First and Refunding Mortgage Bonds,
5.95% Series Due 2036
New York, New York
September 18, 2006
To the
Representatives named in
Schedule I hereto of the Underwriters
named in Schedule II hereto
PECO Energy
Company, a corporation organized under the laws of the Commonwealth
of Pennsylvania (the “Company”), proposes to sell to
the several underwriters named in Schedule II hereto (the
“Underwriters”), for whom you (the
“Representatives”) are acting as representatives,
$300,000,000 principal amount of the Company’s First and
Refunding Mortgage Bonds, 5.95% Series due 2036 (the
“Securities”). The Securities are to be issued under
the Company’s First and Refunding Mortgage, dated as of
May 1, 1923 (the “Mortgage”), as amended and
supplemented through the date hereof, and as further amended by the
Supplemental Indenture, dated as of September 15, 2006 (the
“Supplement”), between the Company and Wachovia Bank,
National Association (formerly, First Union National Bank), as
trustee (the “Trustee”). The Mortgage, together with
any and all amendments or supplements thereto, including the
Supplement, is referred to herein collectively as the
“Indenture.” To the extent there are no additional
Underwriters listed on Schedule I other than you, the term
Representatives as used herein shall mean you, as Underwriters, and
the terms Representatives and Underwriters shall mean either the
singular or plural as the context requires. Any reference herein to
the Registration Statement, the Base Prospectus, any Preliminary
Prospectus or the Final Prospectus shall be deemed to refer to and
include the documents incorporated by reference therein pursuant to
Item 12 of Form S-3 which were filed under the Exchange Act on
or before the Effective Date of the Registration Statement or the
issue date of the Base Prospectus, any Preliminary Prospectus or
the Final Prospectus, as the case may be; and any reference herein
to the terms “amend,” “amendment” or
“supplement” with respect to the Registration
Statement, the Base Prospectus, any Preliminary Prospectus or the
Final Prospectus shall be deemed to refer to and include the filing
of any document under the Exchange Act after the Effective Date of
the Registration Statement or the issue date of the Base
Prospectus, any Preliminary Prospectus or the Final Prospectus, as
the case may be, deemed to be incorporated therein by reference.
Certain terms used herein are defined in Section 18
hereof.
1.
Representations and Warranties. The Company represents and
warrants to, and agrees with, each Underwriter as set forth below
in this Section 1.
(a) The Company
meets the requirements for use of Form S-3 under the Act and has
prepared and filed with the Commission a registration statement
(the file number of which is set forth in Schedule I hereto)
on Form S-3, including a related base
prospectus, for
registration under the Act of the offering and sale of the
Securities. Such Registration Statement, including any amendments
thereto filed prior to the Execution Time, has become effective.
The Company may have filed one or more amendments thereto,
including a Preliminary Prospectus, each of which has previously
been furnished to you. The Company will next file with the
Commission a final term sheet as contemplated by Section 5(b)
hereof and a final prospectus supplement relating to the Securities
in accordance with Rules 415 and 424(b). As filed, such final
prospectus supplement shall contain all 430B Information, together
with all other such required information, and, except to the extent
the Representatives shall agree in writing to a modification, shall
be in all substantive respects in the form furnished to you prior
to the Execution Time or, to the extent not completed at the
Execution Time, shall contain only such specific additional
information and other changes (beyond that contained in the Base
Prospectus and any Preliminary Prospectus) as the Company has
advised you, prior to the Execution Time, will be included or made
therein. The Registration Statement, at the Execution Time, meets
the requirements set forth in Rule 415(a)(1)(x).
(b) On the
Effective Date, the Registration Statement did, and when the Final
Prospectus is first filed in accordance with Rule 424(b) and on the
Closing Date (as defined herein), the Final Prospectus (and any
supplement thereto) will, comply in all material respects with the
applicable requirements of the Act, the Exchange Act and the Trust
Indenture Act and the respective rules thereunder; on the Effective
Date and at the Execution Time, the Registration Statement did not
and will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading;
on the Effective Date and on the Closing Date the Indenture did or
will comply in all material respects with the applicable
requirements of the Trust Indenture Act and the rules thereunder;
and, on the date of any filing pursuant to Rule 424(b) and on the
Closing Date, the Final Prospectus (together with any supplement
thereto) will not include 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; provided , however ,
that the Company makes no representations or warranties as to
(i) that part of the Registration Statement which shall
constitute the Statement of Eligibility and Qualification (Form
T-1) under the Trust Indenture Act of the Trustee or (ii) the
information contained in or omitted from the Registration Statement
or the Final Prospectus (or any supplement thereto) in reliance
upon and in conformity with information furnished in writing to the
Company by or on behalf of any Underwriter through the
Representatives specifically for inclusion in the Registration
Statement or the Final Prospectus (or any supplement thereto), it
being understood and agreed that the only such information
furnished by or on behalf of any Underwriter consists of the
information described as such in Section 8 hereof.
(c) The Disclosure
Package did not, as of the time and date designated as the
“Applicable Time of Sale” in Schedule I hereto
(the “Applicable Time of Sale”), include an untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. The
preceding sentence does not apply to statements in or omissions
from the Disclosure Package based upon and in conformity with
written
2
information
furnished to the Company by any Underwriter through the
Representatives specifically for use therein, it being understood
and agreed that the only such information furnished by or on behalf
of any Underwriter consists of the information described as such in
Section 8 hereof.
(d) The Company
has not made and will not make (other than the final term sheet
prepared and filed pursuant to Section 5(b) hereof) any offer
relating to the Securities that would constitute a “free
writing prospectus” (as defined in Rule 405 under the
Act), without the prior consent of the Representatives; the Company
will comply with the requirements of Rule 433 under the Act
with respect to any such free writing prospectus; any such free
writing prospectus will not, as of its issue date and through the
Closing Date, include any information that is inconsistent with the
information contained in the Registration Statement, the Disclosure
Package and the Final Prospectus, and any such free writing
prospectus, when taken together with the information contained in
the Registration Statement, the Disclosure Package and the Final
Prospectus, did not, when issued or filed pursuant to Rule 433
under the Act, include an untrue statement of a material fact or
omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were
made, not misleading. For the purpose of clarity, nothing in this
Section 2(d) shall restrict the Company from making any filings
required in order to comply with its reporting obligations under
the Exchange Act or the rules and regulations of the Commission
promulgated thereunder.
(e) At the
earliest time after the filing of the Registration Statement that
the Company or another offering participant made a bona fide offer
of the Securities (within the meaning of Rule 164(h)(2)) of
the Securities Act and (y) as of the Execution Time (with such
date being used as the determination date for purposes of this
clause (y)), the Company was not and is not an Ineligible Issuer
(as defined in Rule 405), without taking account of any
determination by the Commission pursuant to Rule 405 that it
is not necessary that the Company be considered an Ineligible
Issuer.
(f) The Company is
not, and after giving effect to the offering and sale of the
Securities and the application of the proceeds thereof as described
in the Disclosure Package and the Final Prospectus will not be
required to register as an “investment company” under
the Investment Company Act.
(g) The Company
has not taken, directly or indirectly, any action designed to cause
or which has constituted or which might reasonably be expected to
cause or result, under the Exchange Act or otherwise, in the
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the
Securities.
(h) The Company
has been duly organized and is validly subsisting as a corporation
in good standing under the laws of the Commonwealth of Pennsylvania
with full power and authority under its articles of incorporation
and bylaws to own or lease, as the case may be, and to operate its
properties and conduct its business as described in the Disclosure
Package and the Final Prospectus, and is duly qualified to do
business as a foreign entity and is in good standing under the laws
of each jurisdiction which requires
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such
qualification, except where the failure to be so qualified would
not reasonably be expected to have a material adverse
effect.
(i) Except as
disclosed in the Company’s Form 10-K for the fiscal year
ended December 31, 2005, the Company does not have any significant
subsidiaries (as such term is defined in Rule 1.02 of
Regulation S-X promulgated under the Act).
(j) The statements
in the Disclosure Package and the Final Prospectus under the
headings “Description of the Bonds” and
“Description of the First and Refunding Mortgage Bonds”
fairly summarize the matters therein described.
(k) This Agreement
has been duly authorized, executed and delivered by the Company;
the Indenture has been duly authorized and, assuming due
authorization, execution and delivery of the Supplement by the
Trustee, when executed and delivered by the Company, will
constitute a legal, valid, binding instrument enforceable against
the Company in accordance with its terms (subject, as to the
enforcement of remedies, to applicable bankruptcy, reorganization,
insolvency, moratorium or other laws affecting creditors’
rights generally from time to time in effect and to general
principles of equity); the Securities have been duly authorized,
and, when executed and authenticated in accordance with the
provisions of the Indenture and delivered to and paid for by the
Underwriters, will have been duly executed and delivered by the
Company and will constitute the legal, valid and binding
obligations of the Company entitled to the benefits of the
Indenture (subject, as to the enforcement of remedies, to
applicable bankruptcy, insolvency, moratorium or other laws
affecting creditors’ rights generally from time to time in
effect and to general principles of equity).
(l) The
Pennsylvania Public Utility Commission has entered an appropriate
order authorizing the Company to issue and sell the Securities as
contemplated herein; such order is in full force and effect and no
proceeding has been initiated upon appeal from or to review the
effectiveness of such order. No other consent, approval,
authorization, filing with or order of any court or state or
federal governmental agency or body, including the Commission and
any applicable state regulatory authority, is required in
connection with the transactions contemplated herein or in the
Indenture, except such as will be obtained under the Act, the Trust
Indenture Act and the Pennsylvania Public Utility Code, and such as
may be required under the blue sky laws of any jurisdiction in
connection with the purchase and distribution of the Securities by
the Underwriters in the manner contemplated by this Agreement, the
Disclosure Package and the Final Prospectus.
(m) Neither the
execution and delivery of this Agreement, nor the consummation of
any of the transactions herein contemplated, nor the fulfillment of
the terms hereof will conflict with, result in a breach or
violation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company (other than the lien of the
Indenture) pursuant to, (i) the charter or bylaws of the
Company; (ii) the terms of any indenture, contract, lease,
mortgage, deed of trust, note agreement, loan agreement or other
agreement, obligation, condition, covenant or instrument to which
the Company is a party or bound or to which its property is
subject; or (iii) any statute, law, rule,
regulation,
4
judgment, order
or decree applicable to the Company of any court, regulatory body,
administrative agency, governmental body, arbitrator or other
authority having jurisdiction over the Company or any of its
subsidiaries or any of its or their properties.
(n) The Company
has good and sufficient title to all property described or referred
to in the Indenture and purported to be conveyed thereby, subject
only to the lien of the Indenture and excepted encumbrances as
therein defined (except as to property released from the lien of
the Indenture in connection with the sale or other disposition
thereof, and certain other exceptions which are not material in the
aggregate).
(o) The
consolidated historical financial statements and schedules of the
Company and its consolidated subsidiaries included or incorporated
by reference in the Disclosure Package and the Final Prospectus
present fairly in all material respects the financial condition,
results of operations and cash flows of the Company as of the date
and for the periods indicated, comply as to form with the
applicable accounting requirements of the Act and have been
prepared in conformity with generally accepted accounting
principles.
(p) No action,
suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Company or any of
its subsidiaries or its or their property is pending or, to the
best knowledge of the Company, threatened that (i) could reasonably
be expected to have a material adverse effect on the performance of
this Agreement or the Indenture, or the consummation of any of the
transactions contemplated hereby or thereby; or (ii) could
reasonably be expected to have a material adverse effect on the
financial condition, business or properties of the Company and its
subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set
forth in or contemplated in the Disclosure Package and the Final
Prospectus (exclusive of any amendment or supplement
thereto).
(q)
PricewaterhouseCoopers LLP, are independent registered public
accountants with respect to the Company within the meaning of the
Act and the applicable published rules and regulations
thereunder.
Any certificate
signed by any officer of the Company and delivered to the
Representatives or counsel for the Underwriters in connection with
the offering of the Securities shall be deemed a representation and
warranty by the Company, as to matters covered thereby, to each
Underwriter.
2.
Purchase and Sale. Subject to the terms and conditions and
in reliance upon the representations and warranties herein set
forth, the Company agrees to sell to each Underwriter, and each
Underwriter agrees, severally and not jointly, to purchase from the
Company, at the purchase price set forth opposite its name in
Schedule II hereto, the principal amount of the Securities set
forth opposite such Underwriter’s name in Schedule II
hereto.
3.
Delivery and Payment. Delivery of and payment for the
Securities shall be made on the date and at the time specified in
Schedule I hereto or at such time on such later date not more
than three Business Days after the foregoing date as the
Representatives shall
5
designate,
which date and time may be postponed by agreement between the
Representatives and the Company or as provided in Section 9
hereof (such date and time of delivery and payment for the
Securities being herein called the “Closing Date”).
Delivery of the Securities shall be made to the Representatives for
the respective accounts of the several Underwriters against payment
by the several Underwriters through the Representatives of the
purchase price thereof to or upon the order of the Company by wire
transfer payable in same-day funds to an account specified by the
Company. Delivery of the Securities shall be made through the
facilities of The Depository Trust Company unless the
Representatives shall otherwise instruct.
4.
Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Securities for sale to the public
as set forth in the Final Prospectus, the Preliminary Prospectus
and the final term sheet contemplated by Section 5(b)
hereof.
5.
Agreements. The Company agrees with the several Underwriters
that:
(a) Prior to the
termination of the offering of the Securities, the Company will not
file any amendment of the Registration Statement or supplement
(including the Final Prospectus or any Preliminary Prospectus) to
the Base Prospectus or any Rule 462(b) Registration Statement
unless the Company has furnished you a copy for your review prior
to filing and will not file any such proposed amendment or
supplement to which you reasonably object. The Company will cause
the Final Prospectus, properly completed, and any supplement
thereto to be filed with the Commission pursuant to the applicable
paragraph of Rule 424(b) within the time period prescribed and will
provide evidence satisfactory to the Representatives of such timely
filing. The Company will promptly advise the Representatives
(1) when the Final Prospectus, and any supplement thereto,
shall have been filed (if required) with the Commission pursuant to
Rule 424(b) or when any Rule 462(b) Registration Statement shall
have been filed with the Commission, (2) when, prior to
termination of the offering of the Securities, any amendment to the
Registration Statement shall have been filed or become effective,
(3) of any request by the Commission or its staff for any
amendment of the Registration Statement, or any Rule 462(b)
Registration Statement, or for any supplement to the Final
Prospectus or for any additional information, (4) of the
issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the institution or
threatening of any proceeding for that purpose and (5) of the
receipt by the Company of any notification with respect to the
suspension of the qualification of the Securities for sale in any
jurisdiction or the institution or threatening of any proceeding
for such purpose. The Company will use its best efforts to prevent
the issuance of any such stop order or the suspension of any such
qualification and, if issued, to obtain as soon as possible the
withdrawal thereof.
(b) The Company
shall prepare a final term sheet, containing solely a description
of the Securities, substantially in the form of Annex I hereto and
approved by the Representatives, and shall file such term sheet
pursuant to Rule 433(d) under the Act within the time period
prescribed by such rule; and shall file promptly all other material
required to be filed by the Company with the Commission pursuant to
Rule 433(d) under the Act.
6
(c) each
Underwriter, severally and not jointly, represents and agrees that,
without the prior consent of the Company and the Representatives,
it has not made and will not make any offer relating to the
Securities that would constitute a “free writing
prospectus” (as defined in Rule 405 under the Act),
other than the final term sheet prepared and filed pursuant to
Section 5(b) hereof or any free writing prospectus that is not
required to be filed by the Company pursuant to Rule 433
(including a preliminary Bloomberg screen containing substantially
the same information, but in any event not more information, than
the final term sheet prepared and filed pursuant to
Section 5(b)).
(d) If, at any
time when a prospectus relating to the Securities is required to be
delivered under the Act (including circumstances when such
requirement may be satisfied pursuant to Rule 172), any event
occurs as a result of which the Final Prospectus as then
supplemented would include any untrue statement of a material fact
or omit to state any material fact necessary to make the statements
therein in the light of the circumstances under which they were
made not misleading, or if it shall be necessary to amend the
Registration Statement or supplement the Final Prospectus to comply
with the Act or the Exchange Act or the respective rules
thereunder, the Company promptly will (1) notify the
Representatives of such event, (2) prepare and file with the
Commission, subject to the second sentence of paragraph (a) of
this Section 5, an amendment or supplement which will correct
such statement or omission or effect such compliance and
(3) supply any supplemented Final Prospectus to you in such
quantities as you may reasonably request. If, prior to the Closing
Date, there occurs an event or development as a result of which the
Disclosure Package would include an untrue statement of a material
fact or would omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances when
the Disclosure Package is delivered to a purchaser, not misleading,
the Company promptly will notify the Representatives so that any
use of the Disclosure Package may cease until it is amended or
supplemented, and will promptly prepare an amendment or supplement
that will correct such statement or omission.
(e) As soon as
practicable, the Company will make generally available to its
security holders and to the Representatives an earnings statement
or statements of the Company and its subsidiaries which will
satisfy the provisions of Section 11(a) of the Act and
Rule 158 under the Act.
(f) The Company
will furnish to the Representatives and counsel for the
Underwriters, without charge, signed copies of the Registration
Statement (including exhibits thereto) and to each other
Underwriter a copy of the Registration Statement (without exhibits
thereto) and, so long as delivery of a prospectus by an Underwriter
or dealer may be required by the Act (including circumstances when
such requirement may be satisfied pursuant to Rule 172), as
many copies of each Preliminary Prospectus, the Final Prospectus
and each Issuer Free Writing Prospectus and any supplement thereto
as the Representatives may reasonably request. The Company will pay
the expenses of printing or other production of all documents
relating to the offering.
(g) The Company
will arrange, if necessary, for the qualification of the Securities
for sale under the laws of such jurisdictions as the
Representatives may
7
designate, will
maintain such qualifications in effect so long as required for the
distribution of the Securities and will pay any fee of the NASD, in
connection with its review of the offering; provided that in no
event shall the Company be obligated to qualify to do business in
any jurisdiction where it is not now so qualified or to take any
action that would subject it to service of process in suits, other
than those arising out of the offering or sale of the Securities,
in any jurisdiction where it is not now so subject.
(h) The Company
will not, without the prior written consent of the Representatives,
offer, sell, contract to sell, pledge, or otherwise dispose of, (or
enter into any transaction which is designed to, or might
reasonably be expected to, result in the disposition (whether by
actual disposition or effective economic disposition due to cash
settlement or otherwise) by the Company, directly or indirectly, or
announce the offering of, any long-term debt securities issued or
guaranteed by the Company or preferred stock (other than the
Securities), until the Business Day set forth on Schedule I
hereto.
(i) The Company
will not take, directly or indirectly, any action designed to or
that would constitute or that might reasonably be expected to cause
or result in, under the Exchange Act or otherwise, stabilization or
manipulation of the price of any security of the Company to
facilitate the sale or resale of the Securities.
(j) The Company
agrees to pay the costs and expenses relating to the following
matters: (i) the preparation of the Supplement, the issuance
of the Securities and the fees of the Trustee; (ii) the
preparation, printing or reproduction and filing of the
Registration Statement, each Preliminary Prospectus and Final
Prospectus, and each amendment or supplement to either of them, and
any Issuer Free Writing Prospectus; (iii) the printing (or
reproduction) and delivery (including postage, air freight charges
and charges for counting and packaging) of such copies of the
Preliminary Prospectus, the Final Prospectus, and all amendments or
supplements to either of them, as may, in each case, be reasonably
requested for use in connection with the offering and sale of the
Securities; (iv) the preparation, printing, authentication,
issuance and delivery of certificates for the Securities, including
any stamp or transfer taxes in connection with the original
issuance and sale of the Securities; (v) the printing (or
reproduction) and delivery of this Agreement, any blue sky
memorandum and all other agreements or documents printed (or
reproduced) and delivered in connection with the offering of the
Securities; (vi) any registration or qualification of the
Securities for offer and sale under the securities or blue sky laws
of the several states (including filing fees and the reasonable
fees and expenses of counsel for the Underwriters relating to such
registration and qualification); (vii) the transportation and
other expenses incurred by or on behalf of Company representatives
in connection with presentations to prospective purchasers of the
Securities; (viii) the fees and expenses of the
Company’s accountants and counsel (including local and
special counsel); (ix) the fees and expenses of any rating
agencies rating the Securities and (x) all other costs and
expenses incident to the performance by the Company of its
obligations hereunder.
6.
Conditions to the Obligations of the Underwriters. The
obligations of the Underwriters to purchase the Securities shall be
subject to the accuracy of the representations and warranties on
the part of the Company contained herein as of the Execution Time
and the
8
Closing Date,
to the accuracy of the statements of the Company made in any
certificates pursuant to the provisions hereof, to the performance
by the Company of its obligations hereunder and to the following
additional conditions:
(a) The Final
Prospectus, and any supplement thereto, shall have been filed in
the manner and within the time period required by Rule 424(b);
the final term sheet contemplated by Section 5(b) hereto, and any
other material required to be filed by the Company pursuant to Rule
433(d) under the Act, shall have been filed with the Commission
within the applicable time periods prescribed for such filings by
Rule 433; and no stop order suspending the effectiveness of
the Registration Statement or any notice by the Commission
objecting to its use shall have been issued and no proceedings for
that purpose shall have been instituted or threatened.
(b) Ballard Spahr
Andrews & Ingersoll, LLP, counsel for the Company, shall have
furnished to the Representatives its opinion, dated the Closing
Date and addressed to the Representatives, to the effect
that:
(i) the Company
has been duly organized and is validly subsisting as a corporation
under the laws of the Commonwealth of Pennsylvania, with full
corporate power and authority under its articles of incorporation
to own or lease, as the case may be, and to operate its properties
and conduct its business as described in the Disclosure Package and
the Final Prospectus;
(ii) the Indenture
is in due and proper form and has been duly and validly authorized
by the necessary corporate action, by orders duly entered from time
to time by the Pennsylvania Public Utility Commission and has been
qualified under the Trust Indenture Act and no other authorization,
approv
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