Exhibit 10.38
================================================================================
CONSTRUCTION AND FINANCING
AGREEMENT
between
DELAWARE COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY
and
PHILADELPHIA SUBURBAN WATER COMPANY
-------------------------
Dated as of October 1, 1999
-------------------------
================================================================================
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions........................................................................................3
ARTICLE II
REPRESENTATIONS AND FINDINGS
SECTION 2.01. Representations and Warranties of the Authority....................................................7
SECTION 2.02. Representation and Warranties of the Company.......................................................7
SECTION 2.03. Findings of the Authority..........................................................................8
ARTICLE III
COMPLETION OF THE FACILITIES; ISSUANCE OF THE BONDS
SECTION 3.01. Portions of Project Completed......................................................................9
SECTION 3.02. Acquisition, Etc., of the Facilities; Completion...................................................9
SECTION 3.03. Issuance of Bonds..................................................................................9
SECTION 3.04. Payments From Construction Fund....................................................................9
SECTION 3.05. Requisitions......................................................................................10
SECTION 3.06. Plans and Specifications..........................................................................10
SECTION 3.07. Completion of Facilities..........................................................................10
SECTION 3.08. Company to Pay Additional Amounts If Required.....................................................10
SECTION 3.09. Contractor Defaults; Company Proceedings. ......................................................11
SECTION 3.10. Investment of Amounts in the Construction Fund....................................................11
ARTICLE IV
LOAN AND OTHER AMOUNTS
SECTION 4.01. Loan by Authority to Company.....................................................................12
SECTION 4.02. Repayment of Loan and Other Amounts..............................................................12
SECTION 4.03. Security For Payment.............................................................................13
SECTION 4.04. Assignment to Trustee............................................................................13
SECTION 4.05. Operation and Maintenance........................................................................14
SECTION 4.06. Insurance........................................................................................14
SECTION 4.07. Liens............................................................................................14
SECTION 4.08. Facilities Used For Purpose of the Act...........................................................15
SECTION 4.09. Payment of Certain Costs.........................................................................15
SECTION 4.10. Obligation to Make Payments Absolute.............................................................15
ARTICLE V
SPECIAL COVENANTS
SECTION 5.01. No Warranty.......................................................................................16
SECTION 5.02. Company to Maintain Corporate Existence, Etc......................................................16
SECTION 5.03. Operation of Facilities; Maintenance of Licenses
and Permits....................................................................................16
SECTION 5.04. Additional Permits................................................................................16
SECTION 5.05. Authority to Maintain Corporate Existence, Etc....................................................17
SECTION 5.06. Compliance With Continuing Disclosure Agreement...................................................17
SECTION 5.07. Certain Tax Covenants.............................................................................17
ARTICLE VI
ASSIGNMENT, LEASING AND SALES
SECTION 6.01. Assignment, Lease and Sale of Facilities.........................................................19
SECTION 6.02. Assignment of Rights Under Agreement.............................................................20
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
SECTION 7.01. Events of Default.................................................................................21
SECTION 7.02. Remedies..........................................................................................22
SECTION 7.03. Remedies Not Exclusive............................................................................23
SECTION 7.04. Reimbursement of Fees and Expenses................................................................23
SECTION 7.05. Waivers of Breaches...............................................................................23
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Termination.......................................................................................25
SECTION 8.02. Notices...........................................................................................25
SECTION 8.03. Benefit of Agreement. ...........................................................................26
SECTION 8.04. Amendments........................................................................................26
SECTION 8.05. Counterparts......................................................................................26
SECTION 8.06. Invalidity of Certain Clauses.....................................................................26
SECTION 8.07. Governing Law.....................................................................................27
SECTION 8.08. Indemnification...................................................................................27
SECTION 8.09. Limitation of Rights Against Authority............................................................29
SECTION 8.10. Limitation of Recourse Against Authority..........................................................30
EXHIBIT A Description of the Facilities........................................................................33
CONSTRUCTION AND FINANCING AGREEMENT
THIS CONSTRUCTION AND FINANCING AGREEMENT, dated as of October 1, 1999,
by and between the DELAWARE COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY, a body
corporate and politic organized and existing under and by virtue of the laws of
the Commonwealth of Pennsylvania ("Authority"), and PHILADELPHIA SUBURBAN WATER
COMPANY, a corporation organized and existing under the laws of the Commonwealth
of Pennsylvania ("Company").
WITNESSETH:
WHEREAS, the Authority was organized pursuant to the Economic
Development Financing Law of the Commonwealth of Pennsylvania, Act of August 23,
1967, P.L. 251, as amended ("Act"), which Act declares it to be the policy of
the Commonwealth of Pennsylvania ("Commonwealth") to promote the health, safety,
morals, employment, business opportunities and general welfare of the people
thereof by providing for the creation of industrial and commercial development
authorities which shall exist and operate as public instrumentalities of the
Commonwealth for the public purpose of alleviating unemployment, maintaining
employment at a high level, eliminating and preventing blight and eliminating or
reducing air and water pollution, and creating and developing business
opportunities by the construction, improvement, rehabilitation, revitalization
and financing of industrial, commercial, manufacturing and research and
development enterprises; and
WHEREAS, the Act declares that every authority incorporated under it
shall be for the purpose of acquiring, holding, constructing, improving,
maintaining, owning, financing and leasing, as lessor or as lessee, among other
things, facilities for the furnishing of water; and
WHEREAS, the Company is engaged primarily in the activity, under the
regulatory control of the Pennsylvania Public Utility Commission, of furnishing
water available on reasonable demand to members of the general public; and
WHEREAS, the Authority adopted resolutions on May 11, 1998 and May 19,
1999 providing for the issuance and sale by the Authority of its revenue bonds
to provide funds for the costs of (i) the acquisition, construction,
installation and equipping of the Facilities (hereinafter defined) and (ii) the
costs of issuance relating thereto (collectively "Project"): and
WHEREAS, in connection with the issuance by the Authority of its
revenue bonds to provide funds for the cost of the Facilities, the Company is to
enter into this Construction and Financing Agreement ("Agreement") under which
the Authority agrees to loan funds to the Company for the construction and
installation of the Facilities and the Company agrees to pay to the Authority,
in repayment of the loan, amounts sufficient to amortize such revenue bonds; and
WHEREAS, the Company has commenced the acquisition, construction,
installation and equipping of certain of the Facilities; and
WHEREAS, the Company now desires the Authority to proceed with the
issuance and sale of its revenue bonds to provide the funds to pay the cost of
the Facilities; and
WHEREAS, the Authority, by due corporate action, has authorized the
issuance and sale of up to $25,000,000 aggregate principal amount of its Water
Facilities Revenue Bonds (Philadelphia Suburban Water Company Project), Series
of 1999 ("1999 Bonds" or "Bonds"), the proceeds of which shall be applied to pay
and to reimburse the Company for its payment of the costs of acquiring,
constructing, installing and equipping the Facilities; and
WHEREAS, the 1999 Bonds are to be issued under and secured by a Trust
Indenture ("Indenture"), dated as of October 1, 1999, between the Authority and
Chase Manhattan Trust Company, National Association, a national banking
association organized and existing under the laws of the United States of
America and having a corporate trust office and place of business in
Philadelphia, Pennsylvania, as successor trustee ("Trustee"); and
WHEREAS, the proceedings to be undertaken by the Authority in respect
of the acquisition, construction, installation and equipping of the Facilities
and the financing thereof have been approved by the Secretary of the Department
of Community and Economic Development of the Commonwealth of Pennsylvania,
NOW, THEREFORE, the parties hereto, intending to be legally bound
hereby and in consideration of the mutual covenant hereinafter contained, DO
HEREBY AGREE as follows:
-2-
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. Terms defined in the Preambles hereof shall
have the meanings ascribed thereto in such Preambles. Capitalized terms not
otherwise defined herein shall have the meanings ascribed thereto in the
Indenture.
For all purposes of this Agreement, the terms defined in this Article I
shall have the meanings herein specified, unless the context clearly otherwise
requires:
"Agreement" or "Financing Agreement" shall mean this Construction and
Financing Agreement dated as of October 1, 1999, between the Authority and the
Company, and any and all modifications, alterations, amendments and supplements
thereto.
"Authorized Company Representative" shall mean any Person or Persons at
the time designated to act as such on behalf of the Company by written
certificate furnished to the Authority and the Trustee containing the specimen
signature of such Person and signed on behalf of the Company by its President,
any Vice President, Secretary or Assistant Secretary, or Treasurer or Assistant
Treasurer. An Authorized Company Representative may be an employee of the
Company.
"Completion Date" shall mean the date of completion of acquisition,
construction, installation and equipping of the Facilities, as that date shall
be certified pursuant to Section 3.07 hereof.
"Construction Fund" shall mean the fund so entitled created under
Section 4.01 of the Indenture.
"Construction Period" shall mean the period between the beginning of
the construction of the Facilities or the date on which the 1999 Bonds are first
delivered to the initial purchasers thereof, whichever is earlier, and the
Completion Date.
"Continuing Disclosure Agreement" shall mean that certain Continuing
Disclosure Agreement between the Company and the Trustee dated the date of
issuance of the Bonds, as it may be amended from time to time in accordance with
the terms thereof.
-3-
"Cost of Construction" in respect of the Facilities shall mean and be
deemed to include all items within the definition of "cost" contained in the Act
including but not limited to
(a) obligations of the Authority and the Company incurred for
labor, materials and other expenses and to contractors, builders and material
men in connection with the acquisition, construction, installation and equipping
of the Facilities;
(b) the cost of contract bonds and of insurance of all kinds
that may be deemed by the Company to be desirable or necessary during the course
of acquisition, construction, installation and equipping of the Facilities which
is not paid by the contractor or contractors or otherwise provided for;
(c) the expenses of the Company not otherwise provided for,
for engineering, including test borings, surveys, estimates, plans and
specifications and preliminary investigations therefor, and for supervising
construction, as well as for the performance of all other duties required or
reasonably necessary for the proper completion of the Facilities;
(d) legal, accounting, financial, advertising, recording and
printing expenses, the service fee of the Authority, compensation and expenses
of the Trustee, and all other fees and expenses incurred in connection with the
issuance of the 1999 Bonds;
(e) interest, not otherwise provide for, accruing upon the
1999 Bonds until completion of the Facility;
(f) all other costs which the Authority and the Company shall
be required to pay under the terms of any contract or contracts for the
acquisition, construction, installation and equipping of the Facilities;
(g) all other costs, to the extent not enumerated above,
within the definition of "Cost" under the Act; and
(h) any sums required to reimburse the Authority and the
Company for advances made by them for any of the above items, or for any other
costs incurred and for work done by them which are properly chargeable to the
Facilities.
-4-
"Counsel" shall mean an attorney or firm of attorneys at law (who may
be employed by or counsel to the Authority or the Company) not unsatisfactory to
the Trustee.
"Debt Service Fund" shall mean the fund created under Section 5.03 of
the Indenture.
"Facilities" shall mean the facilities for the furnishing of water in
the counties of Bucks, Chester, Delaware and Xxxxxxxxxx which are to be
acquired, constructed, installed and equipped and to be financed under this
Agreement, less any deletions therefrom and together with any additions,
improvements and modification thereto and substitutions therefor made in
accordance with the provisions of this Agreement, as more fully described in
Exhibit A hereto.
"Final Determination or Taxability" shall mean, with respect to the
Bonds under consideration, a determination, in a final administrative proceeding
before the Internal Revenue Service (including, without limiting the generality
of the foregoing, an examination of the federal income tax return of any
Bondholder) or a court of competent jurisdiction that has made a determination,
decision, judgment or decree, or has taken any other official action, to the
effect that interest on the Bonds has become includable in the gross income of
Bondholders for federal income tax purposes, and such action is no longer
subject to appeal or other contest before the Internal Revenue Service or the
same or another court of competent jurisdiction; for this purpose, an action
shall be considered no longer subject to appeal or other contest when there has
been filed with the Trustee a Certified Resolution of the Company that the
Company will not appeal or otherwise contest such action or when the Trustee has
determined that such action is not being appealed or otherwise contested in good
faith; provided that no Bondholder shall have any duty or obligation to appeal
or otherwise contest any determination that interest on such Bonds has become
includable in the gross income of such Bondholder for Federal income tax
purposes.
"First Mortgage Bond" shall mean the bonds designated "First Mortgage
Bond, 6% Series due 2029", due June 1, 2029, in the principal amount of
$25,000,000, issued by the Company and outstanding under the Mortgage Indenture.
"Loan" shall mean the financing provided by the Authority to the
Company pursuant to Section 4.01 hereof to provide funds for and toward the
Costs of Construction of the Facilities.
-5-
"Loan Repayments" shall mean the payments to be made by the Company to
the Authority pursuant to Section 4.02(a) hereof.
"Mortgage Indenture" shall mean the Indenture of Mortgage dated as of
January 1, 1941 from the Company to The Pennsylvania Company for Insurances on
Lives and Granting Annuities (now Chase Manhattan Trust Company, National
Association), as successor mortgage trustee, as heretofore and hereafter
supplemented and amended.
"Plans and Specifications" shall mean the plans and specifications
prepared for the Facilities, duly certified by an Authorized Company
Representative and on file at the principal office of the Company in Bryn Mawr,
Pennsylvania, as the same may be revised from time to time prior to the
Completion Date in accordance with Section 3.06 of this Agreement.
"Redemption Price" shall mean the principal amount of the Bonds subject
to redemption plus any premium applicable thereto.
"Tax Compliance Agreement" shall have the meaning set forth in the
Indenture.
-6-
ARTICLE II
REPRESENTATIONS AND FINDINGS
SECTION 2.01. Representations and Warranties of the Authority. The
Authority makes the following representations as the basis for the undertakings
on the part of the Company herein contained:
(a) The Authority is a public instrumentality of the
Commonwealth and a public body corporate and politic organized and existing
under and pursuant to the Act;
(b) The Authority has power to enter into this Agreement and
to perform and observe the agreements and covenants on its part contained
herein; and by proper corporate action has duly authorized the execution and
delivery hereof; and the execution and delivery of this Agreement by the
Authority and its performance of its obligations hereunder, to the best of its
knowledge, do not and will not violate or constitute a default under the
Authority's Articles of Incorporation or bylaws or any agreement, indenture,
mortgage, lease, note or other obligation or instrument or order or regulation
of any court or administrative agency binding upon the Authority;
(c) Under existing statutes and decisions no taxes on income
or profits are imposed on the Authority; and
(d) As required by the Act, the Department of Community and
Economic Development has approved as of July 14, 1999, the proceedings to be
undertaken in respect of the issuance and sale of the 1999 Bonds and the
construction of the Facilities.
SECTION 2.02. Representation and Warranties of the Company. The Company
makes the following representations as the basis for the undertakings on the
part of the Authority herein contained:
-7-
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the Commonwealth, and has all
required corporate power to enter into this Agreement and to perform and observe
the agreements and covenants on its part contained herein; the Company by proper
corporate action has duly authorized the execution and delivery of this
Agreement; and the execution and delivery of this Agreement by the Company and
its performance of its obligations hereunder do not and will not violate or
constitute a default under the Corporation's Articles of Incorporation or bylaws
or any agreement, indenture, mortgage, lease, note or other obligation or
instrument or any order of any court or administrative agency binding upon the
Company;
(b) The cost of the Facilities, as defined in the Act, is
estimated by the Company as of the date hereof to be not less than $25,000,000;
and
(c) The Facilities are to be located in the Counties of
Delaware, Xxxxxxx, Xxxxxxxxxx and Bucks, in the Commonwealth, and within the
authorized service area of the Company.
SECTION 2.03. Findings of the Authority. The Authority hereby confirms
its findings that:
(a) The Company is of a nature and size and is engaged in
activities which require substantial capital, is financially responsible to
assume all obligations prescribed by the Authority and the Act and is qualified
to be an "occupant" for purposes of the Act; and
(b) The Project to be undertaken by the Authority hereunder
will promote the purposes of the Act by protecting the health, safety and
general welfare of the people of the Commonwealth and encouraging economic
development within the Commonwealth through the provision of basic services and
facilities, thereby alleviating unemployment, maintaining employment at a high
level and creating and developing business opportunities.
-8-
ARTICLE III
COMPLETION OF THE FACILITIES; ISSUANCE OF THE BONDS
SECTION 3.01. Portions of Project Completed. Work on certain of the
Facilities has been commenced and/or has been completed.
SECTION 3.02. Acquisition, Etc., of the Facilities; Completion. The
Company will cause the acquisition, construction, installation and equipping of
the Facilities to be completed with all reasonable dispatch for and at the
expense of the Authority, as herein provided, substantially in accordance with
the Plans and Specifications. In order to effectuate the purposes of this
Agreement, the Company will make, execute, acknowledge and deliver, or cause to
be made, executed, acknowledged and delivered, all such contracts, orders,
receipts, writings and instructions, in the name of the Company or otherwise,
with or to other persons, firms or corporations, and in general do or cause to
be done all such other things as may be requisite or proper for acquiring,
constructing, installing and equipping the Facilities and fulfilling the
obligations of the Company under this Agreement.
The Company will maintain such records in connection with the
acquisition, construction, installation and equipping of the Facilities as to
permit ready identification of the Facilities, and the Cost of Construction
thereof.
SECTION 3.03. Issuance of Bonds. In order to provide funds for payment
of the Cost of Construction of the Facilities the Authority will sell, issue and
deliver to the initial purchasers thereof, the 1999 Bonds and deliver the
proceeds thereof to the Trustee. A sum equal to the accrued interest, if any,
paid by the initial purchasers of the 1999 Bonds shall be deposited in the Debt
Service Fund and the balance of the proceeds received from said sale, after
payment of the costs of issuance of the 1999 Bonds, and certain other funds of
the Company available for the purpose, shall be deposited in the Construction
Fund.
SECTION 3.04. Payments From Construction Fund. In the Indenture, the
Authority has authorized and directed the Trustee to make payments from the
Construction Fund to pay the Cost of Construction of the Facilities upon receipt
of Requisitions (as defined therein) signed by an Authorized Company
Representative, setting forth the matters required pursuant to Exhibit "B" to
the Indenture.
-9-
SECTION 3.05. Requisitions. The Company will cause such Requisitions to
be submitted to the Trustee as may be necessary to effect payments out of the
Construction Fund in accordance with the provisions of the Indenture; provided,
however, that the Company will not submit any Requisition for payment of any
item not properly included in the cost of the Facilities as defined in the Act
or which, if paid, would result in less than 95% of the proceeds from the 1999
Bonds being used to acquire, construct, install and equip the Facilities.
SECTION 3.06. Plans and Specifications. The Company may revise the
Plans and Specifications, including revisions to add structures, equipment,
fixtures and machinery not described in Exhibit A hereto, and modifications or
deletions of structures, equipment, fixtures and machinery described therein, at
any time and from time to time prior to the Completion Date, provided that in
the case of a material change, (a) an Authorized Company Representative shall
certify to the Trustee that the Facilities provided for by the revised Plans and
Specifications will constitute facilities for the furnishing of water meeting
the requirements of Section 142(a)(4) of the Code; and (b) the Trustee shall be
furnished with a Favorable Opinion of Recognized Bond Counsel that the revision
of the Plans and Specifications and the expenditure of moneys from the
Construction Fund to pay the Cost of Construction of the Facilities in
accordance with the revised Plans and Specifications will not adversely affect
the exclusion of interest on the 1999 Bonds from gross proceeds of the holders
thereof for federal income purposes.
SECTION 3.07. Completion of Facilities. When the Facilities have been
completed, the Company shall so notify the Authority and the Trustee by a
certificate of an Authorized Company Representative. Such certificate shall
establish the Completion Date and shall state that, except for amounts retained
by the Trustee at the Company's direction for any Cost of Construction of the
Facilities not then due and payable or the liability for payment of which is
being contested or disputed by the Company: (a) acquisition, construction,
installation and equipping of the Facilities have been completed substantially
in accordance with the Plans and Specifications, and all labor, services,
materials and supplies used therefor have been paid for; and (b) all other
facilities necessary in connection with the Facilities have been constructed,
installed and equipped in accordance with the Plans and Specifications, and all
costs and expenses incurred in connection therewith have been paid.
Notwithstanding the foregoing, such certificate may state that it is given
without prejudice to any rights against third parties which exist at the date
thereof or which may subsequently come into being.
-10-
SECTION 3.08. Company to Pay Additional Amounts If Required. If the
moneys in the Construction Fund shall not be sufficient to pay the Cost of
Construction of the Facilities in full, the Company will complete the Facilities
and pay all that portion of the Cost of Construction thereof in excess of the
moneys available therefor in the Construction Fund. The Authority does not make
any warranty, either express or implied, that the moneys which will be paid into
the Construction Fund will be sufficient to pay the Cost of Construction of the
Facilities. If the Company shall pay any portion of the Cost of Construction of
the Facilities pursuant to the provisions of this Section, it shall not be
entitled to any reimbursement therefor from the Authority, the Trustee or the
holders of any of the 1999 Bonds, nor shall it be entitled to any diminution in
or postponement of the Loan Repayments required in Section 4.02 hereof to be
paid by the Company.
SECTION 3.09. Contractor Defaults; Company Proceedings. In the event of
default of any contractor or subcontractor under any contract made by it in
connection with the Facilities or in the event of a breach of warranty with
respect to any materials, workmanship or performance guaranty, the Company may
proceed, either separately or in conjunction with others, to pursue such
remedies against the contractor or subcontractor so in default and against each
surety for the performance of such contract as it may deem advisable. The
Company will advise the Authority of the steps it intends to take in connection
with any such default.
If the Company shall so notify the Authority, the Company may,
in its own name or in the name of the Authority, prosecute any action or
proceeding or take any other action involving any such contractor, subcontractor
or surety which the Company deems reasonably necessary, and in such event the
Authority will cooperate fully with the Company. Any amounts recovered by way of
damages, refunds, adjustments or otherwise in connection with the foregoing
prior to the Completion Date shall be paid into the Construction Fund, and any
amounts so recovered after the Completion Date shall be retained by or paid to
the Company.
SECTION 3.10. Investment of Amounts in the Construction Fund. Any
moneys held in the Construction Fund shall be invested or reinvested as provided
in Article VI of the Indenture. The Company shall not request any investment of
such moneys which would be in violation of the covenant of the Authority
contained in the final paragraph of Section 6.03 of the Indenture.
-11-
ARTICLE IV
LOAN AND OTHER AMOUNTS
SECTION 4.01. Loan by Authority to Company. The Authority on this date
is lending to the Company the sum of $25,000,000 ("Loan"), being the
proceeds of the issuance of the 1999 Bonds.
SECTION 4.02. Repayment of Loan and Other Amounts. (a) Loan Repayments.
The Company shall pay to the Authority, as and for the repayment of the loan,
(i) on the second Business Day prior to each Interest Payment Date, maturity
date or date established for the redemption of the 1999 Bonds, as the case may
be, an amount which, together with other moneys available for the purpose in the
Debt Service Fund under the Indenture, will equal the sum of (x) the interest
which will become due on such date on the 1999 Bonds; plus (y) the principal
amount of the 1999 Bonds, if any, maturing on such date; plus (z) the principal
amount of and premium, if any, on the 1999 Bonds, if any, to be redeemed on such
date; and (ii) on any date on which the 1999 Bonds shall be declared to be and
shall become due and payable prior to their stated maturity pursuant to the
provisions of the Indenture, an aggregate amount equal to the sum of the
principal or redemption price of and interest so becoming due and payable on the
1999 Bonds (all of the foregoing are collectively "Loan Repayments").
Nothing herein contained shall be construed as imposing on the
Authority or on the Trustee any duty or responsibility of giving any prior
notice to the Company of the due date of any Loan Repayment hereunder, or of the
amount on deposit in the Debt Service Fund, or of the amount of any credits
available to the Company against any Loan Repayment and failure by the Company
to receive any such prior notice, even if customarily given by the Authority or
the Trustee, shall not relieve the Company of its obligation to make any Loan
Repayment when it is due and payable.
All such payments shall be made in funds which will be immediately
available funds at the place of payment on the payment date in question. The
Company shall have the option to make prepayment, from time to time, in whole or
in part of any amount due as aforesaid on account of the Loan, together with
interest accrued and to accrue with respect to such prepayment. The Authority
shall direct the Trustee in writing to apply such prepayments to the purchase or
redemption of Bonds in such manner, consistent with the provisions of the
Indenture, as may be directed by the Company.
-12-
In the event the Company shall fail to make any of the payments
required in this Section, the item or payment so in default shall continue as an
obligation of the Company until the amount in default shall have been fully
paid, and the Company will pay the same with interest thereon from the due date
until paid at the highest rate per annum borne by the Bonds.
The obligation of the Company to make Loan Repayments hereunder is
subject to acceleration as set forth in Section 7.02 hereof.
(b) Other Amounts. So long as any Bonds are outstanding, the Company
shall pay to the Authority on each of the Loan Repayment dates referred to in
Section 4.02(a) of this Agreement the amount of Administration Expenses not
theretofore provided for which have then accrued and become payable.
In furtherance of the foregoing, the parties agree that the Company
shall pay to the Authority the reasonable fees and expenses of the Authority in
connection with this Agreement and the Bonds and any and all other expenses
incurred in connection with the authorization, issuance, sale and delivery of
the Bonds or incurred by the Authority in connection with any litigation which
may at any time be instituted involving this Agreement, the Bonds, or any of the
other documents contemplated thereby, or incurred in connection with the
administration of this Agreement, or otherwise in connection with this
Agreement, or any of the other documents, instruments or agreements in
connection therewith. Such fees shall include, but not be limited to, the
Authority's regular annual administration fees and termination fees.
SECTION 4.03. Security For Payment. To further secure the obligation of
the Company to make Loan Repayments, the Company will execute and deliver its
First Mortgage Bond under the Mortgage Indenture in one or more series, in such
principal amounts and with such interest rates, interest payment and maturity
dates and redemption provisions as may correspond to such provisions of the 1999
Bonds issued and sold by the Authority. Contemporaneously with the execution and
delivery of this Agreement the Company is executing and delivering, as security
for its obligation to make Loan Repayments, its First Mortgage Bond which
contains provisions with respect to interest rate, interest payment and maturity
dates, redemption and acceleration of maturity corresponding to such provisions
of the 1999 Bonds.
-13-
SECTION 4.04. Assignment to Trustee. It is understood and agreed that
the obligations of the Company to make the payments due under this Agreement and
the First Mortgage Bond securing those obligations are to be assigned and
pledged by the Authority to the Trustee. The Company assents to such assignment
and pledge and agrees that, as to the Trustee, its obligation to make such
payments and the payments required under the First Mortgage Bond shall be
absolute and unconditional and shall not be subject to any defense other than
payment or to any right of set off, counterclaim or recoupment arising out of
any breach by the Authority of any obligation to the Company, whether hereunder
or otherwise, or out of any indebtedness or liability at any time owing to the
Company by the Authority.
The Authority hereby directs the Company and the Company agrees to pay
to the Trustee at its designated office in Philadelphia, Pennsylvania, all
payments pursuant to this Agreement and the payments required under the First
Mortgage Bond.
SECTION 4.05. Operation and Maintenance. The Company shall maintain,
preserve, and keep the Facilities or cause the Facilities to be maintained,
preserved and kept, with the appurtenances and every part and parcel thereof, in
good repair, working order and condition and, from time to time, will make or
cause to be made all such repairs, replacements and renewals as it deems
necessary. The Authority shall not operate the Facilities or have any obligation
to maintain them.
The Company shall have the privilege of remodeling the Facilities or
making substitutions, modifications and improvements to the Facilities from time
to time as it, in its discretion, may deem to be desirable for its uses and
purposes, the cost of which remodeling, substitutions, modifications and
improvements shall be paid by the Company and the same shall be the property of
the Company and be included under the terms of this Agreement as part of the
Facilities.
SECTION 4.06. Insurance. At all times during the term of this Agreement
the Company will keep the Facilities continuously insured in accordance with the
requirements of the Mortgage Indenture.
-14-
SECTION 4.07. Liens. The Company will pay or cause to be discharged or
make adequate provision to satisfy and discharge, within sixty (60) days after
the same shall accrue, any lien or charge (other than Permitted Encumbrances)
upon any Loan Repayments hereunder or upon any First Mortgage Bond pledged as
security for the payment thereof and all lawful claims or demands which, if
unpaid, might be or become a lien upon any Loan Repayments hereunder or upon any
First Mortgage Bond pledged as security for the payment thereof. Notwithstanding
the foregoing, if the Company shall first notify the Authority and Trustee of
its intention so to do, the Company may in good faith contest any such lien or
charge or claim or demand in appropriate legal proceedings, and in such event
may permit the items so contested to remain undischarged and unsatisfied during
the period of such contest and any appeal therefrom, unless the Authority or the
Trustee shall notify the Company in writing that, in the opinion of Counsel, by
nonpayment of any such items the lien of the Indenture as to the Loan Repayments
payable pursuant to this Agreement or as to any First Mortgage Bond pledged as
security for the payment thereof shall be materially endangered, in which event
the Company shall promptly pay and cause to be satisfied and discharged all such
unpaid items. The Authority will cooperate fully with the Company in any such
contest.
SECTION 4.08. Facilities Used For Purpose of the Act. So long as the
Company operates the Facilities, they will be used for purposes permitted by the
Act and as facilities for the furnishing of water.
SECTION 4.09. Payment of Certain Costs. The Company shall pay, or cause
to be paid in addition to the payments provided for in Section 4.02, Section
4.04 and Section 4.07 hereof, all of the expenses of operation of the
Facilities, including, without limitation, the cost of all necessary and proper
repairs, replacements and renewals made pursuant to Section 4.05 hereof.
SECTION 4.10. Obligation to Make Payments Absolute. It is understood
and agreed that the payments under Section 4.02 hereof and other charges payable
hereunder shall continue to be payable at the time and in the amounts herein
specified, whether or not the Facilities, or any portion thereof, shall have
been destroyed by fire or other casualty, or title thereto, or the use thereof,
shall have been taken by the exercise of the power of eminent domain, and that
there shall be no abatement of any such payments and other charges by reason
thereof.
-15-
ARTICLE V
SPECIAL COVENANTS
SECTION 5.01. No Warranty. The Authority makes no warranty, either
express or implied, as to the actual or designed capacity of the Facilities, as
to the suitability of the Facilities for the purposes specified in this
Agreement, or that the Facilities will be suitable for the Company's purposes or
needs.
SECTION 5.02. Company to Maintain Corporate Existence, Etc. The Company
shall maintain its corporate existence and its qualification to do business in
the Commonwealth, will not dissolve or otherwise dispose of all or substantially
all its assets and will not consolidate with or merge into another corporation
except as provided in this Section 5.02; provided, however, that the Company may
consolidate with or merge into another corporation, or sell or otherwise
transfer to another Company all or substantially all its assets as an entirety
and thereafter dissolve, if (a) the successor corporation assumes in writing all
the obligations of the Company herein and in the First Mortgage Bond, and (b) if
the successor corporation is not a Pennsylvania corporation, said successor
shall either qualify to do business in the Commonwealth or file with the Trustee
a consent to service of process in the Commonwealth in form satisfactory to the
Trustee.
If consolidation, merger or sale or other transfer is made as permitted
by this Section, the provisions of this Section shall continue in full force and
effect and no further consolidation, merger or sale or other transfer shall be
made except in compliance with the provisions of this Section.
SECTION 5.03. Operation of Facilities; Maintenance of Licenses and
Permits. The Company shall operate the Facilities as part of its system for the
furnishing of water to the general public at rates approved by the Public
Utility Commission of the Commonwealth , and to that end will maintain in force
and effect the requisite franchises, operating rights, certificates of public
convenience and necessity, tariffs, licenses and permits.
-16-
SECTION 5.04. Additional Permits. In the event it may be necessary for
the proper performance of this Agreement on the part of the Authority or the
Company that any application or applications for any permit or license to do or
to perform certain things be made to any governmental or other agency by the
Company or the Authority, the Company and the Authority shall execute upon the
request of the other such application or applications.
SECTION 5.05. Authority to Maintain Corporate Existence, Etc. The
Authority will maintain its corporate existence and duly will procure any
necessary renewals and extensions thereof; will use its best efforts to
maintain, preserve and renew all its rights, powers, privileges and franchises;
and will comply with all valid acts, rules, regulations, orders and directions
of any legislative, executive, administrative or judicial body applicable to the
Facilities. The Authority further covenants that it will not voluntarily or
knowingly take or fail to take any action that would result in the loss of any
exemption from taxes which it presently enjoys or to which it may subsequently
become entitled.
SECTION 5.06. Compliance With Continuing Disclosure Agreement. The
Company hereby covenants and agrees that it will comply with and carry out all
of the provisions of the Continuing Disclosure Agreement. Notwithstanding any
other provision of this Agreement, failure of the Company to comply with the
Continuing Disclosure Agreement shall not be considered an Event of Default
hereunder or under the Indenture; however, the Trustee may (and, at the request
of any Participating Underwriter (as defined in the Continuing Disclosure
Agreement) or the holders of at least 25% aggregate principal amount in
Outstanding 1999 Bonds and provision of indemnity satisfactory to the Trustee in
its sole discretion, shall) or any Bondholder may, take such actions as may be
necessary and appropriate, including seeking specific performance by court
order, to cause the Company to comply with its obligations under this Section
5.06.
-17-
SECTION 5.07. Certain Tax Covenants. The Company will comply with all
provisions of the Tax Compliance Agreement to be complied by it. The Company
will not take any action or fail to take any action (including the requirement
to make rebate payments to the United States as required under Section 148(f) of
the Code and the Tax Compliance Agreement and the obligations described in 5.05
of the Indenture) which would cause the Bonds to be "arbitrage bonds" within the
meaning of Sections 103(b) and 148(a) of the Code or would otherwise cause
interest on the 1999 Bonds to be includible in the gross income of the holders
thereof for federal income tax purposes (except with respect to the interest on
the 1999 Bonds during any period when such Bonds are held by a "substantial
user" of the Facilities financed by the 1999 Bonds or a "related person" within
the meaning of Section 147(a) of the Code); provided, however, that if the
Trustee receives an opinion of Recognized Bond Counsel that any action or
failure to take action will cause the interest on the 1999 Bonds to be included
in the gross income of Bondholders for Federal income tax purposes, no Event of
Default shall be deemed to have occurred unless and until there is a Final
Determination of Taxability.
SECTION 5.08. Financial Statements. For so long as the Bond Insurance
Policy is outstanding and in effect, the Company shall provide the Bond Insurer
within 120 days after the end of the Company's fiscal year copies of the
Company's audited financial statements and such additional information as the
Bond Insurer may reasonably request from time to time.
-18-
ARTICLE VI
ASSIGNMENT, LEASING AND SALE OF FACILITIES
SECTION 6.01. Assignment, Lease and Sale of Facilities. The Company
shall not sell, lease or otherwise dispose of or encumber the Facilities except
as provided in Section 5.02 and this Section 6.01. This Agreement may be
assigned in whole or in part and the Facilities may be sold or leased as a whole
or in part by the Company, subject, however, to the following conditions:
(a) The Company may sell or otherwise dispose of any
machinery, fixtures, apparatus, tools, instruments or other movable property
constituting part of the Facilities (collectively, "Moveable Property") which
the Company deems no longer to be needed or useful in its operation of the
Facilities; provided, that if the original cost of acquisition of such
machinery, fixtures, apparatus, tools, instruments or other movable property was
more than $100,000, the Company shall, in writing, certify to the Authority that
such items are no longer needed or useful in its operation of the Facilities.
Any proceeds thereof shall be paid to the Trustee for deposit in the
Construction Fund or used to purchase replacements for the Moveable Property
sold or disposed of pursuant to this Section 6.01(a);
(b) No sale, assignment or leasing (other than pursuant to
Section 5.02 hereof) shall relieve the Company from primary liability for any of
its obligations hereunder, and in the event of any such sale, assignment or
leasing the Company shall continue to remain primarily liable for the payments
specified in Sections 4.02, 4.04 and 4.07 hereof and for performance and
observance of the other agreements on its part herein provided;
(c) The purchaser, assignee or lessee from the Company shall
assume the obligations of the Company hereunder to the extent of the interest
assigned or leased;
(d) The Company shall, at least fifteen (15) days prior to the
delivery thereof, furnish or cause to be furnished to the Authority, for its
information only, a true and complete copy of each such proposed sale agreement,
assignment or lease, as the case may be, and shall furnish to the Authority and
the Trustee an executed copy thereof following execution;
-19-
(e) The Company shall pay the Authority's and the Trustee's
reasonable costs and expenses incurred, and the reasonable fees charged thereby,
in connection with such sale, assignment or lease; and
(f) The Company shall furnish to the Trustee a Favorable
Opinion to the effect that the proposed sale, assignment or lease, as the case
may be, will not adversely affect the exclusion of interest on the 1999 Bonds
from gross income of the holders thereof from federal income tax purposes.
SECTION 6.02. Assignment of Rights Under Agreement. The Authority shall
assign its rights under and interest in this Agreement (except for its rights to
receive certain fees and expenses, to receive certain notices, and any and all
rights to indemnification), and will pledge and assign all Loan Repayments and
security therefor, including the First Mortgage Bond of the Company pledged as
security therefor, and receipts and revenues receivable under or pursuant to
this Agreement, and income earned by the investment of funds held under the
Indenture, to the Trustee pursuant to the Indenture as security for payment of
the principal of, premium, if any, and interest on the Bonds, but such
assignment or pledge shall be subject to this Agreement.
Except as provided in Section 6.01(b) and Section 6.02 hereof, the
Authority will not otherwise sell, assign, transfer, convey or dispose of the
revenues from the Facilities or the First Mortgage Bond during the term of this
Agreement, nor will it take any action which may reasonably be construed as
tending to cause or induce the levy of special assessments against the
Facilities or such revenues or the First Mortgage Bond, nor will it create or
suffer to be created any lien or charge upon the Facilities or such revenues or
the First Mortgage Bond except Permitted Encumbrances.
-20-
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
SECTION 7.01. Events of Default. (a) Subject to the provisions set
forth in Section 7.01(c) hereof, each of the following shall be an "Event of
Default" under this Agreement, and the terms "Event of Default" or "Default"
shall mean, whenever they are used in this Agreement, any one or more of the
following events:
(i) Failure by the Company to pay when due any Loan
Repayments; or
(ii) Failure by the Company to pay when due any
payment required to be made under this Agreement other than Loan Repayments,
which failure shall continue for a period of sixty (60) days after written
notice, specifying such failure and requesting that it be remedied, is given to
the Company by the Authority or the Trustee, unless the Company is contesting in
good faith its obligation to make the payment or the Authority and the Trustee
shall agree in writing to an extension of such time prior to its expiration; or
(iii) Failure by the Company to observe and perform
any covenant, condition or agreement on its part to be observed or
performed, other than as referred to in subsections (a) and (b) of this Section,
which failure shall continue for a period of sixty (60) days after written
notice, specifying such failure and requesting that it be remedied, is given to
the Company by the Authority or the Trustee, unless the Authority and the
Trustee shall agree in writing to an extension of such time prior to its
expiration; or
(iv) The dissolution or liquidation of the Company or
the filing by the Company of a voluntary petition under the laws of the
United States relating to bankruptcy or failure by the Company promptly to
procure the dismissal of an involuntary petition in bankruptcy filed against it,
or an assignment by the Company for the benefit of its creditors, or the entry
by the Company into an agreement of composition with its creditors, or the
appointment by a court of competent jurisdiction of a receiver for the Company.
The term "dissolution or liquidation of the Company" as used in this subsection,
shall not be construed to include the cessation of the corporate existence of
the Company resulting either from a merger or consolidation of the Company into
or with another Company or a dissolution or liquidation of the Company following
a transfer of all or substantially all its assets as an entirety under the
conditions permitting such actions contained in Section 5.02 hereof.
-21-
(b) A failure by the Authority to observe or perform any
covenant or agreement herein contained on its part to be observed or performed
shall not constitute an event of default hereunder, but the Company shall be
entitled to enforce the observance and performance by the Authority of any of
its covenants or agreements herein contained by such remedies at law or in
equity as it deems desirable, subject to the limitation of liability set forth
in Section 8.03 hereof.
(c) The foregoing provisions of this Section are subject to
the following limitations: if by reason of acts of God; strikes, lockouts or
other industrial disturbances; acts of public enemies; orders of any kind of the
government of the United States or of the Commonwealth or any department,
agency, political subdivision or official of either of them, or any civil or
military authority; insurrections; riots; epidemics; landslides; lightning;
earthquakes; fires; hurricanes; storms; floods; washouts; droughts; arrests;
restraint of government and people; civil disturbances; explosions; breakage or
accident to machinery; partial or entire failure of utilities; or any cause or
event not reasonably within the control of the Company, the Company is unable in
whole or in part to carry out its agreements herein contained, other than the
obligations on the part of the Company contained in Sections 4.02 hereof, the
Company shall not be deemed in default during the continuance of such inability.
The Company agrees to use its best efforts to remedy with all
reasonable dispatch the cause or causes preventing it from carrying out its
agreements; provided, however, that the settlement of strikes, lockouts and
other industrial disturbances shall be entirely within the discretion of the
Company, and the Company shall not be required to make settlement of strikes,
lockouts and other industrial disturbances by acceding to the demands of the
opposing party or parties when such course, in the judgment of the Company , is
unfavorable to the Company.
Any failure of the Company to perform its obligations under
Section 4.02 hereof shall constitute an Event of Default regardless of the
reason for such failure to perform.
SECTION 7.02. Remedies. Whenever any Event of Default referred to in
Section 7.01 hereof shall have happened and be subsisting, any one or more of
the
-22-
following remedial steps may be taken, provided such Default has not theretofore
been cured:
(a) The Authority, at its option, may declare the unpaid
principal balance of the Loan to be immediately due and payable, whereupon the
same shall become immediately due and payable; and
(b) The Authority may take any action at law or in equity to
collect the payments then due and thereafter to become due or to enforce
performance and observance of any obligation, agreement or covenant of the
Company under this Agreement and under the First Mortgage Bond. All amounts
collected pursuant to action taken under this Section shall be applied in
accordance with the Indenture.
SECTION 7.03. Remedies Not Exclusive. No remedy conferred upon or
reserved to the Authority by this Agreement is intended to be exclusive of any
other available remedy or remedies, but each and every such remedy shall be
cumulative and shall be in addition to every other remedy given under this
Agreement or now or hereafter existing at law or in equity or by statute. No
delay or omission to exercise any right or power accruing upon any default shall
impair any such right or power or shall be construed to be a waiver thereof, but
any such right and power may be exercised from time to time and as often as may
be deemed expedient. In order to entitle the Authority to exercise any remedy
reserved to it in this Article, it shall not be necessary to give any notice
other than such notice as may be herein expressly required.
SECTION 7.04. Reimbursement of Fees and Expenses. If the Company shall
default under any of the provisions of this Agreement and the Authority shall
employ attorneys or incur other expenses for the collection of Loan Repayments
or for the enforcement of performance or observance of any obligation or
agreement on the part of the Company contained in this Agreement or in the First
Mortgage Bond, the Company, on demand therefor, will reimburse the Authority for
reasonable fees and expenses of such attorneys and such other reasonable
expenses so incurred.
-23-
SECTION 7.05. Waivers of Breaches. In the event any agreement contained
in this Agreement shall be breached by either party and such breach shall
thereafter be waived by the other party, such waiver shall be limited to the
particular breach so waived and shall not be deemed to waive any other breach
hereunder. In view of the assignment of the Authority's rights in and under this
Agreement to the Trustee under the Indenture, the Authority shall have no power
to exercise any right hereunder or waive any default hereunder by the Company
without the written consent of the Trustee to such exercise or waiver, or, if
the maturity of the Outstanding 1999 Bonds shall have been accelerated at the
request of the holders of the 1999 Bonds, the consent of the holders of a
majority in principal amount of the 1999 Bonds then Outstanding. In the event
any default by the Company hereunder shall have been waived as a default under
the Indenture by the holders of the requisite majority in principal amount of
the 1999 Bonds, no consent of the Trustee shall be required, and the Authority
shall be obligated to waive the Company's default hereunder.
-24-
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Termination. This Agreement shall terminate upon (i)
payment in full of the 1999 Bonds (including interest and premium, if any,
thereon), or the making of provision for payment thereof in accordance with the
provisions of the Indenture; (ii) payment of all other reasonable and necessary
obligations incurred by the Authority to pay the Cost of Construction of the
Facilities, including interest, Premium and other charges, if any, thereon; and
(iii) payment of all unpaid Administration Expenses.
Any amounts, other than amounts being held for payment of the
1999 Bonds or other payments referred to in the preceding sentence, then
remaining in the Debt Service Fund and other Funds established under the
Indenture shall belong to and be paid to the Company by the Trustee.
SECTION 8.02. Notices. All notices, certificates, requests or other
communications hereunder shall be sufficiently given and shall be deemed given
when mailed by registered mail, postage prepaid, addressed as follows:
if to the Authority:
000 X. Xxxxx Xxxxxx
Xxxxx 000
Xxxxx, Xxxxxxxxxxxx 00000
if to the Company:
000 Xxxxxxxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxxxxx 00000
Attention: Vice President and Treasurer
-25-
if to the Trustee:
Chase Manhattan Trust Company, National Association
One Liberty Place
Suite 5210
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Corporate Trust Department
A duplicate copy of each notice, certificate, request or other communication
given hereunder to the Authority, the Company or the Trustee shall also be given
to the others. The Company, the Authority and the Trustee, by giving notice as
above provided, may designate any further or different addresses to which
subsequent notices, certificates, requests or other communications shall be
sent.
SECTION 8.03. Benefit of Agreement. This Agreement shall inure to the
benefit of and shall be binding upon the Authority, the Company and their
respective successors and assigns, subject to the limitation that any obligation
or liability of the Authority created by or arising out of this Agreement shall
not be a general debt or liability of the Authority, but shall be payable solely
out of the proceeds derived from this Agreement, the First Mortgage Bond, or the
sale of the 1999 Bonds or income earned on invested funds as provided herein and
in the Indenture.
SECTION 8.04. Amendments. This Agreement may be amended in any respect
but only by written agreement of the parties hereto, subject to the limitations
upon such amendments set forth in the Indenture.
SECTION 8.05. Counterparts. This Agreement may be executed in any
number of counterparts, each of which, when so executed and delivered shall be
an original; but such counterparts shall together constitute but one and the
same Agreement.
SECTION 8.06. Invalidity of Certain Clauses. If any clause, provision
or section of this Agreement be held illegal or invalid by any court, the
invalidity of such clause, provision or section shall not affect any of the
remaining clauses, provisions or sections hereof, and this Agreement shall be
construed and enforced as if such illegal or invalid clause, provision or
section had not been contained herein. In case any agreement or obligation
contained in this Agreement be held to be in violation of law, then such
agreement or obligation shall be deemed to be the agreement or obligation of the
Authority or the Company, as the case may be, only to the extent permitted by
law.
-26-
SECTION 8.07. Governing Law. The laws of the Commonwealth shall govern
the construction and interpretation of this Agreement.
SECTION 8.08. Indemnification.
(a) The Company agrees that at all times it will protect and
hold the Authority and its officers, members, employees and agents (including,
but not limited to, the Authority's legal counsel), past, present and future,
harmless and indemnified from and against all claims for losses, damages or
injuries to the Trustee or others, including death, personal injury and property
damage or loss, arising during the term hereof or during any other period when
the Authority has, had or shall have any interest in the Facilities or arising
out of the use thereof or any activity conducted thereon or in any other manner
connected therewith, directly or indirectly, including but not limited to claims
arising out of the acquisition, construction, installation, equipping and
operation of the Facilities; and the Authority, and its officers, members,
employees and agents, past, present and future, shall not be liable for any
loss, damage or injury to the Person or property of the Company or its agents,
servants or employees or any other Person who or that may be upon the Facilities
or damaged or injured as a result of any condition existing or activity
occurring upon the Facilities or any other matter connected directly or
indirectly therewith due to any act or negligence of any Person, excepting only
willful misconduct or gross negligence of the Authority, and its officers,
agents, members or employees, past, present and future.
(b) The Company hereby covenants and agrees that it will
indemnify and hold the Trustee and its directors, officers, agents and employees
(collectively, the "Indemnitees") harmless from and against any and all claims,
liabilities, losses, damages, fines, penalties, and expenses, including
out-of-pocket, incidental expenses, legal fees and expenses, the allocated costs
and expenses of in-house counsel and legal staff and the costs and expenses of
defending or preparing to defend against any claim (collectively "Losses") that
may be imposed on, incurred by, or asserted against, the Indemnitees or any of
them for following any instruction or other direction upon which the Trustee is
authorized to rely pursuant to the terms of this Agreement and the Indenture. In
addition to and not in limitation of the immediately preceding sentence, the
Company also covenants and agrees to indemnify and hold the Indemnitees and each
of them harmless from and against any and all Losses that may be imposed on,
incurred by, or asserted against the Indemnitees or any of them in connection
with or arising out of the Trustee's performance under this Agreement and the
Indenture, provided the Trustee has not acted with negligence or engaged in
willful misconduct. The provisions of this Section 8.08(b) shall survive the
termination of this Agreement and the Indenture, the defeasance of the 1999
bonds and the resignation or removal of the Trustee for any reason.
-27-
(c) The Company shall indemnify, hold harmless and defend the
Authority and the Trustee and the respective officers, members, directors,
employees and agents (including, but not limited to, the Authority's and the
Trustee's legal counsel) each of them, past, present and future, against all
loss, costs, damages, expenses, suits, judgments, actions and liabilities of
whatever nature, including, specifically, (i) any liability under any state or
federal securities laws (including, but not limited to attorneys fees,
litigation and court costs, amounts paid in settlement and amounts paid to
discharge judgments) and (ii) any and all costs and expense arising out of, or
from, any state or federal environmental laws (including, without limitation,
costs of remediation, attorney's fees and expenses, litigation and court costs,
amounts paid in settlement and amounts paid to discharge judgments) directly or
indirectly resulting from or arising out of or related to: (A) the design,
construction, installation, operation, use, occupancy, maintenance or ownership
of the Facilities (including compliance with laws, ordinances and rules and
regulations of public authorities relating thereto); or (B) any statements or
representations with respect to Company, the Project, this Agreement, the 1999
Bonds, the Indenture or any other document or instrument delivered in connection
with the issuance of the 1999 Bonds (including any statements or representations
made in connection with the offer or sale thereof) made or given to the
Authority, the Trustee or any underwriters or purchasers of any of the bonds, by
the Company or any of its directors, officers, agents or employees, including
but not limited to, statements or representations of facts, financial
information or corporate affairs.
The Company also will pay and discharge and indemnify and hold harmless
the Authority and the Trustee from (i) any lien or charge upon payments by the
Company to the Authority and the Trustee under this Agreement, and (ii) any
taxes (including, without limitation, any ad valorem taxes and sales taxes,
assessments, impositions and other charges) in respect of any portion of the
Facilities.
If any such claim is asserted, or any such lien or charge upon
payments, or any such taxes, assessments, impositions or other charges are
sought to be imposed, the Authority or the Trustee will give prompt notice to te
Company, and the Company shall have the sole right and duty to assume, and will
assume, the defense thereof, with full power to litigate, compromise or settle
the same in its sole discretion.
-28-
(d) The Company releases the Authority and the Trustee from,
agrees that the Authority and the Trustee shall not be liable for, and agrees to
indemnify and hold the Authority and the Trustee and their agents, employees and
servants, harmless from, any liability arising out of the construction of the
Facilities or the Loan. If any such claim is asserted, the Authority or the
Trustee will give prompt notice to the Company and the Company will assume the
defense thereof, with full power to litigate, compromise or settle the claim in
its sole discretion. The Company will reimburse the Authority or the Trustee, as
the case may be, for all direct costs, including reasonable attorney's fees and
expenses properly incurred in connection therewith.
(e) If the indemnification provided herein is for any reason
determined to be unavailable to the Authority or the Trustee, then, with respect
to any such loss, claim, demand or liability, including expenses in connection
therewith, the Authority and the Trustee, as appropriate, shall be entitled as a
matter of right to contribution by the Company. The amount of each contribution
shall be in such proportion as is appropriate to reflect relative culpability of
the parties.
(f) The Company shall not make any claim against the
Authority, nor shall the Authority be liable for any damage or injury to any
property of the Company or any other person on the Facilities or to any part of
the Facilities due to any cause whatsoever, nor will the Company resist the
Authority's claim to indemnification on the ground that the right to such claim
is not set forth herein with sufficient particularity.
SECTION 8.09. Limitation of Rights Against Authority.
(a) The Company hereby expressly acknowledges that the
Authority is a conduit issuer and that all of the right, title and interest of
the Authority in and to this Agreement are to be assigned to the Trustee (except
for the right of the Authority to receive its reasonable fees and expenses and
to indemnification), naming the Trustee its true and lawful attorney for and in
its name to enforce the terms and conditions of this Agreement. Notwithstanding
any other provision contained herein, the Company hereby expressly agrees,
acknowledges and covenants that to the extent practicable it shall duly and
punctually perform or cause to be performed each and every duty and obligation
of the Authority hereunder and under the Indenture.
(b) The Company shall neither xxx the Authority, or any of its
members, officers, agents or employees, past, present or future, for any costs,
damages, expenses, suits, judgments, liabilities, claims, losses, demands,
actions or nonactions based upon this financing or sustained in connection with
or as a result of this financing nor ever raise as a defense in any proceedings
whatsoever that the Authority is a true party in interest.
-29-
Notwithstanding any other provisions of this Agreement, the Company
shall be entitled to (i) bring an action of specific performance against the
Authority to compel any action required to be taken by the Authority hereunder
or an action to enjoin the Authority from performing any action prohibited by
this instrument, but no such action shall in any way impose pecuniary liability
against the Authority or any of its members, officers, agents or employees,
past, present and future, (ii) join the Authority in any litigation if such
joinder is necessary to pursue any of the Company's rights, provided that prior
to such joinder, the Company shall post such security as the Authority may
require to further protect the Authority from loss and (iii) pecuniary
remuneration from the Authority for damage or loss suffered by Company by reason
of the willful misconduct of the Authority or any of its members, officers,
agents or employees, past, present or future.
SECTION 8.10. Limitation of Recourse Against Authority.
(a) In the event of any default by the Authority hereunder,
and notwithstanding any provision or obligation to the contrary herein before or
hereinafter set forth, the liability of the Authority, its incorporator,
officers, members, agents and employees, past, present or future, shall be
limited to its interest in the Facilities, the improvements thereon, the rents,
issues and profits therefrom, the Trust Estate and the lien of any judgment
shall be restricted thereto. The Authority, its incorporator, officers, members,
agents and employees, past, present or future, do not assume general liability
nor specific liability for the repayment of any mortgage or other loan, or for
the costs, fees, penalties, taxes, interest, commissions, charges, insurance or
any other payments therein recited or therein set forth, or incurred in any way
in connection therewith. Other than as set forth hereinabove in this Section
8.10, there shall be no other recourse for damages of any kind or nature by the
Company or any other entity against the Authority, its incorporator, officers,
members, agents and employees, past, present or future, or any of the property
or other assets nor or hereafter owned by it or them, either directly or
indirectly; and all such recourse or liability is hereby expressly waived and
released as a condition of and in consideration of execution and delivery of
this Agreement by the Authority.
-30-
(b) No recourse under or upon any obligation, covenant or
agreement contained herein or in any 1999 Bond shall be had against the
Authority or any member, officer, employee or agent, past, present or future, of
the Authority or of any successor of the Authority under this Agreement, any
other agreement, any rule of law, statute or constitutional provision, or by
enforcement of any assessment or by any legal or equitable proceeding or
otherwise, its expressly being agreed and understood that the obligations of the
Authority hereunder, and under the 1999 Bonds and elsewhere, are solely
corporate obligations of the Authority to the extent specifically limited in the
Act and that no personal liability whatsoever shall attach to or shall be
incurred by the Authority or such members, officers, employees or agents, past,
present or future, of the Authority or of any successor of the Authority, or any
of them, because of such indebtedness or by reason of any obligation, covenant
or agreement contained herein, in the 1999 Bonds on implied therefrom.
-31-
IN WITNESS WHEREOF, the parties hereto have caused this Construction
and Financing Agreement to be duly executed as of the day and year first above
written.
DELAWARE COUNTY INDUSTRIAL
DEVELOPMENT AUTHORITY
By:____________________________________
Chairman
(Seal)
Attest:____________________________
Secretary
PHILADELPHIA SUBURBAN WATER
COMPANY
By:____________________________________
Vice President
(Seal)
Attest:____________________________
Asst. Secretary
-00-
XXXXXXXXXXXX XX XXXXXXXXXXXX:
Series.:
COUNTY OF DELAWARE :
On this the 7th day of October 1999, before me the undersigned notary
public personally appeared Xxxxxx X. Xxxxxx who acknowledged himself to be the
Chairman of the Delaware County Industrial Development Authority, a public body
corporate and politic organized and existing under the laws of the Commonwealth
of Pennsylvania, and that he as such officer, being authorized to do so,
executed the foregoing Construction and Financing Agreement for the purposes
therein contained by signing the name of Delaware County Industrial Development
Authority by himself as its Chairman.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
[SEAL]
/s/ Xxxx X. Xxxxxxx
-------------------
Notary Public
My Commission Expires:
-00-
XXXXXXXXXXXX XX XXXXXXXXXXXX:
Series.:
COUNTY OF DELAWARE :
On this the 5th day of October 1999, before me the undersigned notary
public personally appeared Xxxxx X. Xxxx who acknowledged him/herself to be a
[Vice President] of the Philadelphia Suburban Water Company, a Pennsylvania
corporation, and that he/she as such officer, being authorized to do so,
executed the foregoing Construction and Financing Agreement for the purposes
therein contained by signing the name of the Philadelphia Suburban Water Company
by him/herself as its Vice President.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
[SEAL]
/s/ Xxxxx X. Xxxxxxx
--------------------
Notary Public
My Commission Expires:
-34-
EXHIBIT A TO
CONSTRUCTION AND FINANCING
AGREEMENT DATED AS OF OCTOBER 1, 1999 BY AND
BETWEEN THE DELAWARE COUNTY INDUSTRIAL DEVELOPMENT
AUTHORITY AND PHILADELPHIA SUBURBAN WATER COMPANY
DESCRIPTION OF THE FACILITIES
The following projects comprise the Facilities and will be financed
with the proceeds of the 1999 Bonds and will be owned by the Company (dollar
amounts are maximum Bond proceeds allocable to each category):
Bucks County Project: $4,014,029
Replacement of 3,530 feet of 8" water main ("B-1") ; Tie-in 31,700 feet
of 12" water main ("B-2"); Installation of two new filters to increase
capacity at the Neshaminy plant, Middletown Township ("B-3").
Xxxxxxx County Project: $10,121,902
Replacement of 9,594 feet of 12" water main ("C-1"); Tie in 13,770 feet
of 12" water main ("C-2"); Tie in 7,770 feet of 12" water main ("C-3");
Installation of 33,000 feet of 20" water main ("C-4"); Installation of
7,200 feet of 12" water main ("C-5"); Installation of 5,775 feet of 12"
water main ("C-6"); Construction and installation of a booster facility
("C-7"); Completion of all phases of construction and startup costs of
Xxxx Xxxx plant ("C-8"); Tie in 20,440 feet of 12" water main ("C-9").
Delaware County Project: $6,178,368
Replacement of 2,426 feet of 8" water main ("D-1"); Replacement of
2,835 feet of 12" main ("D-2"); Replacement of 4,330 feet of 8" water
main ("D-3"); Replacement of 2,410 feet of 8" water main ("D-4");
Replacement of 3,283 feet of 8" water main ("D-5"); Replacement of
1,060 feet of 8" water main ("D-6"); Replacement of 4,860 feet of 8"
water main ("D-7"); Replacement of 3,430 feet of 8" water main ("D-8");
Replacement of 3,112 feet of 12" water main ("D-9"); Designing,
constructing, equipping and startup of a 16,300 square feet meter
operation and storage building ("D-10").
A-1
Xxxxxxxxxx County Project: $6,902,148
Replacement of 4,288 feet of 12" water main ("M-1"); Replacement of
5,096 feet of 10" water main with 16" water main ("M-2"); Replacement
of 2,745 feet of 8" water main ("M-3"); Replacement of 4,400 feet of 8"
water main ("M-4"); Replacement of 2,243 feet of 4" water main ("M-5");
Replacement of 8,447 feet of 12" water main ("M-6"); Replacement of
2,830 feet of 8" water main ("M-7"); Replacement of 599 feet of 8"
water main ("M-8"); Replacement of 5,209 feet of 12" water main
("M-9"); Replacement of 6,700 feet of 12" water main ("M-10").
A-2