Exhibit 10.1

 

EXECUTION COPY

 

 

$350,000,000

 

 

PSI ENERGY, INC.

 

 

6.12% Debentures due 2035

 

 

UNDERWRITING AGREEMENT

 

 

Dated: October 18, 2005

 

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Barclays Capital Inc.

Goldman, Sachs & Co.

BNP Paribas Securities Corp.

Harris Nesbitt Corp.

 

c/o Barclays Capital Inc.

200 Park Avenue

New York, NY 10166

 

Goldman, Sachs & Co.

85 Broad Street

New York, NY 10004

 

Dear Sirs:

 

PSI Energy, Inc., an Indiana corporation (hereinafter called the “Company”),
proposes to issue and sell $350,000,000 aggregate principal amount of its 6.12%
Debentures due 2035 (hereinafter called the “Debentures”), to be issued pursuant
to the provisions of the Indenture, dated as of November 15, 1996, between the
Company and The Bank of New York Trust Company, N.A. (successor trustee to Fifth
Third Bank), as Trustee (hereinafter called the “Indenture”), as supplemented by
the Ninth Supplemental Indenture to be dated as of October 21, 2005 between the
Company and the Trustee (hereinafter called the “Supplemental Indenture”).

 

The Company has filed with the Securities and Exchange Commission (hereinafter
called the “Commission”) a registration statement (File No. 333-112552)
including a prospectus relating to various securities of the Company, including
debentures, and has filed with the Commission (or will promptly after the sale
so file) a prospectus supplement specifically relating to the Debentures
pursuant to Rule 424 under the Securities Act of 1933, as amended (hereinafter
called the “Securities Act”).  The term “Registration Statement” means the
registration statement as amended to the date of this Agreement.  The term
“Basic Prospectus” means the prospectus included in the Registration Statement. 
The term “Prospectus” means the Basic Prospectus together with the prospectus
supplement specifically relating to the Debentures, as filed with the Commission
pursuant to Rule 424.  The term “preliminary prospectus” means a preliminary
prospectus supplement specifically relating to the Debentures together with the
Basic Prospectus.  As used herein, the terms “Registration Statement”, “Basic
Prospectus”, “Prospectus” and “preliminary prospectus” shall include in each
case the material, if any, incorporated by reference therein.

 

I.

 

The Company hereby represents and warrants to each Underwriter that:

 

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(a)           (i) Each prospectus and prospectus supplement filed as part of the
registration statement as originally filed or as part of any amendment thereto
or filed pursuant to Rule 424 under the Securities Act, complied when so filed
in all material respects with the requirements of the Securities Act and the
applicable rules and regulations thereunder, (ii) each document incorporated by
reference in the Registration Statement and the Prospectus complied when filed
(and each document subsequently filed by the Company pursuant to the Exchange
Act and deemed incorporated by reference into the Registration Statement and the
Prospectus will, at the time of filing, comply) in all material respects with
the provisions of the Securities Exchange Act of 1934, as amended (hereinafter
called the “Exchange Act”), and the applicable rules and regulations of the
Commission thereunder, and (iii) the Registration Statement and the Prospectus,
as amended or supplemented, will comply in all material respects with the
Securities Act and the applicable rules and regulations thereunder and, as of
the date hereof does not, and as of the Closing Date will not, contain any
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;
except that these representations and warranties do not apply to statements or
omissions in the Registration Statement or the Prospectus, or any preliminary
prospectus based upon information furnished to the Company in writing by any
Underwriter expressly for use therein.

 

(b)           (i) The execution and delivery by the Company of this Agreement,
the issuance of the Debentures in accordance with the Indenture and the
Supplemental Indenture, the sale of the Debentures in accordance with this
Agreement, the performance by the Company of its obligations under this
Agreement and the consummation of the transactions contemplated herein will not
result in any violation by the Company of applicable law or any terms or
provisions of its articles of consolidation or by-laws or any indenture,
mortgage or other agreement or instrument by which the Company or its subsidiary
is bound that is material to the Company and its subsidiary, taken as a whole,
or any judgment, order or decree of any governmental body, agency or court
having jurisdiction over the Company or its subsidiary and (ii) the consolidated
historical financial statements of the Company, together with related schedules,
included or incorporated by reference in the Prospectus, present fairly in all
material respects the consolidated financial position of the Company and its
subsidiary at the respective dates indicated and the results of their operations
and their cash flows for the respective periods indicated in accordance with
generally accepted accounting principles consistently applied throughout such
periods.

 

(c)           The Company (i) is a corporation duly incorporated and validly
existing in good standing under the laws of the State of Indiana, (ii) except
for certain operating permits for which the Company has made application but
which have either been denied or have not yet been granted in the form
requested, except for certain notices of violations and except as may be limited
by state and federal environmental laws and regulations has due corporate and
governmental authority to carry on the public utility businesses in which it is
engaged and to own and operate the properties in use in such businesses and
(iii) is duly qualified to do

 

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business in each jurisdiction where the failure to be so qualified would
adversely affect the ability of the Company to perform its obligations under
this Agreement, the Indenture and the Debentures.

 

(d)           The Company’s sole subsidiary (i) is a corporation duly
incorporated and validly existing in good standing under the laws of its state
of incorporation, (ii) except for certain operating permits for which the
Company has made application but which have either been denied or have not yet
been granted in the form requested, except for certain notices of violations and
except as may be limited by state and federal environmental laws and regulations
has due corporate and governmental authority to carry on the business in which
it is engaged and to own and operate the properties in use of such business and
(iii) is duly qualified to do business in each jurisdiction where the failure to
be so qualified would adversely affect the ability of the Company to perform its
obligations under this Agreement, the Indenture and the Debentures.

 

(e)           The Debentures have been duly authorized and, on the Closing Date,
will have been validly executed and delivered by the Company.  When the
Debentures have been issued, executed and authenticated in accordance with the
provisions of the Indenture and the Supplemental Indenture and delivered to and
paid for by the Underwriters in accordance with the terms of this Agreement, the
holders thereof will be entitled to the benefits of the Indenture and the
Supplemental Indenture pursuant to which such Debentures are to be issued, and
the Debentures will be valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency or similar laws
affecting creditors’ rights generally and (ii) rights of acceleration and the
availability of equitable remedies may be limited by equitable principles of
general applicability.

 

(f)            The Indenture has been duly authorized, executed and delivered by
the Company and the Supplemental Indenture has been duly authorized by the
Company and, on or prior to the Closing Date, will have been validly executed
and delivered by the Company.  When the Supplemental Indenture has been duly
executed and delivered by the Company (assuming the due authorization, execution
and delivery of the Supplemental Indenture by the Trustee), each of the
Indenture and the Supplemental Indenture will be a valid and binding agreement
of the Company, enforceable against the Company in accordance with its terms
except as (i) the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditors’ rights generally, and
(ii) rights of acceleration and the availability of equitable remedies may be
limited by equitable principles of general applicability; and the Indenture has
been duly qualified under the Trust Indenture Act of 1939.

 

(g)           This Agreement has been duly authorized, executed and delivered by
the Company.

 

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(h)           There has not occurred any material adverse change (not in the
ordinary course of business) in the condition of the Company and its subsidiary,
taken as a whole, from that set forth in or contemplated by the Prospectus.

 

(i)            The Company is not, and after giving effect to the offering and
sale of the Debentures and the application of the proceeds thereof as described
in the Prospectus, will not be an “investment company” as such term is defined
in the Investment Company Act of 1940, as amended.

 

(j)            The Company maintains a system of internal control over financial
reporting (as such term is defined in Rule 13a-15(f) of the Exchange Act) that
has been designed by the Company’s principal executive officer and principal
financial officer, or under their supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted
accounting principles.  The Company’s management assessed the effectiveness of
the Company’s internal control over financial reporting as of December 31,
2004.  In making this assessment, management used the criteria established in
Internal Control-Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission.  Based on its assessment and those
criteria, management believed that the internal control over financial reporting
maintained by the Company, as of December 31, 2004, was effective.  The Company
is not aware of any material weaknesses in its internal control over financial
reporting.

 

(i)            The Company maintains disclosure controls and procedures (as such
term is defined in Rule 13a-15(e) of the Exchange Act) that have been designed
to ensure that material information relating to the Company and its subsidiaries
is made known to the Company’s principal executive officer and principal
financial officer by others within those entities; such disclosure controls and
procedures were effective, as of June 30, 2005, in providing reasonable
assurance that information requiring disclosure is recorded, processed,
summarized, and reported within the timeframe specified by the Commission’s
rules and forms.

 

II.

 

The Company hereby agrees to sell to each of the Underwriters named below, and
the Underwriters, upon the basis of the representations and warranties herein
contained, but subject to the conditions hereinafter stated, agree to purchase
from the Company, each severally and not jointly, the principal amount of
Debentures set forth opposite their names at a price of 99.072% of their
principal amount - the purchase price - and accrued interest from October 21,
2005, to the date of payment and delivery: 

 

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Name

 

Principal Amount

 

 

 

 

 

Barclays Capital Inc.

 

$

122,500,000

 

 

 

 

 

Goldman, Sachs & Co.

 

$

122,500,000

 

 

 

 

 

BNP Paribas Securities Corp.

 

$

52,500,000

 

 

 

 

 

Harris Nesbitt Corp.

 

$

52,500,000

 

 

 

 

 

Total

 

$

350,000,000

 

 

III.

 

The Company is advised by you that the Underwriters propose to make a public
offering of their respective portions of the Debentures as soon after the
execution of this Agreement as in your judgment is advisable. The Company is
further advised by you that the Debentures are to be offered to the public at
99.947% of their principal amount - the public offering price - and accrued
interest, and to certain dealers at a price which represents a concession of up
to 0.50% of their principal amount under the public offering price, and that any
Underwriter may allow, and such dealers may reallow, a concession, not in excess
of 0.25% of their principal amount, to certain other dealers.

 

The Company acknowledges and agrees that the Underwriters are acting solely in
the capacity of an arm’s length contractual counterparty to the Company with
respect to the offering of Debentures contemplated hereby (including in
connection with determining the terms of the offering) and not as a financial
advisor or a fiduciary to, or an agent of, the Company or any other person.

 

IV.

 

Payment for the Debentures shall be made by transfer of immediately available
funds to an account identified by us in writing not less than two full business
days prior to the date of payment, against delivery to you for the respective
accounts of the several Underwriters of the Debentures through The Depository
Trust Company at 10:00 A.M., New York time, on October 21, 2005 or at such other
time on the same or such other date, not later than October 28, 2005 as may be
designated by you.  The time and date of such payment and delivery are herein
referred to as the “Closing Date”.  All other documents referred to herein that
are to be delivered at the Closing Date shall be delivered at that time at the
office of Davis Polk & Wardwell, 450 Lexington Avenue, New York, NY 10017.

 

V.

 

The obligations of the Company and the several obligations of the Underwriters
hereunder are subject to the conditions that:

 

(a)           The Registration Statement shall have become effective under the
Securities Act of 1933.

 

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(b)           No stop order suspending the effectiveness of the Registration
Statement shall be in effect and no proceedings for such purpose shall be
pending before, or threatened by, the Commission.  The representations and
warranties of the Company contained in Article I hereof shall be true and
correct on the date hereof and on and as of the Closing Date.

 

(c)           An appropriate order or orders of the Indiana Utility Regulatory
Commission necessary to permit the issue and sale of the Debentures as
contemplated hereby and containing no material provision or condition which is
unacceptable to the Company or the Underwriters shall be in effect and no
proceedings to suspend the effectiveness of such order or orders shall be
pending or threatened.

 

The several obligations of the Underwriters hereunder are subject to the
following further conditions:

 

(d)           There shall have been no material adverse change (not in the
ordinary course of business) in the condition of the Company and its subsidiary,
taken as a whole, from that set forth in or contemplated by the Registration
Statement and the Prospectus; and you shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer of the
Company, to the foregoing effect.

 

(e)           Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date, there shall not have occurred any downgrading of, nor
shall any notice have been given of any review with a negative implication with
respect to, the rating accorded any of the Company’s securities by any of
Standard & Poor’s Ratings Service, Moody’s Investors Service, Inc. or Fitch IBCA
(or any of their successors).

 

(f)            You shall have received on the Closing Date a certificate, dated
the Closing Date and signed by an executive officer of the Company, to the
effect set forth in (b) and (c) of the first paragraph of this Article V 
(provided that such certificate may omit any reference as to the extent to which
provisions or conditions in the orders referred to in (c) above are acceptable
to the Underwriters).  The officer making such certificate may rely upon the
best of his knowledge as to proceedings threatened.

 

(g)           You shall have received on the Closing Date the favorable opinion
or opinions of Thompson Hine LLP, counsel for the Company, dated the Closing
Date, to the effect that:

 

(i)            each of the Indenture and the Supplemental Indenture has been
duly authorized, executed and delivered by the Company and is valid and binding
instrument enforceable in accordance with its terms, except as (A) the
enforceability thereof may be limited by bankruptcy, insolvency or similar laws
affecting the enforcement of creditors’ rights generally and (B) rights of
acceleration and the availability of equitable remedies may be

 

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limited by equitable principles of general applicability; and the Indenture has
been duly qualified under the Trust Indenture Act of 1939;

 

(ii)           the Debentures, when duly executed by the Company, authenticated
by the Trustee and delivered to and paid for by the Underwriters pursuant to
this Agreement, will be valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms, except as
(A) the enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting the enforcement of creditors’ rights generally and
(B) rights of acceleration and the availability of equitable remedies may be
limited by equitable principles of general applicability; and the Debentures
shall be entitled to the benefits of the Indenture and the Supplemental
Indenture;

 

(iii)          the statements in the Prospectus under the captions “Description
of the Unsecured Debt Securities” and “Certain Terms of the Debentures,” other
than the statements under the captions “Description of the Unsecured Debt
Securities – Global Securities” and “Certain Terms of the Debentures – Global
Securities,”  insofar as such statements purport to summarize certain provisions
of the documents referred to therein, fairly summarize such provisions in all
material respects;

 

(iv)          this Agreement has been duly executed and delivered by the
Company;

 

(v)           no consent, approval, authorization, filing with or order of any
court or governmental agency or body is required to be made or obtained by the
Company pursuant to the laws, rules or regulations of the State of Indiana or of
the United States of America in connection with the performance of their
obligations hereunder or under the Indenture and Supplemental Indenture, except
such as may be required under the blue sky laws of any jurisdiction in
connection with the purchase and distribution of the Debentures by the
Underwriters (about which such counsel need express no opinion) and such other
approvals as have been obtained; and

 

(vi)          such counsel (A) is of the opinion that the Registration Statement
and the Prospectus and any supplements or amendments thereto (except for the
financial statements, schedules and other financial and statistical data
included or incorporated by reference therein or excluded therefrom or the
exhibits to the Registration Statement as to which such counsel need not express
an opinion) comply as to form in all material respects with the requirements of
the Securities Act and the rules and regulations of the Commission thereunder
and (B) except for the financial statements, schedules and other financial and
statistical data included or incorporated by reference therein or excluded
therefrom or the exhibits to the Registration Statement as to which such counsel
need not express a belief, has no reason to believe that the Registration
Statement as of its effective date and at the date of this Agreement contained
an untrue statement of a

 

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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 (as amended or supplemented if applicable) as of its date and on the
Closing Date contained an untrue statement of a material fact or omitted to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.

 

In regard to clause (vi) above, such counsel may state that their opinion and
belief is based upon their participation in the preparation of the Prospectus
and any supplements and amendments thereto (other than documents incorporated by
reference) and upon their review and discussion of the contents thereof and of
the Registration Statement (in each case, including documents incorporated by
reference), but is without independent check or verification except as
specified.  In giving such opinion, Thompson Hine LLP may assume matters
governed by New York law and may rely, as to matters of Indiana law, on the
opinion of J. William DuMond, Esq., counsel to the Company.

 

(h)           You shall have received on the Closing Date the favorable opinion
of J. William DuMond, Esq. counsel to the Company, dated the Closing Date, to
the effect that:

 

(i)            the Company is a corporation duly incorporated and existing in
good standing under the laws of the State of Indiana, and the Company has due
corporate and governmental authority to carry on the public utility businesses
in which it is engaged and, except where the failure would not, singularly or in
the aggregate, reasonably be expected to have a material adverse effect on the
consolidated financial position, stockholders’ equity, results of operations,
business or prospects of the Company and its subsidiary, taken as a whole, to
own and operate the properties in use in such businesses;

 

(ii)           the Company’s sole subsidiary is a corporation duly incorporated
and existing in good standing under the laws of its state of incorporation and
has due corporate and governmental authority to carry on the business in which
it is engaged, except where the failure would not, singularly or in the
aggregate, reasonably be expected to have a material adverse effect on the
consolidated financial position, stockholders’ equity, results of operations,
business or prospects of the Company and its subsidiary, taken as a whole, and
to own and operate the properties in use in such business;

 

(iii)          the Company and its subsidiary are each duly qualified to
transact business and are in good standing in the jurisdictions in which the
conduct of their respective businesses or the ownership or leasing of their
respective properties requires such qualification;

 

(iv)          each of the Indenture and the Supplemental Indenture has been duly
authorized, executed and delivered by the Company and is valid and binding
instrument enforceable in accordance with its terms, except as (A) the
enforceability thereof may be limited by bankruptcy, insolvency or

 

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similar laws affecting the enforcement of creditors’ rights generally and
(B) rights of acceleration and the availability of equitable remedies may be
limited by equitable principles of general applicability; and the Indenture has
been duly qualified under the Trust Indenture Act of 1939;

 

(v)           the Debentures have been duly authorized and executed by the
Company and, when duly authenticated by the Trustee and delivered to and paid
for by the Underwriters pursuant to this Agreement, will be valid and binding
obligations of the Company, enforceable against the Company in accordance with
their terms, except as (A) the enforceability thereof may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of creditors’
rights generally and (B) rights of acceleration and the availability of
equitable remedies may be limited by equitable principles of general
applicability, and the Debentures shall be entitled to the benefits of the
Indenture and the Supplemental Indenture;

 

(vi)          an appropriate order or orders of the Indiana Utility Regulatory
Commission is in effect on the Closing Date and no further approval,
authorization, consent or order of any other commission or other governmental
authority (other than under state securities or Blue Sky laws, as to which such
counsel are not called upon to express an opinion) is required for the issuance
and sale of the Debentures;

 

(vii)         such counsel does not know of any contract required to be filed as
an exhibit to the Registration Statement, or incorporated therein by reference,
which has not been so filed or incorporated by reference;

 

(viii)        this Agreement has been duly authorized, executed and delivered by
the Company; and

 

(ix)          each document incorporated by reference in the Prospectus (except
for the financial statements and schedules and other financial and statistical
data therein as to which such counsel need not express an opinion) complied when
filed with the Commission as to form in all material respects with the
requirements of the Exchange Act, together with the applicable rules and
regulations of the Commission thereunder.

 

In regard to clauses (iv), (v) and (viii) above, such counsel may state that no
opinion is expressed with respect to the effect of New York law.

 

(i)            You shall have received on the Closing Date an opinion of Davis
Polk & Wardwell, counsel for the Underwriters, dated the Closing Date, covering
the matters in (i), (ii), (iii), (iv) and (vi) of (g) above, provided that with
respect to (vi) of (g) above, such counsel may state that their opinion and
belief is based upon their participation in the preparation of the Registration
Statement and the Prospectus and any amendments and supplements thereto (other
than documents incorporated by reference), and upon their review and discussion
of the contents

 

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thereof (including documents incorporated by reference), but is without
independent check or verification except as specified.  In giving said opinion,
Davis Polk & Wardwell may rely, as to matters of Indiana law, on the opinion of
J. William DuMond, Esq., counsel to the Company.

 

(j)            You shall have received on the Closing Date a letter, dated the
Closing Date, in form and substance satisfactory to you, from Deloitte & Touche
LLP, independent accountants, containing statements and information of the type
ordinarily included in accountants’ “comfort letters” to underwriters with
respect to the financial statements and certain financial information contained
in or incorporated by reference into the Registration Statement and the
Prospectus.

 

VI.

 

In further consideration of the agreements of the Underwriters herein contained
the Company covenants as follows:

 

(a)           To furnish without charge to you two signed copies of the
Registration Statement (including exhibits and documents incorporated by
reference), and to each other Underwriter a copy of the Registration Statement
(without exhibits but including documents incorporated by reference) and, during
the period mentioned in paragraph (c) below, as many copies of the Prospectus
and any amendments and supplements thereto as you may reasonably request.  The
terms “supplement” and “amendment” or “amend” as used in this Agreement shall
include or refer to all documents subsequently filed by the Company with the
Commission pursuant to the Exchange Act which are deemed to be incorporated by
reference in the Registration Statement and Prospectus from the date of filing
such documents in accordance with Form S-3.

 

(b)           Before amending or supplementing the Registration Statement or the
Prospectus, to furnish to each of you a copy of each such proposed amendment or
supplement.

 

(c)           If, during such period after the first date of the public offering
of the Debentures as in the opinion of your counsel a prospectus covering the
Debentures is required by law to be delivered in connection with sales by an
Underwriter or dealer, any event shall occur as a result of which it is
necessary to amend or supplement the Prospectus in order to make the statements
therein, in the light of the circumstances when the Prospectus is delivered to a
purchaser, not misleading, or if it shall be necessary to amend or supplement
the Prospectus to comply with law, forthwith to prepare and furnish, at its own
expense, to the Underwriters and to the dealers (whose names and addresses you
will furnish to the Company) to which Debentures may have been sold by you on
behalf of the Underwriters and to any other dealers upon request, either
amendments or supplements to the Prospectus so that the statements in the
Prospectus as so amended or supplemented will not, in the light of the
circumstances when the Prospectus is delivered to a purchaser, be misleading or
so that the Prospectus will comply with law.

 

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(d)           To endeavor to qualify the Debentures for offer and sale under the
securities or Blue Sky laws of such jurisdictions as you shall reasonably
request and to pay all expenses (including fees and disbursements of counsel) in
connection with such qualification and in connection with the determination of
the eligibility of the Debentures for investment under the laws of such
jurisdictions as you may designate.

 

(e)           To make generally available to the Company’s security holders as
soon as practicable an earnings statement covering the twelve-month period
beginning after the date of this Agreement, which shall satisfy the provisions
of Section 11(a) of the Securities Act (including Rule 158 thereunder).

 

(f)            During the period beginning on the date of this Agreement and
terminating on the Closing Date not to offer, sell, contract to sell or
otherwise dispose of any debt securities of the Company substantially similar to
the Debentures, without your prior written consent.

 

VII.

 

The Company agrees to indemnify and hold harmless each Underwriter and each
person, if any, who controls any Underwriter within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act, from and against any and
all losses, claims, damages and liabilities (including the fees and expenses of
counsel in connection with any governmental or regulatory investigation or
proceeding) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or Prospectus (if used
within the period set forth in paragraph (c) of Article VI hereof and as amended
or supplemented if the Company shall have furnished any amendments or
supplements thereto) or any preliminary prospectus, or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except insofar as
such losses, claims, damages or liabilities are caused by any such untrue
statement or omission or alleged untrue statement or omission based upon
information furnished in writing to the Company by any Underwriter expressly for
use therein.

 

In case any action shall be brought against any Underwriter or any person
controlling such Underwriter, based upon the Registration Statement or
Prospectus or any amendment or supplement thereto or any preliminary prospectus
and in respect of which indemnity may be sought against the Company, such
Underwriter shall promptly notify the Company in writing, and the Company, upon
the request of such Underwriter, shall assume the defense thereof on behalf of
such Underwriter or controlling person, including the employment of counsel and
payment of all expenses.  In any such action, any Underwriter or any such
controlling person shall have the right to employ its own counsel but the fees
and expenses of such counsel shall be at the expense of such Underwriter or such
controlling person unless (i) the employment of such counsel has been
specifically authorized in writing by the Company or (ii) the named parties to
any such action (including any impleaded parties) include both such Underwriter
or such controlling person and the Company and such Underwriter or such
controlling person shall have

 

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been advised by such counsel that there maybe one or more legal defenses
available to it which are different from or additional to those available to the
Company (it being understood, however, that the Company shall not, in connection
with any one such action or separate but substantially 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 (in addition to one firm of local counsel) for all
such Underwriters and controlling persons, which firm shall be designated in
writing by you, and that such fees and expenses shall be reimbursed as they are
incurred).  The Company shall not be liable for indemnification (or contribution
as provided below) with respect to the settlement of any such action effected
without its written consent, but if settled with the written consent of the
Company or if there be a final judgment for the plaintiff in any such action,
the Company agrees to indemnify and hold harmless any Underwriter and any such
controlling person from and against any loss or liability by reason of such
settlement or judgment (or to make contribution as provided below).

 

Each Underwriter agrees, severally and not jointly, to indemnify and hold
harmless the Company, its directors, its officers who sign the Registration
Statement and any person controlling the Company to the same extent as the
foregoing indemnity from the Company to each Underwriter, but only with
reference to information relating to such Underwriter furnished in writing by
such Underwriter expressly for use in the Registration Statement, the Prospectus
or any preliminary prospectus.  In case any action shall be brought against the
Company, any of its directors or any such officer or controlling person based on
the Registration Statement, the Prospectus or any preliminary prospectus and in
respect of which indemnity may be sought against any Underwriter, the
Underwriter shall have the rights and duties given to the Company, and the
Company, its directors or any such officer or controlling person shall have the
rights and duties given to the Underwriter, by the preceding paragraph of this
Article VII.

 

If the indemnification provided for in the first paragraph of this Article VII
is unavailable to any Underwriter or other indemnified party in respect of any
losses, claims, damages or liabilities referred to therein, then the Company, in
lieu of indemnifying such indemnified party thereunder, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company on the one hand and such
Underwriter on the other from the offering of the Debentures or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company on
the one hand and of such Underwriter on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations.  The
relative benefits received by the Company on the one hand and the Underwriters
on the other shall be deemed to be in the same proportion as the total net
proceeds from the offering (before deducting expenses) received by the Company
bear 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 of 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 by the Underwriters and the
parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.

 

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If the indemnification provided for in this Article VII is sought solely by the
Company under the third paragraph hereof and there is no claim for
indemnification by any Underwriter or any person controlling such Underwriter
arising out of the same misstatement or omission and if such indemnification is
unavailable to the Company in respect of any losses, claims, damages or
liabilities referred to in such third paragraph, then each Underwriter, in lieu
of indemnifying the Company, shall contribute to the amount paid or payable by
the Company as a result of such losses, claims, damages or liabilities in such
proportion as is appropriate to reflect the relative fault of the Company on the
one hand and of such Underwriter or Underwriters on the other in connection with
the statements or omissions which resulted in such losses, claims, damages or
liabilities,  as well as any other relevant equitable considerations.  The
relative fault of the Company on the one hand and of such Underwriter or
Underwriters on the other shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Underwriters 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 Article VII 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 in the two immediately preceding
paragraphs.  The amount paid or payable by an indemnified party as a result of
the losses, claims, damages and liabilities referred to in such paragraphs shall
be deemed to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim.  Notwithstanding the
provisions of this Article VII, no Underwriter shall be required to contribute
any amount in excess of the amount by which the total price at which the
Debentures underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages which such Underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission.  No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who is not guilty of such fraudulent
misrepresentation.  The Underwriters’ obligations to contribute pursuant to this
Article VII are several in proportion to their respective underwriting
percentages listed in Article II hereof and not joint.

 

The indemnity and contribution agreements contained in this Article VII and the
representations and warranties of the Company set forth in this Agreement shall
remain operative and in full force and effect regardless of (i) any termination
of this Agreement, (ii) any investigation made by or on behalf of any
Underwriter or any person controlling any Underwriter or by or on behalf of the
Company, its directors or officers or any person controlling the Company and
(iii) acceptance of and payment for any of the Debentures.

 

VIII.

 

This Agreement shall be subject to termination in your absolute discretion, by
notice given to the Company, if (a) prior to the Closing Date (i) trading in
securities on the New York Stock Exchange or the American Stock Exchange shall
have been suspended or materially

 

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limited, (ii) trading in any securities of the Company shall have been suspended
on any national securities exchange in the United States or in any
over-the-counter market in the United States, (iii) a general moratorium on
banking activities in New York shall have been declared by Federal or New York
State authorities, (iv) there shall have occurred any outbreak or escalation of
hostilities or any change in the financial markets or other calamity or crisis,
any of which is material and adverse and (b) in the case of any of the events
specified in clauses (a)(i) through (iv), such event either singly or together
makes it, in your reasonable judgment, impracticable or inadvisable to market
the Debentures.  Any termination of this Agreement pursuant to this Article VIII
shall be without liability on the part of the Company to the Underwriters, or
the Underwriters to the Company.

 

IX.

 

This Agreement shall become effective upon signature.

 

If any one or more of the Underwriters shall fail or refuse to purchase
Debentures which it or they have agreed to purchase hereunder, and the aggregate
principal amount of Debentures which such defaulting Underwriter or Underwriters
agreed but failed or refused to purchase is not more than one-tenth of the
aggregate principal amount of Debentures, the other Underwriters shall be
obligated severally in the proportions which the principal amount of Debentures
set forth opposite their names in Article II bears to the aggregate principal
amount of Debentures so set forth opposite the names of all such non-defaulting
Underwriters, or in such other proportions as you may specify, to purchase the
Debentures which such defaulting Underwriter or Underwriters agreed but failed
or refused to purchase; provided that in no event shall the principal amount of
Debentures which any Underwriter has agreed to purchase pursuant to Article II
hereof be increased pursuant to this Article IX by an amount in excess of
one-ninth of such principal amount of Debentures without the written consent of
such Underwriter.  If any Underwriter or Underwriters shall fail or refuse to
purchase Debentures and the aggregate principal amount of Debentures with
respect to which such default occurs is more than one-tenth of the aggregate
principal amount of Debentures and arrangements satisfactory to you and the
Company for the purchase of such Debentures are not made within 36 hours after
such default, this Agreement will terminate without liability on the part of any
non-defaulting Underwriter or of the Company.  In any such case which does not
result in such a termination, either you or the Company shall have the right to
postpone the Closing Date, but in no event for longer than seven days, in order
that the required changes, if any, in the Registration Statement and in the
Prospectus or in any other documents or arrangements may be effected.  Any
action taken under this paragraph shall not relieve any defaulting Underwriter
from liability in respect of any default of such Underwriter under this
Agreement.

 

If this Agreement shall be terminated by the Underwriters, or any of them,
because of any failure or refusal on the part of the Company to comply with the
terms or to fulfill any of the conditions of this Agreement or if for any reason
the Company shall be unable to perform its obligations under this Agreement, the
Company will reimburse the Underwriters or such Underwriters as have so
terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and disbursements of their counsel)
reasonably incurred by such Underwriters in connection with this Agreement or
the offering contemplated hereunder.

 

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This Agreement shall be governed by and construed in accordance with the laws of
the State of New York.

 

This Agreement may be signed in various counterparts which together shall
constitute one and the same instrument.

 

 

Very truly yours,

 

 

 

 

 

PSI ENERGY, INC.

 

 

 

 

 

By:

/s/ Wendy L. Aumiller

 

 

 

Name:

Wendy L. Aumiller

 

 

Title:

Vice President and

 

 

 

Treasurer

 

 

 

 

Accepted:

 

 

 

BARCLAYS CAPITAL INC.

 

 

 

By:

/s/ Pamela Kendall

 

 

 

Name:

Pamela Kendall

 

 

Title:

Director

 

 

 

 

 

GOLDMAN, SACHS & CO.

 

 

 

By:

/s/ Goldman, Sachs & Co.

 

 

 

(Goldman, Sachs & Co.)

 

 

 

Acting severally on behalf of themselves

 

and the several Underwriters named in

 

Section II hereof

 

 

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