ALLEGHENY ENERGY, INC.
DEBT SECURITIES
---------------
UNDERWRITING AGREEMENT
----------------------
August 15, 2000
TO THE REPRESENTATIVES OF THE
SEVERAL UNDERWRITERS NAMED IN
THE RESPECTIVE PRICING AGREEMENTS
HEREINAFTER DESCRIBED
Ladies and Gentlemen:
From time to time Allegheny Energy, Inc., a Maryland corporation (the
"Company"), proposes to enter into one or more Pricing Agreements (each a
"Pricing Agreement") in the form of Annex I hereto, with such additions and
deletions as the parties thereto may determine, and, subject to the terms and
conditions stated herein and therein, to issue and sell to the firms named in
Schedule I to the applicable Pricing Agreement (such firms constituting the
"Underwriters" with respect to such Pricing Agreement and the securities
specified therein) certain of its debt securities (the "Securities") specified
in Schedule II to such Pricing Agreement (with respect to such Pricing
Agreement, the "Designated Securities").
The terms and rights of any particular issuance of Designated
Securities shall be as specified in the Pricing Agreement relating thereto and
in or pursuant to the indenture (the "Indenture") identified in such Pricing
Agreement.
1. Particular sales of Designated Securities may be made from time to
time to the Underwriters of such Securities, for whom the firms designated as
representatives of the Underwriters of such Securities in the Pricing Agreement
relating thereto will act as representatives (the "Representatives"). The term
"Representatives" also refers to a single firm acting as sole representative of
the Underwriters and to an Underwriter or Underwriters who act without any firm
being designated as its or their representatives. This Underwriting Agreement
shall not be construed as an obligation of the Company to sell any of the
Securities or as an obligation of any of the Underwriters to purchase the
Securities. The obligation of the Company to issue and sell any of the
Securities and the obligation of any of the Underwriters to purchase any of the
Securities shall be evidenced by the Pricing Agreement with respect to the
Designated Securities specified therein. Each Pricing Agreement shall specify
the aggregate principal amount of such Designated Securities, the initial public
offering price of such Designated Securities, the purchase price to the
Underwriters of such Designated Securities, the names of the Underwriters of
such Designated Securities, the names of the Representatives of such
Underwriters and the principal amount of such Designated Securities to be
purchased by each Underwriter and shall set forth the date, time and manner of
delivery of such Designated Securities and payment therefor. The Pricing
Agreement shall also specify (to the extent not set forth in the Indenture and
the registration statement and prospectus with respect thereto) the terms of
such Designated Securities. A Pricing Agreement shall be in the form of
<PAGE>
an executed writing (which may be in counterparts), and may be evidenced by an
exchange of telegraphic communications or any other rapid transmission device
designed to produce a written record of communications transmitted. The
obligations of the Underwriters under this Agreement and each Pricing Agreement
shall be several and not joint.
2. The Company represents and warrants to, and agrees with, each of the
Underwriters that:
(a) A registration statement on Form S-3 (File No. 333-41638) (the
"Initial Registration Statement") in respect of the Securities has been
filed with the Securities and Exchange Commission (the "Commission"); the
Initial Registration Statement and any post-effective amendment thereto,
each in the form heretofore delivered or to be delivered to the
Representatives and, excluding exhibits to the Initial Registration
Statement, but including all documents incorporated by reference in the
prospectus contained therein, to the Representatives for each of the other
Underwriters, have been declared effective by the Commission in such form;
other than a registration statement, if any, increasing the size of the
offering (a "Rule 462(b) Registration Statement"), filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended (the "Act"), which
became effective upon filing, no other document with respect to the Initial
Registration Statement or document incorporated by reference therein has
heretofore been filed or transmitted for filing with the Commission (other
than prospectuses filed pursuant to Rule 424(b) of the rules and
regulations of the Commission under the Act); and no stop order suspending
the effectiveness of the Initial Registration Statement, any post-effective
amendment thereto or the Rule 462(b) Registration Statement, if any, has
been issued and no proceeding for that purpose has been initiated or
threatened by the Commission (any preliminary prospectus included in the
Initial Registration Statement or filed with the Commission pursuant to
Rule 424(a) under the Act is hereinafter called a "Preliminary Prospectus";
the various parts of the Initial Registration Statement, any post-effective
amendment thereto and the Rule 462(b) Registration Statement, if any,
including all exhibits thereto and the documents incorporated by reference
in the prospectus contained in the Initial Registration Statement at the
time such part of the Initial Registration Statement became effective but
excluding Form T-1, each as amended at the time such part of the Initial
Registration Statement became effective or such part of the Rule 462(b)
Registration Statement, if any, became or hereafter becomes effective, are
hereinafter collectively called the "Registration Statement"; the
prospectus relating to the Securities, in the form in which it has most
recently been filed, or transmitted for filing, with the Commission on or
prior to the date of this Agreement, being hereinafter called the
"Prospectus"; any reference herein to any Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to the applicable form under the
Act, as of the date of such Preliminary Prospectus or Prospectus, as the
case may be; any reference to any amendment or supplement to any
Preliminary Prospectus or the Prospectus shall be deemed to refer to and
include any documents filed after the date of such Preliminary Prospectus
or Prospectus, as the case may be, under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and incorporated by reference in
such Preliminary Prospectus or Prospectus, as the case may be; any
reference to any amendment to the Initial Registration Statement shall be
deemed to refer to and include any annual report of the Company filed
pursuant to Sections 13(a) or 15(d) of the Exchange Act after the effective
date of the Initial Registration Statement that is incorporated by
reference in the Registration Statement; and any reference to the
2
<PAGE>
Prospectus as amended or supplemented shall be deemed to refer to the
Prospectus as amended or supplemented in relation to the applicable
Designated Securities in the form in which it is filed with the Commission
pursuant to Rule 424(b) under the Act in accordance with Section 5(a)
hereof, including any documents incorporated by reference therein as of the
date of such filing);
(b) The documents incorporated by reference in the Prospectus, when
they became effective or were filed with the Commission, as the case may
be, conformed in all material respects to the requirements of the Act or
the Exchange Act, as applicable, and the rules and regulations of the
Commission thereunder, and none of such documents contained an untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading; and any further documents so filed and incorporated by
reference in the Prospectus or any further amendment or supplement thereto,
when such documents become effective or are filed with the Commission, as
the case may be, will conform in all material respects to the requirements
of the Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder 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; provided, however, that this representation and warranty shall
not apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by an
Underwriter of Designated Securities through the Representatives expressly
for use in the Prospectus as amended or supplemented relating to such
Securities;
(c) The Registration Statement and the Prospectus conform, and any
further amendments or supplements to the Registration Statement or the
Prospectus will conform, in all material respects to the requirements of
the Act and the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act") and the rules and regulations of the Commission thereunder
and do not and will not, as of the applicable effective date as to the
Registration Statement and any amendment thereto and as of the Time of
Delivery of the Designated Securities as to the Prospectus and any
amendment or supplement thereto, 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; provided, however,
that this representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information
furnished in writing to the Company by an Underwriter of Designated
Securities through the Representatives expressly for use in the Prospectus
as amended or supplemented relating to such Securities;
(d) Neither the Company nor any of its subsidiaries has sustained
since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus any loss or interference with
its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental
action, order or decree that would be material to the Company and its
subsidiaries taken as a whole, otherwise than as set forth or contemplated
in the Prospectus; and, since the respective dates as of which information
is given in the Registration Statement and the Prospectus, there has not
been any material decrease in the capital stock, any material increase in
the consolidated long-term debt of the Company or any material adverse
change, or any development involving a prospective
3
<PAGE>
material adverse change, in or affecting the general affairs, management,
financial position, stockholders' equity or results of operations of the
Company and its subsidiaries, taken as a whole, otherwise than as set forth
or contemplated in the Prospectus;
(e) The Company has been duly incorporated and is existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, with corporate power and authority to own its properties and
conduct its business as described in the Prospectus;
(f) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company
have been duly and validly authorized and issued and are fully paid and
non-assessable;
(g) The Securities have been duly authorized, and, when Designated
Securities are issued and delivered pursuant to this Agreement and the
Pricing Agreement with respect to such Designated Securities, such
Designated Securities will have been duly executed, authenticated, issued
and delivered and will constitute valid and legally binding obligations of
the Company entitled to the benefits provided by the Indenture, which will
be substantially in the form filed as an exhibit to the Registration
Statement; the Indenture has been duly authorized and duly qualified under
the Trust Indenture Act and, at the Time of Delivery for such Designated
Securities (as defined in Section 4 hereof), the Indenture will constitute
a valid and legally binding instrument of the Company, enforceable in
accordance with its terms, subject to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles; and the
Indenture conforms, and the Designated Securities will conform, in all
material respects to the descriptions thereof contained in the Prospectus
as amended or supplemented with respect to such Designated Securities;
(h) The issue and sale of the Securities and the compliance by the
Company with all of the provisions of the Securities, the Indenture, this
Agreement and any Pricing Agreement, and the consummation of the
transactions herein and therein contemplated will not conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other material agreement or instrument to which the Company is
a party or by which the Company is bound or to which any of the property or
assets of the Company is subject, nor will such action result in any
violation of the provisions of the Certificate of Incorporation or By-laws
of the Company or any statute or any order, rule or regulation of any court
or governmental agency or body having jurisdiction over the Company or any
of its properties; and no consent, approval, authorization, order,
registration or qualification of or with any such court or governmental
agency or body is required for the issue and sale of the Securities or the
consummation by the Company of the transactions contemplated by this
Agreement or any Pricing Agreement or the Indenture, except such as have
been, or will have been prior to the Time of Delivery, obtained under the
Act and the Trust Indenture Act, such consents, approvals, authorizations,
registrations or qualifications as may be required under state securities
or Blue Sky laws in connection with the purchase and distribution of the
Securities by the Underwriters and such approval as may be required by
applicable public utility commissions and under the Public Utility Holding
Company Act of 1935;
4
<PAGE>
(i) The statements set forth in the Prospectus under the caption
"Description of Securities We May Offer" and in any prospectus supplement
under the caption "Description of Notes", insofar as they purport to
constitute a summary of the terms of the Securities, and in the Prospectus
under the caption "Plan of Distribution" and in any prospectus supplement
under the caption, "Underwriting" insofar as they purport to describe the
provisions of the laws and documents referred to therein, are accurate and
complete in all material respects;
(j) Neither the Company nor any of its subsidiaries is in violation of
its Certificate of Incorporation or By-laws or in default in the
performance or observance of any material obligation, agreement, covenant
or condition contained in any material indenture, mortgage, deed of trust,
loan agreement, lease or other agreement or instrument to which it is a
party or by which it or any of its properties may be bound;
(k) Other than as set forth in the Prospectus, as amended or
supplemented, there are no legal or governmental proceedings pending to
which the Company or any of its subsidiaries is a party or of which any
property of the Company or any of its subsidiaries is the subject which is
reasonably likely to have a material adverse effect on the current or
future consolidated financial position, stockholders' equity or results of
operations of the Company and its subsidiaries; and, to the best of the
Company's knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others;
(l) PricewaterhouseCoopers LLP, who have certified certain financial
statements of the Company and its subsidiaries, are independent public
accountants as required by the Act and the rules and regulations of the
Commission thereunder;
(m) This Agreement and the Pricing Agreement with respect to the
Designated Securities have been duly authorized, executed and delivered by
the Company.
3. Upon the execution of the Pricing Agreement applicable to any
Designated Securities and authorization by the Representatives of the release of
such Designated Securities, the several Underwriters propose to offer such
Designated Securities for sale upon the terms and conditions set forth in the
Prospectus as amended or supplemented.
4. Designated Securities to be purchased by each Underwriter pursuant
to the Pricing Agreement relating thereto, in the form specified in such Pricing
Agreement, and in such authorized denominations and registered in such names as
the Representatives may request upon at least forty-eight hours' prior notice to
the Company, shall be delivered by or on behalf of the Company to the
Representatives for the account of such Underwriter, against payment by such
Underwriter or on its behalf of the purchase price therefor by wire transfer of
Federal (same-day) funds to the account specified by the Company to the
Representatives at least forty-eight hours in advance or at such other place and
time and date as the Representatives and the Company may agree upon in writing,
such time and date being herein called the "Time of Delivery" for such
Securities.
5. The Company agrees with each of the Underwriters of any Designated
Securities:
(a) To prepare the Prospectus as amended or supplemented in relation
to the applicable Designated Securities in a form approved by the
Representatives (such approval not to be unreasonably withheld) and to file
such Prospectus pursuant to Rule 424(b) under the Act not later than the
Commission's close of business on the second business day following the
execution and delivery of the Pricing Agreement relating to
5
<PAGE>
the applicable Designated Securities or, if applicable, such earlier time
as may be required by Rule 424(b); to make no further amendment or any
supplement to the Registration Statement or Prospectus as amended or
supplemented after the date of the Pricing Agreement relating to such
Securities and prior to the Time of Delivery for such Securities, other
than periodic requirements under the Exchange Act not relating to the
Securities or their offer and sale which shall be disapproved by the
Representatives for such Securities acting reasonably promptly after
reasonable notice thereof; to advise the Representatives promptly of any
such amendment or supplement after such Time of Delivery and furnish the
Representatives with copies thereof; to file promptly all reports and any
definitive proxy or information statements required to be filed by the
Company with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d)
of the Exchange Act for so long as the delivery of a prospectus is required
in connection with the offering or sale of such Securities, and during such
same period to advise the Representatives, promptly after it receives
notice thereof, of the time when any amendment to the Registration
Statement has been filed or becomes effective or any supplement to the
Prospectus or any amended Prospectus has been filed with the Commission, of
the issuance by the Commission of any stop order or of any order preventing
or suspending the use of any prospectus relating to the Securities, of the
suspension of the qualification of such Securities for offering or sale in
any jurisdiction, of the initiation or threatening of any proceeding for
any such purpose, or of any request by the Commission for the amending or
supplementing of the Registration Statement or Prospectus or for additional
information; and, in the event of the issuance of any such stop order or of
any such order preventing or suspending the use of any prospectus relating
to the Securities or suspending any such qualification, to promptly use its
best efforts to obtain the withdrawal of such order;
(b) Promptly from time to time to take such action as the
Representatives may reasonably request to qualify such Securities for
offering and sale under the securities laws of such U.S. jurisdictions as
the Representatives may request and to comply with such laws so as to
permit the continuance of sales and dealings therein in such jurisdictions
for as long as may be necessary to complete the distribution of such
Securities, provided that in connection therewith the Company shall not be
required to qualify as a foreign corporation or to file a general consent
to service of process in any jurisdiction;
(c) Prior to 10:00 a.m., New York City time, on the New York Business
Day next succeeding the date of this Agreement and from time to time, to
furnish the Underwriters with copies of the Prospectus as amended or
supplemented in such quantities as the Representatives may reasonably
request, and, if the delivery of a prospectus is required at any time in
connection with the offering or sale of the Securities and if at such time
any event shall have occurred as a result of which the Prospectus as then
amended or supplemented would include an untrue statement of a 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 when such Prospectus is delivered, not misleading, or, if for any
other reason it shall be necessary during such same period to amend or
supplement the Prospectus or to file under the Exchange Act any document
incorporated by reference in the Prospectus in order to comply with the
Act, the Exchange Act or the Trust Indenture Act, to notify the
Representatives and upon their request to file such document and to prepare
and furnish without charge to each Underwriter and to any dealer in
securities as many copies as the Representatives may
6
<PAGE>
from time to time reasonably request of an amended Prospectus or a
supplement to the Prospectus which will correct such statement or omission
or effect such compliance;
(d) To make generally available to its securityholders as soon as
practicable, but in any event not later than eighteen months after the
effective date of the Registration Statement (as defined in Rule 158(c)
under the Act), an earnings statement of the Company and its subsidiaries
(which need not be audited) complying with Section 11(a) of the Act and the
rules and regulations of the Commission thereunder (including, at the
option of the Company, Rule 158);
(e) During the period beginning from the date of the Pricing Agreement
for such Designated Securities and continuing to and including the later of
(i) the termination of trading restrictions for such Designated Securities,
as notified to the Company by the Representatives and (ii) the Time of
Delivery for such Designated Securities, not to offer, sell, contract to
sell or otherwise dispose of any debt securities of the Company which
mature more than one year after such Time of Delivery and which are
substantially similar to such Designated Securities, without the prior
written consent of the Representatives; and
(f) If the Company elects to rely upon Rule 462(b), the Company shall
file a Rule 462(b) Registration Statement with the Commission in compliance
with Rule 462(b) by 10:00 P.M., Washington, D.C. time, on the date of the
Pricing Agreement, and the Company shall at the time of filing either pay
to the Commission the filing fee for the Rule 462(b) Registration Statement
or give irrevocable instructions for the payment of such fee pursuant to
Rule 111(b) under the Act.
6. The Company covenants and agrees with the several Underwriters that
the Company will pay or cause to be paid the following: (i) the fees,
disbursements and expenses of the Company's counsel and accountants in
connection with the registration of the Securities under the Act and all other
expenses in connection with the preparation, printing and filing of the
Registration Statement, any Preliminary Prospectus and the Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and dealers; (ii) the cost of printing or producing
any Agreement among Underwriters, this Agreement, any Pricing Agreement, any
Indenture, any Blue Sky and Legal Investment Memoranda, closing documents and
any other documents in connection with the offering, purchase, sale and delivery
of the Securities; (iii) all expenses in connection with the qualification of
the Securities for offering and sale under state securities laws as provided in
Section 5(b) hereof, including the reasonable fees and disbursements of counsel
for the Underwriters in connection with such qualification and in connection
with the Blue Sky and Legal Investment Surveys; (iv) any fees charged by
securities rating services for rating the Securities; (v) any filing fees
incident to, and the reasonable fees and disbursements of counsel for the
Underwriters in connection with, any required review by the National Association
of Securities Dealers, Inc. of the terms of the sale of the Securities; (vi) the
cost of preparing the Securities; (vii) the fees and expenses of any Trustee and
any agent of any Trustee and the fees and disbursements of counsel for any
Trustee in connection with any Indenture and the Securities; and (viii) all
other costs and expenses incident to the performance of its obligations
hereunder which are not otherwise specifically provided for in this Section. It
is understood, however, that, except as provided in this Section, and Sections 8
and 11 hereof, the Underwriters will pay all of their own costs and expenses,
including the fees of their counsel, transfer taxes on resale of any of the
Securities by them, and any advertising expenses connected with any offers they
may make.
7
<PAGE>
7. The obligations of the Underwriters of any Designated Securities
under the Pricing Agreement relating to such Designated Securities shall be
subject, in the discretion of the Representatives, to the condition that all
representations and warranties and other statements of the Company in or
incorporated by reference in the Pricing Agreement relating to such Designated
Securities are, at and as of the Time of Delivery for such Designated
Securities, true and correct, the condition that the Company shall have
performed all of its obligations hereunder theretofore to be performed, and the
following additional conditions:
(a) The Prospectus as amended or supplemented in relation to the
applicable Designated Securities shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed for such
filing by the rules and regulations under the Act and in accordance with Section
5(a) hereof; if the Company has elected to rely upon Rule 462(b), the Rule
462(b) Registration Statement shall have become effective by 10:00 P.M.,
Washington, D.C. time, on the date of the Pricing Agreement; no stop order
suspending the effectiveness of the Registration Statement or any part thereof
shall have been issued and no proceeding for that purpose shall have been
initiated or threatened by the Commission; and all requests for additional
information on the part of the Commission shall have been complied with to the
Representatives' reasonable satisfaction;
(b) Counsel for the Underwriters shall have furnished to the
Representatives such written opinion or opinions (a draft of each such opinion
is attached as Annex II(a) hereto), dated the Time of Delivery for such
Designated Securities, with respect to the matters covered in subsection (d)
below as well as such other related matters as the Representatives may
reasonably request, and such counsel shall have received such papers and
information as they may reasonably request to enable them to pass upon such
matters;
(c) The Company's corporate counsel, which counsel shall be reasonably
satisfactory to the Representatives, shall have furnished to the Representatives
his written opinion (a draft of such opinion is attached as Annex II(b) hereto),
dated the Time of Delivery for such Designated Securities, in form and substance
reasonably satisfactory to the Representatives, to the effect that:
(i) The Company has been duly incorporated and is existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, with full corporate power to own and operate its properties
and to carry on its business as described in the Prospectus as amended or
supplemented;
(ii) To the best of such counsel's knowledge, other than as set forth
in the Prospectus, as amended or supplemented, there are no material
pending legal proceedings to which the Company is or may be a party or of
which property of the Company is or may be the subject which depart from
the ordinary routine litigation incident to the kinds of business conducted
by the Company;
(iii) This Agreement and the Pricing Agreement with respect to the
Designated Securities have been duly authorized, executed and delivered by
the Company;
(iv) The Designated Securities have been duly authorized, executed,
authenticated, issued and delivered and constitute valid and legally
binding obligations of the Company entitled to the benefits provided by the
Indenture, subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or
affecting creditors' rights and to general
8
<PAGE>
equitable principles; and the Designated Securities and the Indenture
conform in all material respects to the descriptions thereof in the
Prospectus as amended or supplemented;
(v) The Indenture has been duly authorized, executed and delivered by
the Company and constitutes a valid and legally binding instrument of the
Company, enforceable in accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization and other laws of
general applicability relating to or affecting creditors' rights and to
general equity principles; and the Indenture has been duly qualified under
the Trust Indenture Act;
(vi) The issue and sale of the Designated Securities and the
compliance by the Company with all of the provisions of the Designated
Securities, the Indenture, this Agreement and the Pricing Agreement with
respect to the Designated Securities and the consummation of the
transactions herein and therein contemplated will not conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any material indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument known to such
counsel to which the Company is a party or by which the Company is bound or
to which any of the property or assets of the Company is subject, nor will
such actions result in any violation of the provisions of the Certificate
of Incorporation or By-laws of the Company or any statute or any order,
rule or regulation known to such counsel of any court or governmental
agency or body having jurisdiction over the Company or any of its
properties;
(vii) No consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body is
required for the issue and sale of the Designated Securities or the
consummation by the Company of the transactions contemplated by this
Agreement or such Pricing Agreement or the Indenture, except such as have
been obtained under the Act, the Public Utility Holding Act of 1935 and the
Trust Indenture Act and such consents, approvals, authorizations, orders,
registrations or qualifications as may be required under state securities
or Blue Sky laws in connection with the purchase and distribution of the
Designated Securities by the Underwriters;
(viii) The statements set forth in the Prospectus under the caption
"Description of Securities We May Offer", and in any prospectus supplement
under the caption "Description of Notes" insofar as they purport to
constitute a summary of the provisions of the Indenture and in the
Prospectus under the caption "Plan of Distribution" and in a prospectus
supplement under the caption "Underwriting", insofar as they purport to
describe the provisions of the laws and documents referred to therein, are
accurate, and complete in all material respects;
(ix) The documents incorporated by reference in the Prospectus as
amended or supplemented (other than the financial statements and related
schedules therein, as to which such counsel need express no opinion), when
they became effective or were filed with the Commission, as the case may
be, complied as to form in all material respects with the requirements of
the Act or the Exchange Act, as applicable, and the rules and regulations
of the Commission thereunder; and he has no reason to believe that any of
such
9
<PAGE>
documents (other than the financial statements and related schedules
therein, as to which such counsel need express no opinion), when they
became effective or were so filed, as the case may be, contained, in the
case of a registration statement which became effective under the Act, an
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading, or, in the case of other documents which were filed under
the Act or the Exchange Act with the Commission, an untrue statement of a
material fact or omitted to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which
they were made when such documents were so filed, not misleading; and
(x) The Registration Statement and the Prospectus as amended or
supplemented and any further amendments and supplements thereto made by the
Company prior to the Time of Delivery for the Designated Securities (other
than the financial statements and related schedules therein, as to which
such counsel need express no opinion) comply as to form in all material
respects with the requirements of the Act and the Trust Indenture Act and
the rules and regulations thereunder; although they do not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement or the Prospectus, except for those
referred to in the opinion in subsection (x) of this Section 7(c), they
have no reason to believe that, as of its effective date, the Registration
Statement or any further amendment thereto made by the Company prior to the
Time of Delivery (other than the financial statements and related schedules
therein, as to which such counsel need express no opinion) contained an
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading or that, as of its date, the Prospectus as amended or
supplemented or any further amendment or supplement thereto made by the
Company prior to the Time of Delivery (other than the financial statements
and related schedules therein, as to which such counsel need express no
opinion) contained an untrue statement of a material fact or omitted to
state a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading or
that, as of the Time of Delivery, either the Registration Statement or the
Prospectus as amended or supplemented or any further amendment or
supplement thereto made by the Company prior to the Time of Delivery (other
than the financial statements and related schedules therein, as to which
such counsel need express no opinion) contains an untrue statement of a
material fact or omits to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; and they do not know of any amendment to the
Registration Statement required to be filed or any contracts or other
documents of a character required to be filed as an exhibit to the
Registration Statement or required to be incorporated by reference into the
Prospectus as amended or supplemented or required to be described in the
Registration Statement or the Prospectus as amended or supplemented which
are not filed or incorporated by reference or described as required;
(d) The Company's outside counsel, which counsel shall be reasonably
satisfactory to the Representatives, shall have furnished to the Representatives
their written opinions (drafts
10
<PAGE>
of such opinions are attached as Annex II(c) hereto), dated the Time of Delivery
for such Designated Securities, in form and substance reasonably satisfactory to
the Representatives, to the effect that:
(i) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the jurisdiction of its
incorporation;
(ii) This Agreement and the Pricing Agreement with respect to the
Designated Securities have been duly authorized, executed and delivered by
the Company;
(iii) The Indenture has been duly authorized, executed and delivered
by the Company and duly qualified under the Trust Indenture Act and,
assuming due authorization, execution and delivery by the Trustee,
constitutes a 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 creditor's rights
and to general equity principles; and
(iv) The Designated Securities have been duly authorized, executed and
delivered by the Company and, assuming due authentication thereof by the
Trustee and upon payment therefor by the Underwriters in accordance with
the provisions of this Agreement and the Pricing Agreement, 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 creditor's rights and to general
equity principles.
Such Counsel shall also confirm to the Underwriters that on the
basis of the information such counsel gained in the course of the
performance of their services in connection with this offering of the
Designated Securities as described in such letter, considered in the light
of the experience such counsel has gained through their practice under the
Act, that in their opinion, each part of the Registration Statement, when
such part became effective, and the Prospectus, as amended and
supplemented, appeared on their face to be appropriately responsive in all
material respects to the requirements of the Act and the applicable rules
and regulations of the Commission thereunder; and further, that nothing
that came to their attention in the course of such review has caused them
to believe that any part of the Registration Statement, when such part
became effective, contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or
necessary to make the statements therein not misleading or that the
Prospectus, as amended or supplemented, as of the date of the Pricing
Agreement, contained any untrue statement of a material fact or omitted 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; and also, that nothing that has come to their attention in the
course of the procedures described in such letter has caused them to
believe that the Prospectus, as amended or supplemented, as of the date and
time of delivery of such counsel's letter, contained any untrue statement
of a material fact or omitted to state any material fact necessary in order
to make the statements therein, in the light of the circumstances under
11
<PAGE>
which they were made, not misleading. Such counsel may state that they do
not assume any responsibility for the accuracy, completeness or fairness of
the statements contained in the Registration Statement, or the Prospectus,
as amended and supplemented, except for those made in the Prospectus under
the caption "Description of Securities We May Offer" and in any prospectus
supplement under the caption "Description of the Notes" insofar as they
relate to the provisions of the Indenture; and also that they do not
express any opinion or belief as to the financial statements or other
financial data derived from accounting records contained in the Prospectus
as amended or supplemented.
(e) On the date of the Pricing Agreement for such Designated Securities
at a time prior to the execution of the Pricing Agreement with respect to such
Designated Securities and at the Time of Delivery for such Designated
Securities, the independent accountants of the Company who have certified the
financial statements of the Company and its subsidiaries included or
incorporated by reference in the Registration Statement shall have furnished to
the Representatives a letter, dated the same date as the Pricing Agreement, and
a letter dated such Time of Delivery, respectively, as to such matters as the
Representatives may reasonably request and in form and substance satisfactory to
the Representatives (the executed copy of the letter delivered upon execution of
this Agreement is attached as Annex I(a) hereto and a draft of the form of
letter to be delivered on the effective date of any post-effective amendment to
the Registration Statement and as of each Time of Delivery is attached as Annex
I(b) hereto);
(f) (i) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus as amended prior to the date of the
Pricing Agreement relating to the Designated Securities any loss or interference
with its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental action,
order or decree, otherwise than as set forth or contemplated in the Prospectus
as amended prior to the date of the Pricing Agreement relating to the Designated
Securities, and (ii) since the respective dates as of which information is given
in the Prospectus as amended prior to the date of the Pricing Agreement relating
to the Designated Securities there shall not have been any decrease in the
capital stock or any material increase in the consolidated long-term debt of the
Company and its subsidiaries on a consolidated basis or any change, or any
development involving a prospective change, in or affecting the general affairs,
management, financial position, stockholders' equity or results of operations of
the Company and its subsidiaries, otherwise than as set forth or contemplated in
the Prospectus as amended prior to the date of the Pricing Agreement relating to
the Designated Securities, the effect of which, in any such case described in
clause (i) or (ii), is in the judgment of the Representatives so material and
adverse as to make it impracticable or inadvisable to proceed with the public
offering or the delivery of the Designated Securities on the terms and in the
manner contemplated in the Prospectus as first amended or supplemented relating
to the Designated Securities;
(g) On or after the date of the Pricing Agreement relating to the
Designated Securities (i) no downgrading shall have occurred in the rating
accorded the Company's long-term debt securities or preferred stock by any
"nationally recognized statistical rating organization", as that term is defined
by the Commission for purposes of Rule 436(g)(2) under the Act, and (ii) no such
organization shall have publicly announced that it has under surveillance or
review, with possible negative implications, its rating of any of the Company's
long-term debt securities or preferred stock
12
<PAGE>
(h) On or after the date of the Pricing Agreement relating to the
Designated Securities there shall not have occurred any of the following: (i) a
suspension or material limitation in trading in securities generally on the New
York Stock Exchange; (ii) a suspension or material limitation in trading in the
Company's securities on the New York Stock Exchange; (iii) a general moratorium
on commercial banking activities declared by either Federal or New York State
authorities; or (iv) the outbreak or escalation of hostilities involving the
United States or the declaration by the United States of a national emergency or
war, if the effect of any such event specified in this clause (iv) in the
judgment of the Representatives makes it impracticable or inadvisable to proceed
with the public offering or the delivery of the Designated Securities on the
terms and in the manner contemplated in the Prospectus as first amended or
supplemented relating to the Designated Securities;
(i) The Company shall have complied with the provisions of Section 5(c)
hereof with respect to the furnishing of prospectuses on the New York Business
Day next succeeding the date of this Agreement;
(j) The Company shall have furnished or caused to be furnished to the
Representatives at the Time of Delivery for the Designated Securities a
certificate or certificates of officers of the Company satisfactory to the
Representatives as to the accuracy of the representations and warranties of the
Company herein at and as of such Time of Delivery, as to the performance by the
Company of all of its obligations hereunder to be performed at or prior to such
Time of Delivery, as to the matters set forth in subsections (a) and (f) of this
Section and as to such other matters as the Representatives may reasonably
request; and
(k) An order of the Commission under the Public Utility Holding Company
Act of 1935 authorizing the issuance and sale of the Designated Securities shall
be in full force and effect, and such order shall not contain any provision
unacceptable to the Representatives in their reasonable judgment.
8. (a) The Company will indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, any preliminary
prospectus supplement, the Registration Statement, the Prospectus as amended or
supplemented and any other prospectus relating to the Securities, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse each Underwriter for any legal or other expenses reasonably incurred
by such Underwriter in connection with investigating or defending any such
action or claim as such expenses are incurred; provided, however, that the
Company shall not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in any Preliminary
Prospectus, any preliminary prospectus supplement, the Registration Statement,
the Prospectus as amended or supplemented and any other prospectus relating to
the Securities, or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by any Underwriter
of Designated Securities through the Representatives expressly for use in the
Prospectus as amended or supplemented relating to such Securities.
13
<PAGE>
(b) Each Underwriter will indemnify and hold harmless the Company
against any losses, claims, damages or liabilities to which the Company may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, any preliminary prospectus supplement,
the Registration Statement, the Prospectus as amended or supplemented and any
other prospectus relating to the Securities, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in any Preliminary Prospectus, any preliminary
prospectus supplement, the Registration Statement, the Prospectus as amended or
supplemented and any other prospectus relating to the Securities, or any such
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by such Underwriter through the
Representatives expressly for use therein; and will reimburse the Company for
any legal or other expenses reasonably incurred by the Company in connection
with investigating or defending any such action or claim as such expenses are
incurred.
(c) Promptly after receipt by an indemnified party under subsection (a)
or (b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under such subsection. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and,
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such subsection for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the written consent
of the indemnified party, effect the settlement or compromise of, or consent to
the entry of any judgment with respect to, any pending or threatened action or
claim in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified party is an actual or potential party
to such action or claim) unless such settlement, compromise or judgment (i)
includes an unconditional release of the indemnified party from all liability
arising out of such action or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act, by or on behalf of
any indemnified party.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the Underwriters
of the Designated Securities on the other from the offering of the Designated
Securities to which such loss, claim, damage or liability (or action in respect
thereof)
14
<PAGE>
relates. If, however, the allocation provided by the immediately preceding
sentence is not permitted by applicable law or if the indemnified party failed
to give the notice required under subsection (c) above, then each indemnifying
party shall contribute to such amount paid or payable by such indemnified party
in such proportion as is appropriate to reflect not only such relative benefits
but also the relative fault of the Company on the one hand and the Underwriters
of the Designated Securities on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities (or
actions in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and such Underwriters on the other shall be deemed to be in the same proportion
as the total net proceeds from such offering (before deducting expenses)
received by the Company bear to the total underwriting discounts and commissions
received by such Underwriters. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company on the one hand or such
Underwriters on the other and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Underwriters agree that it would not be just and equitable
if contribution pursuant to this subsection (d) were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this subsection (d). The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages or liabilities (or actions in respect thereof) referred to above in this
subsection (d) shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
any such action or claim. Notwithstanding the provisions of this subsection (d),
no Underwriter shall be required to contribute any amount in excess of the
amount by which the total price at which the applicable Designated Securities
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages which such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
obligations of the Underwriters of Designated Securities in this subsection (d)
to contribute are several in proportion to their respective underwriting
obligations with respect to such Securities and not joint.
(e) The obligations of the Company under this Section 8 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls any
Underwriter within the meaning of the Act; and the obligations of the
Underwriters under this Section 8 shall be in addition to any liability which
the respective Underwriters may otherwise have and shall extend, upon the same
terms and conditions, to each officer and director of the Company and to each
person, if any, who controls the Company within the meaning of the Act.
9. (a) If any Underwriter shall default in its obligation to purchase
the Designated Securities which it has agreed to purchase under the Pricing
Agreement relating to such Designated Securities, the Representatives may in
their discretion arrange for themselves or another party or other parties to
purchase such Designated Securities on the terms contained herein. If within
thirty-six hours after such default by any Underwriter the Representatives do
not arrange for the purchase of such Designated Securities, then the Company
shall be entitled to a further period of thirty-six hours within which to
procure another party or other parties
15
<PAGE>
satisfactory to the Representatives to purchase such Designated Securities on
such terms. In the event that, within the respective prescribed period, the
Representatives notify the Company that they have so arranged for the purchase
of such Designated Securities, or the Company notifies the Representatives that
it has so arranged for the purchase of such Designated Securities, the
Representatives or the Company shall have the right to postpone the Time of
Delivery for such Designated Securities for a period of not more than seven
days, in order to effect whatever changes may thereby be made necessary in the
Registration Statement or the Prospectus as amended or supplemented, or in any
other documents or arrangements, and the Company agrees to file promptly any
amendments or supplements to the Registration Statement or the Prospectus which
in the opinion of the Representatives may thereby be made necessary. The term
"Underwriter" as used in this Agreement shall include any person substituted
under this Section with like effect as if such person had originally been a
party to the Pricing Agreement with respect to such Designated Securities.
(b) If, after giving effect to any arrangements for the purchase of the
Designated Securities of a defaulting Underwriter or Underwriters by the
Representatives and the Company as provided in subsection (a) above, the
aggregate principal amount of such Designated Securities which remains
unpurchased does not exceed one-eleventh of the aggregate principal amount of
the Designated Securities, then the Company shall have the right to require each
non-defaulting Underwriter to purchase the principal amount of Designated
Securities which such Underwriter agreed to purchase under the Pricing Agreement
relating to such Designated Securities and, in addition, to require each
non-defaulting Underwriter to purchase its pro rata share (based on the
principal amount of Designated Securities which such Underwriter agreed to
purchase under such Pricing Agreement) of the Designated Securities of such
defaulting Underwriter or Underwriters for which such arrangements have not been
made; but nothing herein shall relieve a defaulting Underwriter from liability
for its default.
(c) If, after giving effect to any arrangements for the purchase of the
Designated Securities of a defaulting Underwriter or Underwriters by the
Representatives and the Company as provided in subsection (a) above, the
aggregate principal amount of Designated Securities which remains unpurchased
exceeds one-eleventh of the aggregate principal amount of the Designated
Securities, as referred to in subsection (b) above, or if the Company shall not
exercise the right described in subsection (b) above to require non-defaulting
Underwriters to purchase Designated Securities of a defaulting Underwriter or
Underwriters, then the Pricing Agreement relating to such Designated Securities
shall thereupon terminate, without liability on the part of any non-defaulting
Underwriter or the Company, except for the expenses to be borne by the Company
and the Underwriters as provided in Section 6 hereof and the indemnity and
contribution agreements in Section 8 hereof; but nothing herein shall relieve a
defaulting Underwriter from liability for its default.
10. The respective indemnities, agreements, representations, warranties
and other statements of the Company and the several Underwriters, as set forth
in this Agreement or made by or on behalf of them, respectively, pursuant to
this Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Underwriter or any controlling person of any Underwriter, or the Company,
or any officer or director or controlling person of the Company, and shall
survive delivery of and payment for the Securities.
11. If any Pricing Agreement shall be terminated pursuant to Section 9
hereof, the Company shall not then be under any liability to any Underwriter
with respect to the Designated Securities covered by such Pricing Agreement
except as provided in Sections 6 and 8 hereof;
16
<PAGE>
but, if for any other reason Designated Securities are not delivered by or on
behalf of the Company as provided herein, the Company will reimburse the
Underwriters through the Representatives for all out-of-pocket expenses approved
in writing by the Representatives, including reasonable fees and disbursements
of counsel, reasonably incurred by the Underwriters in making preparations for
the purchase, sale and delivery of such Designated Securities, but the Company
shall then be under no further liability to any Underwriter with respect to such
Designated Securities except as provided in Sections 6 and 8 hereof.
12. In all dealings hereunder, the Representatives of the Underwriters
of Designated Securities shall act on behalf of each of such Underwriters, and
the parties hereto shall be entitled to act and rely upon any statement,
request, notice or agreement on behalf of any Underwriter made or given by such
Representatives jointly or by such of the Representatives, if any, as may be
designated for such purpose in the Pricing Agreement.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Representatives as set forth in the
Pricing Agreement; and if to the Company shall be delivered or sent by mail,
telex or facsimile transmission to the address of the Company set forth in the
Registration Statement: Attention: Secretary; provided, however, that any notice
to an Underwriter pursuant to Section 8(c) hereof shall be delivered or sent by
mail, telex or facsimile transmission to such Underwriter at its address set
forth in its Underwriters' Questionnaire, or telex constituting such
Questionnaire, which address will be supplied to the Company by the
Representatives upon request. Any such statements, requests, notices or
agreements shall take effect upon receipt thereof.
13. This Agreement and each Pricing Agreement shall be binding upon,
and inure solely to the benefit of, the Underwriters, the Company and, to the
extent provided in Sections 8 and 10 hereof, the officers and directors of the
Company and each person who controls the Company or any Underwriter, and their
respective heirs, executors, administrators, successors and assigns, and no
other person shall acquire or have any right under or by virtue of this
Agreement or any such Pricing Agreement. No purchaser of any of the Securities
from any Underwriter shall be deemed a successor or assign by reason merely of
such purchase.
14. Time shall be of the essence of each Pricing Agreement. As used
herein, "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
15. THIS AGREEMENT AND EACH PRICING AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
16. This Agreement and each Pricing Agreement may be executed by any
one or more of the parties hereto and thereto in any number of counterparts,
each of which shall be deemed to be an original, but all such respective
counterparts shall together constitute one and the same instrument.
17
<PAGE>
Very truly yours,
ALLEGHENY ENERGY, INC.
By: /s/ Thomas J. Kloc
---------------------------------
Name: Thomas J. Kloc
Title: Vice President and
Controller
18
<PAGE>
ANNEX I
FORM OF PRICING AGREEMENT
[Name(s) of Representative(s)]
As Representatives of the several
Underwriters named in Schedule I hereto,
[c/o] [Name and address of lead Representative]
.............., 200_
Ladies and Gentlemen:
Allegheny Energy, Inc., a Maryland corporation (the "Company"),
proposes, subject to the terms and conditions stated herein and in the
Underwriting Agreement, dated July __, 2000 (the "Underwriting Agreement"), to
issue and sell to the Underwriters named in Schedule I hereto (the
"Underwriters") the Securities specified in Schedule II hereto (the "Designated
Securities"). Each of the provisions of the Underwriting Agreement is
incorporated herein by reference in its entirety, and shall be deemed to be a
part of this Agreement to the same extent as if such provisions had been set
forth in full herein; and each of the representations and warranties set forth
therein shall be deemed to have been made at and as of the date of this Pricing
Agreement, except that each representation and warranty which refers to the
Prospectus in Section 2 of the Underwriting Agreement shall be deemed to be a
representation or warranty as of the date of the Underwriting Agreement in
relation to the Prospectus (as therein defined), and also a representation and
warranty as of the date of this Pricing Agreement in relation to the Prospectus
as amended or supplemented relating to the Designated Securities which are the
subject of this Pricing Agreement. Each reference to the Representatives herein
and in the provisions of the Underwriting Agreement so incorporated by reference
shall be deemed to refer to you. Unless otherwise defined herein, terms defined
in the Underwriting Agreement are used herein as therein defined. The
Representatives designated to act on behalf of the Representatives and on behalf
of each of the Underwriters of the Designated Securities pursuant to Section 12
of the Underwriting Agreement and the address of the Representatives referred to
in such Section 12 are set forth at the end of Schedule II hereto.
An amendment to the Registration Statement, or a supplement to the
Prospectus, as the case may be, relating to the Designated Securities, in the
form heretofore delivered to you is now proposed to be filed with the
Commission.
Subject to the terms and conditions set forth herein and in the
Underwriting Agreement incorporated herein by reference, the Company agrees to
issue and sell to each of the Underwriters, and each of the Underwriters agrees,
severally and not jointly, to purchase from the Company, at the time and place
and at the purchase price to the Underwriters set forth in Schedule II hereto,
the principal amount of Designated Securities set forth opposite the name of
such Underwriter in Schedule I hereto.
<PAGE>
If the foregoing is in accordance with your understanding, please sign
and return to us [one for the Company and each of the Representatives plus one
for each counsel] counterparts hereof, and upon acceptance hereof by you, on
behalf of each of the Underwriters, this letter and such acceptance hereof,
including the provisions of the Underwriting Agreement incorporated herein by
reference, shall constitute a binding agreement between each of the Underwriters
and the Company. It is understood that your acceptance of this letter on behalf
of each of the Underwriters is or will be pursuant to the authority set forth in
a form of Agreement among Underwriters, the form of which shall be submitted to
the Company for examination upon request, but without warranty on the part of
the Representatives as to the authority of the signers thereof.
Very truly yours,
ALLEGHENY ENERGY, INC.
By:
----------------------------
Name:
Title:
Accepted as of the date hereof:
[Name(s) of Representative(s)]
[By:]
-----------------------------------
[Name of lead representative]
[[Name(s) of Co-Representative Corporation(s)]
By:
-------------------------------------
Name:
Title:
-------------------------------------
[(Name(s) of Co-Representative
Partnership(s))]]
On behalf of each of the Underwriters
2
<PAGE>
SCHEDULE I
PRINCIPAL
AMOUNT OF
DESIGNATED
SECURITIES
TO BE
UNDERWRITER PURCHASED
----------- ---------
[Name of Lead Representative]........................................ $
[NAME(S) OF CO-REPRESENTATIVE(S)]....................................
[NAMES OF OTHER UNDERWRITERS]........................................
----------
Total....................................................... $
==========
3
<PAGE>
SCHEDULE II
TITLE OF DESIGNATED SECURITIES:
[ %] [Floating Rate] [Zero Coupon] [Notes]
[Debentures] due ____________________,
AGGREGATE PRINCIPAL AMOUNT:
[$]
PRICE TO PUBLIC:
___% of the principal amount of the Designated Securities, plus accrued
interest [, if any,] from ______ to _____________ [and accrued
amortization[, if any,] from ________ to __________]
PURCHASE PRICE BY UNDERWRITERS:
____% of the principal amount of the Designated Securities, plus accrued
interest from _________ to __________ [and accrued amortization[, if
any,] from ___________ to ____________]
FORM OF DESIGNATED SECURITIES:
[Definitive form to be made available for checking and packaging at least
twenty-four hours prior to the Time of Delivery at the office of [The
Depository Trust Company or its designated custodian] [the
Representatives]]
[Book-entry only form represented by one or more global securities
deposited with The Depository Trust Company ("DTC") or its designated
custodian, to be made available for checking by the Representatives at
least twenty-four hours prior to the Time of Delivery at the office of
DTC.]
SPECIFIED FUNDS FOR PAYMENT OF PURCHASE PRICE:
Federal (same day) funds
TIME OF DELIVERY:
____ a.m. (New York City time), _________________, 200_
INDENTURE:
Indenture dated _____________, 200_, between the Company and __________,
as Trustee
MATURITY:
INTEREST RATE:
[ %] [Zero Coupon] [See Floating Rate Provisions]
INTEREST PAYMENT DATES:
[months and dates, commencing ....................., 200_]
REDEMPTION PROVISIONS:
[No provisions for redemption]
4
<PAGE>
[The Designated Securities may be redeemed, otherwise than through the
sinking fund, in whole or in part at the option of the Company, in the
amount of [$____] or an integral multiple thereof,
[on or after ________, ____ at the following redemption prices (expressed
in percentages of principal amount). If [redeemed on or before _______,
___%, and if] redeemed during the 12-month period beginning ________,
REDEMPTION
YEAR PRICE
---- -----
and thereafter at 100% of their
principal amount, together in each
case with accrued interest to the
redemption date.]
[on any interest payment date falling
on or after______, _____, at the
election of the Company, at a
redemption price equal to the
principal amount thereof, plus accrued
interest to the date of redemption.]]
[Other possible redemption provisions,
such as mandatory redemption upon
occurrence of certain events or
redemption for changes in tax law]
[Restriction on refunding]
SINKING FUND PROVISIONS:
[No sinking fund provisions]
[The Designated Securities are entitled to the benefit of a sinking fund
to retire [$______] principal amount of Designated Securities on
__________ in each of the years ________ through _____ at 100% of their
principal amount plus accrued interest[, together with [cumulative]
[noncumulative] redemptions at the option of the Company to retire an
additional [$______] principal amount of Designated Securities in the
years ________ through _________ at 100% of their principal amount plus
accrued interest.]
[If Designated Securities are extendable debt securities, insert--
EXTENDABLE PROVISIONS:
Designated Securities are repayable on _________, _______ [insert date
and years], at the option of the holder, at their principal amount with
accrued interest. The initial annual interest rate will be _____%, and
thereafter the annual interest rate will be adjusted on _________, and
__________ to a rate not less than _____% of the effective annual
interest rate on U.S. Treasury obligations with ______-year maturities as
of the [insert date 15 days prior to maturity date] prior to such [insert
maturity date].]
[If Designated Securities are floating rate debt securities, insert--
5
<PAGE>
FLOATING RATE PROVISIONS:
Initial annual interest rate will be ____% through ______ [and thereafter
will be adjusted [monthly] [on each _______, ______, ______ and _____]
[to an annual rate of ___% above the average rate for _______-year
[month][securities][certificates of deposit] issued by ______________ and
_______________ [insert names of banks].] [and the annual interest rate
[thereafter] [from ______ through _______] will be the interest yield
equivalent of the weekly average per annum market discount rate for
______-month Treasury bills plus ____% of Interest Differential (the
excess, if any, of (i) the then current weekly average per annum
secondary market yield for ______-month certificates of deposit over (ii)
the then current interest yield equivalent of the weekly average per
annum market discount rate for ______-month Treasury bills); [from
__________ and thereafter the rate will be the then current interest
yield equivalent plus ___% of Interest Differential].]
DEFEASANCE PROVISIONS:
CLOSING LOCATION FOR DELIVERY OF DESIGNATED SECURITIES:
ADDITIONAL CLOSING CONDITIONS:
Paragraph 7(h) of the Underwriting Agreement should be modified in the
event that the Securities are denominated in, indexed to, or principal or
interest are paid in, a currency other than the U.S. dollar, more than one
currency or in a composite currency. The country or countries issuing such
currency should be added to the banking moratorium and hostilities clauses
and the following additional clause should be added to the paragraph (the
entire paragraph should be restated, as amended):
";( ) the imposition of the proposal of exchange controls by any
governmental authority in [insert the country or countries issuing such
currency, currencies or composite currency]".
NAMES AND ADDRESSES OF REPRESENTATIVES:
Designated Representatives:
Address for Notices, etc.:
[OTHER TERMS]*:
------------------------
6
<PAGE>
Annex I(a)
August 15, 2000
Allegheny Energy, Inc.
and
Goldman, Sachs & Co.,
Salomon Smith Barney, Inc.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated
and PNC Capital Markets, Inc.
Ladies and Gentlemen:
We have audited the consolidated financial statements and financial statement
schedule of Allegheny Energy, Inc. (the "Company") as of December 31, 1999 and
1998 and for each of the three years in the period ended December 31, 1999
included in Allegheny Energy, Inc's. Annual Report on Form 10-K for the year
ended December 31, 1999 incorporated by reference in the registration statement
(No. 333-41638) on Form S-3 filed by the Company under the Securities Act of
1933 (the "Act"); our reports with respect thereto are also incorporated by
reference in such registration statement. Such registration statement, including
the Prospectus Supplement dated August 15, 2000, is herein referred to as the
"Registration Statement".
In connection with the Registration Statement:
1. We are independent certified public accountants with respect to the Company
within the meaning of the Act and the applicable rules and regulations
thereunder adopted by the Securities and Exchange Commission (SEC).
2. In our opinion, the consolidated financial statements and financial
statement schedule audited by us and incorporated by reference in the
Registration Statement comply as to form in all material respects with the
applicable accounting requirements of the Act and the related rules and
regulations adopted by the SEC.
3. We have not audited any consolidated financial statements of the Company as
of any date or for any period subsequent to December 31, 1999; although we
have conducted an audit for the year ended December 31, 1999, the purpose
(and therefore the scope) of such audit was to enable us to express our
opinion on the consolidated financial statements as of December 31, 1999
and for the year then ended, but not on the financial statements for any
interim period within such year. Therefore, we are unable to and do not
express any opinion on the unaudited consolidated balance sheet as of June
30, 2000 and the unaudited consolidated statements of income and the
consolidated statements of cash flows for the six-month periods
<PAGE>
ended June 30, 2000 and 1999 included in the Company's quarterly report on
Form 10-Q for the quarter ended June 30, 2000, incorporated by reference in
the Registration Statement, or on the financial position, results of
operations or cash flows as of any date or for any period subsequent to
December 31, 1999.
4. For purposes of this letter we have read the 2000 minutes of the meetings
of the Board of Directors of the Company as set forth in the minute books
as of August 11, 2000, officials of the Company having advised us that the
minutes of all such meetings through that date were set forth therein
(except for minutes of the July 12, 2000 Board of Director meeting which
was not approved in final form, for which drafts were provided to us;
officials of the Company have represented that such drafts include all
substantive actions taken at such meeting), and have carried out other
procedures to August 11, 2000 (our work did not extend to the period from
August 12, 2000 to August 15, 2000, inclusive), as follows:
a. With respect to six-month periods ended June 30, 2000 and 1999, we
have:
(i) performed the procedures (completed on August 11, 2000) specified
by the American Institute of Certified Public Accountants for a
review of interim financial information as described in SAS No.
71, Interim Financial Information, on the unaudited consolidated
financial statements, described in 3, included in the Company's
quarterly report on Form 10-Q for the quarter ended June 30,
2000, incorporated by reference in the Registration Statement;
and
(ii) Inquired of certain officials of the Company who have
responsibility for financial and accounting matters whether the
unaudited financial statements referred to under a.(i) above
comply as to form in all material respects with the applicable
accounting requirements of the Securities Exchange Act of 1934 as
it applies to Form 10-Q and the related rules and regulations
adopted by the SEC.
b. With respect to the period from July 1, 2000 to July 31, 2000, we have
(i) read the unaudited consolidated financial data of the Company and
subsidiaries for of both July 2000 and 1999 furnished us by the
Company, officials of the Company having advised us that no such
financial data as of any date or for any period subsequent to
July 31, 2000 were available; and
(ii) inquired of certain officials of the Company who have
responsibility for financial and accounting matters as to whether
the unaudited financial data referred to under b.(i) above are
stated on a basis substantially consistent with that of the
audited financial statements incorporated by reference in the
Registration Statement.
<PAGE>
The foregoing procedures do not constitute an audit made in accordance with
generally accepted auditing standards. Also, they would not necessarily
reveal matters of significance with respect to the comments in the
following paragraph. Accordingly, we make no representations as to the
sufficiency of the foregoing procedures for your purposes.
5. Nothing came to our attention as a result of the foregoing procedures,
however, that caused us to believe that:
a. (i) Any material modification should be made to the unaudited
consolidated financial statements described in 3, incorporated by
reference in the Registration Statement, for them to be in conformity
with accounting principles generally accepted in the United States.
(ii) The unaudited consolidated financial statements described in 3,
do not comply as to form in all material respects with the applicable
accounting requirements of the Securities Exchange Act of 1934 as it
applies to Form 10-Q and the related rules and regulations adopted by
the SEC.
b. (i) at July 31, 2000 there was any change in the common stock,
increase in long-term debt or decrease in stockholders' equity of the
Company as compared with amounts shown in the June 30, 2000 unaudited
consolidated balance sheet incorporated by reference in the
Registration Statement except for the amortization of debt discount
expenses or (ii) for the period from July 1, 2000 to July 31, 2000,
there were any decreases, as compared with the corresponding period in
the preceding year, in consolidated total operating revenues,
operating income or income before extraordinary items, except in all
instances for changes, increases or decreases which the Registration
Statement discloses have occurred or may occur, and except as follows
(dollars in thousands):
<TABLE>
<CAPTION>
Month ending Month ending
July 31, 2000 July 31, 1999 Increase(Decrease)
------------- ------------- ------------------
<S> <C> <C> <C>
Total operating revenues $275,843 $284,789 ($8,946)
Operating income $37,625 $49,905 ($12,280)
Income before extraordinary
Items $19,734 $35,647 ($15,913)
</TABLE>
6. As mentioned in 4.b., Company officials have advised us that no
consolidated financial data as of any date or for any period subsequent to
July 31, 2000 are available; accordingly, the procedures carried out by us
with respect to changes in financial statement items after July 31, 2000
have, of necessity, been even more limited than those with respect to the
periods referred to in 4. We have inquired of certain officials of the
Company who have responsibility for financial and accounting matters as to
whether (i) at August 11, 2000 there was any change in common stock,
increase in long-term debt, or decrease in stockholders' equity of the
Company as compared with amounts shown on the June 30, 2000 unaudited
<PAGE>
consolidated balance sheet, incorporated by reference in the Registration
Statement, except for the amortization of debt discount expenses, or (ii)
for the period from July 1, 2000 to August 11, 2000, there were any
decreases, as compared with the corresponding period in the preceding year,
in total operating revenues, operating income or income before
extraordinary items. On the basis of these inquiries and our reading of the
minutes as described in 3, nothing came to our attention that caused us to
believe that there was any such change, increase or decrease, except in all
instances for changes, increases or decreases which the Registration
Statement discloses have occurred or may occur. Officials of the Company
are unable to quantify the change, as compared with the corresponding
period in the preceding year, in total operating revenues, operating income
or income before extraordinary items due to the lack of availability of
financial information.
7. For purposes of this letter, we have also read the items identified by you
on the attached copy of the Registration Statement and documents
incorporated by reference in the Registration Statement and have performed
the following procedures, which were applied as indicated with respect to
the symbols explained below (dollars in thousands):
A. We agreed the amount with the corresponding amount as set forth in the
unaudited consolidated financial statements of the Company included in
Form 10-Q for the quarter ended June 30, 2000 and found them to be in
agreement.
B. We agreed the amount with the corresponding amount as set forth in the
unaudited consolidated financial statements of the Company included in
Form 10-Q for the quarter ended June 30, 1999 and found them to be in
agreement.
C. We agreed the amount with the corresponding amount as set forth in the
Company's accounting records for the six months ended June 30, 2000.
D. We agreed the amount with the corresponding amount as set forth in the
unaudited consolidated financial statements of the Company included in
Form 10-Q for the quarter ended March 31, 2000, incorporated by
reference in this Registration Statement, and found them to be in
agreement.
E. We recomputed the amount by adding the second quarter charge of $3,216
to net income for the six months ended June 30, 1999 as set forth in
the Form 10-Q for the quarter ended June 30, 1999, and found them to
be in agreement.
F. We recomputed the amount by (a) subtracting the corresponding amount
as set forth in the Company's unaudited Consolidated Statement of
Income for the six months ended June 30, 1999, as set forth in the
Form 10-Q for the quarter ended June 30, 1999 from the corresponding
amount for the year ended December 31, 1999, as set forth in the
Consolidated Statement of Income, as set forth in the Company's 1999
Form 10-K, (b) adding the corresponding amount as set forth in the
Company's unaudited Consolidated Statement of Income for the six
months ended June 30, 2000,
<PAGE>
(c) adding the following extraordinary charges and other transactions,
as set forth in the Company's accounting records; West Virginia,
Maryland and Pennsylvania extraordinary charge of $87,455, Reacquired
debt, extraordinary charge of $10,018, Merger Related Costs of
$11,801, Davis pumped-storage generation project costs of $8,160, and
(d) subtracting insurance/litigation settlements of $1,715 as set
forth in the Company's accounting records, and found them to be in
agreement.
G. We recomputed the amount by (a) subtracting the corresponding amount
as set forth in the Company's unaudited Consolidated Statement of
Income for the six months ended June 30, 1998, as set forth in the
Company's Form 10-Q for the quarter ended June 30, 1998, from the
corresponding amount for the year ended December 31, 1998, as set
forth in the Consolidated Statement of Income, as set forth in the
Company's 1999 Form 10-K, (b) adding the corresponding amount as set
forth in the Company's unaudited Consolidated Statement of Income for
the six months ended June 30, 1999, as set forth in the Company's Form
10-Q for the quarter ended June 30, 1999, (c) adding the following
extraordinary charges and other transactions, as set forth in the
Company's accounting records; West Virginia, Maryland and Pennsylvania
Extraordinary Charges of $9,980, Insurance/Litigation Settlements of
$3,216 and Pennsylvania Settlement Costs of $23,748 and found them to
be in agreement.
H. We agreed the amount with the corresponding amount as set forth in the
Company's accounting records for the six months ended June 30, 1999
and found them to be in agreement
I. We recomputed the amount from corresponding amounts set forth in the
Company's accounting records for the three months ended March 31,
2000, the six months ended June 30, 2000 and the years ended December
31, 1999 to 1995, and found them to be in agreement.
J. We obtained the amount from information included in Company prepared
schedules derived from the Company's accounting records and found them
to be in agreement. We make no comment with respect to the portion of
the rentals deemed to be representative of the interest factor.
K. We compared the amount with the corresponding amounts as set forth in
the attached schedules, "Computation in Support of Ratio of Earnings
to Fixed Charges" and found them to be in agreement.
8. Our audit of the consolidated financial statements for the periods referred
to in the introductory paragraph of this letter comprised audit tests and
procedures deemed necessary for the purpose of expressing an opinion on
such financial statements taken as a whole. For none of the periods
referred to therein, or any other period, did we perform audit tests for
the purpose of expressing an opinion on individual balances of accounts or
summaries of
<PAGE>
selected transactions such as those enumerated above, and, accordingly, we
express no opinion thereon.
9. It should be understood that we make no representations as to questions of
legal interpretation or regarding the sufficiency for the purposes of
Goldman, Sachs & Co., Salomon Smith Barney, Inc., Merrill Lynch, Pierce,
Fenner & Smith Incorporated & Co. and PNC Capital Markets, Inc.
(collectively, "the Underwriters") of the procedures enumerated in the
preceding paragraphs also, such procedures would not necessarily reveal any
material misstatement of the amounts referred to therein. Further, we have
addressed ourselves solely to the foregoing data as set forth or
incorporated by reference in the Registration Statement and make no
representations as to the adequacy of disclosure or as to whether any
material facts have been omitted.
10. This letter is solely for the information of the addressees and to assist
the Underwriters in conducting and documenting their investigation of the
affairs of the Company in connection with the offering of the securities
covered by the Registration Statement, and it is not to be used,
circulated, quoted, or otherwise referred to for any other purpose,
including but not limited to the registration, purchase, or sale of
securities, nor is it to be filed with or referred to in whole or in part
in the Registration Statement or any other document, except that reference
may be made to it in any list of closing documents pertaining to the
offering of the securities covered by the Registration Statement.
Yours very truly,
/s/ PricewaterhouseCoopers
--------------------------
<PAGE>
Annex I(b)
______, 2000
Ladies and Gentlemen:
We refer to our letter of ______, 2000 relating to the Registration Statement
(No. 333-41638), including the Prospectus Supplement (collectively referred to
herein as the "Registration Statement") dated _____, 2000 of Allegheny Energy,
Inc. (the Company). We reaffirm as of the date hereof all statements made in
that letter, except that for purposes of this letter:
1. The reading of the minutes described in paragraph 4 has been carried out
through _____, 2000, officials of the Company having advised us that the
minutes of all such meetings through that date were set forth therein
(except for minutes of the ______, 2000 Board of Directors meeting which
were not approved in final form, for which drafts were provided to us:
officials of the Company have represented that such drafts include all
substantive actions taken at such meeting)
2. The procedures and inquiries covered in paragraph 4 of that letter were
carried out to _____, 2000 (our work did not extend to the period from
______, 2000 to _____, 2000, inclusive).
3. The references to ______, 2000 in paragraph 6 of that letter are changed to
______, 2000.
This letter is solely for the information of the addressees and to assist
_____________ in conducting and documenting their investigation of the affairs
of the Company in connection with the Registration Statement, and is not to be
used circulated, quoted, or otherwise referred to for any other purpose,
including but not limited to the registration, purchase, or sale of securities,
nor is it to be filed with or referred to in whole or in part in the
Registration Statement or any other document, except that references may be made
to it in any list of closing documents pertaining to the offering of the
securities covered by the Registration Statement.
Yours very truly,
<PAGE>
Annex II(a)
Form of Opinion of the Counsel for the Underwriters
[Simpson Thacher & Bartlett Letterhead]
August 18, 2000
Goldman, Sachs & Co.
Salomon Smith Barney, Inc.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
PNC Capital Markets, Inc.
c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Ladies and Gentlemen :
We have acted as your counsel in connection with the
purchase by you of $165,000,000 aggregate principal amount of 7.750% Notes
due August 1, 2005 (the "Notes") of Allegheny Energy, Inc., a Maryland
corporation (the "Company"), pursuant to the pricing agreement dated August
15, 2000 (the "Pricing Agreement") between you and the Company which
incorporates by reference the underwriting agreement, dated August 15, 2000
(together with the Pricing Agreement, the "Underwriting Agreement").
We have examined the Registration Statement on Form S-3
(File No. 333-41638) filed by the Company under the Securities Act of 1933,
as amended (the "Act"), as it became effective under the Act (the
"Registration Statement"); the Company's prospectus dated July 18, 2000, as
supplemented by the prospectus supplement dated August 15, 2000 (the
"Prospectus"), filed by the Company pursuant to Rule 424(b)
of the rules and regulations of the Securities and Exchange Commission (the
"Commission") under the Act, which pursuant to Form S-3 incorporates by
1
<PAGE>
reference the Annual Report on Form 10-K of the Company for the fiscal year
ended December 31, 1999, the Quarterly Report on Form 10-Q of the Company for
the quarter ended March 31, 2000 and the Current Reports on Form 8-K of the
Company dated March 6, March 7, April 27, May 24, June 5, July 27, and August
16, 2000 (the "Exchange Act Documents"), each as filed under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"); and the Indenture
dated as of July 26, 2000 (the "Indenture") between the Company and Bank One
Trust Company, N.A., as Trustee (the "Trustee") relating to the Notes. In
addition, we have examined, and have relied as to matters of fact upon, the
documents delivered to you at the closing, and upon originals or copies,
certified or otherwise identified to our satisfaction, of such corporate
records, agreements, documents and other instruments and such certificates or
comparable documents of public officials and of officers and representatives
of the Company, and have made such other and further investigations, as we
have deemed relevant and necessary as a basis for the opinions hereinafter
set forth.
In such examination, we have assumed the genuineness of all
signatures, the legal capacity of natural persons, the authenticity of all
documents submitted to us as originals, the conformity to original documents
of all documents submitted to us as duplicates or certified or conformed
copies, and the authenticity of the originals of such latter documents.
Based upon the foregoing, and subject to the qualifications
and limitations stated herein, we are of the opinion that:
2
<PAGE>
1. The Company has been duly incorporated and is
existing and in good standing as a corporation under the laws of the
State of Maryland.
2. The Indenture has been duly authorized, executed and delivered
by the Company and duly qualified under the Trust Indenture Act and,
assuming due authorization, execution and delivery thereof by the
Trustee, constitutes a valid and legally binding obligation of the
Company enforceable against the Company in accordance with its terms.
3. The Notes have been duly authorized, executed and issued by the
Company and, assuming due authentication thereof by the Trustee and
upon payment and delivery in accordance with the Underwriting
Agreement, will constitute valid and legally binding obligations of the
Company enforceable against the Company in accordance with their terms
and entitled to the benefits of the Indenture.
4. The statements made in the Prospectus under the caption
"Description of Securities We May Offer" and "Description of the
Notes," insofar as they purport to constitute summaries of certain
terms of documents referred to therein, constitute accurate summaries
of the terms of such documents in all material respects.
5. The Underwriting Agreement has been duly
authorized, executed and delivered by the Company.
Our opinions set forth in paragraphs 2 and 3 above are
subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether considered
in a proceeding in equity or at law) and an implied covenant of good faith
and fair dealing.
All legal proceedings taken by the Company in connection
with the offering of the Notes, and the legal opinions, dated the date
hereof, rendered to you by Robert R. Winter, Esq., Deputy General Counsel of
Allegheny Energy Service Corporation and Sullivan & Cromwell, counsel for the
Company, pursuant to the Underwriting Agreement, are in form satisfactory to
us. Insofar as the opinions expressed herein relate to or are dependent upon
3
<PAGE>
matters governed by the laws of the State of Maryland, we have relied upon
the opinion of Robert R. Winter, Esq., the Deputy General Counsel of
Allegheny Energy Service Corporation.
We have not independently verified the accuracy,
completeness or fairness of the statements made or included in the
Registration Statement, the Prospectus or the Exchange Act Documents and take
no responsibility therefor, except as and to the extent set forth in
paragraph 4 above. In the course of the preparation by the Company of the
Registration Statement and the Prospectus (excluding the Exchange Act
Documents), we participated in conferences with certain officers and
employees of the Company, with representatives of Pricewaterhouse Coopers LLP
and with counsel to the Company. We did not participate in the preparation of
the Exchange Act Documents. Based upon our examination of the Registration
Statement, the Prospectus and the Exchange Act Documents, our investigations
made in connection with the preparation of the Registration Statement and the
Prospectus (excluding the Exchange Act Documents) and our participation in
the conferences referred to above, (i) we are of the opinion that the
Registration Statement, as of its effective date, and the Prospectus, as of
August 15, 2000, complied as to form in all material respects with the
requirements of the Act, the Trust Indenture Act and the applicable rules and
regulations of the Commission thereunder and that the Exchange Act Documents
complied as to form when filed in all material respects with the requirements
of the Exchange Act and the applicable rules and regulations of the
4
<PAGE>
Commission thereunder, except that in each case we express no opinion with
respect to the financial statements or other financial data contained or
incorporated by reference in the Registration Statement, the Prospectus or
the Exchange Act Documents, and (ii) we have no reason to believe that the
Registration Statement, as of its effective date (including the Exchange Act
Documents on file with the Commission on such effective date), contained any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary in order to make the statements
therein not misleading or that the Prospectus (including the Exchange Act
Documents) contains any untrue statement of a material fact or omits 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, except
that in each case we express no belief with respect to the financial
statements or other financial data contained or incorporated by reference in
the Registration Statement, the Prospectus or the Exchange Act Documents.
We are members of the Bar of the State of New York and we do
not express any opinion herein concerning any law other than the law of the
State of New York, the federal law of the United States and, to the extent
set forth herein, the laws of the State of Maryland.
5
<PAGE>
This opinion letter is rendered to you in connection with
the above described transactions. This opinion letter may not be relied upon
by you for any other purpose, or relied upon by, or furnished to, any other
person, firm or corporation without our prior written consent.
Very truly yours,
SIMPSON THACHER & BARTLETT
6
<PAGE>
Annex II(b)
Dear Sirs:
In connection with the purchase today by you pursuant to the Pricing
Agreement, dated __________, 2000, between Allegheny Energy, Inc., a Maryland
corporation (the "Company"), and you, of $__________ principal amount of the
Company's ___% Notes due _________ (the "Securities") issued pursuant to the
Indenture, dated as of July 26, 2000, between the Company and Bank One Trust
Company, N.A., as the trustee (the "Trustee"), I, as counsel for the Company, or
attorneys under my supervision, have examined such corporate records,
certificates and other documents, and such questions of law, as I have
considered necessary or appropriate for the purposes of this opinion.
On the basis of the foregoing, I am of the opinion that:
1. The Company has been duly incorporated and is existing as a
corporation in good standing under the laws of the State of Maryland, with full
corporate power to own and operate its properties and to carry on its business
as described in the Prospectus dated July 21, 2000 (the "Prospectus") as
supplemented by the Prospectus Supplement dated _________, 2000 (the "Prospectus
Supplement"). To the best of my knowledge, other than as set forth in the
Prospectus as supplemented by the Prospectus Supplement,
<PAGE>
there are no material pending legal proceedings to which the Company is or may
be a party or of which property of the Company is or may be the subject which
depart from the ordinary routine litigation incident to the kinds of business
conducted by the Company.
2. The Underwriting Agreement, dated August 15, 2000, between the
Company and you (the "Underwriting Agreement") and the Pricing Agreement with
respect to the Securities have been duly authorized, executed and delivered by
the Company.
3. The Securities have been duly authorized, executed, authenticated,
issued and delivered and constitute valid and legally binding obligations of the
Company entitled to the benefits provided by the Indenture, subject, as to
enforcement, to bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to general
equitable principles; and the Securities and the Indenture conform in all
material respects to the descriptions thereof in the Prospectus as amended or
supplemented.
4. The Indenture has been duly authorized, executed and delivered by
the Company and constitutes a valid and legally binding instrument of the
Company, enforceable in accordance with its terms, subject, as to enforcement,
to bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting
<PAGE>
creditors' rights and to general equity principles; and the Indenture has been
duly qualified under the Trust Indenture Act of 1939 (the "Trust Indenture
Act").
5. The issue and sale of the Securities and the compliance by the
Company with all of the provisions of the Securities, the Indenture, the
Underwriting Agreement and the Pricing Agreement with respect to the Securities
and the consummation of the transactions herein and therein contemplated will
not conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any material indenture, mortgage,
deed of trust, loan agreement or other material agreement or instrument known to
me to which the Company is a party or by which the Company is bound or to which
any of the property or assets of the Company is subject, nor will such actions
result in any violation of the provisions of the Certificate of Incorporation or
By- laws of the Company or any statute or any order, rule or regulation known to
me of any court or governmental agency or body having jurisdiction over the
Company or any of its properties.
6. No consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body is
required for the issue and sale of the Securities or the consummation by the
Company of the transactions contemplated by the Underwriting Agreement, the
Pricing Agreement or the Indenture, except such as have been obtained under the
Securities Act of 1933 (the "Act"), the Public Utility Holding Company Act of
1935, the Trust Indenture Act and all Maryland state laws and regulations and
such consents, approvals, authorizations, orders, registrations or
<PAGE>
qualifications as may be required under state securities or Blue Sky laws in
connection with the purchase and distribution of the Securities by the
Underwriters.
7. The statements set forth in the Prospectus under the caption
"Description of Securities We May Offer", and in the Prospectus Supplement under
the caption "Description of Notes" insofar as they purport to constitute a
summary of the terms of the Securities and in the Prospectus under the caption
"Plan of Distribution" and under the caption of "Underwriting" in the Prospectus
Supplement, insofar as they purport to describe the provisions of the laws and
documents referred to therein, are accurate, and complete in all material
respects.
8. The documents incorporated by reference in the Prospectus as amended
or supplemented (other than the financial statements and related schedules
therein, as to which I express no opinion), when they became effective or were
filed with the Securities and Exchange Commission (the "Commission"), as the
case may be, complied as to form in all material respects with the requirements
of the Act or the Securities Exchange Act of 1934, as applicable, and the rules
and regulations of the Commission thereunder; and I have no reason to believe
that any of such documents (other than the financial statements and related
schedules therein, as to which I express no opinion) when they became effective
or were so filed, as the case may be, contained, in the case of the Registration
Statement which became effective under the Act, an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, or, in the case of
other documents which were filed
<PAGE>
under the Act or the Exchange Act with the Commission, an untrue statement of a
material fact or omitted to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were made
when such documents were so filed, not misleading.
9. The Registration Statement and the Prospectus as supplemented by the
Prospectus Supplement and any further amendments and supplements thereto made by
the Company prior to the delivery of the Securities (other than the financial
statements and related schedules therein, as to which I express no opinion)
comply as to form in all material respects with the requirements of the Act and
the Trust Indenture Act and the rules and regulations thereunder; although I do
not assume any responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement or the Prospectus, except for
those referred to in the opinion in paragraph 8, I have no reason to believe
that, as of its effective date, the Registration Statement or any further
amendment thereto made by the Company prior to the delivery of the Securities
(other than the financial statements and related schedules therein, as to which
I express no opinion) contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or that, as of its date, the
Prospectus as supplemented by the Prospectus Supplement or any further amendment
or supplement thereto made by the Company prior to the delivery of the
Securities (other than the financial statements and related schedules therein,
as to which I express no opinion) contained an untrue statement of a material
fact
<PAGE>
or omitted to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading or
that, as of the delivery of the Securities, either the Registration Statement or
the Prospectus as supplemented by the Prospectus Supplement or any further
amendment or supplement thereto made by the Company prior to the delivery of the
Securities (other than the financial statements and related schedules therein,
as to which I express no opinion) contains an untrue statement of a material
fact or omits to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading;
and I do not know of any amendment to the Registration Statement required to be
filed or any contracts or other documents of a character required to be filed as
an exhibit to the Registration Statement or required to be incorporated by
reference into the Prospectus as supplemented by the Registration Statement or
required to be described in the Registration Statement or the Prospectus as
supplemented by the Prospectus Supplement which are not filed or incorporated by
reference or described as required.
The foregoing opinion is limited to the Federal laws of the United
States and the laws of the States of New York and Maryland and I am expressing
no opinion as to the effect of the laws of any other jurisdiction. With respect
to all matters of New York law, I have, with your approval, relied upon the
opinion, dated the date hereof, of Sullivan & Cromwell, and my opinion is
subject to the same assumptions and qualifications with respect to such matters
as are contained in such opinion.
<PAGE>
Also, with your approval, I have relied as to certain matters on
information obtained from public officials, officers of the Company and other
sources believed by me to be responsible, and I have assumed that the Securities
will conform to the specimen thereof examined by me, and that the signatures on
all documents examined by me are genuine, assumptions which we have not
independently verified.
Very truly yours,
<PAGE>
Annex II(c)
Dear Sirs:
In connection with the purchase today by you pursuant to the Pricing
Agreement (the "Pricing Agreement"), dated August __, 2000, among Allegheny
Energy Inc., a Maryland corporation (the "Company") and you, of $__________
principal amount of the Company's __% Notes due ____ (the "Securities") issued
pursuant to the Indenture, dated as of July 26, 2000 (the "Indenture"), between
the Company and Bank One Trust Company, N.A., as trustee (the "Trustee"), we, as
counsel for the Company, have examined such corporate records, certificates and
other documents, and such questions of law, as we have considered necessary or
appropriate for the purposes of this opinion.
Upon the basis of such examination, it is our opinion that:
<PAGE>
(1) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Maryland.
(2) The Underwriting Agreement dated as of August 15, 2000 among the
Company and you (the "Underwriting Agreement") and the Pricing Agreement have
been duly authorized, executed and delivered by the Company.
(3) The Indenture has been duly authorized, executed and delivered by
the Company and duly qualified under the Trust Indenture Act of 1939 and,
assuming due authorization, execution and delivery by the Indenture Trustee,
constitutes a 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.
(4) The Securities have been duly authorized, executed and delivered by
the Company and, assuming due authentication thereof by the Trustee and upon
payment therefor by you in accordance with the provisions of the Underwriting
Agreement and the Pricing Agreement, will constitute valid and legally binding
obligations of the
<PAGE>
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.
The foregoing opinion is limited to the Federal laws of the United
States and the laws of the States of New York and Maryland and we are expressing
no opinion as to the effect of the laws of any other jurisdiction. With respect
to all matters of Maryland law, we have, with your approval, relied upon the
opinion, dated the date hereof, of Robert R. Winter and our opinion is subject
to the same assumptions and qualifications with respect to such matters as are
contained in such opinion.
Also, with your approval, we have relied as to certain matters on
information obtained from public officials, officers of the Company and other
sources believed by us to be responsible, and we have assumed that the
Securities will conform to the specimen thereof examined by us, and that the
signatures on all documents examined by us are genuine, assumptions which we
have not independently verified.
Very truly yours,
<PAGE>
Dear Sirs:
This is with reference to the registration under the Securities Act of
1933 (the "Act") and offering of $_________ principal amount of __% Notes (the
"Securities") of Allegheny Energy, Inc. (the "Company"). The Registration
Statement was filed on Form S-3 in accordance with procedures of the Securities
and Exchange Commission (the "Commission") permitting a delayed or continuous
offering of securities pursuant thereto and, if appropriate, a post-effective
amendment or prospectus supplement that provides information relating to the
terms of the securities and the manner of their distribution. The Securities
have been offered by the Prospectus dated July 21, 2000 (the "Basic
Prospectus"), as supplemented by the Prospectus Supplement dated _________, 2000
(the "Prospectus Supplement"), which updates or supplements certain information
contained in the
<PAGE>
Basic Prospectus. The Basic Prospectus as so supplemented does not necessarily
contain a current description of the Company's business and affairs since,
pursuant to Form S-3 it incorporates by reference certain documents filed with
the Commission which contain information as of various dates.
As counsel for the Company, we reviewed the Registration Statement, the
Basic Prospectus and the Prospectus Supplement, participated in discussions with
your representatives and those of the Company, its internal counsel and its
accountants, and advised the Company as to the requirements of the Act and the
applicable rules and regulations thereunder. Between the date of the Prospectus
Supplement and the time of the delivery of this letter, we participated in
further discussions with your representatives and those of the Company and
reviewed certificates of certain officials of the Company and the opinions
addressed to you from the Company's internal counsel and your counsel being
delivered to you on the date hereof. On the basis of the information that we
gained in the course of the performance of the services referred to above,
considered in the light of our understanding of the applicable law (including
the requirements of Form S-3 and
<PAGE>
the character of the prospectus contemplated thereby) and the experience we have
gained through our practice under the Act, we confirm to you that, in our
opinion, each part of the Registration Statement, when such part became
effective, and the Basic Prospectus, as supplemented by the Prospectus
Supplement, as of the date of the Prospectus Supplement, appeared on their face
to be appropriately responsive in all material respects to the requirements of
the Act and the applicable rules and regulations of the Commission thereunder.
Further, nothing that came to our attention in the course of such review has
caused us to believe that any part of the Registration Statement, when such part
became effective, contained any untrue statement of a material fact or omitted
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading or that the Basic Prospectus, as
supplemented by the Prospectus Supplement, as of the date of the Prospectus
Supplement, contained any untrue statement of a material fact or omitted 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. Also,
nothing that has come to our attention in the course of the procedures described
in the second sentence of this
<PAGE>
paragraph has caused us to believe that the Basic Prospectus, as supplemented by
the Prospectus Supplement, as of the date hereof, contained any untrue statement
of a material fact or omitted 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.
The limitations inherent in the independent verification of factual
matters and the character of determinations involved in the registration process
are such, however, that we do not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement, the Prospectus or the Prospectus Supplement except for those made
under the caption "Description of Securities We May Offer" in the Prospectus and
"Description of the Notes" and "Underwriting" in the Prospectus Supplement
insofar as they relate to provisions of documents therein described. Also, we do
not express any opinion or belief as to the financial statements or other
financial data derived from accounting records contained in the Registration
Statement, the Basic Prospectus or the Prospectus Supplement.
<PAGE>
This letter is furnished by us as counsel for the Company to you as
Underwriters of the Securities and is solely for your benefit.
Very truly yours,
