BOND PURCHASE AGREEMENT
$19,000,000
Luzerne County Industrial Development Authority
Exempt Facilities Revenue Refunding Bonds,
1993 Series A
(Pennsylvania Gas and Water Company Project)
December 2, 1993
Luzerne County Industrial Development
Authority
Wilkes-Barre, Pennsylvania 18711
Attention: Executive Director
Pennsylvania Gas and Water Company
39 Public Square
Wilkes-Barre, Pennsylvania 18711
Attention: Chief Financial Officer
Gentlemen:
Legg Mason Wood Walker, Incorporated, as representative
(in such capacity, the "Representative"), on behalf of itself and
Butcher & Singer, a division of Wheat, First Securities, Inc.
(together, the "Underwriters"), offers to enter into this Bond
Purchase Agreement (the "Purchase Agreement") relating to
$19,000,000 aggregate principal amount of Luzerne County Industrial
Development Authority Exempt Facilities Revenue Refunding Bonds,
1993 Series A (Pennsylvania Gas and Water Company Project) (the
"Bonds") of the Luzerne County Industrial Development Authority
(the "Issuer"). This offer is made subject to acceptance by the
Issuer and the Company (as hereinafter defined) prior to 5:00 P.M.,
prevailing time in Philadelphia, Pennsylvania, on the date hereof,
and upon such acceptance, as evidenced by the due execution hereof
by the Issuer and the Company, this Purchase Agreement shall
constitute a binding agreement among the Issuer, the
Representative, the Underwriters and the Company in full force and
effect according to the terms hereof.
All capitalized terms used herein and not otherwise
defined shall have the meanings specified in the Official Statement
(defined below).
The Bonds shall mature and shall be subject to mandatory
and optional redemption and shall bear interest as set forth in
Exhibit A hereto and shall otherwise be as described in the
Official Statement hereinafter mentioned. The Bonds shall be
eligible for deposit at The Depository Trust Company, New York, New
York ("DTC") and for DTC's book-entry only system for clearance and
settlement of municipal securities transactions.
The Bonds shall be issued pursuant to a Bond Resolution
of the Authority adopted on November 12, 1993 (the "Bond
Resolution"). The Bonds shall be as described in, and shall be
issued under and pursuant to, the Indenture.
The Bonds are special limited obligations of the Issuer,
payable solely from and secured by (i) the payments to be made by
the Company under and pursuant to the Agreement and the 1993 First
Mortgage Bonds, and (ii) amounts on deposit from time to time in
the funds and accounts created pursuant to the Indenture. To
evidence and secure its obligations under the Agreement, the
Company will issue and deliver to the Issuer the Company's 1993
First Mortgage Bonds in the principal amount of $19,000,000 issued
under and secured by the Indenture of Mortgage, as to be further
supplemented by the Twenty-Eighth Supplemental Indenture to be
dated as of December 1, 1993, providing for the issuance of the
1993 First Mortgage Bonds.
Proceeds of the Bonds will be used to provide funds
sufficient, together with other available moneys supplied by or on
behalf of the Company, to reimburse National Australia Bank,
Limited, New York Branch ("NAB") for drawings on a letter of
credit (the "Letter of Credit") provided by NAB in connection with
the issuance of the 1989 Bonds. Proceeds of the draws on the
Letter of Credit will be used to enable the Issuer, at the
direction of the Company, to refund (the "Refunding Program"),
through redemption on January 1, 1994, the Issuer's 1989 Bonds.
The estimated sources and uses of proceeds of the Bonds, together
with other available moneys, is attached hereto as Exhibit B.
The Issuer and the Company hereby consent to and confirm
the prior use by the Underwriters of the Preliminary Official
Statement dated November 15, 1993 (the "Preliminary Official
Statement") in connection with the public offering of the Bonds by
the Underwriters, and further confirm the authority of the
Underwriters to use, and consent to the use of, a final Official
Statement, which has been or will be approved by the Company, with
respect to the Bonds, to be dated the date hereof, and any
amendments or supplements thereto which shall be approved by the
Company (as so amended and supplemented, the "Official Statement")
in connection with the public offering, sale and distribution of
the Bonds. The Issuer, with respect to information pertaining to
the Issuer contained in the Preliminary Official Statement, and the
Company, with respect to all information contained in the
Preliminary Official Statement other than information pertaining to
the Issuer, hereby represent and warrant that the Preliminary
Official Statement previously furnished to the Underwriters has
been "deemed final" by the Issuer and the Company as of its date
for purposes of Rule 15c2-12 ("Rule 15c2-12") of the Securities and
Exchange Commission (the "Commission") promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
except for the omission of such information as is permitted to be
omitted in accordance with paragraph (b)(1) of Rule 15c2-12.
The Issuer shall provide, or cause to be provided, to the
Representative as soon as practicable after the Issuer's acceptance
of this Purchase Agreement (but, in no event later than seven
business days after the Issuer's acceptance hereof, and in
sufficient time to accompany any confirmation that requests payment
from any customer) copies of the Official Statement, executed by
the Issuer and the Company (and conformed copies thereof) in
sufficient quantity to enable the Representative to comply with the
rules of the Commission and the Municipal Securities Rulemaking
Board.
The Issuer and the Company hereby authorize the
Representative and the Representative hereby agrees to file the
Official Statement with at least one of the nationally recognized
municipal securities information repositories designated by the
Commission. The Issuer and the Company further authorize the
Representative and the Representative hereby agrees to file the
Official Statement with the Municipal Securities Rulemaking Board,
or its designee.
1. Purchase, Sale and Closing. The Issuer hereby
agrees to sell to the Underwriters, and the Underwriters, upon the
basis of the representations, warranties, covenants and agreements
of the Company and the Issuer contained herein, but subject to the
conditions hereinafter set forth, jointly and severally agree to
purchase from the Issuer, all (but not less than all) of the Bonds
at an aggregate purchase price of $19,000,000, plus accrued
interest on the Bonds from December 1, 1993, to the Closing Date
(as hereinafter defined). Payment for the Bonds shall be made by
wire transfer to the Trustee in Federal funds. The closing for the
delivery of and payment for the Bonds shall take place at the
offices of Ballard Spahr Andrews & Ingersoll, 1735 Market Street,
51st Floor, Philadelphia, Pennsylvania, at 9:00 am., local time in
Philadelphia, Pennsylvania, on December 21, 1993, or at such other
date, time or place as may be designated by the Representative,
with the approval of the Company and the Issuer (the "Closing
Date"). The Bonds will be delivered on the Closing Date to DTC in
New York, New York, in definitive fully registered form without
coupons, duly executed and authenticated, registered in the name of
DTC's nominee, Cede & Co., and in the form of one Bond certificate
in the principal amount of $19,000,000 maturing January 1, 2019.
The Bonds will be made available to the Representative for
inspection at a place suitable for such inspection in New York, New
York, at least 24 hours before the Closing Date.
As sole compensation for the services of the Underwriters
with respect to the Bonds the Company shall pay the Underwriters
concurrently with closing of the sale of the Bonds a fee equal to
$399,000 in connection with the purchase and sale of the Bonds
hereunder.
2. Authority of Representative; Public Offering of
Bonds. The Representative hereby represents and warrants that it
has been duly designated and authorized to execute this Agreement
on behalf of itself and the other Underwriter and to act hereunder
for and on behalf of itself and the other Underwriter. The
Underwriters agree to make a bona fide public offering of the Bonds
at not in excess of the initial public offering prices set forth in
the Official Statement.
3. Representations and Warranties of Issuer. In
addition to the other representations and warranties made by the
Issuer in this Agreement, the Issuer hereby represents and warrants
to the Company and the Underwriters as follows:
(a) The Issuer is a body corporate and politic
constituting a public corporation and public instrumentality duly
created and validly existing under the Pennsylvania Industrial and
Commercial Development Authority Law of 1967, as amended (the
"Act"), and has (or at the relevant time or times had) full power
and authority (i) to adopt the Bond Resolution, (ii) to execute,
deliver and perform its obligations under this Purchase Agreement,
the Indenture, the Agreement and all other Issuer documents
relating to the Refunding Program (the "Issuer Financing
Documents"), (iii) to issue, sell, execute and deliver the Bonds to
the Underwriters as provided in this Purchase Agreement, and (iv)
to finance the Project Facilities and to undertake, carry out and
consummate all other transactions contemplated by each of the
aforesaid documents.
(b) The Issuer has duly authorized by all requisite
corporate action (i) the execution and delivery of, and the due
performance of its obligations under, this Purchase Agreement and
the other Issuer Financing Documents, (ii) the taking of any and
all actions as may be required on the part of the Issuer to carry
out, give effect to and consummate the transactions contemplated by
this Purchase Agreement and the other Issuer Financing Documents,
and (iii) the distribution of the Preliminary Official Statement
and the execution and distribution of the Official Statement.
(c) The Bond Resolution has been duly adopted by
the Issuer and is in full force and effect. This Purchase
Agreement has been duly authorized, executed and delivered by the
Issuer. The Purchase Agreement is, and when executed and delivered
by the parties thereto, the other Issuer Financing Documents will
be, legal, valid and binding obligations of the Issuer, enforceable
in accordance with their respective terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws
in effect from time to time affecting the rights of creditors
generally and except to the extent that the enforceability thereof
may be limited by the application of general principles of equity.
At the Closing Date, each of the Issuer Financing Documents shall
have been duly executed and delivered by the Issuer.
(d) The Bonds have been duly authorized by the
Issuer and, when issued, authenticated by the Trustee, delivered
and paid for by the Underwriters on the Closing Date in accordance
with the terms of this Purchase Agreement, will constitute legal,
valid and binding obligations of the Issuer, enforceable in
accordance with their terms, and entitled to the benefits and
security of the Indenture, except as such enforceability may be
limited by bankruptcy, insolvency or other laws of general
application relating to or affecting creditors' rights and by
general principles of equity.
(e) The adoption of the Bond Resolution, the
execution and delivery by the Issuer of this Purchase Agreement,
the Bonds and the other Issuer Financing Documents, and compliance
with the provisions of the Bond Resolution and of this Purchase
Agreement, the Bonds and the other Issuer Financing Documents, will
not conflict with or constitute a breach of, or a default under,
any indenture, commitment, agreement or other instrument to which
the Issuer is a party or by which it or any of its property is
bound, or any constitutional or statutory provision, rule,
regulation, ordinance, judgment, order or decree to which the
Issuer or any of its property is subject.
(f) There is no action, suit, proceeding, inquiry
or investigation before or by any court, arbitrator, grand jury,
public board or body, in which the Issuer has been served or of
which it has otherwise received official notice or which, to the
best knowledge of the Issuer after due inquiry, is threatened
against the Issuer (nor to the best knowledge of the Issuer is
there any basis therefor), (i) which in any way questions the
powers of the Issuer referred to in subparagraph (a) of this
Paragraph 3 or the validity of the proceedings taken by the Issuer
in connection with the issuance and sale of the Bonds, or (ii)
wherein an unfavorable decision, ruling or finding would adversely
affect the transactions contemplated by this Purchase Agreement or
by the Official Statement, or (iii) which in any way would
adversely affect the legality, validity or enforceability of the
Issuer's obligations with respect to the Bonds, the Bond
Resolution, this Purchase Agreement or the other Issuer Financing
Documents.
(g) No approval, permit, consent, authorization or
order of any court or any governmental agency, authority or body
not already obtained (other than any approvals that may be required
under the Blue Sky or securities laws of any jurisdiction, as to
which no representation is made) is required with respect to the
Issuer in connection with the issuance and sale of the Bonds; the
execution and delivery by the Issuer of, or the performance by the
Issuer of its obligations under, this Purchase Agreement and the
other Issuer Financing Documents; or the transactions on the part
of the Issuer contemplated hereby and thereby.
(h) On and as of the date hereof and unless an
event of the nature described in Paragraph 5(c) hereof subsequently
occurs, at all times during the period from the date hereof to and
including the date which is 25 days following the End of the
Underwriting Period (as defined and determined in accordance with
Paragraph 11 hereof), the information in the Official Statement
with respect to the Issuer and its affairs does not and will not
contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of
the circumstances under which they are made, not misleading.
(i) If the Official Statement is supplemented or
amended pursuant to Paragraph 5(c) hereof, at the time of each such
supplement or amendment to the Official Statement and, unless the
Official Statement is subsequently supplemented or amended pursuant
to Paragraph 5(c) hereof, at all times during the period from the
date of this Purchase Agreement to and including the date which is
25 days following the End of the Underwriting Period (as defined
and determined in accordance with Paragraph 11 hereof), the
information with respect to the Issuer and its affairs contained in
the Official Statement, as so amended or supplemented, will not
contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
4. Representations and Warranties of Company. In
addition to the other representations made by the Company in this
Purchase Agreement, the Company hereby represents and warrants to
the Issuer and the Underwriters as follows:
(a) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws
of the Commonwealth of Pennsylvania, with full corporate power and
authority to own, lease and operate its properties and conduct its
business as its business is described in Appendix A to the
Preliminary Official Statement. The Company is duly qualified as
a foreign corporation to transact business and is in good standing
in each jurisdiction in which it owns or leases properties or in
which the conduct of its business requires such qualification,
except to the extent that the failure to be so qualified or be in
good standing would not have a material adverse effect on the
business, financial (or other) condition, results of operations or
prospects of the Company and its subsidiaries considered as a
whole.
(b) The financial statements of the Company,
together with related notes and schedules as set forth in the
Preliminary Official Statement, present fairly in all material
respects the financial position and the results of operations of
the Company at the indicated dates and for the indicated periods.
Such financial statements have been prepared in accordance with
generally accepted accounting principles, consistently applied
throughout the periods presented except as noted in the
accountant's reports thereon or the notes thereto, and all
adjustments necessary for a fair presentation of results for such
periods have been made; and the selected financial information
included in the Preliminary Official Statement presents fairly the
information shown therein and has been compiled on a basis
consistent with the financial statements presented therein.
(c) Since the date as of which information is given
in the Preliminary Official Statement (except to the extent
corrected or updated in the Official Statement), there has not been
any material adverse change or any development involving a
prospective material adverse change in or affecting the business,
financial (or other) condition, operations, management or prospects
of the Company and its subsidiaries taken as a whole, whether or
not occurring in the ordinary course of business, and there has not
been any material transaction entered into by the Company or any of
its subsidiaries, other than transactions in the ordinary course of
business and changes and transactions contemplated by the
Preliminary Official Statement. None of the Company and its
subsidiaries has any contingent obligations which are or are
reasonably likely to be material to the Company and its
subsidiaries taken as whole and which are required to be disclosed
and are not disclosed in the Preliminary Official Statement (except
to the extent such omission has been corrected in the Official
Statement).
(d) The Preliminary Official Statement and the
Official Statement (together with any amendments or supplements
thereto), as of their respective dates did not, and the Official
Statement (together with any amendments or supplements thereto) as
of the Closing Date will not, contain (as used hereinafter, the
term "contain" shall include information contained in documents
incorporated by reference therein) any untrue statement of a
material fact or omit to state a material fact required to be
stated therein in order to make the statements therein, in light of
the circumstances under which they were made, not misleading
(except to the extent any untrue statement or omission contained in
the Preliminary Official Statement was corrected in the Official
Statement); provided, however, this representation and warranty
shall not apply to statements or omissions made in reliance upon
and in conformity with information furnished in writing to the
Company by or on behalf of any Underwriter through the
Representative expressly for use therein or as to information
relating to the Issuer.
(e) The Company, PEI, and their subsidiaries are
not in violation of their respective Articles of Incorporation or
By-Laws or in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, loan agreement, note, lease or other
instrument to which any of them is a party or by which any of them
or their properties may be bound, other than such violations or
defaults that would not individually or in the aggregate have a
material adverse effect on the business, financial (or other)
condition, results of operations or prospects of the Company, PEI
and their subsidiaries considered as a whole.
(f) On August 26, 1993, a securities certificate
was registered by the Pennsylvania Public Utility Commission with
respect to the issuance of the 1993 First Mortgage Bonds, and no
other consent, approval, authorization, registration, or order of
any court or governmental authority or agency was required to be
made or obtained by the Company for the offer and sale of the 1993
First Mortgage Bonds and the Bonds except for filings and
applications pursuant to state securities or Blue Sky laws and
regulations.
(g) The 1993 First Mortgage Bonds have been duly
and validly authorized and, when issued and delivered against
payment therefor and in accordance with the Mortgage, will be duly
and validly issued and conform, in all material respects, to the
description of the 1993 First Mortgage Bonds contained in the
Preliminary Official Statement and the Official Statement, and the
1993 First Mortgage Bonds will be valid and binding obligations of
the Company, enforceable against the Company in accordance with
their terms, except as the enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization or other similar
laws affecting creditors' rights generally and except as
enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in
equity or at law); when the 1993 First Mortgage Bonds are issued in
accordance with the provisions of the Mortgage, such 1993 First
Mortgage Bonds will entitle the holders thereof to the rights and
security specified in such Mortgage, except as enforcement thereof
may be limited by applicable bankruptcy, insolvency, reorganization
or other similar laws affecting creditors' rights generally and
except as enforcement thereof is subject to general principles of
equity (regardless of whether enforcement is considered in a
proceeding in equity or at law); and the Mortgage conforms, in all
material respects, to the description thereof in the Preliminary
Official Statement and the Official Statement.
(h) Each of the Agreement, the Refunding Agreement
and the Twenty-Eighth Supplemental Indenture has been duly
authorized by the Company and each of the Agreement and the Twenty-
Eighth Supplemental Indenture conforms, in all material respects,
to the description thereof contained in the Preliminary Official
Statement and the Official Statement.
(i) The execution and delivery of this Purchase
Agreement did not, and the issuance and sale of the 1993 First
Mortgage Bonds and the Bonds, the execution and delivery of the
Agreement, the Refunding Agreement and the Twenty-Eighth
Supplemental Indenture, and the compliance by the Company with all
of the provisions of this Purchase Agreement, the Refunding
Agreement, the Agreement and the Twenty-Eighth Supplemental
Indenture (the "Company Financing Documents") and the consummation
of the transactions herein and therein contemplated will not
conflict with or constitute a breach of, or default under any
contract, indenture, mortgage, loan agreement, note, lease or other
instrument to which the Company, PEI or any of their subsidiaries
is a party, or by which any of them may be bound or to which any of
their property or assets is subject (except for such conflicts,
breaches, violations and defaults that would not have a material
adverse effect on the financial condition or operations of the
Company and its subsidiaries taken as a whole and that would not
affect the validity of the 1993 First Mortgage Bonds) nor will such
action result in any violation of the provisions of the respective
Articles of Incorporation or By-Laws of the Company, PEI or any of
their respective subsidiaries or any law, administrative regulation
or administrative or court decree.
(j) Except in each case for such exceptions
(including those described in the Official Statement) as would not,
individually or in the aggregate, have a material adverse effect on
the business, financial (or other) condition, results of operations
or prospects of the Company and its subsidiaries considered as a
whole, (i) the Company and its subsidiaries have such permits,
licenses, franchises, water rights, certificates, approvals and
authorizations of governmental or regulatory authorities
("Permits") as are necessary to own their respective properties and
to conduct their respective businesses in the manner now being
conducted and as described in the Preliminary Official Statement,
and (ii) the Company and its subsidiaries have each fulfilled and
performed all of their respective obligations with respect to such
Permits, and no event has occurred which allows, or after notice or
lapse of time would allow, revocation or termination thereof or
result in any other impairment of the rights of the holder of any
such Permit.
(k) There is no action, suit or proceeding before
or by any court or governmental agency or body, domestic or
foreign, now pending or, to the knowledge of the Company,
threatened against or affecting the Company or any of its
subsidiaries which, in the opinion of management of the Company
after consultation with legal counsel handling such matters, is
reasonably likely to (i) result in any material adverse change in
the condition, financial or otherwise, earnings, affairs or
business prospects of the Company and its subsidiaries considered
as a whole, except as set forth in, or incorporated by reference
in, the Preliminary Official Statement or the Official Statement,
or (ii) materially and adversely affect the offering of the 1993
First Mortgage Bonds and the Bonds.
(l) This Purchase Agreement has been duly
authorized, executed and delivered by the Company.
(m) PEI is a "holding company" within the meaning
of the Public Utility Holding Company Act of 1935 as amended
("PUHCA"), but is exempt, pursuant to Section 3(a) of PUHCA, from
all the provisions of PUHCA (except Section 9(a)(2) thereof) and
the rules and regulations thereunder. PEI has filed an annual
exemption statement on Form U-3A-2 pursuant to Rule U-2 promulgated
under PUHCA for each year of its existence as required to maintain
its exempt status. The Commission has taken no action, nor
threatened to take any action, to terminate PEI's exemption and the
Company and PEI are not aware of any basis the Commission may have
for taking any such action.
(n) The Company is not subject to the Natural Gas
Act, 15 U.S.C. Subsection 717 et seq.; all of the conditions set forth in
Section 1(c) of the Natural Gas Act, 15 U.S.C. Subsection 717(c), for the
non-application of the Natural Gas Act to the Company are
satisfied.
(o) Except as set forth in the Official Statement,
the Company and its subsidiaries are in compliance with all
applicable laws, ordinances, rules or regulations, and any order,
judgment or decree to which each may be subject, except where the
failure to comply would not have a material adverse effect on the
business, financial (or other) condition, operations or prospects
of the Company and its subsidiaries taken as a whole.
(p) The Company and its subsidiaries are in
compliance with all applicable environmental protection laws and
all applicable orders, rules and regulations promulgated under such
laws by governmental agencies having jurisdiction therein, except
for such failures to be in compliance as would not, individually or
in the aggregate, have a material adverse affect on the business,
financial (or other) condition, results of operations or prospects
of the Company and its subsidiaries considered as a whole. Neither
the Company nor any of its subsidiaries have received any notice
that they are responsible parties or potentially responsible
parties or are subject to any evaluation under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended (42 U.S.C. Section 9601 et seq.) or the Resource
Conservation and Recovery Act of 1976, as amended (42 U.S.C.
Section 6901 et seq.) or applicable state environmental laws, nor
do any of them have knowledge of any liability to which they may be
subject under such statutes, except where any such notice, claim,
evaluation or liability is not reasonably likely to result in a
material adverse effect on the business, financial (or other)
condition, results of operations or prospects of the Company and
its subsidiaries taken as a whole. Except to the extent that such
matters would not individually or in the aggregate have a material
adverse effect on the business, financial (or other) condition,
results of operations or prospects of the Company and its
subsidiaries considered as a whole, there are no past or present
events, conditions, circumstances, activities, practices, incidents
or actions of the Company or any of its subsidiaries that, to the
knowledge of the Company based on present legal and regulatory
requirements: (i) interfere with or prevent compliance or continued
compliance with applicable environmental laws or with applicable
orders, rules, and regulations promulgated under such laws by
government agencies having jurisdiction therein; or (ii) would be
reasonably likely to give rise to any legal liability (whether
statutory or at common law) or form the basis of any claim, action,
suit, proceeding, notice of violation, investigation or demand
(whether for money damages, remediation, clean up or performance of
any evaluation, study or assessment or injunctive or equitable
relief) based on or relating to the generation, handling, storage
or release into the environment of any pollutant, contaminant,
chemical or industrial, toxic or hazardous substance or waste.
(q) The Company and its subsidiaries have such
title to, or other interest in, all real property and personal
property owned by them as is necessary for the conduct of their
respective businesses as currently being conducted or as
contemplated to be conducted as described in the Preliminary
Official Statement. The Company and its subsidiaries occupy their
respective leased properties under valid and binding leases.
5. Covenants of Issuer and Company. The Issuer and the
Company hereby covenant and agree with the Representative and the
Underwriters as follows:
(a) To cooperate with the Representative in
endeavoring to qualify the Bonds for offer and sale under the state
securities or Blue Sky laws of such jurisdictions as the
Representative may reasonably request and in determining their
eligibility for investment under the laws of such jurisdictions as
the Representative may reasonably request, provided that the
foregoing shall not require the Issuer or the Company to qualify to
do business in any foreign jurisdiction or require the Issuer to
submit to service of process in any jurisdiction;
(b) Not to take, or omit to take any action which
it is required to take which will adversely affect the exclusion of
the interest on the Bonds from the gross income of the holders
thereof for Federal income tax purposes;
(c) To promptly notify the Representative if,
during the period from the date hereof to and including the date
which is 25 days following the End of the Underwriting Period (as
defined and determined in accordance with Paragraph 11 hereof), any
event shall occur which is reasonably likely to, or would cause the
Official Statement, as then supplemented or amended, to contain any
untrue statement of a material fact or to omit to state a material
fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and if in
the opinion of the Representative such event requires the
preparation and distribution of a supplement or amendment to the
Official Statement, to prepare and furnish to the Representative
(i) such number of copies of the supplement or amendment to the
Official Statement, in form and substance mutually agreed upon by
the Issuer and the Company and approved by the Representative, as
the Representative may reasonably request, and (ii) if such
notification shall be given subsequent to the Closing Date, such
additional legal opinions, certificates, instruments and other
documents as the Representative may reasonably deem necessary to
evidence the truth and accuracy of any such supplement or amendment
to the Official Statement; and
(d) In the case of the Company, concurrently with
the Company's acceptance hereof, to deliver to the Representative
a letter of Arthur Andersen & Co., independent certified public
accountants, substantially in the form set forth in Exhibit C
hereto.
6. Conditions Precedent. The obligations of the
Underwriters hereunder are subject to the satisfaction, or waiver
thereof by the Representative, of the following conditions:
(a) At the time of Closing: (1) this Purchase
Agreement, and the other Issuer Financing Documents and Company
Financing Documents shall be in full force and effect, and this
Purchase Agreement shall not have been amended, modified or
supplemented prior to the Closing except as may have been agreed to
by the Representative; (2) the Issuer and the Company shall have
duly adopted, and there shall be in full force and effect, such
additional resolutions or agreements as shall, in the opinion of
Bond Counsel, be necessary in connection with the transactions
contemplated hereby; (3) the representations and warranties of the
Issuer in the Issuer Financing Documents and of the Company in the
Company Financing Documents shall be true and accurate in all
material respects; (4) the Issuer and the Company shall perform or
shall have performed all obligations required under or specified in
this Purchase Agreement to be performed at or prior to the Closing;
and (5) the proceeds of the sale of the Bonds shall be applied as
described in the Official Statement.
(b) The Representative may terminate this Purchase
Agreement by notification from the Representative to the Issuer and
the Company if at any time prior to the Closing: (1) legislation
shall be enacted by the Congress of the United States or adopted by
either House thereof or a decision by a Court of the United States
or the United States Tax Court shall be rendered, or a ruling,
regulation or official release or statement by or on behalf of the
Treasury Department of the United States, the Internal Revenue
Service or other governmental agency shall be made with respect to
Federal taxation upon revenues or other income of the general
character expected to be derived by the Issuer or upon interest
received on bonds of the general character of the Bonds which would
have the effect of changing, directly or indirectly, the Federal
income tax consequences of interest on bonds of the general
character of the Bonds in the hands of holders thereof, or which
would materially affect the market price of the Bonds adversely; or
(2) legislation shall be enacted or any action shall be taken by
the Securities and Exchange Commission which, in the opinion of the
counsel for the Representative, has the effect of requiring the
contemplated distribution of the Bonds to be registered under the
Securities Act of 1933, as amended, or the Indenture to be
qualified under the Trust Indenture Act of 1939, as amended; or (3)
there shall exist any event which either (A) makes untrue or
incorrect in any material respect any statement or information
contained in the Preliminary Official Statement or the Official
Statement, or (B) is not reflected in the Preliminary Official
Statement or the Official Statement but should be reflected therein
in order to make the statements and information contained therein,
in the light of the circumstances under which they are made, not
misleading and the effect of such event materially adversely
impacts the marketability of the Bonds; or (4) the United States
shall be engaged in any conflict or hostilities which have resulted
in a declaration of war, a national emergency or any other national
calamity, or there shall have occurred any other conflict or
outbreak of hostilities or an escalation of any existing conflict
or hostilities, the effect of such outbreak or escalation on the
financial markets of the United States being such as, in the
reasonable belief of the Representative, materially and adversely
affects the ability of the Representative to market or sell the
Bonds; or (5) there shall be in force a general suspension of
trading on the New York Stock Exchange or minimum or maximum prices
for trading shall have been fixed and be in force, or maximum
ranges for prices for securities shall have been required and be in
force on the New York Stock Exchange, whether by virtue of a
determination by the New York Stock Exchange or by order of the
Securities and Exchange Commission or any other governmental
authority having jurisdiction; or (6) a general banking moratorium
shall have been declared by Federal, New York or Pennsylvania
authorities having jurisdiction and be in force; or (7) a stop
order, ruling, regulation or official statement by the Securities
and Exchange Commission shall be issued or made to the effect that
the issuance, offering or sale of the Bonds, or obligations of the
general character of the Bonds as contemplated hereby, is in
violation of any provision of the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, or the
Trust Indenture Act of 1939, as amended; or (8) a supplement or
amendment shall have been made to the Official Statement subsequent
to the date hereof which, in the reasonable judgment of the
Representative, materially adversely affects the marketability of
the Bonds or market prices thereof.
(c) At the Closing, the Representative shall
receive the following documents:
1. Executed counterparts of the Company Financing
Documents and the Issuer Financing Documents;
2. A Certified copy of the Bond Resolution;
3. The approving opinion of Ballard, Spahr,
Andrews & Ingersoll, Bond Counsel, as to the Bonds, addressed
to the Issuer and the Representative in the form attached as
Exhibit D to the Official Statement with such changes as are
satisfactory to the Representative;
4. A supplemental opinion or opinions of Bond
Counsel addressed to the Company and the Representative, in
form satisfactory to the Representative, to the effect that:
(A) the Bonds are exempt securities within the meaning of
Section 3(a)(2) of the Securities Act of 1933, and it is not
necessary to qualify the Indenture under the Trust Indenture
Act of 1939, as amended, (B) each of the Indenture and the
Agreement has been duly authorized, executed, and delivered
and constitutes the valid and binding obligation of the
Issuer, and is enforceable in accordance with its terms,
subject to limitations on creditors' rights generally, (C) the
Purchase Agreement has been duly authorized, executed, and
delivered by the Issuer and constitutes the legal, valid, and
binding obligation of the Issuer, enforceable in accordance
with its terms, (D) the descriptions, statements and summaries
of provisions of the Bonds, the Bond Resolution, the
Indenture, and the Agreement contained in the Official
Statement under the headings "INTRODUCTORY STATEMENT", "THE
1993 BONDS", "SECURITY FOR THE 1993 BONDS", and "APPENDIX C -
Summary of Certain Provisions of the Indenture, the Agreement,
The 1993 First Mortgage Bonds and the Mortgage" fairly
summarize the provisions of the documents or matters of law
intended to be summarized therein as of the date of the
Official Statement, and the descriptions and summaries
contained on the cover page and under the heading "TAX
MATTERS" accurately reflect the opinion of such counsel with
respect to the matters stated therein relating to Pennsylvania
and federal tax law as applicable to the Bonds, and (E) all
conditions precedent to the defeasance of the 1989 Bonds have
been satisfied.
5. Certificates dated the date of Closing, signed
by the Chairman or Vice Chairman of the Issuer and by an
authorized officer of the Company, sufficient in form and
substance to show to the satisfaction of Bond Counsel and the
Representative that the Bonds will not be arbitrage bonds
under Section 148 of the Code and the regulations thereunder.
6. A certificate, dated the day of Closing, in
form and substance satisfactory to Bond Counsel and the
Representative, signed by the chief financial officer of the
Company in which such officer states that (A) the
representations and warranties of the Company in this Purchase
Agreement are true and correct in all material respects as of
the date of Closing; (B) the Preliminary Official Statement
and the Official Statement, as of their respective dates,
insofar as they relate to the Company do not contain any
untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to
make the statements therein not misleading; and (C) no event
affecting the Company occurred since the date of the Purchase
Agreement which is required to be disclosed in the Official
Statement in order to make the statements and information
therein not misleading in any material respect.
7. A certificate or certificates, dated the date
of Closing, signed by the Chairman, Vice Chairman, or
Secretary of the Issuer and in form and substance satisfactory
to Bond Counsel and the Representative in which such official,
to the best of his knowledge, states that: (A) the
representations of the Issuer herein contained are true and
correct as of the date of the Closing, and the Official
Statement insofar as it contains information with respect to
the Issuer, does not include any untrue statement of a
material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein,
in light of the circumstances in which they were made, not
misleading; (B) no litigation is pending or, to the knowledge
of the Issuer after consultation with its counsel, threatened
(i) to restrain or enjoin the issuance or delivery of the
Bonds, the application of the proceeds thereof, or the
payment, collection or application of revenues pursuant to the
Indenture and the Agreement, (ii) in any way contesting or
affecting any authority for, or the validity of the Bonds, the
Indenture, the Agreement, this Purchase Agreement, the
application of the proceeds of the Bonds or the payment,
collection or application of revenues, pursuant to the
Indenture and the Agreement, or (iii) in any way contesting
the right and power of the Issuer to act as described in the
Bond Resolution and the Indenture or the Agreement; and (C) to
the knowledge of the Issuer, no event affecting the Issuer has
occurred since the date of the Official Statement which should
be disclosed in the Official Statement for the purposes for
which it is to be used, or which it is necessary to disclose
therein in order to make the statements and information
therein with respect to the Issuer not misleading in any
material respect.
8. An opinion of LeBoeuf, Lamb, Leiby & MacRae,
special counsel for the Company, addressed to the Trustee, the
Issuer and the Representative, dated the date of Closing,
substantially in the form of Exhibit D hereto.
9. An opinion and supplemental letter of Hughes
Hubbard & Reed, counsel for the Company, addressed to the
Trustee, the Issuer and the Representative, dated the date of
Closing, substantially in the form of Exhibit E hereto.
10. An opinion of Hourigan, Kluger, Spohrer &
Quinn, Solicitors for the Issuer, addressed to the
Representative, the Company, and Bond Counsel, dated the date
of Closing, to the effect that: (A) the Issuer has been duly
incorporated and is validly existing as an instrumentality of
the Commonwealth of Pennsylvania, is in good standing under
the laws of the Commonwealth of Pennsylvania and has the full
power and authority to enter into the Indenture and the
Agreement and to issue and sell the Bonds; (B) the Purchase
Agreement, the Indenture, and the Agreement have been duly and
validly authorized, executed and delivered by the Issuer and
are valid and binding obligations of the Issuer enforceable in
accordance with their respective terms except as
enforceability may be limited by applicable bankruptcy,
reorganization, insolvency, or other laws or equitable
principles affecting creditors' rights generally; (C) the
Bonds have been duly and validly authorized, executed, issued
and delivered by the Issuer and constitute the legal, valid
and binding limited obligations of the Issuer, enforceable in
accordance with their respective terms except as
enforceability may be limited by applicable bankruptcy,
reorganization, insolvency or other laws or equitable
principles affecting creditors' rights generally; (D) to the
knowledge of such counsel, there is no action, suit,
proceeding or investigation, at law or in equity, before or by
any court, public board or body, pending or threatened against
or affecting the Issuer, or which the Issuer is or may be a
part or of which property of the Issuer is or may be the
subject, wherein an unfavorable decision, ruling or finding
would adversely affect the transactions contemplated by the
Official Statement or the validity of the Bonds, the
Indenture, the Agreement, or the Purchase Agreement, or which
is required to be set forth in the Official Statement; (E) the
execution and delivery of, the consummation of the trans-
actions contemplated by, and the fulfillment and compliance
with the terms of, the Bonds, the Indenture, the Agreement,
and the Purchase Agreement, do not and will not conflict with
or constitute on the part of the Issuer a breach of or default
under any indenture, mortgage, deed of trust or other
instrument to which the Issuer is a party or by which it is or
may be bound of which we have knowledge after due inquiry, or
any existing law, regulation, administrative or court order or
decree to which the Issuer is a party or by which it is or may
be subject; (F) the Official Statement has been duly
authorized, approved, signed and delivered by the Issuer; (G)
the Bond Resolution was duly adopted by the affirmative vote
of a majority of the entire Board of the Issuer at a public
meeting duly called and held in accordance with all applicable
laws and the By-Laws of the Issuer and has not been amended,
modified or rescinded and remains in full force and effect as
of this date; (H) based upon their participation in the
preparation of the Preliminary Official Statement and the
Official Statement, including conferences and telephone
conferences, the information in the Preliminary Official
Statement and the Official Statement insofar as it pertains to
the Issuer is true and correct in all material respects and
does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they
were made, not misleading; and (I) such other matters as the
Representative may reasonably request prior to the Closing.
11. A letter from Arthur Andersen & Co. addressed
to the Representative and dated the date of Closing
reaffirming the matters set forth in Exhibit C hereto, but
with the procedures described being carried out as of a date
not more than five business days prior to the date of Closing,
and references to the Preliminary Official Statement shall be
updated to also include the Official Statement.
12. Evidence that the ratings on the Bonds of "BBB-
" by Standard and Poor's Corporation and "Baa3" by Moody's
Investors Service have not been reduced.
13. Pennsylvania Public Utility Commission
Securities Certificate and Order for the 1993 First Mortgage
Bonds.
14. Department of Commerce Notification.
15. An Information Return for Tax-Exempt Private
Activity Bond Issues (IRS Form 8038), in a form satisfactory
to Bond Counsel for filing, executed by the Issuer.
16. Written calculations demonstrating that the
money deposited under the Refunding Agreement on the Closing
Date is sufficient to redeem the 1989 Bonds on January 1,
1994.
17. Such additional opinions, certificates, or
documentation as the Representative or Bond Counsel may
reasonably request.
18. A fully executed counterpart of the Letter of
Representations from the Issuer and the Trustee to DTC with
respect to the Bonds, in form and substance satisfactory to
the Representative and its counsel, which Letter of
Representations shall have been duly accepted by DTC as
evidenced by its execution thereof.
19. Evidence of the due filing in all requisite
filing offices of:
(i) The Mortgage
(ii) Financing Statements on Form UCC-l naming the Issuer
as debtor and the Trustee as secured party relative to the
security interests created under the Indenture with respect to
the Bonds; and
(iii) Financing Statements on Form UCC-1 naming the
Company as debtor and the Mortgage Trustee as secured party,
relative to the security interests created under the Twenty-
Eighth Supplemental Indenture.
20. Such additional certificates or documents as
the Representative or its counsel or Bond Counsel may
reasonably request to evidence the authority of the Trustee to
act under the Indenture and the Refunding Agreement.
7. Expenses. All costs and expenses incident to the
authorization, preparation, issuance, sale and delivery of the
Bonds including, without limitation, costs of the preparation,
printing, distribution, execution, delivery and recording or
filing, as the case may be, of the Preliminary Official Statement
and the Official Statement, together with any amendments and
supplements thereto, and the Indenture, the Bonds, this Purchase
Agreement, the Agreement and all other documents, the fees and
disbursements of Bond Counsel, counsel to the Company, counsel to
the Trustee, counsel to the Issuer and firms of accountants and
other consultants and advisors retained by the Issuer or the
Company in connection with this transaction, all rating agency
fees, and all fees and expenses of the Trustee, shall be the
obligation of the Company or shall be paid from the proceeds of the
issuance and sale of the Bonds or otherwise. The Underwriters
shall pay the cost of qualifying the Bonds for sale under the Blue
Sky or securities laws of any jurisdictions and all advertising
costs and other expenses and all costs and expenses of its counsel
in connection with the public offering of the Bonds and the
transactions contemplated thereby.
8. Indemnification and Contribution.
(a) The Company will indemnify and hold harmless
the Issuer and its members, officers and employees and each
Underwriter and each person, if any, who controls (within the
meaning of Section 15 of the Securities Act of 1933, as amended
(the "Act") or Section 20 of the Exchange Act) any Underwriter,
from and against any and all losses, claims, damages or
liabilities, joint or several, to which such indemnified person may
become subject under the Act, the Exchange Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained
in the Preliminary Official Statement or the Official Statement or
any amendment or supplement thereto, or arise out of or are based
upon any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading; and the Company agrees to
reimburse such indemnified person for any legal or other expenses
reasonably incurred by such indemnified person in connection with
investigating, preparing or defending any such loss, claim, damage,
liability, or action as such expenses are incurred; provided,
however, the Company will not be liable in any such case to the
extent that any such loss, claim, damages or liability referred to
in the preceding sentence (x) arises out of or is based upon an
untrue statement or omission or alleged untrue statement or
omission based upon information pertaining to the Issuer, (y)
arises out of or is based upon an untrue statement or omission or
alleged untrue statement or omission made in the Preliminary
Official Statement or the Official Statement in reliance upon and
in conformity with written information furnished to the Company by
or on behalf of such Underwriter expressly for use in the
Preliminary Official Statement, the Official Statement or any
amendment or supplement thereto, or (z) arises out of or is based
upon the fact that such Underwriter sold Bonds to a person to whom
there was not sent or given, at or prior to the written
confirmation of such sale, a copy of the Official Statement
(excluding documents incorporated by reference), or of the Official
Statement as then amended or supplemented (excluding documents
incorporated by reference), in any case where such delivery is
required by the Municipal Securities Rulemaking Board or by Rule
15c2-12 if the Company has previously furnished copies thereof to
such Underwriter and the loss, claim, damage, liability or expense
of such Underwriter results from an untrue statement contained in
or the omission of a material fact from the Preliminary Official
Statement which was corrected in the Official Statement (or the
Official Statement as amended or supplemented). This indemnity
agreement will be in addition to any liability or obligation which
the Company may otherwise have to the persons referred to above in
this Paragraph 8(a).
(b) Each Underwriter will indemnify and hold
harmless (i) the Issuer and its members, officers and employees and
(ii) the Company and each person, if any, who controls the Company
within the meaning of either Section 15 of the Act or Section 20 of
the Exchange Act, in each case from and against any and all losses,
claims, damages or liabilities to which such indemnified person may
be subject under the Act, the Exchange Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in the
Preliminary Official Statement or the Official Statement (as
amended or supplemented if the Company or the Issuer shall have
furnished any amendments or supplements thereto), or arise out of
or are based upon any omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent,
but only to the extent that such untrue statement or omission or
alleged untrue statement or omission was made in the Preliminary
Official Statement, the Official Statement or any amendment or
supplement thereto in reliance upon or in conformity with written
information furnished to the indemnified person by or on behalf of
such Underwriter expressly for use therein, and the Underwriters
agree to reimburse such indemnified person for any legal or other
expenses reasonably incurred by such indemnified person in
connection with investigating, preparing to defend or defending any
such action or claim.
(c) Promptly after receipt by an indemnified person
under subsection (a) or (b) above of notice of the assertion of any
claim or the commencement of any action, such indemnified person or
its affiliate that is a party to this Purchase Agreement 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 assertion or the commencement thereof; but the
omission to so notify the indemnifying party (i) shall not relieve
it from any liability which it may have to any indemnified person
under such subsection unless and to the extent such failure
prejudices the indemnifying party of substantial rights or
defenses; and (ii) shall not, in any event, relieve the
indemnifying party from any obligations to any indemnified person
other than the indemnification obligations under such subsection.
In case any such action shall be brought against any indemnified
person or its affiliate that is a party to this Purchase Agreement
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 reasonably satisfactory to such indemnified
person. Notwithstanding the indemnifying party's election to
appoint counsel to represent the indemnified person in an action,
the indemnified person shall have the right to employ separate
counsel (including local counsel) and the indemnifying party shall
bear the reasonable fees, costs and expenses of such separate
counsel if and only if (i) the use of counsel chosen by the
indemnifying party to represent the indemnified person would
present such counsel with a conflict of interest, (ii) the
indemnifying party shall not have employed counsel reasonably
satisfactory to the indemnified person to represent the indemnified
person within a reasonable time after notice of the institution of
such action, or (iii) the indemnifying party shall authorize the
indemnified person to employ separate counsel at the expense of the
indemnifying party. It is understood that the indemnifying party
shall, in connection with any such action or separate but
substantially similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of only one separate
firm of attorneys together with appropriate local counsel at any
time from all indemnified persons not having actual differing
interests with any other indemnified person. An indemnifying party
will not, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action,
suit or proceeding in respect of which indemnification or
contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim
or action) unless such settlement, compromise or consent includes
an unconditional release of each indemnified person from all
liability arising out of such claim, action, suit or proceeding.
(d) If for any reason whatsoever (other than
because and to the extent that any of the following are applicable:
(A) the exception to Paragraph 8(a) provided in the next to last
sentence of Paragraph 8(a) above, or (B) the specific reasons set
forth in the first sentence of Paragraph 8(c) above pursuant to
which an indemnified person would not be entitled to
indemnification pursuant to Paragraph 8(a) above), the
indemnification provided for in Paragraph 8(a) or (b) above is
unavailable to an indemnified person referred to therein in respect
of any losses, claims, damages, liabilities, judgments or other
expenses covered by Paragraph 8(a) or (b), then each indemnifying
party, in lieu of indemnifying such indemnified person, shall
contribute to the amount paid or payable by such indemnified person
as a result of such losses, claims, damages, liabilities, judgments
and expenses (i) in such proportion as is appropriate to reflect
the relative benefits received by the Company on the one hand and
the Underwriters on the other from the offering of the Bonds, or
(ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand
and the Underwriters on the other in connection with the actions,
statements or omissions which resulted in such losses, claims,
damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the
Company on the one hand and the Underwriters on the other shall be
deemed to be in the same proportion as the maximum total proceeds
to be received, or the actual proceeds received, by the Company
from the sale of the Bonds (before deducting expenses), whether or
not consummated, bear to the total fee received by the Underwriters
pursuant to the last paragraph of section 1 of this Purchase
Agreement (the "Underwriting Fee"). The relative fault of the
Company on the one hand and the Underwriter on the other shall be
determined by reference to, among other things, whether any untrue
or alleged untrue statement of a material fact or the omission to
state a material fact relates to information supplied by the
Company or by the Underwriter, and the parties' relative intent,
knowledge, access to information and opportunity to correct or
prevent such statement or omission.
(e) The Company and the Underwriters agree that it
would not be just and equitable if contribution pursuant to
paragraph 8(d) were determined by pro rata allocation or by any
other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified person as
a result of the losses, claims, damages, liabilities or judgments
referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitation set forth above, any legal or
other expenses reasonably incurred by such indemnified person in
connection with investigating or defending any such action or
claim. Notwithstanding the provisions of Paragraph 8(d), in no
event shall any Underwriter be required to contribute any amount in
excess of the amount by which one-half of the Underwriting Fee
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 Paragraph
11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations to contribute pursuant to Paragraph 8(d)
are several on a co-equal (i.e., 50-50) basis.
9. Survival of Representations, Warranties and
Agreements. All representations, warranties and agreements of the
Issuer and the Company, and all agreements of the Underwriters, set
forth in this Agreement shall remain operative and in full force
and effect regardless of (a) any investigation, or statement as to
the results thereof, made by or on behalf of the Underwriters (b)
delivery of and payment for the Bonds, and (c) any termination of
this Agreement.
10. Information Furnished By Underwriters.
The Company acknowledges that the following
information constitutes the only written information furnished by
or on behalf of any Underwriter expressly for inclusion in the
Preliminary Official Statement or the Official Statement (or any
supplement thereto): (i) the statements set forth in capital
letters on the inside front cover regarding stabilization, and (ii)
the paragraph of text on page 13 under the caption "Underwriting."
11. Determination of End of Underwriting Period.
(a) For purposes of this Agreement, the "End of the
Underwriting Period" shall mean the earlier of (i) the Closing
Date, unless the Issuer and the Company have each been notified to
the contrary by the Representative on or prior to the Closing Date,
or (ii) the date on which the "end of the underwriting period" for
the Bonds has occurred under Rule 15c2-12; provided, however, that
the Issuer and the Company shall be entitled to treat as the End of
the Underwriting Period the date specified in the notification of
the Representative required under subparagraph (c) of this
Paragraph 11.
(b) The Representative shall provide to the Issuer
and the Company, upon request, such information as may be
reasonably required by the Issuer or the Company in order to
determine whether the "end of the underwriting period" for the
Bonds has occurred under Rule 15c2-12 with respect to the unsold
balance of Bonds that are held by any Underwriter for sale to the
public within the meaning of Rule 15c2-12.
(c) As soon as practicable following receipt
thereof, the Representative shall deliver the Official Statement,
and any supplement or amendment thereto, to a nationally recognized
municipal securities information repository approved by the
Commission.
12. Section Headings; Execution in Counterparts.
Section headings in this Agreement are inserted for convenience of
reference only and shall not be considered a part of, or used in
the interpretation of any provisions of, this Agreement. This
Agreement may be executed and accepted in any number of
counterparts, all of which taken together shall constitute one and
the same instrument, and any of the parties hereto may execute or
accept this Agreement by signing any such counterpart.
13. Notice and Other Actions. All notices, requests,
demands and formal actions hereunder shall be in writing and mailed
by registered or certified mail, postage prepaid, or delivered
personally or by any recognized overnight delivery service with
charges prepaid, to the following address:
The Issuer:
Luzerne County Industrial Development Authority
54 West Union Street
Wilkes-Barre, PA 18701
Attention: Secretary
with a copy to:
Hourigan, Kluger, Spohrer & Quinn, P.C.
700 Mellon Bank Center
8 West Market Street
Wilkes-Barre, PA 18701-1861
The Representative:
Legg Mason Wood Walker, Inc.
Jordan Building
203 Franklin Avenue
Scranton, PA 18503-1996
Attention: Thomas Karam
The Company:
Pennsylvania Gas and Water Company
Wilkes-Barre Center
39 Public Square
Wilkes-Barre, PA 18711-1601
Attention: Secretary
14. Parties In Interest. This Agreement is made solely
for the benefit of the Underwriters, the Company, the Issuer and
their respective successors and assigns, and no other person or
entity shall acquire or have any rights under or by virtue of this
Agreement. The terms "successors" and "assigns" shall not include
any purchaser of Bonds from or through any Underwriter merely
because of such purchase.
15. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the Commonwealth of
Pennsylvania.
16. Severability. The provisions of this Agreement are
intended to be severable. If any provision of this Agreement shall
be held invalid or unenforceable in whole or in part in any
jurisdiction such provision shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability
without in any manner affecting the validity or enforceability
thereof in any other jurisdiction or the remaining provisions
hereof in any jurisdiction.
17. Time of the Essence. Time shall be of the essence
in this Agreement.
18. Limitation of Issuer's Liability. Notwithstanding
anything to the contrary herein or in the Bonds, the liability of
the Issuer under this Purchase Agreement or any other instrument,
certificate or agreement executed in connection with the issuance
of the Bonds shall be and hereby is limited for all purposes to the
Issuer's interest in the 1993 First Mortgage Bonds and the
Agreement. In taking any action under this Purchase Agreement or
any other instrument, certificate or agreement executed in
connection with the issuance of the Bonds, the Issuer shall be
entitled to rely upon written directions of the Company and counsel
of nationally recognized standing in matters pertaining to bonds
issued by states and their political subdivisions and shall be
entitled to payment from the Company of all reasonable costs, fees
and expenses incurred or imposed by the Issuer in connection with
the Bonds.
Very truly yours,
LEGG MASON WOOD WALKER, INCORPORATED
By:
Title:
ACCEPTED AND AGREED as of the
date first above written:
LUZERNE COUNTY INDUSTRIAL
DEVELOPMENT AUTHORITY
By:
Authorized Officer
PENNSYLVANIA GAS AND WATER COMPANY
By:
Vice President, Finance
EXHIBIT A
DESCRIPTION OF CERTAIN PROVISIONS OF BONDS
Maturity Date: January 1, 2019
Interest Rate: 6.05%
Redemption Provisions: The Bonds are subject to redemption as
follows:
Optional Redemption. The Bonds are subject to redemption
prior to maturity, at the option of the Issuer, upon direction
of the Company, on any date on or after January 1, 2004, in
whole, or in part by lot, upon payment of the applicable
redemption price shown below (such price being expressed as a
percentage of the principal amount of Bonds to be redeemed),
plus interest accrued to the date fixed for redemption.
[CAPTION]
Redemption Period Redemption Price
(both dates inclusive)
[S] [C]
January 1, 2004 through December 31, 2004 102%
January 1, 2005 through December 31, 2005 101%
January 1, 2006 and thereafter 100%
Extraordinary Optional Redemption. The Bonds are subject to
redemption at any time prior to maturity at the option of the
Authority, upon the direction of the Company, in whole, at a
redemption price equal to 100% of the principal amount thereof,
plus interest accrued to the date fixed for redemption, if any of
the following events shall have occurred:
(i) the damage or destruction of all or substantially all of
the Project Facilities to such extent that, in the reasonable
opinion of the Company, the repair and restoration thereof would
not be economical; or
(ii) the condemnation of all or substantially all of the
Project Facilities or the taking by condemnation of any part, use
or control of the Project Facilities so as to render them
unsatisfactory to the Company for their intended use; or
(iii) in the Company's reasonable opinion, (1) unreasonable
burdens or excess liabilities shall have been imposed upon the
Company with respect to the Project Facilities or the operation
thereof, including, but without being limited to, federal, state or
other ad valorem, property, income or other taxes not being imposed
on the date of the Agreement other than ad valorem taxes presently
levied upon privately owned property used for the same general
purpose as the Project Facilities, or (2) the continued operation
of the Project Facilities is impractical, uneconomical or
undesirable for any reason; or
(iv) as a result of any change in the Constitution of
Pennsylvania or the Constitution of the United States of America,
or by legislative or administrative body (whether state or
federal), or by a final decree, a judgment or order of any court or
administrative body (whether state or federal), after any contest
thereof by the Company in good faith, the Indenture, the Agreement
or the Bonds shall become void or unenforceable or impossible of
performance in accordance with the intent and purposes of the
Issuer and the Company as expressed in the Agreement.
Any such redemption shall be on any date within 180 days
following the occurrence of one of the events listed above.
Special Mandatory Redemption. The Bonds are subject to
mandatory redemption in whole at any time at a redemption price
equal to 100% of the principal amount thereof, together with
accrued interest to the date fixed for redemption, within 180 days
after the occurrence of any "final determination" that, as a result
of a failure by the Company to observe any covenant, agreement or
representation in the Agreement, the interest payable on the Bonds
or any of them is includable for federal income tax purposes in the
gross income of any owner of a Bond, other than an owner who is a
"substantial user" of the Project Facilities or a "related person"
as provided in Section 147(a) of the Internal Revenue Code of 1986,
as amended (the "Code"). As used in the preceding sentence, a
"final determination" shall be deemed to have occurred upon the
issuance to that effect of a published or private ruling or
technical advice by the Internal Revenue Service or a judicial
decision in a proceeding by any court of competent jurisdiction in
the United States (from which ruling, advice or decision no further
right of appeal exists), in all cases in which the Company has
participated or been a party or has been given an opportunity to
participate and has failed to do so; provided, however, that if the
final determination of taxability shall include the determination
that the interest on an amount less than all of the Bonds
outstanding is includable in the gross income of the owners
thereof, and the loss of tax exemption can be cured by a partial
redemption of the Bonds, then only such amount of the Bonds shall
be redeemed (at the redemption price set forth above, together with
accrued interest to the date fixed for redemption); and provided
further, however, that no decree or judgment by any court or action
by the Internal Revenue Service shall be considered a final
determination unless (i) the Issuer has given the Company and the
Trustee prompt written notice of the commencement of such action or
judicial proceeding which resulted in such decree or judgment, and
(ii) the Issuer offers the Company, at the Company's expense, the
opportunity to control the defense thereof.
Notwithstanding the foregoing, if the lien of the Indenture is
discharged prior to the occurrence of a final determination, the
Bonds will not be redeemed as described above.
EXHIBIT B
STATEMENT OF ESTIMATED SOURCES AND USES
As set forth in the Official Statement
EXHIBIT C
LETTER FROM ARTHUR ANDERSEN & CO.
Pursuant to Paragraph 5(d) of the Purchase Agreement, Arthur
Andersen & Co. shall furnish a letter to the Underwriters to the
effect that:
(i) They are independent certified public accountants
with respect to the Company and its subsidiaries within the meaning
of the Securities Act of 1933, as amended, and the applicable
published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules audited by them
and included or incorporated by reference in the Preliminary
Official Statement or the Official Statement comply as to form in
all material respects with the applicable accounting requirements
of the Act or the Exchange Act, as applicable, and the published
rules and regulations thereunder;
(iii) The unaudited selected financial information with
respect to the results of operations and financial position of the
Company for the five most recent fiscal years included in the
Preliminary Official Statement and the Official Statement agrees
with the corresponding amounts in the audited financial statements
for such five fiscal years which were included or incorporated by
reference in the Company's Annual Reports on Form 10-K for such
fiscal years;
(iv) On the basis of limited procedures, not constituting
an examination in accordance with generally accepted auditing
standards, consisting of a reading of the unaudited financial
statements and other information referred to below, a reading of
the latest interim financial statements of the Company and its
subsidiaries, a reading of the minute books of the Company and its
subsidiaries since the date of the latest audited financial
statements included or incorporated by reference in the Preliminary
Official Statement and the Official Statement, inquiries of
officials of the Company and its subsidiaries responsible for
financial and accounting matters and such other inquiries and
procedures as may be specified in such letter, nothing came to
their attention that caused them to believe that:
(A) the unaudited condensed statements of income,
balance sheets and statements of cash flows included or
incorporated by reference in the Company's Quarterly
Reports on Form 10-Q incorporated by reference in the
Preliminary Official Statement and the Official Statement
do not comply as to form in all material respects with
the applicable accounting requirements of the Securities
Exchange Act of 1934, as amended, as it applies to Form
10-Q and the related published rules and regulations
thereunder or are not in conformity with generally
accepted accounting principles applied on a basis
substantially consistent with the basis for the audited
statements of income, balance sheets and statements of
cash flows included or incorporated by reference in the
Company's Annual Report on Form 10-K for the most recent
fiscal year;
(B) any other unaudited income statement data and
balance sheet items included in the Preliminary Official
Statement and the Official Statement do not agree with
the corresponding items in the unaudited financial
statements from which such data and items were derived,
and any such unaudited data and items were not determined
on a basis substantially consistent with the basis for
the corresponding amounts in the audited financial
statements included or incorporated by reference in the
Company's Annual Report on Form 10-K for the most recent
fiscal year;
(C) the unaudited financial statements which were
not included in the Preliminary Official Statement and
the Official Statement but from which were derived the
unaudited condensed financial statements referred to in
clause (A) and any unaudited income statement data and
balance sheet items included in the Preliminary Official
Statement and the Official Statement and referred to in
clause (B) were not determined on a basis substantially
consistent with the basis for the audited financial
statements included or incorporated by reference in the
Company's Annual Report on Form 10-K for the most recent
fiscal year;
(D) any unaudited pro forma condensed financial
statements included or incorporated by reference in the
Preliminary Official Statement and the Official Statement
do not comply as to form in all material respects with
the applicable accounting requirements of the Securities
Act of 1933, as amended, and the published rules and
regulations thereunder or the pro forma adjustments have
not been properly applied to the historical amounts in
the compilation of those statements;
(E) as of a specified date not more than five days
prior to the date of such letter, there have been any
changes in the capital stock or any increase in the long-
term debt of the Company, or any decreases in net current
assets or net assets or other items specified by the
Underwriters, or any increases in any items specified by
the Underwriters, in each case as compared with amounts
shown in the last balance sheet included or incorporated
by reference in the Preliminary Official Statement and
the Official Statement, except in each case for changes,
increases or decreases which the Preliminary Official
Statement and the Official Statement disclose have
occurred or may occur or which are described in such
letter; and
(F) for the period from the date of latest
financial statements included or incorporated by
reference in the Preliminary Official Statement and the
Official Statement to the specified date referred to in
clause (E) there were any decreases in total operating
revenues or the total or per share amounts of net income
or other items specified by the Underwriters, or any
increases in any items specified by the Underwriters, in
each case as compared with the comparable period of the
preceding year and with any other period of corresponding
length specified by the Underwriters, except in each case
for increases or decreases which the Preliminary Official
Statement and the Official statement disclose have
occurred or may occur or which are described in such
letter; and
(v) In addition to the examination referred to in their
report(s) included or incorporated by reference in the Preliminary
Official Statement and the Official Statement and the limited
procedures, reading of minute books, inquiries and other procedures
referred to in paragraphs (iii) and (iv) above, they have carried
out certain specified procedures, not constituting an audit in
accordance with generally accepted auditing standards, with respect
to certain amounts, percentages and financial information specified
by the Underwriters which are derived from the general accounting
records of the Company and its subsidiaries, which appear in the
Preliminary Official Statement and the Official Statement
(excluding documents incorporated by reference) and have compared
certain of such amounts, percentages and financial information with
the accounting records of the Company and its subsidiaries and have
found them to be in agreement.
EXHIBIT D
FORM OF OPINION OF LE BOEUF, LAMB, LEIBY & MAC RAE
[Date of Closing]
Ladies and Gentlemen:
We have acted as special counsel to Pennsylvania Gas and Water
Company, a Pennsylvania corporation (the "Company"), in connection
with the issuance and sale by the Luzerne County Industrial
Development Authority (the "Authority") of $19,000,000 aggregate
principal amount of its Exempt Facilities Revenue Refunding Bonds,
1993 Series A (Pennsylvania Gas and Water Company Project) (the
"Bonds"). The Bonds are being sold to the underwriters (the
"Underwriters") named in the Bond Purchase Agreement dated December
2, 1993 (the "Bond Purchase Agreement") among the Company, the
Authority and the Underwriters.
This opinion is being furnished to you in accordance with
Paragraph 6(c)(8) of the Bond Purchase Agreement. Capitalized
terms not otherwise defined herein shall have the corresponding
meanings given them (i) first, in order of priority, in the Bond
Purchase Agreement and, if not defined therein, (ii) in the
Official Statement dated December 2, 1993, relating to the Bonds
(the "Official Statement").
In such capacity, we have participated in the preparation of
portions of (i) the Preliminary Official Statement dated November
15, 1993 (the "Preliminary Official Statement") relating to the
Bonds, and (ii) the Official Statement. We have also represented
the Company before the Pennsylvania Public Utility Commission
("PPUC"), the Pennsylvania Department of Environmental Regulation
("DER") and in other regulatory matters. PPUC, DER and the United
States Environmental Protection Agency are collectively referred to
as the "Regulatory Authorities".
In rendering the opinions set forth below, we also have
examined such certificates of public officials, corporate records
and documents and other instruments, and have made such other
investigations, as we have deemed necessary in connection with the
opinions hereinafter set forth. As to certain issues of fact
material to such opinions, we have relied upon certificates of
officers of the Company and upon the representations of the Company
contained in the Bond Purchase Agreement.
We have assumed that the documents we have reviewed in
connection with this opinion which purport to have been executed by
parties other than the Company or Pennsylvania Enterprises, Inc.,
a Pennsylvania corporation, which is the Company's parent ("PEI"),
or the directors and officers of the Company or PEI have been duly
executed by such parties and that such parties had all requisite
power to enter into and perform all obligations thereunder, that
execution and delivery thereof have been duly authorized by all
requisite action and that the subject instruments are valid and
binding upon said parties.
We have assumed the authenticity of all documents submitted to
us as originals, the genuineness of all signatures thereon, and the
legal capacity of natural persons executing such documents and the
conformity to originals of all documents submitted to us as copies
and the authenticity of such originals.
Based upon the foregoing, and subject to the limitations
contained herein, we are of the opinion that:
(i) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws
of the Commonwealth of Pennsylvania, with full corporate power and
authority to own, lease and operate its properties and conduct its
business as described in the Preliminary Official Statement and the
Official Statement, to issue the 1993 First Mortgage Bonds, to
execute and deliver the Bond Purchase Agreement, the Agreement, the
Refunding Agreement, the Twenty-Eighth Supplemental Mortgage
Indenture and all other documents being executed and delivered by
it at the Closing and to perform its obligations thereunder.
(ii) The Bond Purchase Agreement, the Agreement, the
Refunding Agreement and the Twenty-Eighth Supplemental Mortgage
Indenture have been duly authorized, executed and delivered by the
Company and are valid, legally binding and enforceable instruments
in accordance with their terms, except (a) as rights of indemnity
or contribution are limited by public policy or by law, (b) as
enforcement thereof may be limited by applicable bankruptcy,
insolvency, reorganization or other similar laws affecting
creditors' rights generally, and (c) as enforcement thereof is
subject to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law).
(iii) The 1993 First Mortgage Bonds have been duly
authorized, issued and executed by the Company and are the legal,
valid and binding obligations of the Company, enforceable in
accordance with their terms, and are entitled to the benefits and
security of the Mortgage in accordance with its terms and are
secured thereby equally and ratably with all first mortgage bonds
of the Company outstanding under the Mortgage, except as
enforcement thereof may be limited by applicable bankruptcy,
insolvency, reorganization or other similar laws affecting
creditors' rights generally and except as enforcement thereof is
subject to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law).
(iv) The Company has filed with the PPUC, pursuant to the
provisions of Chapter 19 of the Pennsylvania Public Utility Code,
a securities certificate relating to the issuance and sale of the
1993 First Mortgage Bonds, and such Securities Certificate has been
registered by order of such Commission dated August 26, 1993, which
Order is in effect as of the date of this opinion and is not
subject to any appeal or modification which could affect the
validity or terms of the 1993 First Mortgage Bonds. To the extent
required by applicable Pennsylvania law, all issued and outstanding
equity and debt securities of the Company have been issued pursuant
to valid security certificates registered by the PPUC.
(v) Except for the Order of the PPUC referred to in
paragraph (iv) above, no approval by any other governmental
authorities, federal, state or otherwise, is required in connection
with the issue and sale of the 1993 First Mortgage Bonds and the
execution and delivery of the Agreement, the Bond Purchase
Agreement, the Refunding Agreement and the Twenty-Eighth
Supplemental Mortgage Indenture, except as may be required under
state or foreign securities or Blue Sky laws and regulations, as to
which no opinion is being rendered.
(vi) The Company possesses, with minor exceptions or
qualifications, such valid franchises, water rights, licenses or
permits, free from unduly burdensome restrictions and of
indeterminate duration, as are usual for the adequate conduct of
the business of the Company in the Commonwealth of Pennsylvania.
(vii) The Twenty-Eighth Supplemental Mortgage Indenture
and a UCC-l financing statement in respect thereof have been filed
for recordation in such manner (including, with respect to the
financing statement, the notation on such financing statement that
the debtor is a transmitting utility) and in such places as is
required by law in order to establish, preserve and protect the
lien of the Mortgage on all real estate and fixed property of the
Company (excluding easements and other similar rights) described in
the Mortgage as subject to the lien thereof, except as described in
paragraph (ix) below.
(viii) Under existing law, no recording, registration,
filing, re-recording, re-registration or re-filing of the Mortgage,
any indenture supplemental thereto, any UCC-l financing statement
or any other document is necessary to maintain the lien of the
Mortgage upon any such property now subject to the lien thereof.
However, as to real property acquired after October 31, 1993, the
lien of the Mortgage will be an equitable lien rather than a legal
lien in the absence of recordation of a supplemental indenture
specifically conveying such property.
(ix) The Mortgage, as security for the Company's
obligations with respect to the 1993 First Mortgage Bonds, creates
a valid first lien on all real estate and fixed property (excluding
easements and other similar rights) specifically described therein
as subject to the lien thereof other than property released from
the Mortgage in accordance with the terms thereof or parcels
recently sold for which a release has not yet been obtained but
which are not material, individually or in the aggregate, subject
only to (a) permitted encumbrances as defined in the Mortgage, (b)
other liens permitted under the Mortgage, (c) liens, encumbrances
and title defects not discoverable by a diligent search of the
public land records and judgments indices, and (d) minor defects
and encumbrances customarily found in the case of properties of
like size and character and defects in rights-of-way and easements
existing at the time of acquisition thereof by the Company, none of
which impair the use of such properties by the Company. However,
as to real property acquired after October 31, 1993, the lien of
the Mortgage will be an equitable lien rather than a legal lien in
the absence of recordation of a supplemental indenture specifically
conveying such property.
(x) Neither the Company nor PEI is in violation of any
provision of their respective Articles of Incorporation or By-Laws
or, to our knowledge after due inquiry, in violation of or default
in the performance or observance of any obligation, agreement,
covenant or condition contained in any material contract,
indenture, mortgage, loan agreement, note, lease or other
instrument to which any of them is a party or by which any of them
or their properties may be bound, which has been filed with or
submitted to any Regulatory Authority or the Securities and
Exchange Commission ("Filed Documents") (except for such defaults
that would not have a material adverse effect on the financial
condition or operations of the Company and its subsidiaries taken
as a whole and that would not affect the validity of the Bond
Purchase Agreement, the Agreement, the Twenty-Eighth Supplemental
Mortgage Indenture, the 1993 First Mortgage Bonds and the Refunding
Agreement). Without limitation of the foregoing, to our knowledge
after due inquiry, (a) no event has occurred which, with the giving
of notice or lapse of time or both, would be an event of default
under any Filed Documents governing indebtedness of the Company or
PEI, and (b) the execution and delivery of the Bond Purchase
Agreement, the Refunding Agreement, the Twenty-Eighth Supplemental
Mortgage Indenture and the Agreement did not and the issuance of
the Bonds and the 1993 First Mortgage Bonds, the compliance by the
Company with all of the terms and provisions of the Bond Purchase
Agreement, the Agreement, the Twenty-Eighth Supplemental Mortgage
Indenture and the Refunding Agreement, and the consummation of the
transactions therein contemplated will not conflict with or
constitute a breach of, or default under (except for such
conflicts, breaches, and defaults that would not have a material
adverse effect on the financial condition or operations of the
Company and its subsidiaries taken as a whole and that would not
affect the validity of the Bond Purchase Agreement, the Agreement,
the Twenty-Eighth Supplemental Mortgage Indenture, the 1993 First
Mortgage Bonds and the Refunding Agreement), or result in the
creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or PEI pursuant to any Filed
Documents to which the Company or PEI is a party or by which it or
any of them may be bound or to which any of the property or assets
of the Company or PEI is subject, other than the Mortgage. The
issuance of the 1993 First Mortgage Bonds and the Bonds (by the
Issuer) does not violate the provisions of the Articles of
Incorporation or By-Laws of the Company or PEI. To our knowledge
after due inquiry, the issuance of the 1993 First Mortgage Bonds
does not violate any law, published rule, regulation administered
or order issued by any Regulatory Authority or pursuant to any
Filed Document.
(xi) Except for such exceptions to the following as do
not or will not, individually or in the aggregate, have a material
adverse effect on the business, financial (or other) conditions,
results of operations or prospects of the Company, (a) the Company
has such Permits from any Regulatory Authority as are necessary to
own its properties and to conduct its business in the manner now
being conducted and as described in the Preliminary Official
Statement and the Official Statement, (b) to our knowledge after
due inquiry the Company has fulfilled and performed all of its
obligations with respect to such Permits, and no event has occurred
which allows, or after notice or lapse of time would allow,
revocation or termination thereof or result in any other impairment
of the rights of the holder of any such Permit, and (c) the Company
has not received any notice of proceedings relating to the
revocation or modification of any such Permit. To our knowledge
after due inquiry, there is no proceeding pending or threatened to
be brought before the PPUC against the Company that may cause any
Permit material to the operations of the Company to be revoked,
withdrawn, canceled, suspended or not renewed. To our knowledge
after due inquiry, the Company is in substantial compliance with
the provisions of the Pennsylvania Public Utility Code, 66
Pa.C.S.A. Subsection 101 et seq., and the rules and regulations of the PPUC
thereunder and any applicable orders of the PPUC and with all
federal and state drinking water statutes and regulations.
(xii) To our knowledge after due inquiry, except as
described or referred to in the Preliminary Official Statement and
the Official Statement, there is no action, suit or proceeding
before or by any court or Regulatory Authority, now pending or
threatened, against or affecting the Company which might (i) result
in any material adverse change in the condition, financial or
otherwise, earnings, affairs or business prospects of the Company,
(ii) materially and adversely affect the properties or assets of
the Company, or (iii) materially and adversely affect the issuance
of the 1993 First Mortgage Bonds.
(xiii) Statements in Appendix A of the Preliminary
Official Statement and the Official Statement, to the extent such
statements describe regulation by, or action of, the Regulatory
Authorities, or laws administered by any of them, constitute a fair
and accurate summary of the legal matters, terms, documents,
proceedings or circumstances referred to therein, and present or
summarize fairly in all material respects the information disclosed
therein.
(xiv) The Company is not subject to the Natural Gas Act,
15 U.S.C. Subsection 717 et seq.
Where an opinion set forth above is qualified, (i) "to our
knowledge," it is intended to be limited to the actual knowledge of
the attorneys in this Firm who have participated in our
representation of the Company in the issuance of the 1993 First
Mortgage Bonds, or our representation of the Company before the
PPUC and in other regulatory matters, [and (ii) "after due inquiry"
consists solely of a review of the subject matter of the opinions
so qualified with appropriate officers of the Company and PEI and
a review of such documents or agreements as may have been
identified by such officers of the Company and PEI as being
necessary to be reviewed in connection with the subject matter of
such opinions.]
The opinions expressed above in paragraphs (vii) and (ix) are
based upon searches and opinions made by other or prior counsel,
and in our opinion such counsel are, or in the case of prior
opinions were, competent and qualified and such opinions are
satisfactory in scope and form and may be relied upon.
The foregoing opinions are limited to the laws of the United
States and the Commonwealth of Pennsylvania.
In addition to the matters set forth above, this is to confirm
that, although we have not independently verified and are not
passing upon or assuming any responsibility for the accuracy,
completeness or fairness of the statements contained in the
Preliminary Official Statement and the Official Statement (except
in respect of the matters covered by paragraph (xiii)) nothing has
come to our attention during the course of our representation of
the Company in connection with matters relating to the Preliminary
Official Statement and the Official Statement and our general
representation of the Company in regulatory matters that causes us
to believe that the Preliminary Official Statement and the Official
Statement (except as to the financial statements, schedules and
other financial information contained or incorporated by reference
therein or omitted therefrom as to which we express no view)
contained any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in
order to make the statements therein not misleading.
The opinions and beliefs expressed herein are for your sole
benefit, and may only be relied on by you. With respect to the
first sentence of paragraph (x) of the foregoing opinion, as it
applies to certain financial covenants, we have only relied upon a
certificate of John F. Kell, Jr., Vice President of Finance of the
Company and PEI, relating to such financial covenants and have not
undertaken any investigation and do not express any opinion as to
the calculations required by such financial covenants.
Very truly yours,
LeBoeuf, Lamb, Leiby & MacRae
EXHIBIT E
FORM OF OPINION OF HUGHES HUBBARD & REED
[Date of Closing]
Ladies and Gentlemen:
We have acted as special counsel to Pennsylvania Gas and Water
Company, a Pennsylvania corporation (the "Company"), in connection
with the issuance and sale by the Luzerne County Industrial
Development Authority (the "Authority") of $19,000,000 aggregate
principal amount of its Exempt Facilities Revenue Refunding Bonds,
1993 Series A (Pennsylvania Gas and Water Company Project) (the
"Bonds"). The Bonds are being sold to underwriters (the
"Underwriters") pursuant to the Bond Purchase Agreement dated
December 2, 1993 (the "Bond Purchase Agreement") among the Company,
the Authority and the Underwriters.
This opinion is being furnished to you at the request of the
Company pursuant to paragraph (9) of Section 6(c) of the Bond
Purchase Agreement. Except as otherwise indicated herein,
capitalized terms used in this Opinion Letter are defined as set
forth in the Bond Purchase Agreement or the Accord (see below).
This Opinion Letter is governed by, and shall be interpreted
in accordance with, the Legal Opinion Accord (the "Accord") of the
ABA Section of Business Law (1991). As a consequence, it is
subject to a number of qualifications, exceptions, definitions,
limitations on coverage and other limitations, all as more
particularly described in the Accord, and this Opinion Letter
should be read in conjunction therewith.
The law covered by the opinion set forth below is limited
to (a) the Public Utility Holding Company Act of 1935, as amended
(the "PUHCA"), and the rules and regulations under such statute,
and (b) the Laws of the State of New York.
In our capacity as special counsel, we have participated with
other counsel in the preparation of (i) the Preliminary Official
Statement dated November 15, 1993 (the "Preliminary Official
Statement") relating to the Bonds and (ii) the Official Statement.
We have also represented the Company or PEI (as defined below) in
connection with, or are otherwise generally familiar with, the
agreements or instruments listed on Annex A to this opinion (the
"Covered Agreements").
In rendering the opinion set forth below, we also have
examined such certificates of public officials, corporate records
and documents and other instruments, and have made such other
investigations as we have deemed necessary in connection with the
opinion hereinafter set forth. As to certain issues of fact
material to this opinion, we have relied upon certificates of
officers of the Company and upon the representations of the Company
contained in the Bond Purchase Agreement.
We have assumed that the documents we have reviewed in
connection with this opinion which purport to have been executed by
parties other than the Company or Pennsylvania Enterprises, Inc.,
a Pennsylvania corporation, which is the Company's parent ("PEI"),
or the directors and officers of the Company or PEI, have been duly
executed by such parties and that such parties had all requisite
power to enter into and perform all obligations thereunder, that
execution and delivery thereof has been duly authorized by all
requisite action and that such documents are valid and binding upon
such parties.
We have assumed the authenticity of all documents submitted to
us as originals, the genuineness of all signatures thereon, and the
legal capacity of natural persons executing such documents and the
conformity to originals of all documents submitted to us as copies.
Based upon the foregoing, we are of the opinion that:
(i) The terms of the 1993 First Mortgage Bonds and the
Mortgage conform, in all material respects, to the description
thereof contained in the Preliminary Official Statement and the
Official Statement.
(ii) To the Opinion Giver's Actual Knowledge, the
execution and delivery of the Bond Purchase Agreement, the
Agreement, the Refunding Agreement and the Twenty-Eighth
Supplemental Mortgage Indenture, and the issuance and sale of the
1993 First Mortgage Bonds, do not constitute a default under any of
the Covered Agreements, except for such defaults that would not
have a material adverse effect on the financial condition or
operations of the Company and its subsidiaries taken as a whole and
that would not affect the validity of the 1993 First Mortgage
Bonds.
(iii) PEI is a "holding company" within the meaning of
the Public Utility Holding Company Act of 1935 ("PUHCA"), but is
exempt, pursuant to Section 3(a) of PUHCA, from all the provisions
of PUHCA (except Section 9(a)(2) thereof) and the rules and
regulations thereunder, assuming that, (A) no person, except PEI,
directly or indirectly owns, controls or holds with power to vote
10% or more of the voting securities (as defined in PUHCA) of the
Company, and (B) no person, directly or indirectly, owns, controls
or holds with power to vote 10% or more of the voting securities
(as defined in the PUHCA) of PEI.
With respect to paragraph (ii) of the foregoing opinion as it
applies to certain financial covenants, we have relied only upon a
certificate of John F. Kell, Jr., Vice President of Finance of the
Company and PEI, relating to such financial covenants and have not
undertaken any investigation and do not express any opinion as to
the calculations required by such financial covenants.
The opinion and beliefs expressed herein are for the sole
benefit of the Underwriters in connection with the transactions
referred to in the Bond Purchase Agreement and may not be relied
upon for any other purpose.
Very truly yours,
HUGHES HUBBARD & REED
HUGHES HUBBARD & REED
OPINION RIDER
[Date of Closing]
[Addressees]
Ladies and Gentlemen:
This letter is being delivered to you pursuant to paragraph
(9) of Section 6(c) of the Bond Purchase Agreement, dated December
2, 1993 (the "Bond Purchase Agreement") among Pennsylvania Gas and
Water Company, Luzerne County Industrial Development Authority and
Legg Mason Wood Walker, Incorporated, on behalf of itself and
Butcher & Singer, a Division of Wheat, First Securities, Inc. All
capitalized terms not otherwise defined herein shall have the same
meaning as in the Bond Purchase Agreement.
In connection with the issuance of the Bonds, as special
counsel for the Company, we have assumed the truth of information
furnished to us and have not independently verified and do not
assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Preliminary Official
Statement or the Official Statement except for and to the extent
set forth in paragraph (i) of our opinion to you of even date
herewith. We have participated in conferences with representatives
of the Company, other counsel for the Company, the independent
public accountants for the Company, your counsel and your
representatives, and bond counsel, at which conferences the
contents of the Preliminary Official Statement and the Official
Statement were discussed. Our examination of the Preliminary
Official Statement and the Official Statement and our participation
in such conferences have not led us to believe that, as of their
respective dates, the Preliminary Official Statement or the
Official Statement (except we express no view as to (x) the
financial statements and schedules and exhibits and other financial
or statistical data contained therein or omitted therefrom and (y)
documents incorporated therein by reference including but not
limited to the documents specified under the heading "Incorporation
of Certain Documents by Reference" in Appendix A to the Preliminary
Official Statement and the Official Statement) 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, in light of the circumstances under which they were made,
not misleading.
We call your attention to the fact that we are not admitted to
practice in the Commonwealth of Pennsylvania and we do not have a
regulated utility practice. Further, we have not advised PEI, the
Company or any of its subsidiaries with respect to their business
operations, including federal and state regulation of their gas and
water businesses (other than the Public Utility Holding Company Act
of 1935), litigation and agreements (other than the Agreements
listed on Annex A hereto).
This letter is furnished by us solely for the benefit of
the Underwriters in connection with the transactions referred to in
the Bond Purchase Agreement and may not be relied upon for any
other purpose without our prior written consent in each instance.
Very truly yours,
HUGHES HUBBARD & REED