_____________________________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________________________
POTOMAC ELECTRIC POWER
COMPANY
(a District of Columbia and Virginia
corporation)
6.50% Senior Notes due
2037
(Additional
Notes of Existing Series)
PURCHASE AGREEMENT
Dated: March
24, 2008
_____________________________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________________________
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Table of Contents
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Page
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SECTION
1.
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Representations
and Warranties.
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3
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(a)
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Representations
and Warranties of the Company.
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3
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(i)
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Compliance
with Securities Law Requirements.
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3
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(ii)
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Incorporated
Documents
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5
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(iii)
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Independent
Accountants
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5
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(iv)
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Financial
Statements
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5
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(v)
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No
Material Adverse Change in Business.
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5
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(vi)
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Good
Standing of the Company.
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6
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(vii)
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No
Significant Subsidiaries.
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6
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(viii)
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Capitalization.
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6
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(ix)
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Authorization
of this Agreement.
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6
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(x)
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Authorization
of the Indenture.
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6
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(xi)
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Authorization
of the Securities.
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6
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(xii)
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Authorization
of the Mortgage.
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6
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(xiii)
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Authorization
of the Collateral Bonds.
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7
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(xiv)
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Description
of the Securities, the Indenture, the Collateral Bonds and the
Mortgage/
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7
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(xv)
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Absence
of Defaults and Conflicts.
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7
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(xvi)
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Absence
of Labor Dispute.
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8
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(xvii)
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Absence
of Proceedings.
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8
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(xviii)
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Description
and Filing of Contracts and Documents.
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8
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(xix)
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Absence
of Further Requirements.
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8
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(xx)
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Possession
of Licenses and Permits.
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8
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(xxi)
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Title
to Property and Mortgaged Property.
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9
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(xxii)
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Lien
of Mortgage.
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9
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(xxiii)
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Leases.
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9
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(xxiv)
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Investment
Company Act.
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10
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(xxv)
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Environmental
Laws.
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10
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(xxvi)
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Internal
Controls.
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10
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(xxvii)
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Compliance
with Sarbanes Oxley.
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11
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(b)
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Officer’s
Certificates.
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11
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SECTION
2.
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Sale
and Delivery to Underwriters; Closing; Covenants of the
Underwriters.
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11
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(a)
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Securities.
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11
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(b)
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Payment.
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11
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(c)
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Denominations;
Registration.
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12
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(d)
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Delivery
of Global Securities.
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12
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(e)
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Notice
of Completion.
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12
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(f)
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Use
of Free Writing Prospectuses.
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12
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SECTION
3.
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Covenants
of the Company.
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12
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(a)
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Preparation
and Filing of Term Sheet.
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12
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(b)
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Preparation
and Filing of the Prospectus.
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12
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(c)
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Review
of Amendments and Supplements.
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12
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(d)
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Free
Writing Prospectuses.
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13
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(e)
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Notification
of Commission Comments and Orders, Etc.
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13
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(f)
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Delivery
of Registration Statements.
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13
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(g)
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Delivery
of Prospectuses.
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13
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(h)
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Continued
Compliance with Securities Laws.
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13
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(i)
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Blue
Sky Qualifications.
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14
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(j)
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Rule
158.
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14
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(k)
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Filing
Fees.
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14
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(l)
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Use
of Proceeds.
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14
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(m)
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Restriction
on Sale of Securities.
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15
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SECTION
4.
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Payment
of Expenses.
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15
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(a)
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Expenses
Payable by the Company.
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15
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(b)
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Expenses
Upon Termination.
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15
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SECTION
5.
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Conditions
of Underwriters’ Obligations.
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15
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(a)
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No
Stop Order; Commission Filings.
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15
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(b)
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Opinions
of Counsel for Company.
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16
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(c)
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Opinion
of Counsel for Underwriters.
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16
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(d)
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Officers’
Certificate.
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16
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(e)
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Accountant’s
Comfort Letter.
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16
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(f)
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Bring-down
Comfort Letter.
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16
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(g)
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Maintenance
of Rating.
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16
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(h)
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Additional
Documents.
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17
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(i)
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Termination
of Agreement.
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17
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SECTION
6.
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Indemnification.
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17
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(a)
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Indemnification
of Underwriters.
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17
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(b)
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Indemnification
of Company, Directors and Officers.
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18
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(c)
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Actions
against Parties; Notification.
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18
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SECTION
7.
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Contribution.
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18
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SECTION
8.
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Representations,
Warranties and Agreements to Survive.
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19
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SECTION
9.
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Termination
of Agreement.
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19
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(a)
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Termination;
General.
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19
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(b)
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Liabilities.
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20
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SECTION
10.
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Default
by One or More of the Underwriters.
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20
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SECTION
11.
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Notices.
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21
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SECTION
12.
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Parties
in Interest.
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21
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SECTION
13.
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No
Advisory or Fiduciary Relationship.
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21
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SECTION
14.
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Governing
Law and Time.
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21
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SECTION
15.
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Counterparts.
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21
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SECTION
16.
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Entire
Agreement.
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22
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SECTION
17.
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Effect
of Headings.
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22
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SCHEDULES
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Schedule
A
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-
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List
of Underwriters.
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Sch A-1
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Schedule
B
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-
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Issuer
Free Writing Prospectuses.
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Sch B-1
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Schedule
C
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-
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Term
Sheet.
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Sch C-1
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EXHIBITS
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Exhibit
A
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-
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Form
of Opinion of Kirk J. Emge
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A-1
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Exhibit
B
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-
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Form
of Opinion of Covington & Burling LLP
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B-1
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POTOMAC ELECTRIC POWER COMPANY
(a
District of Columbia and Virginia corporation)
$250,000,000
6.50%
Senior Notes due 2037
PURCHASE AGREEMENT
March
24, 2008
Citigroup Global Markets Inc.
388
Greenwich Street
New
York, New York 10013
J.P. Morgan Securities Inc.
270
Park Avenue
New
York, New York 10017
As
Representatives of the Several Underwriters
Ladies
and Gentlemen:
Potomac
Electric Power Company, a District of Columbia and Virginia
corporation (the “ Company
”), confirms its agreement (the “ Agreement
”) with Citigroup Global Markets Inc. (“
Citigroup
”) and J.P. Morgan Securities Inc. (“
JPMorgan
”) and each of the other Underwriters named in Schedule
A hereto (collectively, the “ Underwriters
”, which term shall also include any underwriter
substituted as hereinafter provided in Section 10
hereof), for whom Citigroup and JPMorgan are acting as
representatives (in such capacity, the “ Representatives
”), with respect to the issue and sale by the Company
and the purchase by the Underwriters, acting severally and not
jointly, of the respective principal amounts set forth in
Schedule A hereto of $250,000,000 in aggregate principal
amount of the Company’s 6.50% Senior Notes due 2037 (the
“ Securities
”).
The
Securities are to be issued as an additional amount of the
Company’s 6.50% Senior Notes due 2037 series of
securities under an indenture, dated as of November 17, 2003
(the “ Original
Indenture ”), between the Company and The Bank of
New York, trustee (the “ Trustee
”), as supplemented by an officer’s certificate,
dated November 16, 2007 (the “ Original
Officer’s Certificate ” )
, establishing the terms of such series and as further
supplemented by a supplemental officer’s certificate, to
be dated the Closing Time (as defined in Section 2(b))(the
“ Supplemental
Officer’s Certificate ” ),
establishing an additional covenant of such
series. The Company will also enter into a
supplemental indenture, to be dated the Closing Time (the
“ Indenture
Supplement ”), to amend the Original Indenture
(the Original Indenture, as so supplemented by the Original
Officer’s Certificate and the Supplemental
Officer’s Certificate, and as so amended by the
Indenture Supplement, being hereinafter called the “
Indenture
”).
Simultaneously
with the issue and sale by the Company of the Securities, and
as a condition to the purchase thereof by the Underwriters,
the Company will issue and deliver to the Trustee $250,000,000
in aggregate principal amount of its First Mortgage Bonds,
6.50% Collateral Series 2 due 2037 (the “ Collateral
Bonds ”). The Collateral Bonds are to
be issued under the Mortgage and Deed of Trust, dated as of
July 1, 1936, from the Company to The Bank of New York
(successor in trust to The Riggs National
Bank
of Washington, D.C.), trustee (the “ Mortgage
Trustee ”), as amended and supplemented by
various instruments including the supplemental indenture,
dated as of March 24, 2008 (the “ Mortgage
Supplement
”), establishing the terms of the Collateral Bonds, such
Mortgage and Deed of Trust, as so amended and supplemented,
being hereinafter called the “ Mortgage
”.
The
Company understands that the Underwriters propose to make a
public offering of the Securities promptly after this
Agreement has been executed and delivered.
The
Company has filed with the Securities and Exchange Commission
(the “ Commission
”) on August 24, 2007 a registration statement on
Form S-3 (No. 333-145691-03), for the registration of
securities, including the Securities, under the Securities Act
of 1933, as amended (the “ 1933
Act ”), and the offer and sale thereof from time
to time in accordance with Rule 415 of the rules and
regulations of the Commission under the 1933 Act (the “
1933 Act
Regulations ”), and for the qualification of the
Indenture under the Trust Indenture Act of 1939, as amended
(the “ 1939
Act ”).
When
used in this Agreement, the following terms have the specified
meanings:
“
Applicable
Time ” means 3:45 p.m. (Eastern time), on March
24, 2008.
“
Base
Prospectus ” means the base prospectus relating
to the Securities filed as part of the Registration Statement,
in the form in which it has been most recently filed with the
Commission prior to the date of this Agreement.
“
Disclosure
Package ” means, collectively, (i) the Pricing
Prospectus, (ii) the Term Sheet and (iii) any other Issuer
Free Writing Prospectus listed on Schedule B.
“Effective
Time ” means the date and time of the effectiveness of
the Registration Statement for purposes of paragraph (f)(2) of Rule
430B of the 1933 Act Regulations, as applied to the respective
Underwriters.
“
Issuer
Free Writing Prospectus ” means (i) the Term
Sheet and (ii) any other “issuer free writing
prospectus” (as defined by Rule 433 of the 1933 Act
Regulations (“ Rule
433 ”)) with respect to the
Securities.
“
Preliminary
Prospectus ” means either (i) the Base Prospectus
or (ii) the Base Prospectus as supplemented by a preliminary
prospectus supplement provided by the Company to the
Underwriters for use in connection with the offering of the
Securities, in either case as filed with the Commission
pursuant to Rule 424(b) of the 1933 Act Regulations (“
Rule
424(b) ”).
“
Pricing
Prospectus ” means the Preliminary Prospectus in
the form most recently provided to the Underwriters for use in
connection with the offering of the Securities prior to the
Applicable Time.
“
Prospectus
” means the Base Prospectus as supplemented by the final
prospectus supplement relating to the offer and sale of the
Securities, as filed with the Commission pursuant to Rule
424(b).
“
Registration
Statement ” means, with reference to any
particular time, the Company’s registration statement on
Form S-3 (No. 333-145691-03), referred to above, including (a)
any amendments thereto at such time, (b) the exhibits and
schedules thereto at such time and (c) any prospectus filed
with the Commission pursuant to Rule 424(b) that, in
accordance with Rule 430B of the 1933 Act Regulations (“
Rule
430B ”), is deemed to be a part
thereof.
“
Term
Sheet ” means the term sheet prepared and filed
pursuant to Section 3(a) of this Agreement.
The
foregoing definitions are subject to the following
qualifications:
(a) all
references in this Agreement to the Registration Statement,
any Preliminary Prospectus, or the Prospectus or to any of the
financial statements, schedules or other information that is
“contained”, “included” or
“stated” (or other words of like import) therein
shall be deemed to include the information contained in
documents filed with the Commission under the Securities
Exchange Act of 1934 (the “ 1934
Act ”) that are incorporated, or deemed
incorporated, therein by reference pursuant to Item
12 of Form S-3 under the 1933 Act, to the extent such
information has not been superseded or modified in accordance
with Rule 412 under the 1933 Act (as qualified by Rule 430B(g)
of the 1933 Act Regulations) and (i) in the case of references
to the “Registration Statement” are filed with the
Commission at or prior to the Effective Time and (ii) in the
case of references to any “Preliminary Prospectus”
or the “Prospectus” are filed with the Commission
at or prior to the date thereof;
(b) all
references in this Agreement to an amendment to the
Registration Statement shall be deemed to include any document
filed under the 1934 Act subsequent to the date thereof that
is deemed incorporated by reference therein pursuant to Item
12 of Form S-3 under the 1933 Act;
(c) all
references in this Agreement to an amendment or supplement to
any Preliminary Prospectus or the Prospectus shall be deemed
to include any document filed under the 1934 Act subsequent to
the date thereof that is deemed incorporated by reference
therein pursuant to Item 12 of Form S-3 under the 1933 Act;
and
(d) all
references in this Agreement to the Registration Statement,
any Preliminary Prospectus, the Prospectus or any amendment or
supplement to any of the foregoing shall be deemed to include
the copy filed with the Commission pursuant to its Electronic
Data Gathering, Analysis and Retrieval system (“
EDGAR
”).
SECTION
1.
Representations and Warranties .
(a)
Representations and Warranties of the Company.
The Company represents and warrants to each Underwriter on the date
of this Agreement, at the Applicable Time and at the Closing Time
as follows:
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(i)
Compliance
with Securities Law Requirements .
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(A)
Well-Known
Seasoned Issuer Status . At the time the
Registration Statement was filed with the Commission and the
time of the most recent amendment of the Registration
Statement for purposes of complying with Section 10(a)(3) of
the 1933 Act, each of the Company and Pepco Holdings, Inc.
(“ PHI
”), of which the Company is a wholly-owned subsidiary,
was a “well-known seasoned issuer” as defined in
Rule 405 of the 1933 Act Regulations.
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(B)
Eligibility
to Use Form S-3 . At the time the
Registration Statement was filed with the Commission and the
time of the most recent amendment of the Registration
Statement for purposes of complying with Section 10(a)(3) of
the 1933 Act, the Company met the requirements for use of Form
S-3 under the 1933 Act.
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(C)
Status
and Content of the Registration Statement . The
Registration Statement became effective automatically upon the
filing thereof with the Commission under the 1933 Act on
August 24, 2007. No stop order suspending the
effectiveness of the Registration Statement has been issued
under the 1933 Act and no proceedings for that purpose have
been instituted by the Commission or are pending or, to the
knowledge of the Company, are contemplated by the Commission,
and any request on the part of the Commission for additional
information with respect to the Registration Statement has
been complied with. At the time the Registration
Statement became effective, at the time of each amendment, if
any, to the Registration Statement for purposes of complying
with Section 10(a)(3) of the 1933 Act and at the Effective
Time, the Registration Statement complied in all material
respects with the requirements of the 1933 Act and the 1933
Act Regulations and the 1939 Act and the rules and regulations
of the Commission under the 1939 Act (the “ 1939 Act
Regulations ”). At the Effective Time,
the Registration Statement did not contain an untrue statement
of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements
therein not misleading.
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(D)
Status
and Content of the Preliminary Prospectus
. Each Preliminary Prospectus, as of its date and
at the time it was filed with the Commission, conformed in all
material respects with the requirements of the 1933 Act and
the 1933 Act Regulations and the 1939 Act and the 1939 Act
Regulations, and did not contain any untrue statement of
material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not
misleading. Each Preliminary Prospectus delivered
to the Underwriters in connection with the offering of the
Securities was identical to the electronically transmitted
copies thereof filed with the Commission pursuant to EDGAR
(except that the registration fee table was deleted from the
cover thereof), except to the extent permitted by Regulation
S-T. No order preventing or suspending the use of
any Preliminary Prospectus has been issued by the
Commission.
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(E)
Issuer
Free Writing Prospectuses . At the earliest
time after the filing of the Registration Statement that the
Company or another offering participant made a bona fide offer
(within the meaning of Rule 164(h)(2) of the 1933 Act
Regulations) of the Securities, the Company was not an
“ineligible issuer” as defined in Rule 405 of the
1933 Act Regulations. Each Issuer Free Writing
Prospectus, at the time it was filed with the Commission
pursuant to Rule 433 (i) did not include any information that
conflicts with (A) information contained in the Registration
Statement, including any prospectus or prospectus supplement
that is part of the Registration Statement, and not superseded
or modified, or (B) information contained in the
Company’s periodic and current reports filed with the
Commission pursuant to Section 13 or 15(d) of the 1934 Act
that are incorporated or deemed incorporated by reference in
the Registration Statement, and not superseded or modified,
and (ii) complied in all other respects with the requirements
of Rule 164 and Rule 433 (without reliance on subsections (b),
(c) and (d) of Rule 164). No order preventing or
suspending the use of any Issuer Free Writing Prospectus has
been issued by the Commission.
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(F)
Content
of the Disclosure Package . The Disclosure
Package, at the Applicable Time, did not, and, at the Closing
Time, will not, contain any untrue statement of material fact
or omit to state any material fact necessary in order to make
the statements therein, in the light of the circumstances
under which they were made, not misleading.
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(G)
Status
and Content of the Prospectus . The
Prospectus, as of its date, at the time it is filed with the
Commission and at the Closing Time, will conform in all
material respects with the requirements of the 1933 Act and
the 1933 Act Regulations and the 1939 Act
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and
the 1939 Act Regulations and will not contain any untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading. The Prospectus delivered to the
Underwriters in connection with the offering of the Securities
will be identical to the copy thereof filed electronically
with the Commission pursuant to EDGAR (except that the
registration fee table will be deleted from the cover
thereof), except to the extent permitted by Regulation
S-T.
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The
representations and warranties in this subsection (a) shall
not apply to any statements in or omissions from the
Registration Statement, any Preliminary Prospectus, any Issuer
Free Writing Prospectus, the Disclosure Package or the
Prospectus made in reliance upon and in conformity with
information furnished to the Company in writing by any
Underwriter expressly for use therein.
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(ii)
Incorporated
Documents . The documents incorporated or
deemed incorporated by reference in the Registration
Statement, the Disclosure Package and the Prospectus, at the
time they were or hereafter are filed with the Commission,
complied or will comply, as applicable, in all material
respects with the requirements of the 1934 Act and the rules
and regulations of the Commission thereunder (the “
1934 Act
Regulations ”) and, when filed did not and 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.
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(iii)
Independent
Accountants . The accountants who audited
the financial statements and financial statement schedules
included in the Registration Statement, the Disclosure Package
and the Prospectus are independent registered public
accountants within the meaning of Regulation S-X of the
Commission.
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(iv)
Financial
Statements . The
financial statements, together with the respective schedules
and notes relating thereto, included in the Registration
Statement, the Disclosure Package and the Prospectus, present
fairly the financial position of the Company and its
consolidated subsidiaries at the dates indicated and the
results of operations and cash flows of the Company and its
consolidated subsidiaries for the periods specified; said
financial statements have been prepared in conformity with
generally accepted accounting principles (“ GAAP
”) applied on a consistent basis throughout the periods
involved, except as otherwise stated therein. The
selected financial data and the summary financial information
included in the Registration Statement, the Disclosure Package
and the Prospectus present fairly the information shown
therein and have been compiled on a basis consistent with that
of the audited financial statements included in the
Registration Statement. Any pro forma financial
information included in the Registration Statement, the
Disclosure Package or the Prospectus present fairly the
information shown therein, have been prepared in accordance
with the Commission’s rules and guidelines with respect
to pro forma financial information and have been properly
compiled on the bases described therein, and the assumptions
used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the
transactions and circumstances referred to
therein. The financial statements and other
financial data included in the Registration Statement, each
Preliminary Prospectus and the Prospectus comply in all
material respects with the requirements of paragraph (e) of
Item 10 of Regulation S-K.
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(v)
No
Material Adverse Change in Business . Since
the date of the latest audited balance sheet included in the
Disclosure Package and the Prospectus and except as disclosed
therein, there has been no material adverse change in the
business, condition (financial or otherwise) or results of
operations of the Company and its subsidiaries considered as
one
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enterprise,
whether or not arising in the ordinary course of business (any
such change, a “ Material
Adverse Change ”).
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(vi)
Good
Standing of the Company . The Company has
been duly organized and is validly existing as a corporation
in good standing under the laws of the District of Columbia
and the Commonwealth of Virginia and has corporate power and
authority to own, lease and operate its properties and to
conduct its business as described in the Disclosure Package
and the Prospectus and to enter into and perform its
obligations under this Agreement; and the Company is duly
qualified as a foreign corporation to transact business and is
in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership
or leasing of property or the conduct of business, except
where the failure so to qualify or to be in good standing
would not have a material adverse effect on the business,
condition (financial or otherwise) or results of operations of
the Company and its subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business (any
such change or development, a “ Material
Adverse Effect ”).
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(vii)
No
Significant Subsidiaries . The Company has
no “significant subsidiaries” as defined in Rule
1-02 of Regulation S-X.
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(viii)
Capitalization
. The authorized, issued and outstanding capital
stock of the Company is as set forth in the Registration
Statement, the Disclosure Package and the
Prospectus. The shares of issued and outstanding
capital stock of the Company have been duly authorized and
validly issued and are fully paid and non-assessable and are
owned by PHI; none of the outstanding shares of capital stock
of the Company was issued in violation of the preemptive or
other similar rights of any securityholder of the
Company.
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(ix)
Authorization
of this Agreement . This Agreement has been
duly authorized, executed and delivered by the
Company.
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(x)
Authorization
of the Indenture . The Indenture has been
duly authorized, and the Indenture (excluding the Supplemental
Officer’s Certificate and the Indenture Supplement) has
been duly executed and delivered by the Company; and the
Indenture (excluding the Supplemental Officer’s
Certificate and the Indenture Supplement) constitutes, and, at
the Closing Time, the Indenture will constitute, the valid and
legally binding obligation of the Company, enforceable in
accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar
laws of general applicability relating to or affecting
creditors’ rights and to general equity
principles. The Indenture has been duly qualified
under the 1939 Act.
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(xi)
Authorization
of the Securities . The Securities have been
duly authorized by the Company and, at the Closing Time, will
have been duly executed by the Company; and, when the
Securities have been (A) authenticated and delivered by the
Trustee under the Indenture and (B) issued and delivered by
the Company against payment of the purchase price therefor as
provided in this Agreement, the Securities will constitute
valid and legally binding obligations of the Company,
enforceable in accordance with their terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating
to or affecting creditors’ rights and to general equity
principles, and will be entitled to the benefits of the
Indenture ratably with all other securities outstanding
thereunder.
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(xii)
Authorization
of the Mortgage . The Mortgage has been duly
authorized, and the Mortgage (excluding the Mortgage
Supplement) has been duly executed and delivered by
the
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Company;
and the Mortgage (excluding the Mortgage Supplement)
constitutes the valid and legally binding obligation of the
Company, enforceable in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating
to or affecting mortgagees’ and other creditors’
rights and to general equity principles and except to the
extent that the law of the jurisdictions in which the
mortgaged property is located may limit or deny certain
remedial provisions of the Mortgage. At the Closing
Time, the Mortgage Supplement will have been duly executed and
delivered by the Company and the Mortgage (including the
Mortgage Supplement) will constitute the valid and legally
binding obligation of the Company, enforceable in accordance
with its terms, subject to the limitations described
above.
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(xiii)
Authorization
of the Collateral Bonds . The Collateral
Bonds have been duly authorized by the Company and, at Closing
Time, will have been duly executed by the Company; and when
(A) the Collateral Bonds have been (w) authenticated and
delivered by the Mortgage Trustee under the Mortgage and (x)
issued and delivered by the Company to the Trustee as provided
in the Indenture and (B) the Securities have been (y)
authenticated and delivered by the Trustee under the Indenture
and (z) issued and delivered by the Company against payment of
the purchase price therefor as provided in this Agreement, the
Collateral Bonds will constitute valid and legally binding
obligations of the Company, enforceable in accordance with
their terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting
creditors’ rights and to general equity principles, and
will be entitled to the benefits of the Mortgage ratably with
all other securities outstanding thereunder.
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(xiv)
Description
of the Securities, the Indenture, the Collateral Bonds and the
Mortgage . The descriptions of the
Securities, the Indenture, the Collateral Bonds and the
Mortgage in the Registration Statement, the Disclosure Package
and the Prospectus are accurate in all material respects and
the Securities, the Indenture (excluding the Original
Officer’s Certificate and the Supplemental
Officer’s Certificate), the Collateral Bonds and the
Mortgage will be in substantially the respective forms filed
or incorporated by reference, as the case may be, as exhibits
to the Registration Statement.
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(xv)
Absence
of Defaults and Conflicts . The Company is
not in violation of its articles of incorporation or by-laws
or in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, deed of trust, loan or credit
agreement, note, lease or other agreement or instrument to
which the Company is a party or by which it may be bound, or
to which any of the property or assets of the Company is
subject (collectively, “ Agreements
and Instruments ”) except for such defaults as
have not resulted, and are not reasonably expected to result,
in a Material Adverse Effect; and the execution, delivery and
performance of this Agreement, the Indenture and the
Securities, and the Mortgage and the Collateral Bonds, and the
consummation of the transactions contemplated herein
(including the issuance and sale of the Securities, the use of
the proceeds from the sale of the Securities as described in
the Registration Statement, the Disclosure Package and the
Prospectus and the issuance and delivery of the Collateral
Bonds) and compliance by the Company with its obligations
hereunder, under the Indenture, on the Securities, under the
Mortgage and on the Collateral Bonds have been duly authorized
by all necessary corporate action and do not and will not,
whether with or without the giving of notice or passage of
time or both, conflict with or constitute a breach of, or
default or Repayment Event (as defined below) under, or result
in the creation or imposition of any Lien (as defined below),
other than the Lien of the Mortgage and the Lien of the
Indenture, upon any property or assets of the Company pursuant
to, the Agreements and Instruments (except for such conflicts,
breaches, defaults or
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Liens
as would not result in a Material Adverse Effect), nor will
such action result in any violation of the provisions of the
articles of incorporation or by-laws of the Company or any
applicable law, statute, rule, regulation, judgment, order,
writ or decree of any government, government instrumentality
or court, domestic or foreign, having jurisdiction over the
Company or any of its assets, properties or
operations. As used herein, a “ Repayment
Event ” means any event or condition that gives
the holder of any note, debenture or other evidence of
indebtedness (or any person acting on such holder’s
behalf) the right to require the repurchase, redemption or
repayment of all or a portion of such indebtedness by the
Company.
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(xvi)
Absence
of Labor Dispute . No labor dispute with the
employees of the Company exists or, to the knowledge of the
Company, is imminent, and the Company is not aware of any
existing or imminent labor disturbance by the employees of any
of its principal suppliers, manufacturers, customers or
contractors, which, in either case, could reasonably be
expected to result in a Material Adverse Effect.
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(xvii)
Absence
of Proceedings . There is no action, suit,
proceeding, inquiry or investigation before or brought by any
court or governmental agency or body, domestic or foreign, now
pending, or, to the knowledge of the Company, threatened,
against or affecting the Company, that (A) is required to be
disclosed in the Registration Statement, the Pricing
Prospectus or the Prospectus and is not disclosed as required,
(B) could reasonably be expected to materially and adversely
affect the consummation of the transactions contemplated in
this Agreement or the performance by the Company of its
obligations hereunder or (C) except as disclosed in the
Registration Statement, the Disclosure Package and the
Prospectus, could reasonably be expected to result in a
Material Adverse Effect. The aggregate of all
pending legal or governmental proceedings to which the Company
is a party or of which any of its properties or assets is the
subject that are not described in the Pricing Prospectus,
including ordinary routine litigation incidental to the
business, could not reasonably be expected to result in a
Material Adverse Effect.
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(xviii)
Description
and Filing of Contracts and Documents . All
contracts or documents that are required to be described in
the Registration Statement, the Pricing Prospectus or the
Prospectus or to be filed as exhibits to the Registration
Statement have been so described and filed as
required.
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(xix)
Absence
of Further Requirements . All
filings with, and authorizations, approvals, consents,
licenses, orders, registrations, qualifications or decrees of,
any court or governmental authority or agency that are
necessary or required for the performance by the Company of
its obligations hereunder, in connection with the offering,
issuance or sale of the Securities hereunder or the
consummation of the transactions contemplated by this
Agreement or for the due execution, delivery or performance by
the Company of the Indenture and the Mortgage, have been
obtained, except such as may be required under the 1933 Act or
the 1933 Act Regulations or under state securities laws, and
the Company has complied with all terms and conditions
contained in such authorizations, approvals, consents,
licenses, orders, registrations, qualifications or decrees as
have been obtained.
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(xx)
Possession
of Licenses and Permits . The Company
possesses such permits, licenses, approvals, consents and
other authorizations (collectively, “ Governmental
Licenses ”) issued by the appropriate federal,
state, local or foreign regulatory agencies or bodies
necessary to conduct the business now operated by it and is in
compliance with the terms and conditions of all such
Governmental Licenses, except (a) as disclosed in the
Registration Statement, the Disclosure Package and the
Prospectus or (b) where the failure so to possess any such
Governmental License
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or
to comply therewith would not, singly or in the aggregate,
have a Material Adverse Effect; all of the Governmental
Licenses are valid and in full force and effect, except where
the invalidity of such Governmental Licenses or the failure of
such Governmental Licenses to be in full force and effect
would not have a Material Adverse Effect; and the Company has
not received any notice of proceedings relating to the
revocation or modification of any such Governmental Licenses,
the revocation or modification of which would, singly or in
the aggregate, result in a Material Adverse
Effect.
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(xxi)
Title
to Property and Mortgaged Property . The
Company has good and marketable title to all real property
owned by the Company and described in the Mortgage as subject
to the lien thereof, and good title to all other property
owned by the Company and so described as subject to such lien,
in each case, subject only to such exceptions, defects and
qualifications as do not (A) affect the value of any such
properties that are material to the business of the Company in
any material respect or (B) affect the use made or proposed to
be made of such properties by the Company in any material
respect; and the descriptions of all such property contained
in the Mortgage are correct and adequate for purposes of the
lien purported to be created by the Mortgage.
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(xxii)
Lien of
Mortgage . The Mortgage (excluding
the Mortgage Supplement) constitutes, and at the Closing Time
the Mortgage will constitute, a valid first lien upon and
security interest in the interest held by the Company in its
property covered by the Mortgage, subject to no mortgage,
pledge, lien, security interest, charge or other encumbrance
of any kind (collectively, “ Liens
”) prior to the lien of the Mortgage except
“permitted liens” (as defined in the Mortgage) and
other Liens permitted by the Mortgage and to such other
matters as do not materially affect the security for the
Collateral Bonds. The Mortgage (excluding the
Mortgage Supplement) by its terms effectively subjects, and at
and after the Closing Time the Mortgage by its terms will
effectively subject, to the lien thereof all property (except
property of the kinds specifically excepted from the lien of
the Mortgage) acquired by the Company after the date of the
execution and delivery of the Mortgage, subject to no Lien
prior to the lien of the Mortgage except (A) “permitted
liens” (as defined in the Mortgage), (B) any Lien
thereon existing at the time of such acquisition, (C) any Lien
for unpaid portions of the purchase price thereof placed
thereon at the time of such acquisition, (D) with respect to
real property, any Lien placed thereon following the
acquisition thereof by the Company and prior to the recording
and filing of a supplemental indenture or other instrument
specifically describing such real property, (E) as otherwise
provided in Article XII of the Mortgage, (F) except for
possible claims in bankruptcy and possible claims for taxes
and (G) such other matters as would not materially affect the
security for the Collateral Bonds. At the Closing
Time, the Mortgage (except for the Mortgage Supplement) will
have been duly recorded, and the Mortgage Supplement will have
been duly filed for recordation as a mortgage of real estate,
in the only counties in which any real property subject to the
lien of the Mortgage is located, and all requisite steps will
have been taken to perfect the security interest of the
Mortgage in personal property of the Company; and at the
Closing Time all taxes and recording and filing fees required
to be paid with respect to the execution, recording or filing
of the Mortgage, the filing of financing statements and
similar documents and the issuance of the Collateral Bonds
will have been paid.
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(xxiii)
Leases
. All of the leases and subleases material to the
business of the Company, and under which the Company holds
properties described in the Registration Statement, the
Disclosure Package and the Prospectus, are in full force and
effect, and the Company has no notice of any claim of any sort
asserted by anyone adverse to the rights of the Company under
any of the leases or subleases mentioned above, or affecting
or questioning the rights of the Company to the continued
possession of the leased or subleased premises under any such
lease or
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sublease,
that, if the subject of an adverse decision, ruling or
finding, would have a Material Adverse Effect.
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(xxiv)
Investment
Company Act . The Company is not, and upon
the issuance and sale of the Securities as herein contemplated
and the application of the net proceeds therefrom as described
in the Registration Statement, the Disclosure Package and the
Prospectus will not be, an “investment company” or
an entity “controlled” by an “investment
company” as such terms are defined in the Investment
Company Act of 1940, as amended (the “ 1940
Act ”).
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(xxv)
Environmental
Laws . Except as described in the
Registration Statement, the Disclosure Package and the
Prospectus and except as would not, singly or in the
aggregate, result in a Material Adverse Effect, (A) the
Company is not in violation of any federal, state, local or
foreign statute, law, rule, regulation, ordinance, code,
policy or rule of common law or any judicial or administrative
interpretation thereof, including any judicial or
administrative order, consent, decree or judgment, relating to
pollution or protection of human health, the environment
(including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or wildlife,
including, without limitation, laws and regulations relating
to the release or threatened release of chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous substances,
petroleum or petroleum products (collectively, “
Hazardous
Materials ”) or to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Materials (collectively, “
Environmental
Laws ”), (B) the Company has all permits,
authorizations and approvals required under any applicable
Environmental Laws and is in compliance with their
requirements, (C) there are no pending, or to the knowledge of
the Company, threatened administrative, regulatory or judicial
actions, suits, demands, demand letters, claims, liens,
notices of noncompliance or violation, investigation or
proceedings relating to any Environmental Law against the
Company and (D) to the knowledge of the Company, there are no
events or circumstances that could reasonably be expected to
form the basis of an order for clean-up or remediation, or an
action, suit or proceeding by any private party or
governmental body or agency, against or affecting the Company
relating to Hazardous Materials or Environmental
Laws.
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(xxvi)
Internal
Controls . (i) The Company has
established and maintains the following:
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(I) a
system of “internal accounting controls” as
contemplated in Section 13(b)(2)(B) of the 1934 Act (the
“ Accounting
Controls ”);
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(II) “disclosure
controls and procedures” as such term is defined in
Rule 13a-15(e) under the 1934 Act (the “ Disclosure
Controls ”); and
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(III) “internal
control over financial reporting” as such term is
defined in Rule 13a-15(f) under the 1934 Act (the “
Reporting
Controls ” and, together with the Accounting
Controls and the Disclosure Controls, the “ Internal
Controls ”);
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(B) The
Internal Controls are evaluated by the Company periodically as
appropriate and, in any event, as required by
law;
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(C) Based
on the most recent evaluations of the Accounting Controls, the
Accounting Controls perform the functions for which they were
established in all material respects;
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(D) As
of the most recent date as of which the effectiveness of the
design and operation of the Disclosure Controls were evaluated
by the Company, the Disclosure Controls were effective to
provide reasonable assurance that material information
relating to the Company and its subsidiaries that is required
to be disclosed in reports filed with, or submitted to, the
Commission under the 1934 Act (I) is recorded, processed,
summarized and reported within the time periods specified by
the Commission rules and forms and (II) is accumulated and
communicated to management, including its chief executive
officer and chief financial officer, as appropriate, to allow
timely decisions regarding required disclosure;
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(E) As
of December 31, 2007 (the most recent date as of which the
Reporting Controls were evaluated by the Company), the
Reporting Controls were effective based on the framework in
Internal Control--Integrated Framework issued by the Committee
of Sponsoring Organizations of the Treadway Commission;
and
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(F) Since
the respective dates as of which the Internal Controls were
last evaluated, nothing has come to the attention of the
Company that has caused the Company to conclude that (I) the
Accounting Controls do not perform the functions for which
they were established in all material respects or (II) the
Disclosure Controls are not effective (within the meaning of
the evaluation standards identified above).
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(xxvii)
Compliance
with Sarbanes Oxley . The Company is in
compliance in all material respects with the Sarbanes-Oxley
Act of 2002 and the rules and regulations of the Commission
that have been adopted thereunder, all to the extent that such
Act and such rules and regulations are in effect and
applicable to the Company.
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(b)
Officer’s Certificates . Any certificate
signed by any officer of the Company delivered to the Underwriters
or to counsel for the Underwriters in connection with the offer and
sale of the Securities shall be deemed a representation and
warranty by the Company to each Underwriter as to the matters
covered thereby.
SECTION
2.
Sale and Delivery to Underwriters; Closing; Covenants of the
Underwriters .
(a)
Securities . On the basis of the representations
and warranties herein contained and subject to the terms and
conditions herein set forth, the Company agrees to sell to each
Underwriter, severally and not jointly, and each Underwriter,
severally and not jointly, agrees to purchase from the Company, at
a purchase price of 96.042% of the principal amount thereof, plus
accrued interest from November 16, 2007 to the Closing Time (as
herein defined) the aggregate principal amount of Securities set
forth in Schedule A opposite the name of such Underwriter, plus any
additional principal amount of Securities which such Underwriter
may become obligated to purchase pursuant to the provisions of
Section 10 hereof.
(b)
Payment . Payment of the purchase price for, and
delivery of certificates for, the Securities shall be made at the
offices of Covington & Burling LLP at 1201 Pennsylvania Avenue,
NW, Washington, DC 20004, or at such other place as shall be agreed
upon by the Representatives and the Company, at 9:00 A.M.
(Eastern time) on the fifth business day after the date hereof
(unless postponed in accordance with the provisions of
Section 10), or such other time not later than ten business
days after such date as shall be agreed upon by the Representatives
and the Company (such time and date of payment and delivery being
herein called “ Closing
Time ”).
Payment
shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company,
against delivery to the Representatives for the respective
accounts of
the
Underwriters of certificates for the Securities to be
purchased by them. It is understood that each
Underwriter has authorized the Representatives, for its
account, to accept delivery of, receipt for, and to make
payment of the purchase price for, the Securities which it has
agreed to purchase. Either or both of the
Representatives, individually and not as representatives of
the Underwriters, may (but shall not be obligated to) make
payment of the purchase price for the Securities to be
purchased by any Underwriter whose funds have not been
received by the Closing Time, but such payment shall not
relieve such Underwriter from its obligations
hereunder.
(c)
Denominations; Registration . The Securities
shall be in such denominations ($1,000 or integral multiples
thereof) and registered in such names as the Representatives may
request in writing at least one full business day before the
Closing Time. The Securities will be made available for
examination and packaging by the Representatives in Washington D.C.
not later than 10:00 A.M. (Eastern time) on the business day
prior to the Closing Time.
(d)
Delivery of Global Securities. In lieu of the
delivery to the Underwriters of certificates representing the
Securities at the Closing Time, as contemplated above, the Company,
with the approval of the Representatives, may deliver one or more
global Securities to a custodian for The Depository Trust Company
(“ DTC
”), to be held by DTC initially for the accounts of the
several Underwriters.
(e)
Notice of Completion . Promptly after the
completion of the distribution of the Securities by the
Underwriters, JPMorgan on behalf of the Underwriters shall deliver
to the Company a notice in writing confirming the completion of the
distribution (the “ Notice of
Completion ”).
(f)
Use of Free Writing Prospectuses. Each
Unde
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