Company
who have responsibility for financial and accounting matters,
nothing has come to their attention which in their judgment
would indicate that (1) the unaudited consolidated financial
data included in the Forms 10-Q (if any) do not comply as to
form in all material respects with the applicable accounting
requirements of the 1934 Act and the published rules and
regulations of the Commission thereunder, or that any
material modifications should be made to such unaudited
consolidated financial data for such unaudited consolidated
financial data to be in conformity with generally accepted
accounting principles; (2) the
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unaudited amounts of operating revenue, net income, earnings
applicable for common stock and earnings per share of common
stock and unaudited amounts for property and plant -- net,
long-term debt, preferred and preference stock and common
equity outstanding, as included in the Registration
Statement, were not determined on a basis substantially
consistent with that of the corresponding amounts in
the audited consolidated statements of earnings and
consolidated balance sheets incorporated by reference in
the Registration Statement; (3) the ratios of earnings to
fixed charges, actual and (if any) pro forma, as set forth in
the Registration Statement were not arithmetically correct;
(4) at the date of the latest available unaudited interim
financial data there was any change in the common stock
outstanding or long-term debt of the Company or any decrease
in the common equity of the Company (before giving effect to
dividends declared on common stock) as compared with amounts
shown in the most recent consolidated balance sheet
incorporated by reference in the Registration Statement; or
for the period from the date of such consolidated balance
sheet to the date of the latest available unaudited interim
consolidated financial data there were any decreases, as
compared with the corresponding period in the preceding year,
in operating revenue or in net income or earnings per share;
or (5) at a specified date not more than three business days
prior to the date of such letter there was any change in the
common stock outstanding or long-term debt of the Company, in
each case as compared with amounts shown in the most recent
consolidated balance sheet incorporated by reference in the
Registration Statement; except in all instances for (i)
changes or decreases which the Registration Statement
discloses have occurred or may occur or (ii) changes or
decreases not in excess of $500,000 or (iii) changes
occasioned by the issuance of common stock pursuant to the
Company's Shareholder Dividend Reinvestment Plan, Savings
Plan for Exempt Employees, Savings Plan for Bargaining Unit
Employees and Savings Plan for Non- Bargaining Unit,
Non-Exempt Employees, or Long-Term Incentive Plan or upon the
conversion of the Company's 7% Convertible Debentures and the
5% Convertible Debentures. The letter of PWC also shall be
to the effect that they have carried out certain specified
procedures, not constituting an audit, with respect to
certain amounts, percentages and financial information
which are derived from the general accounting records
of the Company, which appear in the Registration
Statement and Prospectus and which are specified by the
Representatives, and have compared such amounts, percentages
and financial information with the accounting records of the
Company and have found them to be in agreement.
(f) That the Company shall have performed such of its
obligations under this Agreement as are to be performed by
the terms hereof at or before the Closing Date.
(g) At the Closing Date counsel for the
Underwriter shall have
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been furnished with such certificates, documents and
opinions as they may reasonably require for the purpose
of enabling them to pass upon the issuance and sale of the
Bonds as herein contemplated and related proceedings, or in
order to evidence the accuracy of any of the representations
and warranties, or the fulfillment of any of the conditions
herein contained; and all proceedings taken by the Company in
connection with the issuance and sale of the Senior Notes as
herein contemplated shall be satisfactory in form and
substance to the Representatives and counsel for the
Underwriters.
If any condition specified in this Section shall not have
been fulfilled when and as required to be fulfilled, this Agreement
may be terminated by the Representatives by notice to the Company
at any time at or prior to the Closing Date and such termination
shall be without liability of any party to any other party except
as provided in Section 5 and Section 8.
SECTION 7. Conditions of Company's Obligations. The
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obligations of the Company with respect to the issue, sale and
delivery of the Senior Notes shall be subject to the following
conditions:
(a) That, at or before 6:00 p.m., New York Time, on
the date hereof, or such later time and day as the Company
may have from time to time consented to in writing or by
telephone, confirmed in writing, all orders of the Public
Service Commission of the District of Columbia necessary to
permit the issue, sale and delivery of the Senior Notes shall
be in effect; and that prior to the Closing Date no stop
order with respect to the effectiveness of the Registration
Statement shall have been issued under the 1933 Act by the
Commission and that at the Closing Date no proceedings
therefor shall be pending or threatened.
(b) That no order of the Public Service Commission of
the District of Columbia relating to the issue or sale of the
Senior Notes or to the application of the proceeds thereof,
which may be entered after the execution of this Agreement
and prior to the Closing Date, shall contain any conditions
which are not acceptable to the Company.
In case any of the conditions specified in this Section shall
not have been fulfilled, this Agreement may be terminated by the
Company, upon notice thereof to the Representatives, at any time
prior to Closing Date, and such termination shall be without
liability of any party to any other party except as provided in
Section 5 and Section 8.
SECTION 8. Indemnification. (a) The Company agrees to
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indemnify and hold harmless the several Underwriters and each
person who controls any of the several Underwriters within the
meaning of Section 15 of the 1933 Act against any and all losses,
claims, damages or liabilities, as incurred, joint or several, to
which
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they or any of them may become subject under the 1933 Act or
under any other statute or common law, and to reimburse each such
Underwriter and each such controlling person for any legal or other
expenses (including, to the extent hereinafter provided, reasonable
counsel fees) incurred by them in connection with investigating any
such losses, claims, damages or liabilities, or in connection with
defending or settling (if settled with the written consent of the
Company) any actions, insofar as such losses, claims, damages,
liabilities, expenses or actions arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement as originally filed or as
subsequently amended, or the omission or alleged omission therefrom
of a material fact required to be stated therein or necessary to
make the statements therein not misleading, or arising out of any
untrue statement or alleged untrue statement of a material fact
contained in the Prospectus as originally filed or as subsequently
amended or supplemented, or the omission or alleged omission
therefrom of a material fact necessary in order to make the
statements therein, in light of the circumstances under which they
were made, not misleading; provided, however, that the indemnity
agreement contained in this Section shall not apply to any such
losses, claims, damages, liabilities, expenses or actions arising
out of, or based upon any such untrue statement or alleged untrue
statement, or any such omission or alleged omission, if such
statement or omission was made in reliance upon and in conformity
with information furnished herein or in writing to the Company by
the Representatives or by or on behalf of any of the several
Underwriters through the Representatives expressly for use in the
Registration Statement as originally filed or as subsequently
amended or in the Prospectus as originally filed or as subsequently
amended or supplemented; and provided, further, that the indemnity
agreement contained in this Section shall not inure to the benefit
of any Underwriter (or of any person controlling such Underwriter)
on account of any such losses, claims, damages, liabilities,
expenses or actions arising from the sale of Senior Notes to any
person if such Underwriter failed to send or give a copy of the
Prospectus (as it may have been amended or supplemented) (excluding
documents incorporated by reference) to such person with or prior
to the written confirmation of the sale involved. The indemnity
agreement of the Company contained in this Section and the
representations and warranties of the Company contained in Section
2 hereof shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any
Underwriter, or any such controlling person, and shall survive the
delivery of the Senior Notes. The Underwriters agree to notify the
Company promptly of the commencement of any litigation or
proceedings against them or any of them or against any such
controlling person in connection with the sale of Senior Notes.
(b) Each Underwriter agrees to indemnify and hold harmless
the Company, its officers and directors, and each person who
controls the Company or any of its officers and directors within
the meaning of Section 15 of the 1933 Act against any and all
losses, claims, damages or liabilities, as incurred, joint or
several, to which they or any of them may become subject under the
1933 Act
- 12 -
or under any other statute or common law, and to reimburse
each of them for any legal or other expenses (including, to the
extent hereinafter provided, reasonable counsel fees) incurred by
them in connection with investigating any such losses, claims,
damages or liabilities, or in connection with defending or settling
(if settled with the written consent of the Representatives) any
actions, insofar as such losses, claims, damages, liabilities,
expenses or actions arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained
in the Registration Statement as originally filed or as
subsequently amended, or the omission or alleged omission
therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading, or arising
out of any untrue statement or alleged untrue statement of a
material fact contained in the Prospectus as originally filed or as
subsequently amended or supplemented, or the omission or alleged
omission therefrom of a material fact necessary in order to make
the statements therein, in light of the circumstances under which
they were made, not misleading, if such statement or omission was
made in reliance upon and in conformity with information furnished
herein or in writing to the Company by the Representatives or by or
on behalf of the several Underwriters through the Representatives
expressly for use in the Registration Statement as originally filed
or as subsequently amended or in the Prospectus as originally filed
or as subsequently amended or supplemented. The indemnity
agreement contained in this Section shall remain operative and in
full force and effect regardless of any investigation made by or on
behalf of the Company, or any such controlling person, and shall
survive the receipt of the proceeds of the sale of the Senior
Notes. The Company agrees promptly to notify the Representatives
of the commencement of any litigation or proceedings against the
Company, any of its officers or directors or any controlling person
in connection with the sale of Senior Notes. The foregoing
indemnity agreement is in addition to any further liability which
any Underwriter may otherwise have to the Company or any of its
directors, officers or controlling persons.
(c) The Company and each of the several Underwriters agree
that, upon the receipt of notice of the commencement of any action
against it, its officers and directors, or any person controlling
it as aforesaid in respect of which indemnity may be sought on
account of any indemnity agreement contained herein, it will
promptly give written notice of the commencement thereof to the
party or parties against whom indemnity shall be sought hereunder.
The omission so to notify such indemnifying party or parties of any
such action shall relieve such indemnifying party or parties from
any liability which it or they may have to the indemnified party on
account of any indemnity agreement contained in (a) or (b) above,
but shall not relieve such indemnifying party or parties from any
liability which it or they may have to the indemnified party
otherwise than on account of such indemnity agreement. In case
such notice of any such action shall be so given, such indemnifying
party shall be entitled to participate at its own expense in the
defense or, if it so elects, to assume (in conjunction with any
other indemnifying parties) the defense of such action, in which
event
- 13 -
such defense shall be conducted by counsel chosen by such
indemnifying party or parties and reasonably satisfactory to the
indemnified party or parties who shall be defendant or defendants
in such action, and such defendant or defendants shall
bear the fees and expenses of any additional counsel retained by
them; but if the indemnifying party shall elect not to assume the
defense of such action, such indemnifying party will reimburse such
indemnified party or parties for the reasonable fees and expenses
of any counsel retained by them. In the event that the parties to
any such action (including impleaded parties) include both the
indemnified party or parties and the indemnifying party and any of
the indemnified parties shall have been advised by counsel chosen
by it and reasonably satisfactory to the Company that there may be
one or more legal defenses available to it which are different from
or additional to those available to the indemnifying party, the
indemnifying party shall not have the right to assume the defense
of such action on behalf of the indemnified party or parties and
will reimburse the indemnified party or parties as aforesaid for
the reasonable fees and expenses of any counsel retained by such
indemnified party or parties, it being understood that the
indemnifying party shall not, in connection with any one action or
separate but similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of more than one
separate firm of attorneys for all such indemnified parties, which
firm shall, in connection with indemnification provided for in (a)
above, be designated in writing by the Representatives, and, in
connection with indemnification provided for in (b) above, be
designated in writing by the Company.
(d) In order to provide for just and equitable contribution
in circumstances in which the indemnity agreement provided for in
this Section 8 is for any reason held to be unenforceable by the
indemnified parties although applicable in accordance with its
terms, then each indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable
by such indemnified party as a result of the losses, liabilities,
claims, damages and expenses of the nature contemplated in said
indemnity agreement in such proportion as is equitable and as shall
reflect both the relative benefits received by the Company on the
one hand and the Underwriter or Underwriters, as the case may be,
on the other hand from the offering of the Senior Notes, and the
relative fault, if any, of the Company on the one hand and of the
Underwriter or Underwriters, as the case may be, on the other hand
in connection with the statements or omissions which resulted in
such losses, liabilities, claims, damages or expenses, as well as
any other relevant equitable considerations. The relative benefits
received by the Company on the one hand and the Underwriter or
Underwriters, as the case may be, on the other hand in connection
with the offering of the Senior Notes shall be deemed to be in the
same proportion as the total net proceeds from the offering of such
Senior Notes (before deducting expenses) received by the Company
bear to the total commissions and underwriting discounts received
by the Underwriter or Underwriters, as the case may be. The
relative fault shall be determined by reference to, among other
things, whether
- 14 -
the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to
information supplied by the Company on the one hand or the
Underwriter or the Underwriters on the other hand and the parties'
relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. The Company and
the Underwriters agree that it would not be just and equitable if
contribution pursuant to this Subsection (d) were determined by pro
rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which
does not take account of the equitable considerations referred to
above. The amount paid or payable by an indemnified party as a
result of the losses, liabilities, claims, damages and expenses
referred to above shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or
claim. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the 0000 Xxx) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section, each person, if
any, who controls an Underwriter within the meaning of Section 15
of the 1933 Act shall have the same rights to contribution as such
Underwriter, and each director of the Company, each officer of the
Company who signed the Registration Statement, and each person, if
any, who controls the Company within the meaning of Section 15 of
the 1933 Act shall have the same rights to contribution as the
Company.
SECTION 9. Termination. This Agreement may be terminated
-----------
any time prior to the Closing Date by the Representatives by giving
notice thereof to the Company, if at or prior to such time (i)
there shall have occurred any general suspension of trading in
securities on the New York Stock Exchange or there shall have been
established by the New York Stock Exchange or by the Commission or
by any federal or state agency or by the decision of any court any
limitation on prices for such trading, or (ii) if a banking
moratorium has been declared by any Federal, New York, District of
Columbia or Virginia authority, or (iii) there shall have occurred
any new outbreak or escalation of hostilities or other national or
international calamity or crisis, the effect of which on the
financial markets of the United States shall be such as to make it
impracticable for the Underwriters to enforce contracts for the
sale of the Senior Notes, or (iv) the Company shall have sustained
a substantial loss by fire, flood, accident or other calamity which
renders it impracticable to consummate the sale of the Senior Notes
and the delivery of the Senior Notes by the several Underwriters at
the initial public offering price. Any termination hereof pursuant
to this Section 9 shall be without liability of any party to any
other party except as otherwise provided in Section 5 and Section
8.
SECTION 10. Default. If one or more of the Underwriters
-------
shall fail on the Closing Date to purchase the Senior Notes which
it or they are obligated to purchase hereunder (the "Defaulted
Senior Notes"), then the remaining Underwriters (the "Non-
Defaulting Underwriters") shall have the right, within 24
- 15 -
hours after the Closing Date, to make arrangements for one or more
of the Non-Defaulting Underwriters, or any other underwriters, to
purchase all, but not less than all, of the Defaulted Senior Notes
in such amounts as may be agreed upon and upon the terms herein set
forth. If, however, during such 24 hours such arrangements shall
not have been completed for the purchase of all of the Defaulted
Senior Notes, then:
(a) If the principal amount of the Defaulted Senior
Notes does not exceed 10% of the principal amount of the
Senior Notes, the Non-Defaulting Underwriters shall be
obligated to purchase the total number of such Defaulted
Senior Notes in the proportions that their respective
underwriting obligations hereunder bear to the underwriting
obligations of all Non-Defaulting Underwriters.
(b) If the principal amount of the Defaulted Senior
Notes exceeds 10% of the principal amount of the Senior
Notes, this Agreement shall terminate without any liability
on the part of the Company or any Non-Defaulting Underwriter.
Nothing in this Section 10 and no action taken pursuant to
this Section 10 shall relieve any defaulting party from liability
in respect of its default.
In the event of a default by one or more Underwriters as set
forth in this Section 10 which does not result in a termination of
this Agreement, either the Non-Defaulting Underwriters or the
Company shall have the right to postpone the Closing Date for a
period of not exceeding 7 days in order that any required changes
in the Registration Statement or the Prospectus or in any other
documents or arrangements may be effected.
SECTION 11. Representations, Warranties and Agreements to
---------------------------------------------
Survive Delivery. All representations, warranties and agreements
----------------
contained in this Agreement, or contained in certificates of
officers of the Company submitted pursuant hereto, shall remain
operative and in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter or
controlling person, or by or on behalf of the Company, and shall
survive delivery of the Senior Notes to the Underwriters.
SECTION 12. Miscellaneous. This Agreement shall inure to
-------------
the benefit of the several Underwriters and the Company and with
respect to the provisions of Section 8, the officers and directors
and each controlling person referred to in Section 8, and their
respective successors, heirs or legal representatives. Nothing in
this Agreement is intended or shall be construed to give to any
other person, firm or corporation, other than the Underwriters and
the Company and their respective successors and the controlling
persons and officers and directors referred to in Section 8 and
their heirs and legal representatives, any legal or equitable
right, remedy or claim under or in respect of this Agreement
- 16 -
or any provision herein contained. The term "successors" as used in
this Agreement shall not include any purchaser, as such purchaser,
of any Senior Notes from the Underwriters.
In all dealings hereunder, the Representatives shall act on
behalf of the Underwriters, and the parties hereto shall be
entitled to act and rely upon any statement, request, notice or
agreement on behalf of any Underwriter made or given by the
Representatives (or by any one of the Representatives authorized by
the agreement among the Underwriters relating to the Senior Notes
to act on behalf of all the Underwriters).
SECTION 13. Notices. All communications hereunder shall be
-------
in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to
the Underwriters shall be directed to the Representatives at the
address set forth in Schedule I hereto, and notices to the Company
shall be directed to it at 0000 Xxxxxxxxxxxx Xxxxxx, X. X.,
Xxxxxxxxxx, D. C. 20068, Attention of Xxxxx Xxxxxxx Xxxxxx,
Associate General Counsel, Secretary and Assistant Treasurer.
SECTION 14. Governing Law. This Agreement shall be governed
-------------
by the laws of the State of New York.
SECTION 15. Counterparts. This Agreement may be
------------
simultaneously executed in counterparts, each of which when so
executed shall be deemed to be an original. Such counterparts
shall together constitute one and the same instrument.
- 17 -
If the foregoing is in accordance with your understanding of
our agreement, kindly sign and return to the Company the enclosed
duplicate hereof, whereupon it will become a binding agreement
between the Company and the several Underwriters in accordance with
its terms.
Very truly yours,
POTOMAC ELECTRIC POWER COMPANY
By _________________________________
Xxxxxx X. Xxxxxx
Senior Vice President and
Chief Financial Officer
The foregoing Underwriting Agreement is hereby confirmed and
accepted as of the date first above written.
____________________
____________________
____________________
____________________
By____________________________
- 18 -
SCHEDULE I
Underwriting Agreement dated _______________
Registration Statement No. 333-_____
Representative and Address:
Senior Notes:
Designation: Senior Notes, _____% Series
due ____
Principal Amount: $___________
Supplemental Indenture dated as of _________, 199_
Date of Maturity:
Interest Rate:
Purchase Price: ______% of the principal
amount thereof
Public Offering Price: ______% of the principal amount
thereof, plus accrued interest, if
any, from the date of delivery to
the Underwriters
Closing Date and Location: _________, 199_ at 10:00 a.m.
At the offices of Potomac Electric Power Company
Suite 841
0000 Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, XX 00000
- 19 -
SCHEDULE II
Principal
Amount
Name of Underwriters of Senior Notes
$
Total $
- 20 -
[LETTERHEAD OF POTOMAC ELECTRIC POWER COMPANY]
Ladies and Gentlemen:
This opinion is being delivered to you in connection with the
issuance and sale by Potomac Electric Power Company (the "Company")
of $_____ aggregate principal amount of its Senior Notes, ___%
Series due _____ (the "Senior Notes"), which are being issued under
an Indenture, dated ____, 1998 (the "Senior Note Indenture"),
between the Company and The Bank of New York, as trustee (the
"Senior Note Trustee"), as supplemented by a Supplemental Indenture
thereto, dated _____, 19__, with respect to the Senior Notes (the
"Senior Note Supplemental Indenture"), and which are being
purchased by the Underwriters named in the Underwriting Agreement,
dated _____, 19__, and between the Underwriters and the Company
with respect to the Senior Notes (the "Underwriting Agreement").
The Senior Notes will be secured by First Mortgage Bonds, ___%
Series due ____ (the "First Mortgage Bonds"), of an equal principal
amount issued under the Mortgage and Deed of Trust, dated July 1,
1936, between the Company and The Bank of New York, as successor
trustee (the "Mortgage Bond Trustee"), as heretofore supplemented
and amended (the "Mortgage Bond Indenture"), and as now further
supplemented and amended by a Supplemental Indenture, dated ____,
19__, with respect to the First Mortgage Bonds (the "Mortgage Bond
Supplemental Indenture"). As used herein, the term "Registration
Statement" means the registration statement of the Company on Form
S-3 filed with the Securities and Exchange Commission, File No. 33-
___. All other capitalized terms used in this opinion letter that
are not defined herein, but which are defined, either directly or
by cross-reference, in the Underwriting Agreement, are used herein
with the respective meanings assigned to such terms in the
Underwriting Agreement.
As counsel for the Company, I have examined such corporate
records, certificates and other documents and such questions of law
as I have considered necessary or appropriate for the purpose of
this opinion. I have not examined the Senior Notes, except for the
specimen thereof attached as Exhibit A to the certificate of the
Senior Note Trustee of even date herewith as to due authentication
and delivery of the Senior Notes, have assumed that the Senior
Notes conform in all respects to such specimen, and have relied on
such certificate as to the due authentication and delivery of the
Senior Notes. I likewise have not examined the First Mortgage
Bonds, except for the specimen thereof attached as Exhibit A to the
certificate of the Mortgage Bond Trustee of even date herewith as
to the due authentication and delivery of the First
- 21 -
Mortgage Bonds, have assumed that the First Mortgage Bonds conform
in all respects to such specimen, and have relied on such
certificate as to the due authentication and delivery of the First
Mortgage Bonds. On the basis of my examinations as aforesaid, I
advise you that, in my opinion:
1. The Company has been duly incorporated and is now validly
existing as a corporation in good standing under the laws of the
District of Columbia; is also now validly existing and in good
standing as a domestic corporation of the Commonwealth of Virginia;
has charter power to carry on the business in which it is now
engaged as set forth in the Prospectus, is legally qualified to
carry on in the State of Maryland the business in which it is now
engaged in said State; and is legally qualified to carry on
business within the Commonwealth of Pennsylvania, limited however
to its participation in the construction, ownership and operation
of the Conemaugh generating station and certain related
transmission lines.
2. The Underwriting Agreement has been duly authorized,
executed and delivered by the Company.
3. The Senior Note Indenture and the Senior Note
Supplemental Indenture each has been duly and validly authorized,
executed and delivered by the Company. The Senior Note Indenture,
as supplemented by the Senior Note Supplemental Indenture, is a
valid and legally binding instrument of the Company that is
enforceable against the Company in accordance with its terms,
except as the same may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance or other laws of general
application relating to the enforcement of creditors' rights or by
general principles of equity.
4. The Mortgage Bond Indenture and the Mortgage Bond
Supplemental Indenture each has been duly and validly authorized,
executed and delivered by the Company. The Mortgage Bond
Indenture, as supplemented by the Mortgage Bond Supplemental
Indenture, is a valid and legally binding instrument of the Company
that is enforceable against the Company in accordance with its
terms, except as the same may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance or other laws of general
application relating to the enforcement of creditors' rights or by
general principles of equity.
5. The Senior Notes have been duly and validly authorized by
all necessary corporate action, have been duly and validly issued
in accordance with the provisions of the Senior Note Indenture and
the Senior Note Supplemental Indenture, and constitute valid and
legally binding obligations of the Company enforceable in
accordance with their terms, except as the same may be limited by
bankruptcy, insolvency, reorganization, fraudulent conveyance or
other laws of general application relating to the enforcement of
creditors' rights or by general principles of equity, and are
entitled to the benefit and security afforded by the Senior Note
Indenture.
- 22 -
6. The First Mortgage Bonds have been duly and validly
authorized by all necessary corporate action, have been duly and
validly issued in accordance with the provisions of the Mortgage
Bond Indenture and the Mortgage Bond Supplemental Indenture, and
constitute valid and legally binding obligations of the Company
enforceable in accordance with their terms, except as the same may
be limited by bankruptcy, insolvency, reorganization, fraudulent
conveyance or other laws of general application relating to the
enforcement of creditors' rights or by general principles of
equity, and are entitled to the benefit and security afforded by
the Mortgage Bond Indenture.
7. The Registration Statement is effective under the
Securities Act of 1933, as amended (the "1933 Act"), no stop order
suspending the effectiveness of the Registration Statement has been
issued, and, to the best of my knowledge, no proceedings for that
purpose are pending or threatened under Section 8(d) of the 1933
Act.
8. The approval of the Public Service Commission of the
District of Columbia, which is required for the valid
authorization, issuance and sale of the Senior Notes by the Company
in accordance with the Underwriting Agreement has been obtained and
is in full force and effect. No approval by the State Corporation
Commission of Virginia is necessary for the valid authorization,
issuance and sale of the Senior Notes by the Company in accordance
with the Underwriting Agreement. No approval, consent or order of
the Maryland Public Service Commission or any other regulatory
authority of the State of Maryland is required for the valid
authorization, issuance and sale of the Senior Notes by the Company
in accordance with the Underwriting Agreement (other than any
applicable requirements of the Maryland Securities Law, as to which
I express an opinion). I do not know of any other approvals,
consents or orders of any governmental body that are legally
required as a condition to the valid authorization and issuance of
the Senior Notes (other than compliance with the securities or
"blue sky" laws of any jurisdiction, as to which I express no
opinion).
9. The summary of the terms of the Senior Note Indenture,
the Senior Notes, the Mortgage Bond Indenture and the First
Mortgage Bonds contained in the Registration Statement and
Prospectus fairly describes the provisions thereof required to be
described by the registration form.
10. The Mortgage Bond Indenture constitutes a valid first
lien or charge, to the extent that it purports to be such, upon the
interest held by the Company in its property covered by the
Mortgage Bond Indenture, subject only to such exceptions, defects,
qualifications and other matters as may be permitted by the
Mortgage Bond Indenture and to such other matters as in my opinion
do not materially affect the security for the First Mortgage Bonds.
The Mortgage and Deed of Trust dated July 1, 1936, and the
supplements and amendments thereto, other than the Mortgage Bond
Supplemental Indenture, have been duly recorded and
- 23 -
filed for record in the only counties in which any real property
subject to the lien of the Mortgage Bond Indenture is located, and
the Mortgage Bond Supplemental Indenture also has been so recorded
and filed, and all requisite steps have been taken to perfect the
security interest of the Mortgage Bond Indenture in personal
property of the Company.
11. The Senior Note Indenture constitutes a valid first lien
on the First Mortgage Bonds.
12. The Company holds valid franchises, permits and other
rights adequate for the business of the Company in the territory
which it serves, and such franchises, permits and other rights
contain no unduly burdensome restrictions.
13. There are no material pending legal proceedings (other
than ordinary routine litigation incidental to the business or as
disclosed in the Prospectus) to which the Company is a party or of
which any of its property is the subject.
14. The Company has good and valid title in and to all of the
real property reflected in its most recent audited balance sheet
that is incorporated by reference in the Registration Statement
(except real property disposed of in the ordinary course of
business since that date), free and clear of all liens, charges and
encumbrances against the same, except for the lien of the Mortgage
Bond Indenture and for such liens, charges, encumbrances, defects,
qualifications and other matters affecting title, possession or use
as may be permitted by the Mortgage Bond Indenture.
I also advise you that, in my opinion, Registration Statement,
as of the effective date thereof, appeared on its face to be
appropriately responsive in all material respects to the
requirements of the 1933 Act, and to the extent applicable, the
Securities Exchange Act of 1934, as amended, and the applicable
rules and regulations of the Securities and Exchange Commission
thereunder, and that the Senior Note Indenture and the Senior Note
Supplemental Indenture appear on their face to be appropriately
responsive in all material respects to the requirements of the 1939
Act and the applicable rules and regulations of the Securities and
Exchange Commission thereunder.
Except as set forth in paragraph 9 above, I am not passing
upon, and do not assume any responsibility for, the accuracy,
completeness or fairness of the statements contained in the
Registration Statement and Prospectus and make no representation
that I have independently verified the accuracy, completeness or
fairness of such statements, except insofar as such statements
relate to me. However, based on my examination of the Registration
Statements and Prospectus and of the documents specifically
referred to in the section thereof entitled "Description of Senior
Notes," "Description of Indenture" and "Description of Senior Note
Mortgage Bonds and Mortgage," on my general familiarity with the
affairs of the Company, and on my participation in conferences with
officials and
- 24 -
other representatives of, and other counsel for, the Company, with
PricewaterhouseCoopers LLP, the independent accountants of the
Company, and with your representatives and your counsel, I do not
believe that Registration Statement, at the time it became
effective, 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 or that the
Prospectus, at the time it was filed with the Commission pursuant
to Rule 424(b) under the 1933 Act or at the date hereof, contained
or contains an untrue statement of a material fact or omitted or
omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading. I am expressing no belief,
however, as to the financial statements or other financial or
statistical data constituting a part of, or incorporated by
reference in, the Registration Statement or the Prospectus or as to
the parts of the Registration Statement the constitute the
statement of eligibility of the Senior Note Trustee.
I have assumed, with your approval, but not independently
verified, that the signatures on all documents examined by me are
genuine.
- 25 -
[Letterhead of Xxxxxxxxx & Xxxxxxx]
Ladies and Gentlemen:
We have acted as special counsel to Potomac Electric Power
Company (the "Company") in connection with the issuance and sale by
the Company of $____ in principal amount of Senior Notes, ___%
Series due ____ (the "Senior Notes"), which are being issued under
an Indenture, dated _____, 1998 (the "Senior Note Indenture")
between the Company and The Bank of New York, as trustee (the
"Senior Note Trustee"), as supplemented by a Supplemental Indenture
thereto, dated _____, 19__, with respect to the Senior Notes (the
"Senior Note Supplemental Indenture"), and which are being
purchased by the Underwriters named in the Underwriting Agreement
dated _____, 19__ between the Underwriters and the Company with
respect to the Senior Notes (the "Underwriting Agreement").
The Senior Notes will be secured by First Mortgage Bonds, ___%
Series due ____ (the "First Mortgage Bonds") of an equal principal
amount issued under the Mortgage and Deed of Trust, dated July 1,
1936, between the Company and The Bank of New York, as successor
trustee (the "Mortgage Bond Trustee"), as heretofore supplemented
and amended (the "Mortgage Bond Indenture") and as now further
supplemented and amended by a Supplemental Indenture, dated _____,
19__, with respect to the First Mortgage Bonds (the "Mortgage Bond
Supplemental Indenture").
As used herein, the term "Registration Statement" means the
registration statement of the Company on Form S-3, File No. 33-
_____. All other terms used herein that are not defined herein but
which are defined, either directly or by cross-reference, in the
Underwriting Agreement are used herein with the respective meanings
assigned to such terms therein.
As counsel for the Company, we have examined originals (or
copies certified or otherwise identified to our satisfaction) of
such instruments, certificates and documents and have reviewed such
questions of law as we have deemed necessary or appropriate for the
purpose of the opinions rendered below. In such examination, we
have assumed the genuiness of all signatures, the authenticity of
all documents submitted to us as originals, the conformity to the
original documents of all documents submitted to us as copies, the
conformity of the Senior Notes to the specimen thereof attached as
Exhibit A to the certificate of the Senior Note Trustee of even
date herewith regarding the due authentication and delivery of the
Senior Notes and the conformity of the First Mortgage Bonds to the
specimen thereof attached as Exhibit A to the certificate of the
Mortgage Bond Trustee of even date herewith regarding due
authentication and delivery of the First Mortgage Bonds. As to any
facts material to our opinion we have, when relevant facts were not
independently established, relied upon the aforesaid certificates.
- 26 -
Based on the foregoing, and subject to the following
limitations and qualifications, we are of the opinion that:
1. The Company has been duly incorporated and is validly
existing as a corporation under the laws of the District of
Columbia and under the laws of the Commonwealth of Virginia, and
has the corporate power and authority to execute the Underwriting
Agreement, the Senior Note Indenture, the Senior Note Supplemental
Indenture and the Mortgage Bond Supplemental Indenture, and to
issue and sell the Senior Notes and to issue the First Mortgage
Bonds.
2. The Underwriting Agreement has been duly authorized,
executed and delivered by the Company.
3. The Senior Note Indenture and the Senior Note
Supplemental Indenture each have been duly and validly authorized
by all necessary corporate action, and have been duly and validly
executed and delivered by the Company. As supplemented by the
Senior Note Supplemental Indenture, the Senior Note Indenture
constitutes a valid and legally binding instrument of the Company
that is enforceable against the Company in accordance with its
terms, except as such enforcement may be limited by bankruptcy,
insolvency, reorganization or other laws affecting the enforcement
of creditors' rights or by general principles of equity. The
Senior Note Indenture, as supplemented by the Senior Note
Supplemental Indenture, has been qualified under the Trust
Indenture Act of 1939, as amended (the "1939 Act").
4. The Mortgage Bond Supplemental Indenture has been duly
and validly authorized by all necessary corporate action, has been
duly and validly executed and delivered by the Company. As
supplemented and amended by the Mortgage Bond Supplemental
Indenture, the Mortgage Bond Indenture constitutes a valid and
legally binding instrument of the Company that is enforceable
against the Company in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency,
reorganization or other laws affecting the enforcement of
creditors' rights or by general principles of equity.
5. The Senior Notes have been duly and validly authorized by
all necessary corporate action, have been duly and validly issued
in accordance with the provisions of the Senior Note Indenture and
the Senior Note Supplemental Indenture, and constitute valid and
legally binding obligations of the Company enforceable in
accordance with their terms, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization or other laws
affecting enforcement of creditors' rights or by general principles
of equity, and are entitled to the benefit and security afforded by
the Senior Note Indenture.
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6. The Mortgage Bonds have been duly and validly authorized
by all necessary corporate action, have been duly and validly
issued in accordance with the provisions of the Mortgage Bond
Indenture and the Mortgage Bond Supplemental Indenture, and
constitute valid and legally binding obligations of the Company
enforceable in accordance with their terms, except as such
enforcement may be limited by bankruptcy, insolvency,
reorganization or other laws affecting enforcement of creditors'
rights or by general principles of equity, and are entitled to the
benefit and security afforded by the Mortgage Bond Indenture.
7. The Registration Statement is effective under the
Securities Act of 1933, as amended (the "1933 Act"), and to the
best of our knowledge no stop order suspending the effectiveness of
the Registration Statement has been issued and no proceedings for
that purpose are pending or threatened under Section 8(d) of the
1933 Act. The Registration Statement, at the time it became
effective, and the Prospectus, at the time it was filed with the
Securities and Exchange Commission (the "Commission") pursuant to
Rule 424 under the 1933 Act (except for the financial statements
and other financial and statistical data constituting a part
thereof, as to which we express no opinion), complied as to form in
all material respects with the applicable requirements of the 1933
Act and the 1939 Act, and the applicable rules and regulations of
the Commission thereunder, except that we express no opinion on the
Form T-1 filed as an exhibit thereto. The documents or portions
thereof filed with the Commission pursuant to the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and incorporated
by reference in the Registration Statement and the Prospectus, at
the times they were filed with the Commission, complied as to form
in all material respects with the 1934 Act, and the rules and
regulations of the Commission thereunder.
8. The approval of the Public Service Commission of the
District of Columbia which is required for the valid authorization,
issuance and sale of the Senior Notes by the Company in accordance
with the Underwriting Agreement has been obtained and, to the best
of our knowledge, such approval is in full force and effect. No
approval by the State Corporation Commission of the Commonwealth of
Virginia is necessary for the valid authorization, issuance and
sale of the Senior Notes by the Company in accordance with the
Underwriting Agreement, and we do not know of any other approvals,
consents or orders of any governmental body under the laws of the
District of Columbia or the Commonwealth of Virginia that are
legally required as a condition to the valid authorization and
issuance of the Senior Notes (other compliance with the securities
or "blue sky" laws of such jurisdiction, as to which we express no
opinion).
9. The summary of the terms of the Senior Note Indenture,
the Senior Notes, the Mortgage Bond Indenture and the First
Mortgage Bonds contained in the Registration Statement and the
Prospectus fairly describes the provisions thereof required to be
described by the registration statement form.
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In passing upon the forms of the Registration Statement and
the form of the Prospectus, we necessarily assume the correctness
and completeness of the statements made and information included
therein by the Company and take no responsibility therefor, except
insofar as such statements relate to us and as set forth in
paragraph 9 above. In connection with the Company's preparation of
the Registration Statement and the Prospectus, we had discussions
with certain of its officers and representatives. Our examination
of the Registration Statement and the Prospectus and our
discussions did not disclose to us any information which gives us
reason to believe that, at the time the Registration Statement
became effective, it contained any untrue statement of a material
fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading
or that the Prospectus, at the time it was filed with the
Commission pursuant to Rule 424(b) or at the date hereof, contained
or contains any untrue statement of a material fact or omitted or
omits to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. We are
not making any statement as to the financial statements and other
financial and statistical data constituting a part of the
Registration Statement or the Prospectus.
The opinions set forth herein are solely for your benefit in
connection with the consummation of the transactions contemplated
by the Underwriting Agreement, and may not be relied upon by you
for any other purpose or by any other person for any purpose.
Very truly yours,
Xxxxxxxxx & Xxxxxxx
- 29 -
[LETTERHEAD OF WINTHROP, STIMSON, XXXXXX & XXXXXXX]
Ladies and Gentlemen:
We have acted as counsel for you in connection with your
purchase from Potomac Electric Power Company (the "Company") of
$___ principal amount of its Senior Notes, ___% Series due _____
(the "Senior Bonds"), pursuant to the Underwriting Agreement, dated
_____, 19__, between you and the Company (the "Underwriting
Agreement"). The Senior Notes have been issued under an Indenture,
dated ____, 1998 (the "Senior Note Indenture"), between the Company
and The Bank of New York, as trustee (the "Senior Note Trustee"),
as supplemented by a Supplemental Indenture thereto, dated _____,
19__, with respect to the Senior Notes (the "Senior Note
Supplemental Indenture").
The Senior Notes will be secured by First Mortgage Bonds, ___%
series due ____ (the "First Mortgage Bonds"), of an equal principal
amount issued under the Mortgage and Deed of Trust, dated July 1,
1936, between the Company and The Bank of New York, as successor
trustee (the "Mortgage Bond Trustee"), as heretofore supplemented
and amended (the "Mortgage Bond Indenture"), and as now further
supplemented and amended by a Supplemental Indenture, dated _____,
19__, with respect to the First Mortgage Bonds (the "Mortgage Bond
Supplemental Indenture").
We are members of the New York Bar and, for purposes of this
opinion, do not hold ourselves out as experts on the laws of the
District of Columbia, the State of Maryland or the Commonwealths of
Pennsylvania or Virginia. We understand that you are relying and,
in rendering this opinion, we have, with your consent, relied upon
the opinion of even date herewith addressed to you by Xxxxxxx X.
Xxxxxxxxx, Esq., Senior Vice President and General Counsel of the
Company, as to all matters covered in such opinion relating to the
laws of the District of Columbia, the State of Maryland and the
Commonwealths of Pennsylvania or Virginia. We do not pass upon the
organization of the Company, titles to property, franchises or the
lien of the Senior Note Indenture or the Mortgage Bond Indenture.
As to such matters, it is our understanding that you are relying on
the above-mentioned opinion. We have reviewed such opinion and
believe it is satisfactory and that you and we are justified in
relying thereon.
We have examined the documents described in the list of
closing papers as having been delivered to you at the closing and
such other documents and have satisfied ourselves as to such other
matters as we have deemed necessary in order to enable us to
express this opinion. We have not examined the Senior Notes or the
First Mortgage Bonds, except for specimens thereof, and we have
relied upon certificates of the Senior Note Trustee and the
Mortgage Bond Trustee, respectively, as to the authentication and
delivery thereof. As to various questions of fact material to this
opinion, we have relied upon representations of the Company and
statements in the Registration Statements and the Prospectus
hereinafter mentioned. In such examination, we have assumed the
genuineness of
- 30 -
all signatures, the authenticity of all documents submitted to us,
and the genuineness and conformity to original documents of
documents submitted to us as certified or photostatic copies.
Subject to the foregoing and to the further exceptions and
qualifications set forth below, we are of the opinion that:
1. The Senior Notes have been duly and validly authorized by
all necessary corporate action of the Company, have been duly and
validly issued in accordance with the provisions of the Senior Note
Indenture and the Senior Note Supplemental Indenture, and
constitute legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms,
except as may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, or other laws affecting the enforcement
of mortgagees' and other creditors' rights and by general
principles of equity (regardless of whether enforceability is
considered in a proceeding at equity or in law), and by an implied
covenant of good faith and fair dealing; and the Senior Notes are
entitled to the benefits and security afforded by the Senior Note
Indenture.
2. The Mortgage Bonds have been duly and validly authorized
by all necessary corporate action of the Company, have been duly
and validly issued in accordance with the provisions of the
Mortgage Bond Indenture and the Mortgage Bond Supplemental
Indenture, and constitute legal, valid and binding obligations of
the Company, enforceable against the Company in accordance with
their terms, except as may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization, or other laws of general
application affecting the enforcement of mortgagees' and other
creditors' rights and by general principles of equity (regardless
of whether enforceability is considered in a proceeding at equity
or in law), and by an implied covenant of good faith and fair
dealing; and the Mortgage Bonds are entitled to the benefits and
security afforded by the Mortgage Bond Indenture.
3. The Underwriting Agreement has been duly authorized,
executed and delivered by the Company.
4. The Senior Note Indenture and the Senior Note Supplemental
Indenture, each has been duly and validly authorized, executed and
delivered by the Company, and is a legal, valid and binding
instrument, enforceable against the Company in accordance with its
terms, except as limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, or other laws of general application
relating to the enforcement of mortgagees' and other creditors'
rights and by general principles of equity (regardless of whether
enforceability is considered in a proceeding at equity or in law),
and by an implied covenant of good faith and fair dealing. The
Senior Note Indenture has been qualified under the Trust Indenture
Act of 1939, as amended (the "1939 Act").
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5. The Mortgage Bond Indenture and the Mortgage Bond
Supplemental each has been duly and validly authorized, executed
and delivered by the Company, and is a legal, valid and binding
instrument, enforceable against the Company in accordance with its
terms, except as limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, or other laws of general application
relating to the enforcement of mortgagees' and other creditors'
rights and by general principles of equity (regardless of whether
enforceability is considered in a proceeding at equity or in law),
and by an implied covenant of good faith and fair dealing.
6. The Registration Statement is effective under the
Securities Act of 1933, as amended (the "1933 Act"), and, to the
best of our knowledge, no stop order suspending the effectiveness
of the Registration Statement has been issued and no proceedings
for that purpose are pending or threatened under Section 8(d) of
the 1933 Act. The Registration Statement, at the time it became
effective, and the Prospectus, at the time it was filed with the
Securities and Exchange Commission (the "Commission") pursuant to
Rule 424(b) under the 1933 Act (except as to the financial
statements and other financial or statistical data constituting a
part thereof or incorporated by reference therein, upon which we
express no opinion), complied as to form in all material respects
with the applicable requirements of the 1933 Act and the 1939 Act
and the applicable instructions, rules and regulations of the
Commission thereunder, except that we express no opinion on the
Form T-1 filed as an exhibit thereto. The documents or portions
thereof filed with the Commission pursuant to the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and incorporated
by reference in the Registration Statement and the Prospectus
pursuant to Item 12 of Form S-3 (except as to the financial
statements and other financial or statistical data constituting a
part thereof or incorporated by reference therein, upon which we
express no opinion), at the time they were filed with the
Commission, complied as to form in all material respects with the
applicable requirements of the 1934 Act and the applicable
instructions, rules, and regulations of the Commission thereunder.
7. The summary of the terms of the Senior Note Indenture,
the Senior Notes, the Mortgage Bond Indenture, and the First
Mortgage Bonds contained in the Registration Statement and
Prospectus fairly describes the provisions thereof required to be
described by the registration statement form, except that we
express no opinion as to the statements contained under
"Description of the Senior Note Mortgage Bonds and Mortgage --
Security."
8. The approval of the Public Service Commission of the
District of Columbia, which is required for the valid
authorization, issuance and sale of the Senior Notes by the Company
in accordance with the Underwriting Agreement, has been obtained
and, to the best of our knowledge, such approval is in full force
and effect. No approval by the State Corporation Commission of the
Commonwealth of Virginia is necessary for the valid authorization,
issuance and sale of the
- 32 -
Senior Notes by the Company in accordance with the Underwriting
Agreement, and we do not know of any other approvals of any
governmental body required in that connection (other than in
connection or in compliance with the provisions of the securities
or "blue sky" laws of any jurisdiction, as to which we express no
opinion herein.)
All legal proceedings and legal opinions rendered in
connection with the issuance and sale of the Senior Notes,
including the opinion of Xxxxxxx X. Xxxxxxxxx, Esq., of even date
herewith, are satisfactory in form to us.
In passing upon the forms of the Registration Statement and
the form of the Prospectus, we necessarily assume the correctness
and completeness of the statements made and information included
therein by the Company and take no responsibility therefor, except
insofar as such statements relate to us and as set forth in
paragraph 7 above. In connection with the Company's preparation of
the Registration Statement and the Prospectus, we have had
conferences with certain of its officers and representatives, with
counsel for the Company, with PricewaterhouseCoopers LLP, the
Company's independent public accountants, and with your
representatives. We did not participate in the preparation of the
documents incorporated by reference in the Registration Statements
and the Prospectus. Our examination of the Registration Statement
and the Prospectus, and our discussions in the above-mentioned
conferences, did not disclose to us any information that gives us
reason to believe that the Registration Statement, at the time it
became effective, 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 or that
the Prospectus, at the time it was filed with the Commission
pursuant to Rule 424(b) under the 1933 Act or at the date hereof,
contained or contains any untrue statement of a material fact or
omitted or omits to state a material fact necessary in order to
make the statements therein, in the light of the circumstances
under which they were made, not misleading. We do not express any
opinion or belief as to the financial statements or other financial
or statistical data constituting a part of, or incorporated by
reference in, the Registration Statement or the Prospectus or as to
the parts of the Registration Statement that constitute the
statement of eligibility of the Senior Note Trustee.
This opinion is given to you solely for your use in connection
with the Underwriting Agreement and the transactions contemplated
thereunder and may not be relied upon by any other person or for
any other purpose, without our prior written consent.
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