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__________________________________________________________
__________________________________________________________
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POTOMAC ELECTRIC POWER COMPANY
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(a District of Columbia
and Virginia corporation)
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5.40% Senior Notes due
June 1, 2035
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PURCHASE
AGREEMENT
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Dated: May 24, 2005
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__________________________________________________________
__________________________________________________________
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__________________________________________________________
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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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2
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(a)
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Representations and Warranties by the Company
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2
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(i)
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Compliance with Registration Requirements
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2
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(ii)
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Incorporated Documents
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3
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(iii)
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Independent Accountants
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3
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(iv)
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Financial Statements
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3
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(v)
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No Material Adverse Change in Business
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4
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(vi)
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Good Standing of the Company
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4
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(vii)
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No Significant Subsidiaries
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4
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(viii)
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Capitalization
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4
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(ix)
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Authorization of Agreement
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4
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(x)
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Authorization of the Indenture
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4
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(xi)
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Authorization of the Securities
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4
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(xii)
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Authorization of the Mortgage
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4
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(xii)
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Authorization of the Collateral Bonds
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5
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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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5
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(xv)
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Absence of Defaults and Conflicts
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5
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(xvi)
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Absence of Labor Dispute
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6
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(xvii)
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Absence of Proceedings
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6
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(xviii)
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Accuracy of Exhibits
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6
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(xix)
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Absence of Further Requirements
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6
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(xx)
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Possession of Licenses and Permits
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6
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(xxi)
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Title to Property and Mortgaged Property
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7
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(xxii)
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Lien of Mortgage
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7
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(xxiii)
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Leases
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7
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(xxiv)
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Investment Company Act
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7
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(xxv)
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Environmental Laws
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8
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(xxvi)
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Internal Controls
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8
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(xxvii)
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Compliance with Sarbanes Oxley
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9
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(b)
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Officer's Certificates
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9
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SECTION 2.
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Sale and Delivery to Underwriters; Closing
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9
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(a)
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Securities
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9
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(b)
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Payment
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9
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(c)
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Denominations; Registration
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9
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(d)
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Delivery of Global Securities
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9
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SECTION 3.
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Covenants of the Company
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10
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(a)
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Compliance with Securities Regulations and Commission
Requests
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10
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(b)
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Delivery of Registration Statements
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10
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(c)
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Delivery of Prospectuses
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10
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(d)
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Continued Compliance with Securities Laws
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10
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(e)
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Review of Amendments and Supplements
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11
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(f)
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Blue Sky Qualifications
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11
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(g)
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Rule 158
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11
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(h)
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Use of Proceeds
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11
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(i)
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Restriction on Sale of Securities
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12
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(j)
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Reporting Requirements
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12
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i
_____________________________________________________________________________________
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SECTION 4.
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Payment of Expenses
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12
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(a)
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Expenses
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12
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(b)
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Termination of Agreement
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12
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SECTION 5.
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Conditions of Underwriters' Obligations
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12
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(a)
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Effectiveness of Registration Statement
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12
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(b)
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Opinions of Counsel for Company
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13
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(c)
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Opinion of Counsel for Underwriters
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13
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(d)
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Officers' Certificate
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13
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(e)
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Accountant's Comfort Letter
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13
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(f)
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Maintenance of Rating
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13
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(g)
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Additional Documents
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13
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(h)
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Termination of Agreement
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13
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SECTION 6.
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Indemnification
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14
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(a)
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Indemnification of Underwriters
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14
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(b)
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Indemnification of Company, Directors and Officers
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14
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(c)
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Actions against Parties; Notification
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15
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SECTION 7.
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Contribution
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15
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SECTION 8.
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Representations, Warranties and Agreements to Survive
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16
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SECTION 9.
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Termination of Agreement
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16
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(a)
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Termination; General
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16
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(b)
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Liabilities
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17
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SECTION 10.
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Default by One or More of the Underwriters
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17
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SECTION 11.
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Notices
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17
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SECTION 12.
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Parties
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18
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SECTION 13.
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Governing Law and Time
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18
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SECTION 14.
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Counterparts
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18
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SECTION 15.
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Effect of Headings
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18
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SCHEDULES
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Schedule
A - List
of Underwriters
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Sch A-1
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Schedule
B
- Pricing
Information
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Sch B-1
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EXHIBITS
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Exhibit
A - Form of Opinion of Kirk J. Emge, Esq.
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A-1
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Exhibit
B - Form of Opinion of Covington & Burling
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B-1
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ii
_____________________________________________________________________________________
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POTOMAC ELECTRIC
POWER COMPANY
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(a District of Columbia
and Virginia corporation)
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$175,000,000
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5.40% Senior Notes due
June 1, 2035
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PURCHASE
AGREEMENT
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May 24, 2005
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CREDIT SUISSE FIRST BOSTON LLC
Eleven
Madison Avenue
New
York, New York 10010-3629
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MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
4 World
Financial Center
New
York, New York 10080
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As Representatives of the Several Underwriters
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Ladies and Gentlemen:
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Potomac
Electric Power Company, a District of Columbia and Virginia
corporation (the " Company "), confirms its agreement with
Credit Suisse First Boston LLC (" CSFB ") and Merrill Lynch
& Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated
(" Merrill Lynch ") 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 CSFB and
Merrill Lynch 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 $175,000,000 in aggregate principal
amount of the Company's 5.40% Senior Notes due June 1, 2035 (the "
Securities ").
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The
Securities are to be issued under an indenture, dated as of
November 17, 2003, between the Company and The Bank of New York,
trustee (the " Trustee "), as supplemented by an officer's
certificate, to be dated the Closing Time (as hereinafter defined
in Section 2(b)), establishing the terms of the Securities, such
indenture, as so supplemented, being hereinafter called the
"Indenture".
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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 $175,000,000 in aggregate
principal amount of its First Mortgage Bonds, 5.40% Collateral
Series due 2035 (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 May 24, 2005 (the " Supplemental
Indenture "), establishing the terms of the Collateral Bonds,
such Mortgage and Deed of Trust, as so amended and supplemented,
being hereinafter called the "Mortgage".
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_____________________________________________________________________________________
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The
Company understands that the Underwriters propose to make a public
offering of the Securities promptly after this Agreement has been
executed and delivered.
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The
Company has filed with the Securities and Exchange Commission (the
" Commission ") on June 18, 2003 a registration statement on
Form S-3 (No. 333-106209), for the registration of various
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
and the Mortgage under the Trust Indenture Act of 1939, as amended
(the " 1939 Act "). Such registration statement has been
declared effective by the Commission. Such registration statement,
including the exhibits and schedules thereto, at the time it became
effective, is referred to herein as the " Registration
Statement "; and the final prospectus and the final prospectus
supplement relating to the offering of the Securities, in the forms
first furnished to the Underwriters by the Company for use in
connection with the offering of the Securities, are collectively
referred to herein as the " Prospectus "; provided ,
however , that all references to the "Registration
Statement" and the "Prospectus" shall also be deemed to include all
documents filed pursuant to the Securities Exchange Act of 1934
(the " 1934 Act ") prior to the execution and delivery
hereof which are incorporated therein by reference pursuant to Item
12 of Form S-3 under the 1933 Act. A " preliminary
prospectus " shall be deemed to refer to (i) any prospectus
used before the Registration Statement became effective and (ii)
any prospectus that omitted information to be included upon pricing
in a form of prospectus filed with the Commission pursuant to Rule
424(b) of the 1933 Act Regulations and was used after the
Registration Statement became effective and prior to the initial
delivery of the Prospectus to the Underwriters by the Company. For
purposes of this Agreement, all references to the Registration
Statement, Prospectus or preliminary prospectus or to any amendment
or supplement to any of the foregoing shall be deemed to include
the copy of such document filed with the Commission pursuant to its
Electronic Data Gathering, Analysis and Retrieval system ("
EDGAR ").
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All
references in this Agreement to financial statements and schedules
and other information which is "described", "disclosed", "referred
to", "contained", "included" or "stated" in the Registration
Statement, any preliminary prospectus or the Prospectus (or other
references of like import) shall be deemed to mean and include all
such financial statements and schedules and other information which
is incorporated by reference in the Registration Statement, any
preliminary prospectus or the Prospectus, as the case may be; and
all references in this Agreement to amendments or supplements to
the Registration Statement, any preliminary prospectus or the
Prospectus shall be deemed to mean and include the filing of any
document under the 1934 Act which is incorporated by reference in
the Registration Statement, such preliminary prospectus or the
Prospectus, as the case may be.
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SECTION
1. Representations and
Warranties .
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(a)
Representations and Warranties by the
Company . The Company represents and warrants to each
Underwriter as of the date hereof and as of the Closing Time as
follows:
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(i)
Compliance with Registration
Requirements . The Company meets the requirements for use of
Form S-3 under the 1933 Act. The Registration Statement has become
effective under the 1933 Act and 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.
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2
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At
the time the Registration Statement became effective and at the
Closing Time, the Registration Statement and any amendments and
supplements thereto complied and will comply 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
"), and did not and will not contain an untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading. Neither the Prospectus nor any amendments or
supplements thereto, at the time the Prospectus or any such
amendment or supplement was issued and at the Closing Time,
included or will include an untrue statement of a material fact or
omitted or will 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 representations and
warranties in this subsection shall not apply to statements in or
omissions from the Registration Statement or Prospectus made in
reliance upon and in conformity with information furnished to the
Company in writing by any Underwriter expressly for use in the
Registration Statement or Prospectus.
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Each preliminary prospectus and the
prospectus 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 1933 Act, complied when so filed in
all material respects with the 1933 Act Regulations and each
preliminary prospectus and the Prospectus delivered to the
Underwriters for use in connection with this offering was identical
to the electronically transmitted copies thereof filed with the
Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T.
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(ii)
Incorporated Documents . The
documents incorporated by reference in the Registration Statement
and the Prospectus, at the time they were or hereafter are filed
with the Commission, complied and will comply 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 read together with the other
information in the Prospectus, at the time the Registration
Statement became effective, at the time the Prospectus was issued
and at the Closing Time, did not and will not contain an untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading.
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(iii)
Independent Accountants . The
accountants who audited the financial statements and supporting
schedules included in the Registration Statement are independent
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 and the
Prospectus, present fairly the financial position of the Company
and its consolidated subsidiaries at the dates indicated and the
statement of operations, stockholder's equity 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 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. The
financial statements and other financial data included in the
Registration Statement and the Prospectus as of the date hereof
comply, and as of Closing Time will comply, in all material
respects with the requirements of paragraph (e) of Item 10 of
Regulation S-K.
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3
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(v)
No Material Adverse Change in
Business . Since the respective dates as of which information
is given in the Prospectus, except as otherwise stated 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 enterprise, whether
or not arising in the ordinary course of business (hereinafter, 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 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 (hereinafter, a " Material
Adverse Effect ").
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(vii)
No Significant Subsidiaries . The
Company has no subsidiaries which would be deemed "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 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, except for issued and
outstanding preferred stock, are owned by Pepco Holdings, Inc., a
Delaware corporation; 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 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, executed and delivered by the
Company and 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 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.
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(xii)
Authorization of the Mortgage . At the date hereof, the
Mortgage has been duly authorized, and the Mortgage (excluding the
Supplemental Indenture) has been duly executed and
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4
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delivered by the Company; and at the
date hereof, the Mortgage (excluding the Supplemental Indenture)
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 will have been duly executed and delivered by
the Company and the Mortgage 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.
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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 Prospectus are accurate in all material
respects and the Securities, the Indenture, 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 Prospectus under the caption "Use of Proceeds"
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 hereinafter defined) (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 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
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5
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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 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 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
property or assets is the subject which are not described in the
Registration Statement, 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)
Accuracy of Exhibits . All contracts
or documents which are required to be described in the Registration
Statement, the Prospectus or the documents incorporated by
reference therein 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 made or obtained except (A) such as may be required under
the 1933 Act or the 1933 Act Regulations or under state securities
laws and (B) the appropriate filing for recordation of the
Supplemental Indenture, 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 where the failure so to
possess any such Governmental License 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
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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 (I) affect the value of any such
properties that are material to the business of the Company in any
material respect or (II) 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 Supplemental Indenture) 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 by its terms is effective to 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 Supplemental Indenture) will have been duly recorded, and the
Supplemental Indenture 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 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 sublease, that, if the subject of an adverse decision, ruling or
finding, would have a Material Adverse Effect.
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(xiv)
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
Prospectus will not be, an "investment company" or an entity
"controlled" by an
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"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 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, among other, internal controls (without
duplication),
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(A)
The Company has devised and maintains in effect a system of
"internal accounting controls" as contemplated in Section
13(b)(2)(B) of the 1934 Act (" Accounting Controls "). To
the best knowledge of the Company, the Accounting Controls are
effective in all material respects to perform the functions for
which they were designed.
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(B)
The Company has established and maintains "disclosure controls and
procedures" as such term is defined in Rule 13a-15(e) under the
1934 Act (" Disclosure Controls "). The effectiveness of
such Disclosure Controls is evaluated by the Company's senior
management on a quarterly basis, and, to the best knowledge of the
Company, the Disclosure Controls are effective in all material
respects to perform the functions for which they were
established.
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(ii)
Based on the most recent evaluation of the Company's internal
controls described above, all significant deficiencies in the
design or operation of such internal controls which could adversely
affect the Company's ability to record, process, summarize and
report financial data required to be disclosed by the Company in
its reports filed under Section 13(a) of the 1934 Act within the
time periods specified in the 1934 Act Regulations, any material
weaknesses in such internal controls and any fraud, whether or not
material, that involves management or other employees who have a
significant role in such internal controls have been identified and
reported to the Company's auditors and the audit committee of the
board of directors.
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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 and the New York Stock Exchange 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 shall be deemed a
representation and warranty by the Company to each Underwriter as
to the matters covered thereby.
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SECTION
2. Sale
and Delivery to Underwriters; Closing .
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(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 the prices set forth in Schedule B, 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.
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(b)
Payment . Payment of the purchase
price for, and delivery of certificates for, the Securities shall
be made at the offices of Covington & Burling at 1201
Pennsylvania Avenue, NW, Washington, D.C. 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 ").
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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. CSFB and/or Merrill
Lynch, 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.
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(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.
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(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.
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SECTION
3. Covenants of the Company .
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(a)
Compliance with Securities Regulations
and Commission Requests . The Company, subject to Section 3(b),
will notify the Representatives immediately, and confirm the notice
in writing, (i) when any post-effective amendment to the
Registration Statement shall become effective, or any supplement to
the Prospectus or any amended Prospectus shall have been filed,
(ii) of the receipt of any comments from the Commission with
respect to the Registration Statement or the Prospectus,
(iii) of any request by the Commission for any amendment to
the Registration Statement or any amendment or supplement to the
Prospectus or for additional information with respect to the
Registration Statement or the Prospectus, and (iv) of the
issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order
preventing or suspending the use of any preliminary prospectus, or
of the suspension of the qualification of the Securities for
offering or sale in any jurisdiction, or of the initiation or
threatening of any proceedings for any of such purposes. Following
the execution and delivery of this Agreement, the Company will
promptly file the Prospectus pursuant to Rule 424(b) and will take
such steps as it deems necessary to ascertain promptly whether the
form of prospectus transmitted for filing under Rule 424(b) was
received for filing by the Commission. The Company will make every
reasonable effort to prevent the issuance of any stop order and, if
any stop order is issued, to obtain the lifting thereof at the
earliest possible moment.
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(b)
Delivery of Registration Statements
. The Company has furnished or will deliver to the Representatives
and counsel for the Underwriters, without charge, signed copies of
the Registration Statement as originally filed and of each
amendment thereto (including exhibits filed therewith or
incorporated by reference therein and documents incorporated or
deemed to be incorporated by reference therein) and signed copies
of all consents and certificates of experts, and will also deliver
to the Representatives, without charge, a conformed copy of the
Registration Statement as originally filed and of each amendment
thereto (without exhibits). The copies of the Registration
Statement and each amendment thereto furnished to the Underwriters
will be identical to the electronically transmitted copies thereof
filed with the Commission pursuant to EDGAR, except to the extent
permitted by Regulation S-T.
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(c)
Delivery of Prospectuses . The
Company has delivered to each Underwriter, without charge, as many
copies of each preliminary prospectus as such Underwriter
reasonably requested, and the Company hereby consents to the use of
such copies by the Underwriters for purposes permitted by the 1933
Act. The Company will furnish to each Underwriter, without charge,
during the period when the Prospectus is required to be delivered
under the 1933 Act, such number of copies of the Prospectus (as
amended or supplemented) as such Underwriter may reasonably
request. The Prospectus and any amendments or supplements thereto
furnished to the Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to EDGAR, except to the extent permitted by Regulation
S-T.
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(d)
Continued Compliance with Securities
Laws . (i) The Company will comply with the 1933 Act and
the 1933 Act Regulations and the 1934 Act and the 1934 Act
Regulations so as to permit the completion of the distribution of
the Securities as contemplated in this Agreement and in the
Prospectus.
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(ii) The
Company will immediately notify the Representatives, and confirm
such notice in writing, of (x) any filing made by the Company of
information relating to the offering of the Securities with any
securities exchange or any other regulatory body in the United
States or any other jurisdiction and (y) prior to the completion of
the distribution of the Securities by the Underwriters as evidenced
by a notice in writing from CSFB on behalf of the Underwriters to
the Company (the " Notice of Completion "), any material
changes in or affecting the business, condition (financial or
otherwise) or results of operations of the Company and its
subsidiaries considered as one enterprise which (i) make any
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statement in the Registration Statement or the Prospectus false
or misleading or (ii) are not disclosed in the Registration
Statement or the Prospectus.
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