BOND PURCHASE AGREEMENT $22,000,000 PENNSYLVANIA ECONOMIC DEVELOPMENT FINANCING AUTHORITY Water Facilities Revenue Bonds (Aqua Pennsylvania, Inc. Project) Series A of 2008
Exhibit 10.35
$22,000,000
PENNSYLVANIA ECONOMIC DEVELOPMENT FINANCING AUTHORITY
PENNSYLVANIA ECONOMIC DEVELOPMENT FINANCING AUTHORITY
Bond Purchase Agreement dated December 4, 2008, among the PENNSYLVANIA ECONOMIC DEVELOPMENT
FINANCING AUTHORITY (the “Authority”), AQUA PENNSYLVANIA, INC., a Pennsylvania corporation (the
“Company”), and SOVEREIGN SECURITIES CORPORATION, LLC, a Pennsylvania limited liability company
(the “Underwriter”).
Section 1. Background.
(a) The Authority proposes to enter into a Financing Agreement (the “Financing Agreement”)
dated as of December 1, 2008 with the Company, under which the Authority will agree to loan to the
Company funds to (i) finance certain capital costs of the construction, acquisition and
installation of modifications, expansions and replacements of water distribution, treatment and
related operating systems located in the counties of Chester, Delaware and Xxxxxxxxxx in
Pennsylvania (the “Facilities”) that are part of the Company’s system (the “System”) for the
distribution of water to its customers, and (ii) pay related financing costs (collectively, the
“Project”). To finance the loan under the Financing Agreement, the Authority proposes to issue and
sell $22,000,000 aggregate principal amount of Pennsylvania Economic Development Financing
Authority Water Facilities Revenue Bonds (Aqua Pennsylvania, Inc. Project), Series A of 2008 (the
“Bonds”) to the Underwriter, who will in turn reoffer the Bonds for sale to the public.
(b) The Bonds will be issued pursuant to the Pennsylvania Economic Development Financing Law,
Act of August 23, 1967, P.L. 251, as amended and supplemented (the “Act”), a resolution adopted by
the Authority on October 8, 2008 (the “Authority Resolution”) and under a Trust Indenture dated as
of December 1, 2008 (the “Trust Indenture”), between the Authority and U.S. Bank National
Association, as trustee (the “Trustee”). The Bonds will have such terms as are set forth in
Schedule I attached hereto.
The Bonds will be payable out of payments by the Company under the Financing Agreement,
including payments under its First Mortgage Bond, 6.25% Series due 2017 in the principal amount of
$9,000,000] (the “2017 First Mortgage Bond”), and its First Mortgage Bond, 6.75% Series due 2018 in
the principal amount of $13,000,000] (the “2018 First Mortgage Bond” and, along with the 2017 First
Mortgage Bond, the “First Mortgage Bonds”) issued with respect to the Bonds. The First Mortgage
Bonds will be issued under and secured by the Company’s Indenture of Mortgage dated as of January
1, 1941 (the “Indenture of Mortgage”), from the Company to The Bank of New York Mellon Trust
Company, N.A., trustee (successor to The Pennsylvania Company for Insurance on Lives and Granting Annuities, The Pennsylvania
Company for Banking and Trusts, The First Pennsylvania Banking and Trust Company, First
Pennsylvania Bank, N.A., CoreStates Bank, N.A., Mellon Bank, N.A., Chase Manhattan Trust Company,
National Association and X.X. Xxxxxx Trust Company, National Association) (the “Mortgage Trustee”),
as presently amended and supplemented and as to be further supplemented by a Forty-third
Supplemental Indenture of Mortgage to be dated as of December 1, 2008 (the “Forty-third
Supplemental Mortgage,” which together with the Indenture of Mortgage, as amended and supplemented,
is referred to hereinafter as the “Mortgage”). Each First Mortgage Bond will be issued in the same
aggregate principal amount and will mature on the same date and bear interest at the same rate as
the same maturity of Bonds that it secures. All of the Authority’s rights under the Financing
Agreement to receive and enforce repayment of its loan to the Company and to enforce payment of the
Bonds, including all of the Authority’s rights to the First Mortgage Bonds, and all of the
Authority’s rights to moneys and securities in the Project Funds, the Revenue Funds and the Debt
Service Funds (and the accounts within all such Funds applicable to the Bonds) established by the
Trust Indenture, except for the Authority’s rights to certain fees and reimbursements for expenses,
indemnification and notice thereunder and rights relating to amendments of and notices under the
Financing Agreement, will be assigned to the Trustee as security for the Bonds pursuant to the
Trust Indenture.
(c) The Project will finance the acquisition, construction, installation and equipping of
facilities for the furnishing of water for purposes of Section 142(a)(4) of the Internal Revenue
Code of 1986, as amended (the “Code”), so that the interest on the Bonds will not be includable in
gross income for federal income tax purposes under the Code and the Underwriter may offer the Bonds
for sale without registration under the Securities Act of 1933, as amended (the “1933 Act”) or
qualification of the Trust Indenture under the Trust Indenture Act of 1939, as amended (the “1939
Act”).
(d) A Preliminary Official Statement dated November 12, 2008, including the Appendices thereto
and all documents incorporated therein by reference (the “Preliminary Official Statement”), has
been supplied to the parties hereto, and a final Official Statement to be dated the date hereof,
including the Appendices thereto and all documents incorporated therein by reference, prepared for
use in such offerings will be supplied to the parties hereto as soon as it is available, subject to
Section 10 hereof (such final Official Statement, as it may be amended or supplemented with the
consent of the Authority, the Underwriter and the Company, is hereinafter referred to as the
“Official Statement”).
Section 2. Purchase, Sale and Closing. On the terms and conditions herein set forth,
the Underwriter will buy from the Authority, and the Authority will sell to the Underwriter, all
(but not less than all) of the Bonds at a purchase price equal to $21,490,630, which is equal to
the $22,000,000, aggregate principal amount of the Bonds, less original issue discount of $179,370,
less the underwriting discount of $330,000. Payment for the Bonds shall be made in immediately
available funds to the Trustee for the account of the Authority. Closing (the “Closing”) will be at
the offices of Xxxxxxx Xxxxx Xxxxxxx & Xxxxxxxxx, LLP, Philadelphia, Pennsylvania (“Bond Counsel”),
at 10:00 a.m., Eastern Standard Time, on December 18, 2008 or at such other date, time or place or
in such other manner as may be agreed on by the parties hereto. The Bonds will be delivered as
fully registered bonds in the aggregate principal amount of $22,000,000 in the name of Cede & Co.,
as nominee for The Depository Trust Company (“DTC”), with CUSIP numbers printed thereon, and shall conform in all respects to DTC’s Book-Entry Only System.
Delivery of the Bonds to DTC will be made by delivering the Bonds to the Trustee utilizing the DTC
FAST system. If the Underwriter so requests, the Bonds shall be made available to the Underwriter
(prior to their delivery to DTC) in Philadelphia, Pennsylvania at least three full business days
before the Closing for purposes of inspection.
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The Underwriter agrees to make a bona fide public offering of the Bonds at the initial
offering prices or yields set forth in the Official Statement; provided, however, that the
Underwriter reserves the right (and the Authority and the Company hereby expressly acknowledge such
right): to make concessions to dealers; to effect transactions that stabilize or maintain the
market price of the Bonds above that which might otherwise prevail in the open market and to
discontinue at any time such stabilizing transactions; and to change such initial offering prices,
all as the Underwriter shall deem necessary in connection with the marketing of the Bonds.
Section 3. Authority’s Representations. The Authority makes the following representations on
and as of the date hereof, all of which shall survive Closing:
(a) The Authority is a body politic and corporate, duly created and existing under the
Constitution and laws of the Commonwealth of Pennsylvania (the “Commonwealth”), and has, and at the
date of Closing will have, full legal right, power and authority to: enter into this Bond Purchase
Agreement; execute and deliver the Bonds, the Trust Indenture, the Financing Agreement, this Bond
Purchase Agreement and the Authority’s tax certificate and the other various certificates executed
by the Authority in connection therewith (collectively, with the Authority Resolution, the
“Authority Financing Documents”); issue, sell and deliver the Bonds to the Underwriter as provided
herein; and carry out and consummate the transactions contemplated by the Authority Financing
Documents and the Official Statement to be carried out and/or consummated by it.
(b) The Authority Resolution was duly adopted at a public meeting of the Authority at which a
quorum was present and acted throughout; and the Authority Resolution is in full force and effect
and has not been amended, repealed or superseded in any way.
(c) The sections entitled “INTRODUCTORY STATEMENT” (insofar as it relates to the Authority),
“THE AUTHORITY” and “ABSENCE OF MATERIAL LITIGATION” (solely insofar as the information set forth
therein relates to the Authority) contained in the Preliminary Official Statement as of its date
did not contain any untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements contained therein, in the light
of the circumstances under which they were made, not misleading.
(d) The sections entitled “INTRODUCTORY STATEMENT” (insofar as it relates to the Authority),
“THE AUTHORITY” and “ABSENCE OF MATERIAL LITIGATION” (solely insofar as the information set forth
therein relates to the Authority) contained in the Official Statement as of its date does not or
will not contain any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements contained therein, in
light of the circumstances under which they were made, not misleading.
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(e) The Authority has complied, and will at the Closing be in compliance, in all material
respects with the provisions of the Act.
(f) The Authority has duly authorized and approved the Preliminary Official Statement and the
Official Statement; and has duly authorized and approved the execution and delivery of, and the
performance by the Authority of the obligations on its part contained in, the Authority Financing
Documents.
(g) To the best of the knowledge of the Authority after due inquiry, the Authority is not in
material breach of or in default under any applicable law or administrative regulation of the
Commonwealth or the United States; and the execution and delivery of the Authority Financing
Documents, and compliance with the provisions of each thereof, do not and will not conflict with or
constitute a breach of or default under any existing law, administrative regulation, judgment,
decree, loan agreement, note, resolution, agreement or other instrument to which the Authority is a
party or is otherwise subject.
(h) All approvals, consents and orders of any governmental authority, board, agency or
commission having jurisdiction that would constitute a condition precedent to the Authority’s legal
ability to issue the Bonds or to the Authority’s performance of its obligations hereunder and under
the Authority Financing Documents have been obtained or will be obtained prior to the Closing.
(i) The Bonds, when issued, authenticated and delivered in accordance with the Trust Indenture
and sold to the Underwriter as provided herein, will be validly issued and will be valid and
binding limited obligations of the Authority enforceable against the Authority in accordance with
their terms (except as enforcement may be affected by bankruptcy, insolvency, reorganization,
moratorium or other laws or legal or equitable principles affecting the enforcement of creditors’
rights (“Creditors’ Rights Limitations”).
(j) The terms and provisions of the Authority Financing Documents when executed and delivered
by the respective parties thereto will constitute the valid, legal and binding obligations of the
Authority enforceable against the Authority in accordance with their respective terms (except as
enforcement of remedies may be limited by Creditors’ Rights Limitations).
(k) There is no action, suit, proceeding, inquiry or investigation, at law or in equity,
before or by any court, or public board or body, pending or, to the knowledge of the Authority
after due inquiry, threatened against the Authority, affecting the existence of the Authority or
the titles of its officers to their respective offices or seeking to prohibit, restrain or enjoin
the sale, issuance or delivery of the Bonds or of the revenues or assets of the Authority pledged
or to be pledged to pay the principal of and interest on the Bonds, or the pledge thereof, or in
any way contesting or affecting the validity or enforceability of the Authority Financing Documents
or contesting in any way the completeness or accuracy of the Preliminary Official Statement or the
Official Statement, or contesting the power or authority of the Authority with respect to the
issuance of the Bonds or the execution, delivery or performance of any of the Authority Financing
Documents, wherein an unfavorable decision, ruling or finding would affect in any way the validity
or enforceability of any of the Authority Financing Documents.
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(l) The net proceeds received from the Bonds and applied in accordance with the Trust
Indenture and the Financing Agreement shall be used in accordance with the Act as described in the
Official Statement.
(m) Any certificate signed by any of the authorized officers of the Authority and delivered to
the Underwriter shall be deemed a representation and warranty by the Authority to the Underwriter
as to the statements made therein.
Section 4. Company’s Representations and Warranties. The Company makes the following
representations and warranties on and as of the date hereof and as of the date of Closing, all of
which will survive the Closing:
(a) The Company has not sustained since December 31, 2007 any material loss or interference
with its business from fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action, order or decree; and since
the respective dates as of which information is given in the Official Statement, there have not
been any material changes in the outstanding capital stock or the long-term debt of the Company or
any material adverse change, or a development involving a prospective material adverse change, in
or affecting the general affairs, management, financial position, stockholder’s equity or results
of operations of the Company, otherwise than as set forth or contemplated in the Official
Statement.
(b) The Company was organized, is in good standing and subsists as a corporation under the
laws of the Commonwealth, with power (corporate and other) to own its properties and conduct its
business as described in the Official Statement.
(c) The First Mortgage Bonds have been duly authorized; and, when issued and delivered as
contemplated by this Bond Purchase Agreement, will have been duly executed, authenticated, issued
and delivered and will constitute valid and legally binding obligations of the Company enforceable
in accordance with their terms (except as may be affected by Creditors’ Rights Limitations)
entitled to the benefits provided by the Mortgage.
(d) The Indenture of Mortgage has been duly authorized, executed and delivered by the Company,
and the Forty-third Supplemental Mortgage has been duly authorized by the Company. When the
Forty-third Supplemental Mortgage, in substantially the form approved by the Underwriter and Bond
Counsel, has been executed and delivered by the Company and assuming due authorization and
execution by the Mortgage Trustee, and recorded as required by law, the Mortgage will constitute a
valid and legally binding instrument enforceable against the Company in accordance with its terms
except as enforceability may be affected by Creditors’ Rights Limitations; will constitute a
direct, valid and enforceable first mortgage lien (except as enforceability of such lien may be
affected by Creditors’ Rights Limitations) upon all of the properties and assets of the Company
(not heretofore released as provided for in the Mortgage) specifically or generally described or
referred to in the Mortgage as being subject to the lien thereof, excepting permitted liens under
the Mortgage and excepting property and assets that the Mortgage expressly excludes from the lien
thereof; and will create a mortgage upon all properties and assets acquired by the Company after
the execution and delivery of the Forty-second Supplemental Mortgage and required to be subjected
to the lien of the Mortgage pursuant thereto when so acquired, except for permitted liens under the Mortgage. The Indenture of
Mortgage has been and the Forty-third Supplemental Mortgage will be duly filed, recorded or
registered in each place in the Commonwealth in which such filing, recording or registration was or
is required to protect and preserve the lien of the Mortgage; and all necessary approvals of
regulatory authorities, commissions and other governmental bodies having jurisdiction over the
Company required to subject the mortgaged properties and assets or trust estate (as defined in the
Mortgage) to the lien of the Mortgage have been duly obtained.
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(e) With only such exceptions as are not material and do not interfere with the conduct of the
business of the Company, the Company has good and marketable title to all of its real property
currently held in fee simple, and all of its other interests in real property (other than certain
rights of way, easements, occupancy rights, riparian and flowage rights, licenses, leaseholds and
real property interests of a similar nature). In each case such title is free and clear of all
liens, encumbrances and defects except such as may be described in the Official Statement, the lien
of the Mortgage, permitted liens under the Mortgage or such as do not materially affect the value
of such property and do not interfere with the use made and proposed to be made of such property by
the Company. Any real property and buildings held under lease by the Company are held by it under
valid, subsisting and enforceable leases with such exceptions as are not material and do not
interfere with the use made and proposed to be made of such property and buildings by the Company.
(f) With only such exceptions as are not material and do not interfere with the conduct of the
business of the Company, the Company has all licenses, franchises, permits, authorizations, rights,
approvals, consents and orders of all governmental authorities or agencies necessary for the
ownership or lease of the properties owned or leased by it and for the operation of the business
carried on by it as described in the Official Statement, and all water rights, riparian rights,
easements, rights of way and other similar interests and rights described or referred to in the
Mortgage necessary for the operation of the business carried on by it as described in the Official
Statement. Except as otherwise set forth in the Official Statement, all such licenses, franchises,
permits, orders, authorizations, rights, approvals and consents are in full force and effect and
contain no unduly burdensome provisions. Except as otherwise set forth in the Official Statement,
there are no legal or governmental proceedings pending or, to the knowledge of the Company after
due inquiry, threatened that would result in a material modification, suspension or revocation
thereof. The Company has the legal power to exercise the rights of eminent domain for the purposes
of conducting its water utility operations.
(g) The issue and sale of the Bonds, the issue and delivery of the First Mortgage Bonds and
the compliance by the Company with all of the applicable provisions of the First Mortgage Bonds and
the Mortgage and the execution, delivery and performance by the Company of the Forty-third
Supplemental Mortgage, the Financing Agreement, this Bond Purchase Agreement and the Continuing
Disclosure Agreement will not conflict with or result in a breach of any of the terms or provisions
of, or constitute a default under, or result in the creation or imposition of any lien, charge or
encumbrance (other than the lien of the Mortgage) upon any of the property or assets of the Company
pursuant to the terms of any indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which the Company is a party or by which the Company is bound or to which any of
the property or assets of the Company are subject, nor will such action result in a violation of
the provisions of the Articles of Incorporation, as amended, or the Bylaws of the Company or any statute or any order, rule or
regulation of any court or governmental agency or body having jurisdiction over the Company or any
of its property. No consent, approval, authorization, order, registration or qualification of or
with any court or any such regulatory authority or other governmental body (other than those
already obtained) is required to be obtained by the Company for the issue and sale of the Bonds,
the issue and delivery of the First Mortgage Bonds, the execution, delivery and performance by the
Company of this Bond Purchase Agreement, the Financing Agreement, the Forty-third Supplemental
Mortgage, the First Mortgage Bonds and the Continuing Disclosure Agreement, or the consummation by
the Company of the other transactions contemplated by this Bond Purchase Agreement or the Mortgage.
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(h) The Company has obtained from the Pennsylvania Public Utility Commission an order duly
authorizing the issuance and delivery of the First Mortgage Bonds by the Company and the incurring
of the debt evidenced thereby, on terms not inconsistent with this Bond Purchase Agreement.
(i) The Company is not a holding company, a registered holding company or an affiliate of a
registered holding company within the meaning of the Public Utility Holding Company Act of 1935, as
amended.
(j) There are no legal or governmental proceedings pending to which the Company is a party or
to which any property of the Company is subject, other than as set forth in the Official Statement,
wherein an unfavorable ruling, decision or finding would have a material adverse effect on the
financial position, stockholder’s equity or results of operations of the Company; and, to the best
of the Company’s knowledge after due diligence, no such proceedings are threatened by governmental
authorities or threatened by others.
(k) The Project consists of either land or property of a character subject to depreciation for
federal income tax purposes and will be used to furnish water that is or will be made available to
members of the general public (including electric utility, industrial, agricultural, or commercial
users); the rates for the furnishing or sale of the water have been established or approved by a
state or political subdivision thereof, by an agency or instrumentality of the United States, or by
a public service or public utility commission or other similar body of any state or political
subdivision thereof; and all other information supplied by the Company to the Underwriter with
respect to the exclusion from gross income pursuant to Section 103 of the Code of the interest on
the Bonds is correct and complete.
(l) The Company has not, within the immediately preceding ten (10) years, defaulted in the
payment of principal or interest on any of its bonds, notes or other securities, or any legally
authorized obligation issued by it.
(m) The information with respect to the Company and the Project and the descriptions of the
First Mortgage Bonds and the Mortgage contained in the Preliminary Official Statement and the
Official Statement (including appendices A and B thereto) do not contain any untrue statement of a
material fact or omit to state any material fact necessary to be stated therein in order to make
such information and descriptions, in the light of the circumstances under which they were made,
not misleading.
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Section 5. Authority’s Covenants. The Authority will:
(a) Furnish such information, execute such instruments and take such other action in
cooperation with the Underwriter as the Underwriter may reasonably request to qualify the Bonds for
offer and sale under the Blue Sky or other securities laws and regulations of such states and other
jurisdictions in the United States of America as the Underwriter may designate and will assist, if
necessary therefor, in the continuance of such qualifications in effect so long as required for
distribution of the Bonds; provided, however, that the Authority shall in no event be required to
file a general consent to suit or service of process or to qualify as a foreign corporation or as a
dealer in securities in any such state or other jurisdiction.
(b) Not, on its part, amend or supplement the Official Statement without prior notice to and
the consent of the Underwriter and the Company and will advise the Underwriter and the Company
promptly of the institution of any proceedings by any governmental agency or otherwise affecting
the use of the Official Statement in connection with the offer and sale of the Bonds.
(c) Refrain from knowingly taking any action (and permitting any action with regard to which
the Authority may exercise control) that would result in the loss of the exclusion from gross
income for federal income tax purposes of interest on the Bonds.
Section 6. Company’s Covenants. The Company agrees that it will:
(a) Refrain from knowingly taking any actions (and from permitting any action with regard to
which the Company may exercise control) that would result in the loss of the exclusion from gross
income for federal tax purposes of interest on the Bonds.
(b) Indemnify and hold harmless the Authority, its members, directors, officers, agents,
attorneys, and employees and the Underwriter, its officers, directors, officials, agents,
attorneys, employees, and each person, if any, who controls the Underwriter within the meaning of
Section 15 of the 1933 Act or Section 20 of the Securities Exchange Act of 1934, as amended (the
“1934 Act”), from and against all losses, claims, damages, liabilities and expenses, joint or
several, to which the Authority and the Underwriter, or either of them, or any of their respective
members, directors, officers, agents, attorneys, and employees and each person, if any, who
controls the Underwriter within the meaning of the 1933 Act or 1934 Act as aforedescribed may
become subject, under federal laws or regulations, or otherwise, insofar as such losses, claims,
damages, liabilities and expenses (or actions in respect thereof) arise out of or are based upon:
(i) a breach of the Company’s representations included in this Agreement; (ii) any untrue statement
or alleged untrue statement of any material fact pertaining to the Project or the Company set forth
in the Official Statement, the Preliminary Official Statement or any amendment to either; (iii) the
willful or negligent omission of (or the alleged omission to state) a material fact in the Official
Statement, the Preliminary Official Statement, or any amendment or supplement to either, as such
fact is required to be stated therein or necessary to make the statements therein that pertain to
the Company or the Project not misleading in the light of the circumstances under which they were
made; (iv) or arising by virtue of the failure to register the Bonds under the 1933 Act or the
failure to qualify the Indenture under the 1939 Act; or (v) arising by virtue of any audit or
investigation conducted by a state or federal agency, department or entity questioning, among
other things, the tax-exempt status of the Bonds.
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(c) Undertake, pursuant to the Continuing Disclosure Agreement dated as of December 1, 2008 to
be entered into between the Company and the Trustee (the “Continuing Disclosure Agreement”), to
provide annual reports and notices of certain material events in accordance with Rule 15c2-12 under
the 1934 Act, as amended (“Rule 15c2-12”).
(d) Not amend or supplement the Official Statement without prior notice to, and the consent
of, the Underwriter, and will advise the Underwriter and the Authority promptly of the institution
of any proceedings by any governmental agency or otherwise affecting the use of the Official
Statement in connection with the offer and the sale of the Bonds.
(e) Take all actions reasonably necessary to maintain in effect and to comply with the order
of the Commonwealth Public Utility Commission dated October 23, 2008, registering the Securities
Certificate for the issuance of the First Mortgage Bonds in support of the Bonds.
Section 7. Underwriter’s Covenant and Compensation.
(a) By acceptance hereof the Underwriter agrees to indemnify and hold harmless the Authority,
its members, directors, officers, agents, attorneys, and employees and the Company, its officers,
directors, agents, attorneys, and employees and each person if any, who controls the Company within
the meaning of Section 15 of the 1933 Act against all or several claims, losses, damages,
liabilities and expenses asserted against them, or any of them, at law or in equity, in connection
with the offering and sale of the Bonds on the grounds that the information under the caption
“UNDERWRITING” in the Preliminary Official Statement or the Official Statement (or any supplement
or amendment to said information) contains an untrue or allegedly untrue statement of a material
fact or omits or allegedly omits to state any material fact necessary to make the statements
therein not misleading in the light of the circumstances under which they were made (it being
understood that the Underwriter furnished only the information under such “UNDERWRITING” heading),
or failure on the part of the Underwriter to deliver an Official Statement to any purchaser. The
Underwriter will reimburse any legal or other expenses reasonably incurred by a party, person or
entity indemnifiable under this Section 7 in connection with investigating or defending any such
loss, claim, damage, liability or action. This indemnity agreement will be in addition to any
liability that the Underwriter may otherwise have. The Underwriter shall not be liable for any
settlement of, any such action effected without its consent.
(b) The Underwriter will be paid an underwriting discount of $330,000 with respect to the
Bonds.
(c) The Underwriter acknowledges that the Authority is relying upon the accuracy of the
certification in clause (b) above on the date hereof as a condition precedent to lending the
proceeds of the Bonds to the Company.
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Section 8. Notice of Indemnification; Settlement. Promptly after a party, person or entity
indemnifiable under Section 6 or 7 of this Bond Purchase Agreement (an “Indemnitee”) receives
notice of the commencement of any audit, investigation or action against such Indemnitee in respect
of which indemnity is to be sought by the Indemnitee against the Company
or an Underwriter, as the case may be (the “Indemnifying Party”), the Indemnitee will notify
the Indemnifying Party in writing of such action, and the Indemnifying Party may assume the defense
thereof, including the employment of counsel and the payment of all expenses; but the failure so to
notify the Indemnifying Party will not relieve the Indemnifying Party from any liability that it
may have to the Indemnitee otherwise than hereunder. The Indemnifying Party shall not be liable for
any settlement of any such action effected without its consent, but if settled with the consent of
the Indemnifying Party or if there is a final judgment for the plaintiff in any such action, the
Indemnifying Party will indemnify and hold harmless the Indemnitee from and against any loss or
liability by reason of such settlement or judgment. The indemnity agreements contained in this Bond
Purchase Agreement shall include reimbursement for expenses reasonably incurred by an Indemnitee in
investigating the claim and in defending it if the Indemnifying Party declines to assume the
defense and shall survive delivery of the Bonds. Notwithstanding the foregoing, in the event of an
investigation or audit by the Internal Revenue Service or the Securities and Exchange Commission or
any other state or federal agency, department, or entity with respect to the Bonds, the Authority
shall have the right and duty to undertake its own defense, including the employment of counsel,
with full power to litigate, compromise or settle the same on its own behalf, and the Company
agrees that it will indemnify and hold the Authority harness for all costs and expenses, including,
but not limited to, attorney fees and expenses and costs, of any such settlement.
Section 9. Equitable Contribution. If the indemnification provided for in Section 6(b) of this
Bond Purchase Agreement is unavailable to the Underwriter (or any controlling person thereof) in
respect of any losses, claims, damages or liabilities referred to therein, then the Company shall,
in lieu of indemnifying the Underwriter, contribute to the amount paid or payable by the
Underwriter as a result of such losses, claims, damages or liabilities in such proportion as is
appropriate to reflect the relative benefits received by the Company and the Underwriter,
respectively, from the offering of the Bonds. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law, then the Company shall
contribute to such amount paid or payable by the Underwriter in such proportion as is appropriate
to reflect not only such relative benefits but also the relative fault of the Company and the
Underwriter, respectively, in connection with the statements or omission which resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The
relative benefit received by the Company or the Underwriter shall be deemed to be in the same
proportion as the total proceeds from the offering (before deducting issuance costs and expenses
other than underwriting fees and commissions) received by the Company, on the one hand, bear to the
total underwriting fees and commissions received by the Underwriter, on the other hand. The
relative fault shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission to state a material
fact related to information supplied by the Company or the Underwriter and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent such statement or
omission. The Company and the Underwriter agree that it would not be just and equitable if
contribution pursuant to this Section 9 were determined by pro rata allocation or by any other
method of allocation that does not take account of the equitable considerations referred to above
in this Section 9. The amount paid or payable by the Underwriter as a result of the losses, claims,
damages or liabilities referred to above in this Section 9 shall be deemed to include any
reasonable legal or other expenses reasonably incurred by the Underwriter in connection with
investigating or defending any such action or claim. Notwithstanding the provisions of this Section 9, the Underwriter shall not be required to
contribute any amount in excess of the amount of the discount allowed to the Underwriter as set
forth in Section 7(b) hereof.
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Section 10. Official Statement; Public Offering.
(a) In order to enable the Underwriter to comply with Rule 15c2-12, the Company has prepared
(or caused to be prepared) the Preliminary Official Statement, which the Company and the Authority
(in the case of the Authority, only with respect to the information therein under the headings “THE
AUTHORITY” and, insofar as they relate to the Authority, “INTRODUCTORY STATEMENT” and “ABSENCE OF
MATERIAL LITIGATION”) deem final and complete as of its date except for certain permitted omissions
as described in Rule 15c2-12. The Company shall provide to the Underwriter sufficient copies of
the Official Statement in sufficient time to accompany any confirmation that requires payment from
any customer and in any event within seven business days after the date of this Bond Purchase
Agreement. If the Company, during the period described in Section 10(b) below, has or gains
knowledge of a fact or circumstance that would render the Official Statement misleading in any
material respect, then the Company shall promptly give the Underwriter written notice thereof. The
Authority and the Company hereby authorize the use of the Preliminary Official Statement and the
Official Statement by the Underwriter in connection with the offering of the Bonds.
(b) The Authority and the Company will not adopt or distribute any amendment of or supplement
to the Official Statement, except with the prior written consent of the Underwriter. If from the
date hereof until the earlier of (i) ninety (90) days after the end of the underwriting period (as
defined in Rule 15c2-12) or (ii) the time when the Official Statement is available to any person
from the Repository with which it has been deposited, but in no case less than twenty-five (25)
days following the end of the underwriting period, any event relating to or affecting the
Authority, the Company or the Bonds shall occur, the result of which shall make it necessary, in
the opinion of the Underwriter, to amend or supplement the Official Statement in order to make it
not misleading in the light of the circumstances existing at that time, the Company shall forthwith
prepare, and the Company and the Authority shall approve for distribution, a reasonable number of
copies of an amendment of or supplement to the Official Statement, in form and substance reasonably
satisfactory to the Underwriter, so that the Official Statement then will 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 existing at that time, not misleading. The Authority
shall cooperate with the Company in the issuance and distribution of any such amendment or
supplement.
(c) Upon Closing, the Underwriter shall promptly provide a Nationally Recognized Municipal
Securities Information Repository and the Municipal Securities Rulemaking Board with a copy of the
Official Statement for filing in accordance with Rule 15c2-12, and inform the Authority and the
Company in writing as to the date and place of such filing and the date of the end of the
underwriting period.
- 11 -
Section 11. Conditions of Underwriter’s and Authority’s Obligations. The Underwriter’s
obligations to purchase and pay for the Bonds and the Authority’s obligation to issue and deliver
the Bonds are subject to fulfillment of the following conditions at or before
Closing:
(a) The representations of the Authority and the Company herein, as applicable, shall be true
in all material respects on and as of the date of the Closing and shall be confirmed by appropriate
certificates at Closing.
(b) Neither the Authority nor the Company, as applicable, shall be in default in the
performance of any of their respective covenants herein.
(c) The Underwriter shall have received:
(i) An opinion of Xxxxxxx Xxxxx Xxxxxxx & Xxxxxxxxx, LLP, Bond Counsel, dated the date of
Closing, substantially in the form attached as Exhibit A hereto, addressed to (or with reliance
letters delivered in respect of) the Authority, the Trustee, the Company and the Underwriter.
(ii) An opinion of Xxxxxxx Xxxxx Xxxxxxx & Ingersoll, LLP, Bond Counsel, dated the date of
Closing, substantially in the form attached as Exhibit B hereto, addressed to the Underwriter.
(iii) An opinion of the Office of Chief Counsel of the Pennsylvania Department of Community
and Economic Development, as counsel for the Authority, dated the date of Closing, substantially in
the form attached as Exhibit C hereto, addressed to the Underwriter, the Trustee, the Company and
Bond Counsel.
(iv) Opinions of Xxxxxxxx Xxxxxx LLP, counsel to the Company, and the Company’s Senior Vice
President-Law and Administration, dated the date of Closing, substantially in the forms attached as
Exhibit D hereto, addressed to the Underwriter, the Authority and Bond Counsel.
(v) An agreed upon procedures letter dated the date of the Official Statement and addressed to
the Company and the Underwriter from the Company’s auditor with respect to financial information
set forth in Appendix A and Appendix B to the Official Statement, in form and substance reasonably
satisfactory to the Company’s auditor and the Underwriter.
(vi) A certificate dated the date of Closing executed by the Chairman and the Executive
Director of the Authority and addressed to the Underwriter to the effect that, to the best of their
respective knowledge:
(A) the representations and warranties of the Authority contained herein are true and correct
in all material respects as of the date of Closing; and
(B) the Authority has complied in all material respects with all agreements executed by the
Authority in connection with issuance of the Bonds and satisfied in all material respects the
Authority’s covenants contained in Section 5 herein and all of the conditions on its part to be
performed or satisfied at or prior to the Closing.
- 12 -
(vii) A certificate dated the date of Closing executed by the chief financial officer of the
Company and addressed to the Underwriter to the effect that, to the best of his knowledge:
(A) the representations and warranties of the Company in this Bond 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, under the circumstances in which they were made, not misleading in any respect;
and
(C) no event affecting the Company has occurred since the date of this Bond Purchase Agreement
that is required to be disclosed in the Official Statement or necessary in order to make the
statements and information therein not misleading in any material respect.
(viii) Two executed copies of the Trust Indenture, the Financing Agreement, the Bond Purchase
Agreement, the Forty-third Supplemental Mortgage and the Continuing Disclosure Agreement and
specimen copies of the First Mortgage Bonds.
(ix) Two copies of the Articles of Incorporation and Bylaws of the Company, as amended to the
date of Closing, and of the resolutions of the Board of Directors of the Company authorizing and
approving the execution and delivery of this Bond Purchase Agreement, the Financing Agreement, the
First Mortgage Bonds, the Forty-third Supplemental Mortgage, the Continuing Disclosure Agreement
and the incurrence of indebtedness with respect thereto and all transactions described in the
Official Statement and contemplated by this Bond Purchase Agreement, all certified by its Secretary
or Assistant Secretary.
(x) Two copies of the Authority Resolution.
(xi) One or more letters from the Company’s auditor, dated the date of the Preliminary
Official Statement and the Official Statement and addressed to the Company and the Underwriter,
consenting to the use of the financial statements reported upon by such firm and all references to
such firm contained in the Preliminary Official Statement and the Official Statement.
(xii) Evidence satisfactory to the Underwriter of a rating of “AA-” assigned by Standard &
Poor’s Ratings Services, a Division of The XxXxxx-Xxxx Companies, and that such rating is in full
force and effect as of the date of Closing.
(xiii) Evidence satisfactory to Bond Counsel and the Underwriter of the receipt by the
Authority of a Preliminary Allocation relating to the Bonds and approval of the Project from the
Pennsylvania Department of Community and Economic Development and of the registration of a
Securities Certificate relating to the First Mortgage Bonds and the Bonds with the Pennsylvania
Public Utility Commission.
- 13 -
(xiv) Such additional documentation, including, without limitation, legal opinions, as the
Underwriter or its counsel or Bond Counsel may reasonably request to evidence compliance with
applicable law and the validity of the Bonds, the Financing Agreement, the Trust Indenture, this
Bond Purchase Agreement, the Forty-third Supplemental Mortgage, the First Mortgage Bonds and the
Continuing Disclosure Agreement, and to evidence that the interest on the Bonds is not includable
in gross income under the Code and the status of the offering under the 1933 Act and the 1939 Act.
(d) At Closing there shall not have been any material adverse change in the financial
condition of the Company or any adverse development concerning the business or assets of the
Company that would result in a material adverse change in the prospective financial condition or
results of operations of the Company from that described in the Official Statement, which, in the
judgment of the Underwriter, makes it inadvisable to proceed with the sale of the Bonds; and the
Underwriter shall have received certificates of the Company certifying that no such material
adverse change has occurred or, if such a change has occurred, full information with respect
thereto.
(e) The Underwriter shall deliver at Closing a certificate in form acceptable to Bond Counsel
to the effect that the Underwriter has sold to the public (excluding bond houses and brokers) a
substantial amount of the Bonds at initial offering prices no higher than, or yields no lower than,
those shown on the cover page of the Official Statement and that such certificate may be relied
upon for purposes of determining compliance with Section 148 of the Code.
Section 12. Events Permitting the Underwriter to Terminate. The Underwriter may terminate its
obligation to purchase the Bonds at any time before Closing if any of the following occurs:
(a) A legislative, executive or regulatory action or proposed action, or a court decision,
which in the reasonable judgment of the Underwriter casts sufficient doubt on the legality of, or
the exclusion from gross income for federal income tax purposes of interest on, obligations such as
the Bonds so as to materially impair the marketability or materially lower the market price of the
Bonds.
(b) Any action by the Securities and Exchange Commission or a court that would require
registration of the Bonds or the First Mortgage Bonds under the 1933 Act or qualification of the
Indenture under the 1939 Act.
(c) Any general suspension of trading in securities on the New York Stock Exchange or the
establishment, by the New York Stock Exchange, by the Securities and Exchange Commission, by any
federal or state agency, or by the decision of any court, of any limitation on prices for such
trading, or any outbreak of new hostilities or other national or international calamity or crisis,
or any material escalation in any such hostilities, calamity or crisis, the effect of which on the
financial markets of the United States of America shall be such as to materially impair the
marketability or materially lower the market price of the Bonds.
- 14 -
(d) Any event or condition occurring or arising after the date hereof, which in the reasonable
judgment of the Underwriter renders untrue or incorrect, in any material respect as of
the time to which the same purports to relate, the information contained in the Official
Statement, or which requires that information not reflected in the Official Statement or Appendices
thereto should be reflected therein in order to make the statements and information contained
therein not misleading in any material respect as of such time; provided that the Authority, the
Company and the Underwriter will use their best efforts to amend or supplement the Official
Statement to reflect, to the reasonable satisfaction of the Underwriter, such changes in or
additions to the information contained in the Official Statement.
(e) Pending or threatened litigation affecting or arising out of the ownership of the
Facilities or any other facilities of the Company or the issuance of the Bonds, which, in the
reasonable judgment of the Underwriter, would materially impair the marketability or materially
lower the market price of the Bonds.
(f) Quantities of the Official Statement are not delivered to the Underwriter in a timely
manner as required by Section 10 hereof.
If the Underwriter terminates its obligation to purchase the Bonds because any of the
conditions specified in Section 11 hereof or this Section 12 shall not have been fulfilled at or
before the Closing, such termination shall not result in any liability on the part of the
Authority, the Underwriter or the Company, except for the obligations of the Company under Sections
6(b), 8, 9 and 14 which shall remain in full force and effect.
Section 13. [Intentionally Omitted]
Section 14. Expenses. All expenses and costs of the authorization, issuance, sale and delivery
of the Bonds including, without limitation, accrued interest, the preparation of and furnishing to
the Underwriter of the Preliminary Official Statement and the Official Statement, the preparation
and execution of the Bonds, the Financing Agreement, the Trust Indenture, the First Mortgage Bonds,
the Forty-third Supplemental Mortgage, the Continuing Disclosure Agreement and this Bond Purchase
Agreement, rating agency fees, the issuance and closing fees of the Authority, the fees and
disbursements of counsel to the Authority, the fees and disbursements of Bond Counsel, the fees and
disbursements of counsel to the Underwriter and the expenses incurred in connection with qualifying
the Bonds for sale under the securities laws of various jurisdictions and preparing a Blue Sky
memorandum, if any, shall be paid by the Company from funds contributed by the Company and from
proceeds of the Bonds. The Authority shall bear no out-of-pocket expense in connection with the
transactions contemplated by this Bond Purchase Agreement. The Underwriter will pay all other
expenses of the Underwriter in connection with the public offering of the Bonds.
Section 15. Execution in Counterparts. This Bond Purchase Agreement may be executed 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 this Bond Purchase Agreement by signing any such
counterpart.
- 15 -
Section 16. Notices and Other Actions. All notices, requests, demands and formal actions
hereunder will be in writing mailed, faxed (with confirmation of receipt) or delivered by
nationally recognized, next-day delivery service to:
The Underwriter:
Sovereign Securities Corporation, LLC
Mail Code: 20-210-CPC
0000 Xxxxxx Xxxxxx
Xxxxxx Xxxxxx-Xxxxxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, III Managing Director
Fax #: (000) 000-0000
Email: xxxxxxx@xxxxxxxxxxxxx.xxx
Mail Code: 20-210-CPC
0000 Xxxxxx Xxxxxx
Xxxxxx Xxxxxx-Xxxxxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, III Managing Director
Fax #: (000) 000-0000
Email: xxxxxxx@xxxxxxxxxxxxx.xxx
The Company:
Aqua Pennsylvania, Inc.
000 Xxxxxxxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Treasurer
Fax #: (000) 000-0000
Email: xxxxxxxxx@xxxxxxxxxxx.xxx
000 Xxxxxxxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Treasurer
Fax #: (000) 000-0000
Email: xxxxxxxxx@xxxxxxxxxxx.xxx
The Authority:
Pennsylvania Economic Development Financing Authority
Center for Private Financing
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxxx, XX 00000-0000
Attention: Xxxxxxx Xxxxxx, Director
Fax #: (000) 000-0000
Email: xxxxxxx@xxxxx.xx.xx
Center for Private Financing
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxxx, XX 00000-0000
Attention: Xxxxxxx Xxxxxx, Director
Fax #: (000) 000-0000
Email: xxxxxxx@xxxxx.xx.xx
Section 17. Governing Law. This Bond Purchase Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania, excluding those relating to choice of
laws or conflict of laws, and may not be assigned by the Authority, the Company or the Underwriter.
Section 18. Successors. This Bond Purchase Agreement will inure to the benefit of and be
binding upon the parties and their respective successors and, as to Sections 6, 7, 8 and 9 hereof,
the Indemnitees, and will not confer any rights upon any other person. The term “successor” shall
not include any holder of any Bonds merely by virtue of such holding.
Section 19. Limitations on Liability. No personal recourse shall be had for any claim based on
this Bond Purchase Agreement or the Bonds against any board member, officer, agent, employee, or
attorney past, present or future, of the Authority or any successor body as such,
either directly or through the Authority or any successor body, under any constitutional
provision, statute, or rule of law or by enforcement of any assessment or penalty or otherwise.
Notwithstanding any provision or obligation to the contrary in this Bond Purchase Agreement, the
liability of the Authority for payments of any kind, nature or description provided for herein or
in any other document executed pursuant hereto shall be limited to the revenues derived by the
Authority from the Financing Agreement.
(Signatures on next page)
- 16 -
IN WITNESS WHEREOF, the Authority, the Company and the Underwriter have caused their duly
authorized officers to execute and deliver this Bond Purchase Agreement as of the date first
written above.
| PENNSYLVANIA ECONOMIC DEVELOPMENT FINANCING AUTHORITY |
||||
| By: | /s/ Xxxxxxx Xxxxxx | |||
| XXXXXXX XXXXXX, Director | ||||
| AQUA PENNSYLVANIA, INC. |
||||
| By: | /s/ Xxxxxxx X. Xxxxxxx | |||
| XXXXXXX X. XXXXXXX, Treasurer | ||||
| SOVEREIGN SECURITIES CORPORATION, LLC |
||||
| By: | /s/ Xxxxxx X. Xxxxxx, III | |||
| XXXXXX X. XXXXXX, III | ||||
| Managing Director | ||||
- 17 -
SCHEDULE I
Terms of Bonds
Dated Date: December 18, 2008
| Principal | ||||||||||||||||||||
| Series | Maturity Date | Amount | Rate of Interest | Price | Yield | |||||||||||||||
2008A |
October 1, 2017 | $ | 9,000,000 | 6.25 | % | 98.007 | 6.55 | % | ||||||||||||
2008A |
October 1, 2018 | $ | 13,000,000 | 6.75 | % | 100.000 | 6.75 | % | ||||||||||||
Interest Payment Dates: April 1 and October 1, commencing April 1, 2009
Redemption Provisions: The Bonds are subject to redemption as follows:
Optional Redemption. The Bonds are not subject to optional redemption.
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 of 100% of the principal amount of the Bonds to be redeemed, plus interest accrued
thereon to the date fixed for redemption, if any of the following events shall have occurred:
(a) the damage or destruction of all or substantially all of the Facilities to such extent,
that, in the reasonable opinion of the Company, the repair and restoration thereof would not be
economical; or
(b) the taking by condemnation, or the threat thereof, of all or substantially all of the
Facilities or the taking by condemnation of any part, use or control of the Facilities so as to
render them unsatisfactory to the Company for their intended use; or
(c) in the Company’s reasonable opinion, (1) unreasonable burdens or excessive liabilities
shall have been Imposed upon the Company with respect to the Facilities or the operation thereof,
including, but not 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 property taxes presently
levied upon privately owned property used for the same general purposes as the Facilities, or (2)
the continued operation of the Facilities is impractical, uneconomical or undesirable for any
reason.
Any such redemption shall be on any date within 180 days following the occurrence of one of
the events listed above permitting the exercise of the option.
Special Mandatory Redemption. The Bonds are subject to mandatory redemption, in part, on the
first interest payment date for which notice can be given in accordance with the Trust Indenture
after the Project has been completed and the certificate of the Company with respect
thereto required by the Financing Agreement has been filed with the Authority and the Trustee,
to the extent of any amounts transferred from the Project Fund to the Debt Service Fund pursuant to
the Trust Indenture, at a Redemption Price of 100% of the principal amount of the Bonds to be
redeemed, plus accrued interest thereon to the date fixed for redemption.
Selection shall be made and notice given in accordance with the Trust Indenture.
EXHIBIT “A”
FORM OF APPROVING OPINION OF
XXXXXXX XXXXX XXXXXXX & XXXXXXXXX, LLP
FORM OF APPROVING OPINION OF
XXXXXXX XXXXX XXXXXXX & XXXXXXXXX, LLP
Upon delivery of the Bonds, Xxxxxxx Xxxxx Xxxxxxx & Ingersoll, LLP, Philadelphia, Pennsylvania,
Bond Counsel, will issue its approving opinion in substantially the following form
December __, 2008
| Re: | $
aggregate principal amount of Pennsylvania Economic Development
Financing Authority Water Facilities Revenue Bonds
(Aqua Pennsylvania, Inc. Project) Series A of 2008 |
Ladies and Gentlemen:
We have acted as Bond Counsel to the Pennsylvania Economic Development Financing Authority
(the “Authority”) in connection with the issuance and sale of its $ aggregate principal
amount of Pennsylvania Economic Development Financing Authority Water Facilities Revenue Bonds
(Aqua Pennsylvania, Inc. Project) Series A of 2008 (the “Bonds”). The Bonds are being issued by the
Authority at the request of Aqua Pennsylvania, Inc., as successor to Philadelphia Suburban Water
Company (the “Company”), to finance facilities located in the Pennsylvania Counties of Chester,
Delaware and Xxxxxxxxxx (the “Project Facilities”) for the furnishing of water which is made
available on reasonable demand to members of the general public in portions of the Pennsylvania
Counties of Chester, Delaware and Xxxxxxxxxx.
The Bonds are issuable in fully registered form under a Trust Indenture dated as of December
1, 2008 (the “Indenture”) between the Authority and U.S. Bank National Association, as trustee (the
“Trustee”). The Authority and the Company are entering into a Financing Agreement dated as of
December 1, 2008 (the “Financing Agreement”), pursuant to which the Authority will lend the
proceeds of the Bonds to the Company to finance the Project Facilities.
A-1
In satisfaction of its obligation under the Financing Agreement with respect to the Bonds, the
Company, concurrently with the issuance of the Bonds, is delivering to the Trustee its First
Mortgage Bond % Due 2028 (the “2028 First Mortgage Bond”) and its First Mortgage Bond % Due
2030 (the “2030 First Mortgage Bond” and, together with the 2028 First Mortgage Bond, the “First
Mortgage Bonds”) in the aggregate principal amount equal to the aggregate principal amount of the
Bonds. The Authority has assigned its interests under the Financing Agreement with respect to the
Bonds, including its right to receive the First Mortgage Bonds and the payments thereunder, to the
Trustee for the benefit of the holders of the Bonds.
Sections 103 and 141-150 of the Internal Revenue Code of 1986, as amended (the
"Code"), provide generally that interest on certain issues of bonds, the
proceeds of which are to be used to provide facilities for the furnishing of water within the
meaning of Section 142(a) of the Code, will be excludable from the gross income of the holder
thereof. The Code imposes various requirements pertaining to the use and investment of the proceeds
of such bonds, the maturity of and security for such bonds, the procedure for issuance of such
bonds, the rebate of arbitrage profits to the Internal Revenue Service and filings with the
Internal Revenue Service. We have concluded that the Bonds meet the requirements of the Code in
reliance on representations of the Authority and the Company with respect to the application of the
proceeds of the Bonds, the nature of the Project Facilities and other matters solely within the
knowledge of the Authority and the Company which we have not independently verified, and have
assumed continuing compliance with the covenants in the Indenture, the Financing Agreement and the
certificates of the Company with respect to the Project Facilities delivered at closing pertaining
to the requirements of those sections of the Code which affect the exclusion from gross income of
interest on the Bonds for federal income tax purposes. In the event that such representations are
determined to be inaccurate or incomplete or the Authority or the Company fails to comply with the
aforementioned covenants, interest on the Bonds could become includable in gross income from the
date of issuance, regardless of the date on which the event causing such inclusion occurs.
In our capacity as Bond Counsel, we have examined such documents, records of the Authority and
other instruments as we deemed necessary to enable us to express the opinions set forth below,
including original counterparts or certified copies of the Indenture, the Financing Agreement, the
First Mortgage Bonds, the other documents listed in the closing memorandum filed with the Trustee
and an executed Water Facilities Revenue Bond (Aqua Pennsylvania, Inc. Project) Series A of 2008 as
authenticated by the Trustee.
Based on the foregoing, it is our opinion that:
1. The Authority is a public instrumentality of the Commonwealth of Pennsylvania and a body
corporate and politic, organized and existing under Pennsylvania law, with full power and authority
to execute and deliver the Financing Agreement and the Indenture, and to issue and sell the Bonds.
2. The Financing Agreement and the Indenture have been duly authorized, executed and delivered
by the Authority and constitute legal, valid and binding obligations of the Authority enforceable
against the Authority in accordance with their respective terms, subject to state and federal laws
and equitable principles affecting the enforcement of creditors’ rights.
A-2
3. All right, title and interest of the Authority under the Financing Agreement as they relate to
the Bonds, including the right to receive the First Mortgage Bonds and the payments thereunder
(except for certain rights to indemnification and to payments in respect of administrative expenses
of the Authority), have been effectively assigned to the Trustee by the Indenture.
4. The issuance and sale of the Bonds have been duly authorized by the Authority; the Bonds
have been duly executed and delivered by the Authority; and, on the assumption that all Bonds have
been authenticated by the Trustee, the Bonds are legal, valid and binding obligations of the
Authority enforceable against the Authority in accordance with their terms, subject to state and
federal laws and equitable principles affecting the enforcement of creditors’ rights, and are
entitled to the benefit and security of the Indenture.
5. Under existing laws as enacted and construed on the date of initial delivery of the Bonds,
interest on the Bonds is excludable from gross income for purposes of federal income tax, assuming
the accuracy of the certifications of the Authority and the Company and continuing compliance by
the Authority and the Company with the requirements of the Code, except that interest on a Bond is
not excludable while the Bond is held by a substantial user of the Project Facilities or a related
person as provided in the Code. Interest on the Bonds is a tax preference item that is subject to
individual and corporate federal alternative minimum tax. Interest on Bonds held by foreign
corporations may be subject to the branch profits tax imposed by the Code.
Certain of the maturities of the Bonds are offered at a discount (“original issue discount”)
equal generally to the difference between public offering price and principal amount. For federal
income tax purposes, original issue discount on a Bond accrues periodically over the term of the
Bond as interest with the same tax exemption and alternative minimum tax status as regular
interest. The accrual of original issue discount increases the holder’s tax basis in the Bond for
determining taxable gain or loss from sale or from redemption prior to maturity.”
Ownership of the Bonds may result in other federal income tax consequences to certain
taxpayers, including, without limitation, financial institutions, property and casualty insurance
companies, individual recipients of social security or railroad retirement benefits, certain S
corporations and taxpayers who may be deemed to have incurred or continued debt to purchase or
carry the Bonds. We express no opinion as to these matters.
6. Under the existing laws of the Commonwealth of Pennsylvania as enacted and construed on the
date of initial delivery of the Bonds, interest on the Bonds is exempt from Pennsylvania personal
income tax and Pennsylvania corporate net income tax, and the Bonds are exempt from personal
property taxes in Pennsylvania.
We do not express any opinion herein as to the adequacy or accuracy of the Official Statement
of the Authority pertaining to the offering of the Bonds.
We call your attention to the fact that the Authority’s obligation to make payments in respect
of the Bonds is limited to moneys received from payments to be made by the Company pursuant to the
First Mortgage Bonds and as provided in the Indenture and that the Bonds do not pledge the credit
or taxing power of the Commonwealth of Pennsylvania or any political subdivision thereof. The
Authority has no taxing power.
Very truly yours,
A-3
EXHIBIT B
FORM OF SUPPLEMENTAL OPINION OF
XXXXXXX XXXXX XXXXXXX & XXXXXXXXX, LLP
XXXXXXX XXXXX XXXXXXX & XXXXXXXXX, LLP
December __, 2008
| Re: | $ aggregate principal amount of Pennsylvania Economic Development
Financing Authority Water Facilities Revenue Bonds,
(Aqua Pennsylvania, Inc. Project) Series A of 2008 |
Ladies and Gentlemen:
Reference is made to our approving opinion as Bond Counsel of even date herewith identified as
Closing Item No. [E-3(a)] delivered to you concurrently herewith and relating to the
above-referenced Bonds (the “Bonds”). At your request we have undertaken a review of certain other
matters pertaining to the Bonds. All terms are used but not defined herein shall have the same
meanings ascribed to them in the Official Statement dated November
_____, 2008 (the “Official
Statement”) prepared in connection with the public offering of the Bonds.
Based on the review described in our approving opinion, it is our opinion that:
1. The Bond Purchase Agreement dated November
_____, 2008 (the “Bond Purchase Agreement”), among
you, the Company and the Authority relating to the Bonds has been duly authorized, executed and
delivered by the Authority and constitutes the legal, valid and binding obligation of the Authority
enforceable against the Authority in accordance with its terms, except as enforceability thereof
may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’
rights generally and general principles of equity.
2. It is not necessary in connection with the offering and sale of the Bonds to register the
Bonds under the Securities Act of 1933, as amended, or to qualify the Indenture under the Trust
Indenture Act of 1939, as amended.
3. The information in the Official Statement under the captions “INTRODUCTORY STATEMENT -
Description of the Bonds” and “INTRODUCTORY STATEMENT — Security for the Bonds,” “THE BONDS” (other
than the information under the sub-caption “Book-Entry Only System,” as to which we express no
view) and “SECURITY FOR THE BONDS” (other than the information under the sub-captions “The
Mortgage” and “Additional Parity Indebtedness” as to which we express no view) and the information
set forth in Appendix C to the Official Statement (other than information under the heading “THE
FIRST MORTGAGE BONDS AND THE MORTGAGE” as to which we express no view), insofar as such information
purports to summarize provisions of the Bonds, the Indenture and the Agreement, fairly and
accurately summarize such information in all material respects. The information in the Official
Statement under the caption “TAX MATTERS” and the related information set forth on the outside
front cover of the Official Statement accurately reflect our firm’s opinion with respect to the
matters discussed therein in all material respects.
This letter is furnished by us solely for your benefit in connection with the provisions of
the Bond Purchase Agreement and may not be relied upon by any other persons for any purpose
without our express written permission.
Very truly yours,
B-1
EXHIBIT C
FORM OF OPINION OF COUNSEL FOR THE AUTHORITY
December __, 2008
Aqua Pennsylvania, Inc.
|
U.S. Bank National Association, as Trustee | |
000 Xxxxxxxxx Xxxxxx
|
0 Xxxxxxx Xxxxx, Xxxxx 0000 | |
Xxxx Xxxx, XX 00000
|
00 Xx. 00xx Xxxxxx | |
| Xxxxxxxxxxxx, XX 00000 | ||
Sovereign Securities Corporation, LLC
|
Xxxxxxx Xxxxx Xxxxxxx & Xxxxxxxxx, LLP | |
0000 Xxxxxx Xxxxxx
|
Xxxxxx Bank Center | |
Centre Square — Concourse
|
0000 Xxxxxx Xxxxxx, 00xx Xxxxx | |
Xxxxxxxxxxxx, XX 00000
|
Xxxxxxxxxxxx, XX 00000 |
| Re: | $ aggregate principal amount of Pennsylvania Economic Development
Financing Authority Water Facilities Revenue Bonds,
(Aqua Pennsylvania, Inc. Project) Series A of 2008 |
Ladies and Gentlemen:
I have acted as counsel to the Pennsylvania Economic Development Financing Authority (the
“Authority”) in connection with the authorization, execution and issuance by the Authority of the
captioned Bonds (the “Bonds”). This opinion is being rendered pursuant to Section 11(c)(iii) of the
Bond Purchase Agreement, dated November
_____, 2008 (the “Bond Purchase Agreement”) by and among
Sovereign Securities Corporation, LLC (the “Underwriter”), Aqua Pennsylvania, Inc. (the “Borrower”)
and the Authority. Capitalized terms used herein and not otherwise defined shall have the meanings
ascribed to them in the Bond Purchase Agreement.
As the basis for this opinion, I have examined the Pennsylvania Economic Development Financing
Law, 73 P.S. §§ 371 et seq., as amended (the “Act”); the Resolution of the Board of
Directors of the Authority relating to the Bonds adopted on October 8, 2008 ( the “Resolution”),
and such other documents, certificates and records of the Authority and other instruments and
matters of law as I have deemed necessary to enable me to express the opinion set forth below,
including, without limitation, original counterparts or certified copies of the Trust Indenture,
dated as of December 1, 2008 (the “Indenture”), between the Authority and U.S. Bank National
Association, as trustee (the “Trustee”), the Financing Agreement, dated as of December 1, 2008 (the
“Financing Agreement”), between the Authority and the Borrower) and the Bond Purchase Agreement.
The Indenture, the Financing Agreement and the Bond Purchase Agreement are collectively referred to
herein as the “Authority Documents”.
I have assumed and relied upon the truth, completeness, authority and accuracy of all
documents, certificates and instruments examined and the authenticity of all signatures thereon
other than those of the Authority.
C-1
I have also assumed that each of the documents referred to herein are, where appropriate, duly
authorized and executed by and valid and legally binding obligations of, and enforceable in
accordance with their terms against all parties thereto other than the Authority and that the
actions required to be taken or consents required to be obtained by such parties have been taken
and obtained. In rendering this opinion, I have also assumed that such parties have acted in full
compliance with the terms of all applicable laws, regulations and orders.
As to questions of fact material to this opinion, I have relied upon certificates and
representations of officers and representatives of the Authority or of other public officials,
without independent investigation.
I have not made any independent investigation in rendering this opinion other than the
examination described above. My opinion is therefore qualified in all respects by the scope of that
examination.
My opinions are specifically limited to the present internal laws of the Commonwealth of
Pennsylvania (“Commonwealth”) and present federal law and no opinion is expressed as to the effect
the laws of any other jurisdiction may have upon the subject matter of the opinions expressed
herein under conflict of laws principles or otherwise.
Based upon the foregoing, and subject to the limitations, assumptions, qualifications and
exceptions set forth herein, I am of the opinion that:
1. The Authority is a body corporate and politic constituting an instrumentality of the
Commonwealth and is duly created and presently existing pursuant to the Act.
2. The Authority has duly authorized the execution and issuance of the Bonds and the execution
and delivery of the Authority Documents. The Bonds have been duly and validly executed and
delivered by the Authority and the Authority Documents have each been duly and validly executed and
delivered by the Authority and the Bonds and each of the Authority Documents are valid and binding
agreements of the Authority, enforceable against the Authority in accordance with their respective
terms.
3. The execution and the issuance by the Authority of the Bonds, the execution and delivery by
the Authority of the Authority Documents and performance by the Authority of the Authority’s
obligations under the Bonds and the Authority Documents, do not conflict with or constitute on the
part of the Authority a violation of, breach of or default under any existing constitutional
provision or statute of the Commonwealth applicable to the Authority, or, to my knowledge without
having undertaken any independent investigation, any indenture, mortgage, deed of trust,
resolution, note agreement or other agreement or instrument to which the Authority is a party or by
which the Authority is bound and which is known to me, or, to my knowledge, without having
undertaken any independent investigation, any order, rule or regulation of any court, governmental
agency or body of the Commonwealth having jurisdiction over the Authority or any of its activities
or property.
C-2
4. To my knowledge, without having undertaken any independent investigation, there
is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by
any court, public board or body, pending or threatened against the Authority, wherein an
unfavorable decision, ruling or order would materially and adversely affect the obligations of the
Authority under the Bonds.
5. The Resolution has been duly adopted by the Authority in compliance with the Pennsylvania
Sunshine Act of October 15, 1998, X.X. 000, Xx. 00 (65 P.S. § 701 et seq.)
6. The Authority has approved the distribution of the Preliminary Official Statement dated
November
_____, 2008 and the Official Statement dated November
_____, 2008 (the “Official Statement”) by
the Underwriter in connection with the offering of the Bonds.
7. The information contained in the Official Statement under the headings “INTRODUCTORY
STATEMENT — The Authority,” “THE AUTHORITY” and “ABSENCE OF MATERIAL LITIGATION” (solely insofar as
the information set forth therein relates to the Authority) has been reviewed by me and nothing has
come to my attention which would lead me to believe that such information contains any untrue
statement of a material fact or omits to state a material fact which is required to be stated
therein or which is necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading in any material respect.
The opinions expressed herein are subject in all respects to the following qualifications: (a)
no opinion is rendered as to the availability of equitable remedies including, but not limited to,
specific performance and injunctive relief, whether enforceability is considered in a proceeding in
equity or at law; (b) no opinion is rendered as to the effect of bankruptcy, reorganization,
insolvency, fraudulent conveyance, moratorium and other similar laws or legal principles affecting
creditors’ rights or remedies; (c) no opinion is rendered as to the creation, perfection or
priority of any lien or security interest; (d) no opinion is rendered with respect to any “blue
sky” or other securities laws of the Commonwealth or of other jurisdictions; and (e) no opinion is
rendered with regard to any federal income tax law or regulation or any state tax law or regulation
of the Commonwealth or of other jurisdictions.
No opinion is expressed as to the validity or enforceability of any provisions of the
Authority Documents: (a) allowing any person or entity to institute judicial or non judicial
proceedings or to exercise any other rights, without notice to the person or entity against whom
enforcement is sought; (b) waiving any right or defense of any person or entity; (c) providing or
implying the availability of self-help in any particular event or circumstances; (d) relating to
court costs or legal fees which may be properly chargeable or recoverable in any judicial
proceedings; and (e) relating to indemnification.
I call your attention to the fact that the Bonds are special and limited obligations of the
Authority, payable solely from the payments derived by the Authority under the Financing Agreement.
The Bonds are not obligations or liabilities of the Commonwealth or any political subdivision
thereof nor do the Bonds pledge the credit of the Commonwealth of Pennsylvania or any political
subdivision thereof nor do the Bonds pledge the credit of the Authority (other than to the limited
extent described above). The Authority has no taxing power.
This opinion is given as of the date hereof. No opinion is expressed as to any matter not set
forth in the numbered paragraphs herein. I make no undertaking to supplement this opinion if
facts or circumstances hereafter come to my attention or changes in law occur after the date
hereof. This opinion is rendered solely in connection with the original delivery and payment for
the Bonds on the date hereof, and may not be relied upon for any other purpose. This opinion may
not be relied upon by any other person, including any purchaser of the Bonds from the Underwriter
or otherwise or for any other purpose, nor may this opinion be distributed, quoted or disclosed to
any person, firm or entity without my prior written consent in each instance.
Very truly yours,
C-3
EXHIBIT D
FORM OF OPINIONS OF THE COMPANY’S LEGAL COUNSEL AND THE
COMPANY’S SENIOR VICE PRESIDENT — LAW ANDADMINISTRATION
COMPANY’S SENIOR VICE PRESIDENT — LAW ANDADMINISTRATION
Letterhead of Xxxxxxxx Xxxxxx LLP
December __, 2008
Pennsylvania Economic Development Financing Authority
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxxx, XX 00000-0000
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxxx, XX 00000-0000
Sovereign Securities Corporation, LLC
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Xxxxxxx Xxxxx Xxxxxxx & Ingersoll, LLP
0000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, XX 00000
0000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, XX 00000
| Re: | $ aggregate principal amount of Pennsylvania Economic Development
Financing Authority Water Facilities Revenue Bonds
(Aqua Pennsylvania, Inc. Project) Series A of 2008 |
Ladies and Gentlemen:
We have acted as counsel to Aqua Pennsylvania, Inc. (the “Company”) in connection with (i) the
issuance by the Pennsylvania Economic Development Financing Authority (the “Authority”), and the
sale to Sovereign Securities Corporation, LLC pursuant to that certain Bond Purchase Agreement
dated November
_____, 2008 (the “Purchase Agreement”), of $ aggregate principal amount of
Pennsylvania Economic Development Financing Authority Water Facilities Revenue Bonds (Aqua
Pennsylvania, Inc. Project), Series A of 2008 (the “Authority Bonds”), and (ii) the issuance and
delivery of the Company’s First Mortgage Bond, % Series due 2028 in the principal amount of
$ (the “2028 First Mortgage Bond”); and its First Mortgage Bond, % Series due 2030 in
the principal amount of $ (the “2030 First Mortgage Bond” and along with the 2028 First
Mortgage Bond collectively, the “First Mortgage Bonds”), issued under an Indenture of Mortgage (the
“Original Mortgage”) dated as of January 1, 1941, as amended and supplemented by supplemental
indentures thereto, including the Forty-third Supplemental Indenture dated as of December 1, 2008
(the “Supplemental Indenture”) under which The Bank of New York Mellon Trust Company, N.A. is
successor trustee (the “Mortgage Trustee”). The original Mortgage as amended and supplemented is
hereinafter called the “Mortgage”. Capitalized terms used herein and not otherwise defined shall
have the meanings ascribed to such terms in the Purchase Agreement.
D-1
We have examined and reviewed, among other things:
(a) a copy of the Articles of Incorporation of the Company, as amended and restated and now in
effect;
(b) a copy of the bylaws of the Company as now in effect;
(c) resolutions of the Board of Directors of the Company authorizing the execution and
delivery of the Purchase Agreement, the Financing Agreement, the Supplemental Indenture, the First
Mortgage Bonds, the Continuing Disclosure Agreement and the Official Statement;
(d) the Purchase Agreement;
(e) the Financing Agreement dated as of December 1, 2008 (the “Financing Agreement”) between
the Authority and the Company;
(f) the Continuing Disclosure Agreement dated as of December 1, 2008 (the “Continuing
Disclosure Agreement”) between the Company and U.S. Bank National Association, as trustee for the
Authority Bonds (the “Trustee”);
(g) the Official Statement relating to the Authority Bonds dated November
_____
, 2008 (the
“Official Statement”);
(h) the Securities Certificate relating to the issue and sale of the First Mortgage Bonds,
filed by the Company with the Pennsylvania Public Utility Commission pursuant to the provisions of
Chapter 19 of the Pennsylvania Public Utility Code, and a copy of the Order of the Public Utility
Commission registering such Securities Certificate, certified by the Secretary of the Pennsylvania
Public Utility Commission;
(i) a Subsistence Certificate from the Secretary of the Commonwealth with respect to the
Company;
(j) executed counterparts of the Original Mortgage and of the Supplemental Indenture and
evidence satisfactory to us of the due recordation thereof in the Counties of Adams, Berks,
Bradford, Bucks, Carbon, Xxxxxxx, Columbia, Crawford, Cumberland, Delaware, Forest, Juniata,
Lackawanna, Lawrence, Lehigh, Luzerne, Mercer, Monroe, Xxxxxxxxxx, Northampton, Northumberland,
Pike, Schuylkill, Xxxxxx, Susquehanna, Xxxxx and Wyoming, Pennsylvania;
(k) the documents delivered to the Mortgage Trustee in connection with the authentication of
the First Mortgage Bonds pursuant to the provisions of Sections 2(B) and 3 of Article IV of the
Original Mortgage;
(l) the First Mortgage Bonds delivered to the Trustee at the Closing held today;
(m) the certificates of the Company and other documents delivered to the Mortgage Trustee at
the Closing;
(n) a certificate of the Company and various bringdown title searches of various title
companies in the Counties of Adams, Berks, Bradford, Bucks, Carbon, Xxxxxxx, Columbia, Crawford,
Cumberland, Delaware, Forest, Juniata, Lackawanna, Lawrence, Lehigh, Luzerne, Mercer, Monroe,
Xxxxxxxxxx, Northampton, Northumberland, Pike, Schuylkill, Xxxxxx,
Susquehanna, Xxxxx and Wyoming, Pennsylvania, each dated as of a recent date (collectively,
“Title Searches”), as to matters relating to title to real estate and the lien of the Mortgage
thereon, on which certificate and searches we are relying for the purposes of this opinion; and
(o) various certificates of officers of the Company relating to title to real property and the
priority of any lien thereon.
D-2
In rendering this opinion, we have assumed that all signatures on documents and instruments
examined by us are genuine (except signatures of the Company on the Purchase Agreement, the
Supplemental Indenture, the Financing Agreement, the First Mortgage Bonds and the Continuing
Disclosure Agreement (collectively, the “Company Documents”) and the Official Statement), the
authenticity of all documents submitted to us as originals and the conformity with the original
documents of all documents submitted to us as copies. We have also assumed, with your permission,
that none of the signatories of the documents and instruments referred to above is an affiliate of
the Company within the meaning of 66 Pa.C.S. §2101 (1989).
As to questions of fact material to the opinions hereinafter expressed, we have relied solely
and without investigation upon certificates of public officials, certificates of officers of the
Company and the representations of the Company contained in the Company Documents (including the
exhibits and schedules to such documents) and the certificates and other documents delivered
pursuant thereto. To the extent that the opinions contained herein are given to our knowledge, such
knowledge means the actual knowledge of those attorneys within our firm who have provided
substantive representation to the Company in connection with this financing, without investigation
and inquiry, and does not include matters of which such attorneys could be deemed to have
constructive knowledge.
In rendering this opinion, we have also assumed that each of the Company Documents has been
duly authorized, executed and delivered by each party thereto (other than the Company) and that
each of the Company Documents is binding and enforceable against each such party in accordance with
its respective terms.
Further, as to matters relating to title to real estate and the lien of the Mortgage, we have
relied exclusively upon various certificates of officers of the Company and the Title Searches and
we have not made, nor undertaken to make, any investigation or inquiry with respect to title to
real property or the priority of any lien thereon.
We are generally familiar with the Company’s operations as a public utility within the
Commonwealth of Pennsylvania (the “Commonwealth”).
Based upon the foregoing and such other examination of fact and law as we have deemed
necessary for purposes of this opinion, we are of the opinion that:
1. The Company was organized and subsists under the laws of the Commonwealth, with the
corporate power to own its properties and conduct its business as described in the Official
Statement.
2. The Company has the corporate power and authority to enter into and perform the Company
Documents. The execution, delivery and performance by the Company of the Company Documents have
been duly authorized by all requisite corporate action.
D-3
3. The Purchase Agreement, the Financing Agreement and the Continuing Disclosure Agreement
constitute legal, valid and binding obligations of the Company, enforceable against the Company in
accordance with their respective terms.
4. The First Mortgage Bonds have been duly authorized, executed, authenticated, issued and
delivered and each constitutes a valid and legally binding obligation of the Company entitled to
the benefits provided by the Mortgage.
5. The First Mortgage Bonds are not subject to the registration requirements of the 1933 Act.
6. The Mortgage constitutes a direct, valid and enforceable mortgage lien (except as
enforceability of such lien may be limited by bankruptcy, insolvency, reorganization or other laws
affecting the enforcement of creditors’ rights) upon all of the properties and assets of the
Company (not heretofore released as provided for in the Mortgage) specifically or generally
described or referred to in the Mortgage as being subject to the lien thereof, except for permitted
liens under the Mortgage; (i) the Original Mortgage, either separately or as an exhibit to (a) the
Thirty-Fifth Supplemental Indenture dated as of January 1, 2002, (b) the Thirty-Eighth Supplemental
Indenture dated as of November 15, 2004 or (c) the Forty-first Supplemental Indenture dated as of
January 1, 2007, and (ii) the Forty-third Supplemental Indenture dated as of December 1, 2008, has
been properly recorded in the Counties of Adams, Berks, Bradford, Bucks, Carbon, Xxxxxxx, Columbia,
Crawford, Cumberland, Delaware, Forest, Juniata, Lackawanna, Lawrence, Lehigh, Luzerne, Mercer,
Monroe, Xxxxxxxxxx, Northampton, Northumberland, Pike, Schuylkill, Xxxxxx, Susquehanna, Xxxxx and
Wyoming in the Commonwealth and such recordations are the only recordations necessary in order to
establish, preserve, protect and perfect the lien of the Mortgage on all real estate and fixed
property of the Company (excluding easement and other similar nights) described in the Mortgage as
subject to the lien thereof.
7. With such exceptions as are not material and do not interfere with the conduct of the
business of the Company, the Company has good and marketable title to all of its real property
currently held in fee simple; good and marketable title to all of its other interests in real
property (other than to certain rights of way, easements, occupancy rights, riparian and flowage
rights, licenses, leaseholds, and real property interests of a similar nature); and good and
marketable title to all personal property owned by it; in each case free and clear of all liens,
encumbrances and defects except such as may be described in the Official Statement, the lien of the
Mortgage, permitted liens under the Mortgage or such as do not materially affect the value of such
property and do not interfere with the use made and proposed to be made of such property by the
Company; and any real property and buildings held under lease by the Company are held by it under
valid, subsisting and enforceable leases with such exceptions as are not material and do not
interfere with the use made and proposed to be made of such property and buildings by the Company.
8. The Company is not a holding company, a registered holding company or an affiliate of a
registered holding company within the meaning of the Public Utility Company Holding Act of 1935, as
amended.
9. The Mortgage and the First Mortgage Bonds conform in all material respects as to legal
matters to the descriptions thereof in the Official Statement.
D-4
Without having undertaken to determine independently the accuracy, completeness and
fairness of the statements contained in the Official Statement, nothing has come to our
attention in connection with our representation of the Company in respect of the issuance of the
First Mortgage Bonds which leads us to believe that the information with respect to the Company
contained in the Official Statement (including Appendix A and the information incorporated therein
by reference) contains any untrue statement of a material fact or omits to state a material fact
which is required to be stated therein or which is necessary to make such information and
descriptions, in the light of the circumstances under which they were made, not misleading in any
material respect.
The foregoing opinions are subject to the following qualifications:
(i) The opinions expressed in paragraphs 3 and 4 are subject to the qualifications that the
enforceability of the First Mortgage Bonds are subject to (i) applicable bankruptcy, insolvency,
reorganization, moratorium, and other similar laws of general application relating to or affecting
creditors’ rights, (ii) certain provisions of Pennsylvania law affecting the availability of
certain remedies, and (iii) the further qualification that the availability of specific
performance, injunctive relief or other equitable remedies is subject to the discretion of the
court before which any proceeding therefor maybe brought.
(ii) Our opinions are subject to limitations imposed by general principles of equity,
including principles of commercial reasonableness, good faith and fair dealing (regardless of
whether enforcement is considered in proceedings at law or in equity).
(iii) We express no opinion as to the enforceability with respect to any provisions purporting
to waive the effect of applicable laws and remedies and any provisions releasing any party from, or
requiring indemnification for, liability for gross negligence, recklessness or willful misconduct.
(iv) Any requirements in any of the documents specifying that provisions of a document may
only be waived in writing may not be enforced to the extent that an oral agreement or an implied
agreement by trade practice or course of conduct has been created modifying any provision of such
document.
(v) We express no opinion as to the applicability to the transactions contemplated by the
Company Documents of Section 548 of the Bankruptcy Code or any applicable state law relating to
fraudulent transfers and obligations.
(vi) Other applicable local, state and federal laws, regulations and ordinances, court
decisions and constitutional requirements may limit or render unenforceable certain of the rights
or remedies contained in the Company Documents, but in our opinion, none of the same would
materially impair the practical realization of the benefits intended to be provided by the Company
pursuant to the Company Documents.
(vii) Our opinion is limited in all respects to the laws of the Commonwealth in effect as of
the date hereof and we express no opinion as to the laws of any other jurisdiction.
(viii) This opinion is limited to the matters set forth herein, no opinion may be inferred or
implied beyond the matters expressly stated herein, and our statements contained in the opinion
portion of this letter must be read in conjunction with the assumptions, limitations, exceptions
and qualifications set forth in this letter.
(ix) The opinions herein are expressed as of the date hereof only and not as of some future
date. We undertake no responsibility to advise you of any change in law or new laws, regulations or
judicial decisions in the future. Nor do we assume any obligation to update or supplement this
opinion to reflect any facts or circumstances which may hereafter come to our attention. References
to “laws,” “regulations” and “judicial decisions” herein shall include only officially published
laws and regulations of the Commonwealth.
This opinion is solely for the benefit of each of you and the benefit of any subsequent holder
of the First Mortgage Bonds or the Authority Bonds and may not be relied upon by any other person
or for any other purpose.
Very truly yours,
D-5
[Letterhead of Aqua Pennsylvania]
December __, 2008
Pennsylvania Economic Development Financing Authority
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxxxx, XX 00000-0000
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxxxx, XX 00000-0000
Sovereign Securities Corporation, LLC
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Xxxxxxx Xxxxx Xxxxxxx & Xxxxxxxxx, LLP
0000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, XX 00000
0000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, XX 00000
| Re: | $ aggregate principal amount of
Pennsylvania Economic Development Financing Authority Water
Facilities
Revenue Bonds (Aqua Pennsylvania, Inc. Project) Series A of
2008 |
Ladies and Gentlemen:
I am Senior Vice President-Law and Administration for Aqua Pennsylvania, Inc. (the “Company”).
Pursuant to Section 11(c)(iv) of the Bond Purchase Agreement dated November
_____
, 2008 (the
“Purchase Agreement”) among the Authority, the Underwriter and the Company (fka Pennsylvania
Suburban Water Company, as successor by merger to Philadelphia Suburban Water Company) relating to
the Authority Bonds, I have been asked to render an opinion to you regarding certain matters
involving the Company. Capitalized terms used herein and not otherwise defined shall have the
definitions ascribed to such terms in the Purchase Agreement.
In rendering this opinion, I have assumed the following:
(i) the genuineness of all signatures (other than the signatures of the Company on the
Forty-third Supplemental Mortgage, as hereinafter defined);
(ii) the authenticity and completeness of all documents submitted to me as originals;
(iii) the conformity to original documents of all documents submitted to me as copies, and the
authenticity of the originals of such copies;
(iv) the entity executing the Mortgage as trustee is duly organized and validly existing, in
good standing under the laws of the jurisdiction of its organization, is properly qualified to do
business in all jurisdictions in which the business conducted by it makes such qualification
necessary and has all necessary legal and corporate power and authority to enter into and perform
its obligations under the Mortgage;
E-1
(v) the due authorization, execution and delivery of the Mortgage by or on behalf of the party
thereto other than the Company;
(vi) the enforceability against each party thereto (other than the Company) of the Mortgage in
accordance with its respective terms; and
(vii) that the execution, delivery and performance of the Mortgage by the entity other than
the Company which is party thereto does not and will not conflict with, result in any breach of, or
constitute a default under any order, writ, injunction or decree of any court or governmental
authority, or any agreement, indenture or other instrument, to which any such party is a party or
by which it or its properties are bound, and that all necessary approvals, consents, permits,
registrations, filings or other notices to or grants of authority from any federal or local
governmental body necessary for the execution, delivery and performance of the Mortgage by each
party thereto (other than the Company) have been duly received or made, with all appeal periods
expired and no appeals taken.
I am making each of the foregoing assumptions with your permission and with the disclaimer
that we make no representation as to the accuracy of such assumptions, although I have no knowledge
that any such assumption is untrue.
In my opinion:
1. With such exceptions as are not material and do not materially interfere with the conduct
of the business of the Company: (a) the Company has all licenses, franchises, permits,
authorizations, rights, approvals, consents and order of all governmental authorities or agencies
necessary for the ownership or lease of the properties owned or leased by it and for the operation
of the business carried on by it as described in the Official Statement, and ail water rights,
riparian rights, easements, rights of way and other similar interests and rights described or
referred to in the Mortgage necessary for the operation of the business carried on by it as
described in the Official Statement; (b) except as otherwise set forth in the Official Statement,
all such licenses, franchises, permits, orders, authorizations, rights, approvals and consents are
in full force and effect; (c) to the best of my knowledge, except as otherwise set forth in the
Official Statement, there are no legal or governmental proceedings pending or, to my knowledge,
threatened that would result in a material modification, suspension or revocation thereof; and (d)
the Company has the legal power to exercise the rights of eminent domain for the purposes of
conducting its water utility operations.
2. The issue and sale of the Bonds; the issue and delivery of the First Mortgage Bonds and the
compliance by the Company with all of the applicable provisions of the First Mortgage Bonds and the
Mortgage; and the execution, delivery and performance by the Company of the Forty-third
Supplemental Mortgage, the Financing Agreement, the Purchase Agreement and the Continuing
Disclosure Agreement will not materially conflict with or result in a material breach of any of the
terms or provisions of, or constitute a material default under, or result in the creation or
imposition of any material lien, charge or encumbrance (other than the lien of the Mortgage) upon
any of the property or assets of the Company pursuant to the terms of, any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument to which the Company is a party or
by which the Company is bound or to which any of the property or assets of the Company is
subject, nor will such action result in a violation of the provisions of the Articles of
Incorporation, as amended, or the Bylaws of the Company or any statute or any order, rule or
regulation of any court or governmental agency or body having jurisdiction over the Company or any
of its property. No consent, approval, authorization, order, registration or qualification of or
with any court or any such regulatory authority or other governmental body not already obtained is
required for the issue and delivery of the First Mortgage Bonds, the execution, delivery and
performance of the Purchase Agreement, the Financing Agreement, the Forty-third Supplemental
Mortgage, the First Mortgage Bonds, and the Continuing Disclosure Agreement, or the consummation of
the other transactions contemplated by the Purchase Agreement or the Mortgage.
E-2
3. There are no legal or governmental proceedings pending to which the Company is a party or
of which any property of the Company is the subject, other than as set forth in the Official
Statement and other than litigation incident to the kind of business conducted by the Company,
wherein an unfavorable ruling, decision or finding is likely that would have a material adverse
effect on the financial position, stockholders’ equity or results of operations of the Company.
4. Each of the Indenture of Mortgage dated as of January 1, 1941 (the “Original Mortgage”),
between the Company and The Philadelphia Company for Insurance on Lives and Exacting Annuities (now
The Bank of New York Mellon Trust Company, N.A., as successor in interest), as trustee (the
“Trustee”) and the forty-three indentures supplemental thereto, including the Forty-third
Supplemental Indenture dated as of December 1, 2008 between the Company and the Trustee (the
Original Mortgage as so supplemented and amended, the “Mortgage”) was duly authorized, executed and
delivered by the Company and the Mortgage constitutes a legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms (subject to applicable
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other similar laws
relating to creditors’ rights generally from time to time in effect, and subject, as to
enforceability, to general principles of equity, regardless of whether such enforceability is
considered in a proceeding in equity or at law).
The foregoing opinions are subject to the following qualifications:
(i) The enforceability of the Mortgage, including, without limitation, any non judicial and
self-help remedies and waivers contained therein, may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar laws affecting the rights of
creditors generally and are subject to limitations imposed by general principles of equity,
including principles of commercial reasonableness, good faith and fair dealing (regardless of
whether enforcement is considered in proceedings at law or in equity), public policy and applicable
law which may limit the availability of the remedies provided for therein,
(ii) I express no opinion as to the adequacy of any notice with respect to the disposition of
any collateral. I also express no opinion as to the effectiveness or enforceability of provisions
relating to waivers of notice or waivers of other rights, severability, prepayment fees or
penalties, choice of law, or any provisions which release or limit the Company’s liability or
relate to cumulative remedies or, to the extent they purport to or would have the effect of
compensating the Company in amounts in excess of any actual loss suffered by the Company,
provisions relating to the payment of a default rate of interest.
(iii) I express no opinion as to enforceability with respect to any provisions in the
Mortgage executed by the Company purporting to waive the effect of applicable laws and
remedies and any provisions releasing any party from, or requiring indemnification for, liability
for gross negligence, recklessness or willful misconduct.
E-3
(iv) Requirements in the Mortgage specifying that provisions of the Mortgage may only be
waived in writing may not be enforced to the extent that an oral agreement or an implied agreement
by trade practice or course of conduct has been created modifying any provision of such Mortgage.
(v) My opinion is limited in all respects to laws of the Commonwealth of Pennsylvania in
effect as of the date hereof and we express no opinion as to the laws of any other jurisdiction.
(vi) This opinion is limited to the matters set forth herein, no opinion may be inferred or
implied beyond the matters expressly stated herein, and our statements contained in the opinion
portion of this letter must be read in conjunction with the assumptions, limitations, exceptions
and qualifications set forth in this letter.
(vii) The opinions herein are expressed as of the date hereof only and not as of some future
date. I undertake no responsibility to advise you of any change in law or new laws, regulations or
judicial decisions in the future nor do I assume any obligation to update or supplement this
opinion to reflect any facts or circumstances which may hereafter come to our attention. References
to “laws,” “regulations” and “judicial decisions” herein shall include only officially published
laws and regulations of the Commonwealth of Pennsylvania.
This opinion is solely for your benefit and may not be relied upon by any other person or for
any other purpose.
Very truly yours,
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