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Exhibit 1-B
DELMARVA POWER & LIGHT COMPANY
Preferred Stock
UNDERWRITING AGREEMENT
__________, 199_
To the Representative named in Schedule I hereto
of the Underwriters named in Schedule II hereto
Ladies and Gentlemen:
The undersigned, Delmarva Power & Light Company, a Delaware
and Virginia corporation (the "Company"), hereby confirms its agreement with
each of the several Underwriters hereinafter named as follows:
The term "Underwriters" as used herein shall be deemed to mean
the firm or corporation or the several firms or corporations named in Schedule
II hereto and any underwriter substituted as provided in Section 3 and the term
"Underwriter" shall be deemed to mean one of such Underwriters. If the firm or
firms listed in Schedule I hereto (the "Representative") are the same as the
firm or firms listed in Schedule II hereto, then the terms "Underwriters" and
"Representative", as used herein, shall each be deemed to refer to such firm or
firms. The Representative represents that it has been authorized by the
Underwriters to execute this Agreement on their behalf and to act for them in
the manner herein provided. All obligations of the Underwriters hereunder are
several and not joint. If more than one firm is named in Schedule I hereto, any
action under or in respect of this Agreement may be taken by such firms jointly
as the Representative or by one of the firms acting on behalf of the
Representative and such action will be binding upon all the Underwriters.
1. Description of Shares. The Company has authorized by
appropriate corporate action and proposes to issue and sell to the several
Underwriters its Preferred Stock ("Preferred Stock") as designated, and in the
amount specified, in Schedule I hereto (the "Shares").
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2. Representations, Warranties and Agreements of the Company.
The Company represents and warrants to, and agrees with, the several
Underwriters that:
(a) A registration statement (No. 333- ) with respect to the
Shares, including a preliminary prospectus, has been prepared by the
Company in conformity with the requirements of the Securities Act of
1933, as amended (the "Act"), and the applicable published rules,
regulations and releases of the Securities and Exchange Commission (the
"Commission") thereunder (the "Rules and Regulations"), and has been
filed with the Commission. Such registration statement has been
declared effective by the Commission. Copies of such registration
statement, including the exhibits filed therewith, have heretofore been
delivered to the Representative, and copies of any amendments thereto,
including the exhibits filed therewith, which shall be subsequently
filed also will be delivered to the Representative. As used in this
Agreement, the term "Registration Statement" means such registration
statement, including exhibits, financial statements and all documents
incorporated therein by reference, as amended to the date hereof, and
the term "Prospectus" means the completed prospectus, reflecting the
terms of the sale of the Shares, proposed, on or about the date hereof,
to be mailed to or filed with the Commission pursuant to Rule 424(b) of
the Rules and Regulations under the Act ("Rule 424(b)"), including all
documents incorporated therein by reference (the "Incorporated
Documents"). In the event of any amendment to the Registration
Statement after the date hereof, the term "Registration Statement" also
shall mean such Registration Statement as so amended. In the event of
any supplement to the Prospectus, after the date of the mailing to or
the filing with the Commission of the Prospectus pursuant to Rule
424(b), the term "Prospectus" also shall mean such Prospectus as so
amended or supplemented. Any reference herein to the terms "amend",
"amendment" or "supplement" with respect to the Registration Statement
or the Prospectus shall be deemed to refer to and include the filing of
any document under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), deemed to be incorporated therein after the date
hereof and prior to the termination of the offering of the Shares by
the Underwriters.
(b) No stop order with respect to the Registration Statement
has been issued, no order directed to the adequacy or accuracy of any
document incorporated by reference into the Prospectus has been issued
by the Commission and no proceeding for any such purpose has been
initiated or is pending or, to the knowledge of the Company, is
contemplated by the Commission.
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(c) At the date of this Agreement and at all times subsequent
hereto up to and at the Closing Date (as defined in Section 3), the
Registration Statement does and will, and when the Prospectus shall be
filed with the Commission pursuant to Rule 424(b), and at all times
subsequent thereto up to and at the Closing Date, the Prospectus will,
in each case, contain all statements and information which are required
to be included therein by the Act and the Rules and Regulations and
conform, in all material respects, to the requirements of the Act and
the Rules and Regulations; and on said dates neither the Registration
Statement nor the Prospectus does or will include any untrue statement
of a material fact or 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;
provided, however, that the Company makes no representations or
warranties as to information contained in or omitted from the
Registration Statement or the Prospectus, in reliance upon and in
conformity with written information furnished to the Company by any
Underwriter expressly for use in the preparation thereof. There are no
contracts or documents of the Company or of any Subsidiary (as defined
below) of the Company which are required to be filed as exhibits to the
Registration Statement by the Act or by the Rules and Regulations which
have not been filed as required.
(d) The Company has filed timely all reports and all
definitive proxy and information statements required to be filed by the
Company with the Commission pursuant to the Exchange Act and the rules
and regulations of the Commission thereunder. Each of the Incorporated
Documents, when it was filed with the Commission (or if any such
document has been amended to correct any error or omission therein,
when such amendment was filed with the Commission) and when any other
amendment thereof was filed with the Commission, complied as to form in
all material respects to the requirements of the Exchange Act, and the
rules and regulations of the Commission thereunder, and any
Incorporated Document and any amendment thereto, when hereafter filed
with the Commission, will comply as to form in all material respects to
the requirements of the Exchange Act and the rules and regulations of
the Commission thereunder; and none of such documents (as amended by
any such corrective amendment heretofore filed) includes or will
include any untrue statement of a material fact or omits 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.
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(e) 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 the Prospectus
and to issue and sell the Shares; 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 qualification. The Company has no direct subsidiaries
other than Delmarva Energy Company, Delmarva Industries, Inc., Delmarva
Capital Investments, Inc., Delmarva Services Company, Conectiv
Services, Inc. and Conectiv Communications, Inc. (each, a "Subsidiary"
and, collectively, the "Subsidiaries"), all of the stock of each of
which is owned by the Company, free and clear of any lien, pledge or
other encumbrance, except as discussed in the opinion of Xxxx X.
Xxxxxxxx, General Counsel for the Company, delivered pursuant to
Section 5(d) hereof. Each of the Subsidiaries has been duly organized
and is validly existing as a corporation and in good standing under the
laws of its jurisdiction of incorporation 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 its
ownership or leasing of property 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 the Prospectus.
(f) The performance of this Agreement and the consummation of
the transactions herein contemplated and the fulfillment of the terms
hereof will not result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any statute, indenture,
mortgage, deed of trust, note agreement or other agreement or
instrument to which the Company or any of the Subsidiaries is a party
or by which any of them is bound or to which any of their property is
subject, or of the Company's Restated Certificate and Articles of
Incorporation, as amended, or By-Laws, as amended, or any order, rule
or regulation of any court or other governmental body applicable to the
Company or any of the Subsidiaries or any of their property.
(g) The Company has full power and lawful authority to
authorize, issue and sell the Shares on the terms and conditions herein
set forth, and has taken all corporate action necessary therefor; has
obtained every consent, an
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approval, authorization or other order of any regulatory body which is
required for such authorization, issue or sale, except as may be
required under state securities laws; and such consents, approvals,
authorizations or other orders are not subject to appeal.
(h) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, except as
set forth in or contemplated by the Registration Statement and the
Prospectus: (1) neither the Company nor any of the Subsidiaries has
incurred or will incur any liability or obligation, direct or
contingent, or entered into or will enter into any transaction, not in
the ordinary course of business, in either case, material to the
Company and the Subsidiaries taken as a whole; (2) there has not been
and will not be any material change in the capital stock or long-term
debt of the Company and the Subsidiaries taken as a whole or any
material adverse change in the condition (financial or other), net
worth or results of operations of the Company and the Subsidiaries
taken as a whole; and (3) no loss or damage, material to the Company
and the Subsidiaries taken as a whole (whether or not insured), to the
property of the Company or any of the Subsidiaries has been sustained.
(i) The financial statements set forth in or incorporated by
reference into the Registration Statement and the Prospectus fairly
present the consolidated financial condition of the Company and the
Subsidiaries and the results of their operations as of the dates and
for the periods therein specified; and said financial statements
(including the related notes) have been prepared in accordance with
generally accepted accounting principles which have been consistently
applied throughout the periods involved.
(j) Coopers & Xxxxxxx, which has reported on certain financial
statements filed with the Commission and incorporated by reference into
the Registration Statement and the Prospectus, are independent
certified public accountants as required by the Act and the Rules and
Regulations.
(k) Except as set forth in or contemplated by the Registration
Statement and the Prospectus, there is not pending any action, suit or
other proceeding to which the Company or any of the Subsidiaries is a
party or of which any property of the Company or any of the
Subsidiaries is the subject, before or by any court or other
governmental body, which might result in any material adverse change in
the condition, business or prospects of the Company and the
Subsidiaries taken as a whole or might materially adversely
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affect the properties or assets of the Company and the Subsidiaries
taken as a whole or the transactions contemplated by this Agreement;
and no such action, suit or proceeding is known by the Company to be
threatened or contemplated.
(l) All of the outstanding shares of the capital stock of the
Company have been duly and validly authorized and issued and are fully
paid and non-assessable; when the Shares shall have been delivered
against payment therefor as provided herein, they will have been duly
and validly issued, and will be fully paid and non-assessable and free
and clear of any claim, lien, encumbrance or security interest on
behalf of, or arising through, the Company; and the Shares conform to
the description thereof contained in the Registration Statement and the
Prospectus.
(m) The Company is not an "investment company" or an entity
"controlled" by an "investment company" as such terms are defined in
the Investment Act of 1940, as amended.
(n) The Company and its Subsidiaries (i) are in compliance
with any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) have received all permits,
licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) are
in compliance with all terms and conditions of any such permit, license
or approval, except where such noncompliance with Environmental Laws,
failure to receive required permits, licenses or other approvals or
failure to comply with the terms and conditions of such permits,
licenses or approvals would not, singly or in the aggregate, have a
material adverse effect on the Company and its Subsidiaries, taken as
whole.
(o) In the ordinary course of its business, the Company
conducts a periodic review of the effect of Environmental Laws on the
business, operations and properties of the Company and its
Subsidiaries, in the course of which it identifies and evaluates
associated costs and liabilities (including, without limitation, any
capital or operating expenditures required for clean-up, closure of
properties or compliance with Environmental Laws or any permit, license
or approval, any related constraints on operating activities and any
potential liabilities to third parties). On the basis of such review,
the Company has reasonably concluded that such associated costs and
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liabilities would not, singly or in the aggregate, have a material
adverse effect on the Company and its Subsidiaries, taken as a whole.
3. Sale, Purchase, and Delivery of Shares; Substitution of
Underwriters. On the basis of the representations, warranties and agreements
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, the respective
principal amount of Shares set forth opposite the name of such Underwriter in
Schedule II hereto at the purchase price set forth in Schedule I hereto.
The Company agrees to make the certificates for the Shares
available to the Representative for the purpose of expediting their checking and
packaging on behalf of the Underwriters, at the New York City offices of
Chemical Bank, not later than 1:30 P.M. on the business day next preceding the
Closing Date.
Payment for the Shares shall be made at the place, time and
date specified in Schedule I hereto or at such other time and date as the
Representative and the Company may agree in writing, such time and date for
payment being herein referred to as the "Closing Date". On the Closing Date, the
Company shall deliver certificates for the Shares to the Representative for the
respective accounts of the Underwriters, against payment to or upon the order of
the Company of the purchase price of the Shares, by certified check or checks,
or official bank or bank cashier's check or checks, payable in New York Clearing
House funds. Time shall be of the essence, and delivery at the time determined
as set forth above is a further condition of the obligation of each Underwriter
and of the Company. The certificates for the Shares so delivered shall be
registered in the respective names of the Underwriters in the respective numbers
of shares set forth opposite the names of such Underwriters in Schedule II
annexed hereto, but the Company will, if requested by the Representative not
less than three (3) full business days prior to the Closing Date, deliver all or
any part of such certificates registered in such other names and in such other
denominations as may be requested. To the extent practicable, the Representative
will furnish the taxpayer identification numbers of the registered owners.
It is understood that the several Underwriters propose to
offer the Shares for sale as set forth in the Prospectus.
In the event of default by one or more Underwriters in respect
of their obligations under this Agreement to take up and
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pay for the Shares pursuant to this Section, and if the aggregate of such
defaults shall not exceed 10% of the Shares, the remaining Underwriters shall be
obligated severally (in proportion to their respective commitments hereunder or
in such other proportion as may be agreed upon by the Representative) to
purchase the Shares which such defaulting Underwriter or Underwriters agreed but
failed to purchase. If any Underwriter or Underwriters shall for any reason
permitted under this Agreement cancel its or their obligations to take up and
pay for the Shares pursuant to this Section, or in the event of a default by one
or more Underwriters in respect of their obligations under this Agreement to
take up and pay for the Shares pursuant to this Section, and if the aggregate of
such cancellations or defaults shall exceed 10% of the aggregate principal
amount of the Shares the remaining Underwriters shall have the right to take up
and pay for (in such proportion as may be agreed upon by the Representative) the
Shares which the canceling or defaulting Underwriter or Underwriters agreed but
failed to purchase. If such remaining Underwriters do not, at the Closing Date,
take up and pay for the aggregate principal amount of the Shares which the
canceling or defaulting Underwriter or Underwriters failed to purchase, the time
for delivery of the Shares shall be extended for twenty-four hours, and the
several Underwriters shall have the privilege of substituting within such
twenty-four hours another underwriter or underwriters satisfactory to the
Company. If no such underwriter or underwriters shall have been substituted as
aforesaid, prior to the termination of such extended time for delivery, the time
for delivery of the Shares shall be extended for a further twenty-four hours,
during which the Company shall have the privilege of finding another underwriter
or underwriters, satisfactory to the Representative, to purchase the aggregate
principal amount of the Shares which the canceling or defaulting Underwriter or
Underwriters failed to purchase. If it shall be arranged for the remaining
Underwriters or substituted underwriters to take up the Shares of the canceling
or defaulting Underwriter or Underwriters as provided in this Section, (i) the
Representative or the Company shall have the right to postpone the time of
delivery of the Shares for a period of not more than seven full business days,
in order to effect whatever changes which such arrangements may make necessary
in the Registration Statement or the Prospectus, or in any other documents or
arrangements, and the Company agrees promptly to file any amendment to the
Registration Statement or any supplement to the Prospectus which such
arrangements may make necessary, and (ii) the Shares to be purchased by the
remaining Underwriters or substituted underwriters shall be taken as the basis
of their respective underwriting obligations for all purposes of this Agreement.
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If, in the event of a default by one or more Underwriters, the
remaining Underwriters shall not take up and pay for all of the Shares agreed to
be purchased by the defaulting Underwriters or substitute another underwriter or
underwriters as aforesaid and the Company shall not find another underwriter or
underwriters for such Shares as aforesaid, then this Agreement may be terminated
by the Company by giving prompt notice to the remaining Underwriters.
If the Company shall not so elect to terminate this Agreement,
it shall have the right to require such remaining Underwriters, irrespective of
the default as aforesaid, to purchase the aggregate principal amount of the
Shares which they have agreed to purchase hereunder. In such event the Company
shall, within twenty-four hours after such second twenty-four hour period, give
notice thereof in writing or by facsimile transmission to such remaining
Underwriters and thereupon the time for delivery of the Shares may be postponed
for a period of not more than four full business days in order to effect
whatever changes may thereby be made necessary in the Registration Statement or
the Prospectus, or in any other documents or arrangements and the Company agrees
promptly to file any amendment to the Registration Statement or any supplement
to the Prospectus which may thereby be made necessary. In the absence of such
notice from the Company, this Agreement shall terminate without further action
on the part of either the Company or the Underwriters.
In the event of any such termination, the Company shall not be
under any liability to any Underwriter (except to the extent provided in
Sections 4(e) and 7 hereof) nor shall any Underwriter (other than an Underwriter
who shall have failed to purchase Shares otherwise than for some reason
permitted under this Agreement) be under any liability to the Company (except to
the extent provided in Section 7 hereof).
Any action taken by the non-defaulting Underwriters or by the
Company under this Section shall not relieve any defaulting Underwriter from
liability in respect of any default of such Underwriter under this Agreement.
4. Covenants of the Company. The Company further covenants and
agrees with the several Underwriters that:
(a) The Company shall comply with the provisions of, and make
all requisite filings with the Commission pursuant to, Rule 430A of the
Rules and Regulations and notify the Representative promptly of all
such filings. The Company will not at any time file any amendment to
the Registration Statement or supplement to the Prospectus of which the
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Representative shall not previously have been advised and furnished
with a copy or to which the Representative or Xxxx & Priest, counsel
for the several Underwriters, shall have reasonably and promptly
objected in writing or which is not in compliance with the Act, the
Rules and Regulations, the Exchange Act or the rules and regulations of
the Commission thereunder. The Company will prepare and file with the
Commission, promptly upon the Representative's request, any amendment
to the Registration Statement or supplement to the Prospectus which, in
the opinion of counsel for the several Underwriters and counsel for the
Company, may be necessary or advisable in connection with the offering
of the Shares by the Underwriters. The Company will file promptly all
reports and any definitive proxy or information statements required to
be filed by the Company with the Commission pursuant to the Exchange
Act subsequent to the date of the Prospectus and for so long as the
delivery of a Prospectus is required in connection with the offering or
sale of the Shares.
(b) The Company will notify the Representative promptly, with
a confirmation in writing, of (i) the issuance of any stop order
suspending the effectiveness of the Registration Statement or of any
order preventing or suspending the use of the Prospectus or any order
directed to the adequacy or accuracy of any Incorporated Document or of
the initiation of any proceedings for any such purpose and (ii) the
receipt of any comments from the Commission in respect of the
Registration Statement or the Prospectus, or requesting additional
information or the amendment or supplementation of the Registration
Statement or the Prospectus. If the Commission shall issue a stop order
or any order preventing or suspending the use of the Prospectus or any
order directed to the adequacy or accuracy of any Incorporated Document
at any time, or shall initiate any proceedings for any such purpose,
the Company will make every reasonable effort to prevent the issuance
of such order and, if issued, to obtain the lifting thereof.
(c) Within the time during which a prospectus relating to the
Shares is required to be delivered under the Act, the Company will
comply so far as it is able with all requirements imposed upon it by
the Act, as now and hereafter amended, and by the Rules and
Regulations, as from time to time in force, so far as necessary to
permit the continuance of sales of or dealings in the Shares as
contemplated by the provisions hereof and the Prospectus; and if during
such period any event occurs as a result of which the Prospectus would
include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements
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therein, in the light of the circumstances under which they were made,
not misleading, or if during such period it is necessary to amend or
supplement the Prospectus to comply with the Act or the Rules and
Regulations or to file under the Exchange Act the rules and regulations
of the Commission thereunder any document incorporated by reference
into the Prospectus in order to comply with the Act, the Rules and
Regulations, the Exchange Act or the rules and regulations of the
Commission thereunder, the Company will promptly notify the
Representative and will amend or supplement the Prospectus or file such
document (in form satisfactory to counsel for the several Underwriters
and counsel for the Company and at the expense of the Company) so as to
correct such statement or omission or effect such compliance.
(d) The Company will cooperate with the Underwriters in
qualifying and registering the Shares for sale under the securities
laws and legal investment laws of such jurisdictions as the
Representative may designate, and in continuing such qualifications in
effect so long as required for their distribution; provided, however,
that the Company shall not be obligated to file any general consent to
service of process or to submit to any requirements which it deems
unduly burdensome. The Company will advise the Representative promptly
of any order or communication of any public authority addressed to the
Company suspending or threatening to suspend qualification of the
Shares for sale in any jurisdiction.
(e) Whether or not the transactions contemplated hereunder are
consummated or this Agreement is terminated, the Company will pay, or
reimburse the Underwriters on demand for, all reasonable costs and
expenses incident to the performance of the Company's obligations under
this Agreement, including all expenses incident to the authorization of
the Shares and their issuance and delivery by the Company, all expenses
incident to listing the Shares on any stock exchange, any necessary
stamp taxes in connection with the foregoing, the reasonable fees and
expenses of the Company's counsel and accountants, the costs and
expenses incident to the preparation and filing under the Act of the
Registration Statement (including all exhibits and amendments thereto),
the Prospectus and this Agreement, all fees and disbursements
(including reasonable fees and disbursements of counsel) incurred by
the Company or the Underwriters in connection with the qualification of
the Shares for sale under state securities laws and the preparation of
Blue Sky Memoranda and Legal Investment Surveys, the cost of furnishing
to the Underwriters copies of Blue Sky Memoranda and Legal Investment
Surveys, the Registration
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Statement and the Prospectus, and each amended or supplemented
Registration Statement or Prospectus and each Prospectus prepared to
permit compliance with Section 10(a)(3) of the Act and the cost of
preparing this Agreement and the costs of preparing copies of the legal
opinion referred to in subparagraph (e) of Section 5 hereof, the
Underwriters' Questionnaires and the Agreement Among Underwriters. The
Company shall not, however, be required to pay for any of the
Representative's expenses or those of any of the other Underwriters,
other than as hereinabove set forth; provided, however, that, if this
Agreement shall not be consummated because it is (i) terminated by the
Representative pursuant to Section 5 or Section 6 hereof, (ii)
terminated pursuant to Section 3 hereof, or (iii) terminated by reason
of any failure, refusal or inability on the part of the Company to
perform any undertaking or satisfy any condition of this Agreement or
to comply with any of the terms hereof on its part to be performed,
unless such failure, refusal or inability be due to the default or
omission of the Underwriters, then and in any such case, the Company
shall reimburse the several Underwriters (but not defaulting
Underwriters in the event of termination pursuant to Section 3 hereof)
for all out-of-pocket expenses (including reasonable fees and
disbursements of counsel for the several Underwriters) reasonably
incurred in connection with investigating, marketing and proposing to
market the Shares or in contemplation of performing their obligations
hereunder, but the Company shall not in any event be liable to any of
the several Underwriters for damages on account of loss of anticipated
profits or commissions from the sale by them of the Shares.
(f) The Company will apply the proceeds from the sale of the
Shares substantially as set forth under the caption "Use of Proceeds"
in the Prospectus.
(g) The Company will deliver to the Representative, as
promptly as practicable, a signed copy of the Registration Statement
and all amendments thereto including all exhibits filed therewith and
signed consents, certificates and opinions of accountants and of any
other persons named in the Registration Statement as having prepared,
certified or reviewed any part thereof, and will deliver to the
Representative such number of unsigned copies of the Registration
Statement and of all amendments thereto, without exhibits, as the
Representative may reasonably request. The Company will deliver to or
upon the order of the Representative, from time to time, as many copies
of the Prospectus (excluding Incorporated Documents) as the
Representative may reasonably request.
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(h) The Company will make generally available to its security
holders and deliver to the Representative as soon as it is practicable
to do so, an earnings statement (as defined in Rule 158 under the Act),
which need not be audited, covering a period of at least twelve months
beginning not later than the first day of the month next succeeding the
month in which occurred the effective date of the Registration
Statement, which shall satisfy the requirements of Section 11(a) of the
Act.
(i) For a period of five years from the Closing Date, the
Company will deliver to the Representative and, upon request, to each
of the other Underwriters (i) as soon as available, a copy of each
report of the Company mailed to security holders or filed with the
Commission and (ii) from time to time such other information concerning
the Company as the Representative shall reasonably request. If at any
time, the Company shall have a majority-owned subsidiary or
subsidiaries which is or are "significant" within the meaning of
Regulation S-X of the Commission, the financial statements contained in
the documents referred to in (i) shall be furnished in consolidated
form, if such consolidation is required under such Regulation S-X, for
the Company and such subsidiary or subsidiaries.
(j) During the period beginning on the date hereof and
continuing through the Closing Date, the Company will not offer, sell
or otherwise alienate, without the Representative's prior consent, any
other of its shares of Preferred Stock.
5. Conditions of Underwriters' Obligations. The obligations of
the several Underwriters to purchase and pay for the Shares, as provided herein,
shall be subject to the accuracy, as of the date hereof and as of the Closing
Date (as if made on such Date), of the representations and warranties of the
Company herein, to the accuracy of statements of Company officers made in
certificates delivered pursuant to the provisions hereof, to the performance by
the Company of its obligations hereunder and to the following additional
conditions:
(a) No stop order suspending the effectiveness of the
Registration Statement, or order preventing or suspending the use of
the Prospectus, shall have been issued and shall remain in effect; no
order of the Commission directed to the adequacy or accuracy of any
Incorporated Document shall be in effect; and no proceedings for any
such purpose shall have been instituted or be pending or, to the
knowledge of the Company or the Representative, shall be contemplated
or threatened by the Commission; any request of the Commission
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for additional information (to be included in the Registration
Statement or the Prospectus or otherwise) shall have been complied with
to the reasonable satisfaction of Xxxx & Priest, counsel for the
several Underwriters; no amendment to the Registration Statement or
Prospectus shall have been filed hereafter to which the Representative
or Xxxx & Priest, counsel for the several Underwriters, shall have
reasonably and promptly objected in writing after having received
reasonable notice and a copy thereof; there shall be in full force and
effect on the date of this Agreement appropriate orders of the Delaware
Public Service Commission and the Virginia State Corporation Commission
permitting the issuance and sale of the Shares and the transactions
relating thereto substantially in accordance with the terms and
conditions set forth herein and in the Prospectus; such orders shall
contain no condition inconsistent with the provisions hereof or
unacceptable to the Representative and shall be issued under
circumstances that in the Representative's reasonable judgment are
appropriate for the protection of the Underwriters; and from the date
of this Agreement up to and including the Closing Date, neither of said
orders shall have been rescinded, modified (except to extend the time
for the Company, or to broaden the Company's authority, to act
thereunder) or stayed, or the right of the Company to operate
thereunder restrained, or be subject to any litigation or proceeding
pending, or to the knowledge of the Representative or the Company,
threatened.
(b) Except as set forth in or contemplated by the Prospectus,
subsequent to the respective dates as of which information is given in
the Registration Statement and the Prospectus, there shall not have
been any change in the capital stock, short-term debt or long-term debt
of the Company and the Subsidiaries taken as a whole, or any adverse
change or any development involving a prospective adverse change in the
condition (financial or other), net worth or results of operations of
the Company and the Subsidiaries taken as a whole, all or any of which,
in the Representative's reasonable judgment, materially impairs the
investment quality of the Shares; and no Underwriter shall have
disclosed in writing to the Company on or prior to the Closing Date
that the Registration Statement or Prospectus contained an untrue
statement of fact which, in the opinion of Xxxx & Priest, counsel for
the Underwriters, is material, or omits to state a fact which, in the
opinion of such counsel, is material and is required to be stated
therein or is necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
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(c) The authorization and issuance of the Shares, the
Registration Statement, the Prospectus and all corporate proceedings
and other legal matters incident thereto shall be satisfactory in all
material respects to Xxxx & Priest, and the Company shall have
furnished to Xxxx & Priest such documents as they may reasonably
request to enable them to be satisfied with respect to the matters
referred to in this subparagraph and to furnish to the Representative
an opinion, dated as of the Closing Date, as required by subparagraph
(e) of this Section 5.
(d) On the Closing Date, the Representative shall have
received the favorable opinion of Xxxx X. Xxxxxxxx, General Counsel for
the Company, dated as of such date, satisfactory in form, scope and
substance to the Representative and to counsel for the Underwriters 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 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 the
Prospectus and to issue and sell the Shares;
(ii) the Company is duly qualified 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
qualification; and the Company owns all of the stock of the
Subsidiaries, free and clear of any lien, pledge or other encumbrance;
(iii) except as otherwise set forth in the
Prospectus, 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, and, to the
best of the knowledge of such
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counsel, the Company is not in default or violation of any of 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 the extent that 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) the Shares have been duly and validly authorized
and issued and, when delivered against payment therefor as provided
herein, they will be fully paid and non-assessable and free and clear
of any claim, lien, encumbrance or security interest on behalf of, or
arising through, the Company;
(v) the Shares conform as to legal matters to the
description thereof and the statements concerning them contained in the
Registration Statement and the Prospectus, and the summary of certain
terms and provisions thereof appearing in the Registration Statement
and the Prospectus fairly presents the information called for by the
Act and the Rules and Regulations;
(vi) 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 Shares 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 Shares
(other than in connection with state securities or blue sky laws as to
which counsel need express no opinion);
(vii) the statements in the Prospectus 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;
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(viii) such counsel does not know of any legal or
governmental proceedings required to be described in the Registration
Statement or the Prospectus that are not described as required, or of
any contracts or documents of a character required to be described in
the Registration Statement or Prospectus, incorporated by reference
into the Prospectus or filed as exhibits to the Registration Statement
by the Act or by the Rules and Regulations that are not described,
incorporated by reference or filed as required;
(ix) the performance of this Agreement and the
consummation of the transactions herein contemplated and the
fulfillment of the terms hereof 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,
indenture, mortgage, deed of trust, note or other agreement or
instrument known to such counsel to which the Company or any of the
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 Subsidiaries
or any of their property of any court or other governmental body;
(x) this Agreement has been duly authorized, executed
and delivered by the Company and is valid and binding on the Company,
except that rights to indemnity hereunder may be limited under
securities laws;
(xi) the Registration Statement has become effective
under the Act, and, to the best knowledge of such counsel, no stop
order with respect thereto has been issued, 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; at the time the Registration Statement
became effective, the Registration Statement, and at the time the
Prospectus was first filed with the Commission pursuant to Rule 424(b),
the Prospectus, complied as to form in all material respects with the
requirements of the Act and the Rules and Regulations, and each
Incorporated Document, when filed with the Commission (or if any such
document has been amended to correct any error or omission therein,
when such amendment was filed with the Commission) and when any other
amendment thereof was filed with the Commission, complied as to form in
all material respects with the requirements of the Exchange Act and the
rules and
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regulations of the Commission thereunder (except that such counsel need
express no opinion as to the financial statements and other financial
data included therein); and such counsel has no reason to believe that
the Registration Statement, at the time the Registration Statement
became effective, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, or that the
Prospectus, at the time the Prospectus was first filed with the
Commission pursuant to Rule 424(b) and at the Closing 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, although counsel assumes no
responsibility for the accuracy or completeness of the statements
contained therein, except as specifically stated above; and
(xii) the shareholders of the Company have no preemptive
rights to subscribe for any of the Shares.
(e) On the Closing Date, the Representative shall have
received the favorable opinion of Xxxx & Priest, counsel for the
several Underwriters, dated as of such date, satisfactory in form,
scope and substance to the Representative with respect to the
sufficiency of all corporate proceedings and other legal matters
relating to the Shares, the form of the Registration Statement and the
Prospectus, and as to the execution and authorization of this Agreement
and the transactions contemplated hereby as the Representative may
reasonably require, and the Company shall have furnished to such
counsel such documents as they may have requested for the purpose of
enabling them to pass upon such matters. In rendering such opinions,
Xxxx & Priest may rely as to matters governed by Delaware, Maryland,
New Jersey, Ohio, Pennsylvania and Virginia law upon the opinion of
Xxxx X. Xxxxxxxx, General Counsel for the Company, who may in turn rely
upon the opinions of other counsel as to certain legal conclusions
affected by the laws of Maryland, New Jersey, Ohio, Pennsylvania and
Virginia.
(f) On the date hereof and at the Closing Date, the
Representative shall have received letters of Coopers & Xxxxxxx, dated
as of such dates, to the effect set forth in Schedule III annexed
hereto and with respect to such other matters as to which the
Representative shall have inquired.
(g) On the Closing Date, the Representative shall have
received a certificate or certificates, dated as of such
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date, of the President or a Vice President or the principal accounting
officer of the Company to the effect that, to the best of his or her
knowledge based on a reasonable investigation:
(i) the representations and warranties of the Company
in this Agreement are true and correct, as though made on and as of the
Closing Date, and the Company has complied with all the agreements and
satisfied all the conditions required by this Agreement to be performed
or satisfied by the Company on or prior to the Closing Date; and
(ii) he or she has examined the Registration
Statement and the Prospectus, and, in his or her opinion, when the
Registration Statement became effective and at all times subsequent
thereto, neither the Registration Statement nor the Prospectus included
or then includes any untrue statement of a material fact or omitted or
then 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, and, since
the effective date of the Registration Statement, there has occurred no
event required to be set forth in an amended Registration Statement or
a supplemented Prospectus which had not been so set forth.
All the opinions, letters, certificates and documents
mentioned above or elsewhere in this Agreement will be in compliance with the
provisions hereof only if they are reasonably satisfactory to Xxxx & Priest. The
Company will furnish the Representative with such conformed copies of such
opinions, letters, certificates and documents as the Representative may
reasonably request.
If any condition to the Underwriters' obligations hereunder to
be satisfied on or prior to the Closing Date is not so satisfied, the
Representative may terminate this Agreement without liability on the part of any
Underwriter or the Company, except for the expenses to be paid or reimbursed by
the Company pursuant to Section 4(e) and except for any liability under Section
7 hereof.
6. Termination of Agreement. (a) The Representative, by notice
to the Company, may terminate this Agreement, at any time after the date of this
Agreement and on or prior to the Closing Date, if during such period (i) trading
on the New York Stock Exchange or the American Stock Exchange shall have been
wholly suspended, or minimum or maximum prices for trading shall have been
fixed, or maximum ranges for prices for securities
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shall have been required, on the New York Stock Exchange or the American Stock
Exchange, by the New York Stock Exchange or the American Stock Exchange or by
order of the Commission or any other governmental authority having jurisdiction,
or (ii) a banking moratorium shall have been declared by Federal or New York
authorities, or (iii) an outbreak of hostilities or an escalation thereof, a
declaration of war by Congress, another substantial calamity or crisis or
another event or occurrence of a similar character which, in the
Representative's reasonable judgment, makes it impractical or inadvisable to
proceed with the completion of the sale of and payment for the Shares or to
enforce contracts for the sale of the Shares shall have occurred, or (iv) the
Company shall have sustained a substantial loss by fire, flood, accident or
other calamity which in the Representative's reasonable judgment renders it
inadvisable to consummate the sale of the Shares to, and the delivery of the
Shares by, the several Underwriters, regardless of whether or not such loss
shall have been insured. This Agreement may also be terminated at any time prior
to the Closing Date if, in the reasonable judgment of the Representative, the
subject matter of any amendment or supplement to the Registration Statement or
the Prospectus renders it either inadvisable to proceed with such offering or
inadvisable to proceed with the delivery of the Shares to be purchased
hereunder.
(b) In the event of the termination pursuant to this Section,
the Company shall not be under any liability to any Underwriter, except for the
expenses to be paid by it pursuant to the provisions of Section 4(e) and except
for any liability under Section 7, nor shall any Underwriter be under any
liability to the Company, except for any liability under Section 7.
(c) If the Representative elects to terminate this Agreement
as provided in this Section, the Company shall be notified promptly by the
Representative by telephone, confirmed in writing.
7. Indemnification. (a) The Company will indemnify and hold
harmless each Underwriter and each person, if any, who controls such Underwriter
within the meaning of the Act against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter or such controlling
person may become subject, under the Act, the Exchange Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or allegedly untrue
statement of any material fact contained in the Registration Statement, any
preliminary prospectus, the Prospectus, 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
21
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necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and will reimburse each Underwriter
and each such controlling person for any legal or other expenses reasonably
incurred by such Underwriter or such controlling person in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the Company will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or allegedly untrue statement or omission or alleged
omission made in the Registration Statement, any preliminary prospectus, or the
Prospectus, or any amendment or supplement thereto, in reliance upon and in
conformity with written information furnished to the Company by any Underwriter
specifically for use in the preparation thereof. This indemnity agreement will
be in addition to any liability the Company may otherwise have.
(b) Each Underwriter will indemnify and hold harmless the
Company, each of its directors, each of its officers who has signed the
Registration Statement, and each person, if any, who controls the Company within
the meaning of the Act, against any losses, claims, damages or liabilities,
joint or several, to which the Company or any such director, officer or
controlling person may become subject, under the Act, the Exchange Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or
allegedly untrue statement of any material fact contained in the Registration
Statement, any preliminary prospectus, or the Prospectus, or any amendment or
supplement thereto, or arise out of or based upon the omission or the alleged
omission to state therein 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, in each case to the extent, but only
to the extent, that such untrue statement or allegedly untrue statement or
omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company by such Underwriter specifically
for use in the preparation thereof; and will reimburse the Company for any legal
or other expenses reasonably incurred by the Company or any such director,
officer or controlling person in connection with investigating or defending any
such loss, claim, damage, liability or action. This indemnity agreement will be
in addition to any liability which such Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against an indemnifying party
under this Section, notify the indemnifying party of the commencement thereof;
but the
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omission so to notify the indemnifying party shall not relieve it from any
liability it may have to any indemnified party otherwise than under this
Section. In case any such action is brought against any indemnified party, and
it notifies an indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate in, and, to the extent that it may wish,
jointly with any other indemnifying party, similarly notified, to assume the
defense thereof, with counsel satisfactory to such indemnified party, and after
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party will not be liable to such
indemnified party under this Section for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation, unless, (i) the employment
of additional counsel has been authorized in writing by the indemnifying party
in connection with defending such action, or (ii) representation of both the
indemnifying party and the indemnified party by the same counsel shall be
inappropriate by applicable standards of professional conduct for attorneys in
the jurisdiction where suit shall have been instituted due to actual or
potential conflicting interests between them (it being understood that the
indemnifying party shall not be liable for the expense of more than one separate
counsel (in addition to local counsel) representing the indemnified parties in
such action).
(d) No indemnity by the Company hereunder shall apply in
respect of (i) any preliminary prospectus furnished to a person to whom any of
the Shares shall have been sold, unless a copy of the Prospectus is furnished by
an Underwriter or securities dealer to such person at or prior to the furnishing
of the written confirmation of such sale or mailed to such person with such
confirmation or (ii) any preliminary prospectus or Prospectus used by an
Underwriter or securities dealer after the same has been superseded by an
amended or supplemented preliminary prospectus or Prospectus supplied by the
Company to the Representative for the use of the Underwriters and securities
dealers. As used in this Section 7(d), the term "Prospectus" does not include
any Incorporated Document.
(e) If the indemnification provided for in subparagraph (a)
or (b) above should not be available to an indemnified party in respect of any
losses, claims, damages, liabilities and expenses referred to therein, then the
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities and expenses in such proportion as
is appropriate to reflect the relative benefits received by the indemnifying
party on the one hand and such indemnified party on the other from the offering
of the Shares,
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and also the relative fault of the indemnifying party on the one hand and such
indemnified party on the other in connection with the statements or omissions
that resulted in such losses, claims, damages, liabilities and expenses, as well
as any other relevant equitable considerations. The relative benefits received
by the Company and the Underwriters shall be deemed to be in the same proportion
as the total net proceeds from the offering (before deducting expenses) received
by the Company bears to the total underwriting discounts and commissions
received by the Underwriters, in each case as set forth in the table on the
cover page of the Prospectus. The relative fault of the Company and the
Underwriters shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission to
state a material fact relates to information supplied by the Company or the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
(f) The indemnifying party agrees that it would not be just
and equitable if contribution were to be determined by pro rata allocation (even
if the Underwriters were to be 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, claims, damages, liabilities 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 action or claim (which shall be limited as provided in
subparagraph (c) above if the indemnifying party shall have assumed the defense
of any such action in accordance with the provisions thereof). No person guilty
of fraudulent misrepresentation shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
8. Representations and Indemnities to Survive. All
representations and warranties of the Company contained herein and in the
certificate or certificates delivered pursuant to Section 5(g) and the indemnity
agreements contained in Section 7 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 or any officer,
director or controlling person, and shall survive delivery of and payment for
the Shares and, in the case of the indemnity agreements contained in Section 7,
any termination of this Agreement.
9. Notices. Except as otherwise provided herein, all
communications hereunder shall be in writing and if sent to the Underwriters
shall be mailed, delivered or transmitted by
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facsimile and confirmed to the Representative at the address set forth in
Schedule I hereto, or if sent to the Company shall be mailed, delivered or
transmitted by facsimile and confirmed to it, c/o Vice President and Chief
Financial Officer, 000 Xxxx Xxxxxx, X.X. Xxx 000, Xxxxxxxxxx, Xxxxxxxx 00000.
Any such address may be changed from time to time by notice as aforesaid.
10. Parties. This Agreement shall inure to the benefit of and
be binding upon the several Underwriters and the Company and their respective
successors and assigns. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person or corporation, other than the
parties hereto, their respective successors and assigns and the controlling
persons, officers and directors referred to in Section 7, any legal or equitable
right, remedy or claim under or in respect of this Agreement or any provision
herein contained; this Agreement and all conditions and provisions hereof being
intended to be and being for the sole and exclusive benefit of the parties
hereto, their respective successors and assigns and said controlling persons,
officers and directors, and for the benefit of no other person or corporation.
No purchaser of any of the Shares through or from any Underwriter shall be
construed a successor or assign by reason merely of such purchase.
11. Underwriters Not Agents of the Company. Nothing herein
contained shall constitute the Underwriters, or any of them, agents or
representatives of the Company, or authorize them to act for or on behalf of the
Company in any capacity.
12. Controlling Law. Although the place of performance of
certain obligations under this Agreement is stated to be outside of Delaware, it
is the express intention of the parties hereto that this Agreement shall be
governed by and construed in accordance with the laws of Delaware, without
regard to the choice of law principles.
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If the foregoing correctly sets forth the understanding
between the Company and the Underwriters, please so indicate in the space
provided below for that purpose, whereupon this letter shall constitute a
binding agreement between the Company and the Underwriters severally.
Very truly yours,
DELMARVA POWER & LIGHT COMPANY
By:_____________________________
Title:
ACCEPTED as of the date first above written, as Underwriters and as
Representative of the other Underwriters named in Schedule II.
[REPRESENTATIVE]
By:_________________________________
Title:
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SCHEDULE I
Underwriting Agreement dated
Registration Statement No.
Representative and Address:
SECURITIES:
DESIGNATION: [__% Preferred Stock, par value $100.00
per share] [__% Preferred Stock -- $25
Par]
NUMBER OF SHARES: ______
PURCHASE PRICE PER SHARE:
PUBLIC OFFERING PRICE PER SHARE:
CONCESSION PER SHARE:
REALLOWANCE PER SHARE:
CLOSING DATE, TIME AND LOCATION:
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SCHEDULE II
Underwriter Number of Shares
----------- ----------------
Total
28
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SCHEDULE III
(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 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
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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; and
(v) They have read the Preferred Stock issuance tests contained in Article
Fourth.A.9(a) of the Company's Restated Certificate and Articles of
Incorporation, reviewed a Company-prepared worksheet (attached) showing that
the issuance of the Shares is in compliance with such tests, and passed the
arithmetical accuracy of the computations set forth in such schedule.
