EXHIBIT 10.36
BOND PURCHASE AGREEMENT
$71,310,000
DELAWARE COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY
$49,540,000 $21,770,000
WATER FACILITIES REVENUE BONDS WATER FACILITIES REVENUE REFUNDING BONDS
(AQUA PENNSYLVANIA, INC. PROJECT) (AQUA PENNSYLVANIA, INC. PROJECT)
SERIES A OF 2005 SERIES B OF 2005
Bond Purchase Agreement dated May 10, 2005, among the DELAWARE COUNTY
INDUSTRIAL DEVELOPMENT AUTHORITY (the "Authority"), AQUA PENNSYLVANIA, INC., a
Pennsylvania corporation (the "Company"), and SOVEREIGN SECURITIES CORPORATION,
LLC, a Pennsylvania limited liability company (the "Underwriter").
1. BACKGROUND.
(a) The Authority proposes to enter into a Financing Agreement (the
"Financing Agreement") dated as of May 1, 2005 with the Company, under which the
Authority will agree to loan to the Company funds to (i) finance certain capital
costs of numerous acquisitions, constructions, modifications, expansions,
installations and replacements of water distribution, treatment and related
operating systems located in the counties of Berks, Bucks, Chester, Delaware and
Xxxxxxxxxx in Pennsylvania (the "2005A Facilities") that are part of the
Company's system (the "System") for the distribution of water to its customers,
and related financing costs (collectively, the "Construction Project"); and (ii)
currently refund (the "Refunding Project") the Authority's Water Facilities
Revenue Bonds (Philadelphia Suburban Water Company Project), Series of 1995 (the
"1995 Bonds"), which were issued to finance certain capital costs of numerous
acquisitions, constructions, modifications, expansions, installations and
replacements of water distribution, treatment and related operating systems
located in the counties of Bucks, Chester, Delaware and Xxxxxxxxxx in
Pennsylvania (the "2005B Facilities" and, together with the 2005A Facilities,
the "Facilities") and pay costs of issuance of the 1995 Bonds. To finance the
loan under the Financing Agreement, the Authority proposes to issue and sell
$49,540,000 aggregate principal amount of Delaware County Industrial Development
Authority Water Facilities Revenue Bonds (Aqua Pennsylvania, Inc. Project),
Series A of 2005 (the "Series A Bonds") and $21,770,000 aggregate principal
amount of Delaware County Industrial Development Authority Water Facilities
Revenue Refunding Bonds (Aqua Pennsylvania, Inc. Project), Series B of 2005 (the
"Series B Bonds" and, together with the Series A Bonds, the "2005 Bonds") to the
Underwriter, who will in turn reoffer the 2005 Bonds for sale to the public.
(b) The 2005 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 April 12,
2005 (the "Authority Resolution") and under a Trust Indenture dated as of May 1,
2005 (the "Trust Indenture"), between the Authority and Wachovia Bank, National
Association, as trustee (the "Trustee"). The 2005 Bonds will have such terms as
are set forth in Schedule I attached hereto.
The Series A Bonds will be payable out of payments by the Company
under the Financing Agreement, including payments under its two First Mortgage
Bonds issued with respect to the Series A Bonds in the aggregate principal
amount of $49,540,000 (collectively, the "2005A First Mortgage Bond"). The
Series B Bonds will be payable out of payments by the Company under the
Financing Agreement, including payments under its First Mortgage Bond issued
with respect to the Series B Bonds in the principal amount of $21,770,000 (the
"2005B First Mortgage Bond" and, together with the 2005A First Mortgage Bond,
the "First Mortgage 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 X.X. Xxxxxx Trust Company,
National Association, as 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. and Chase Manhattan Trust
Company, National Association) (the "Mortgage Trustee"), as presently amended
and supplemented and as to be further supplemented by a Thirty-Ninth
Supplemental Indenture of Mortgage to be dated as of May 1, 2005 (the
"Thirty-Ninth 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 principal
amount and will mature on the same date and bear interest at the same rate as
the series of 2005 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 2005 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
2005 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 2005
Bonds pursuant to the Trust Indenture.
(c) The proceeds of the Series B Bonds will be deposited with X.X.
Xxxxxx Trust Company, National Association, as trustee and escrow agent for the
1995 Bonds (the "Escrow Agent") pursuant to an Escrow Deposit Agreement dated as
of May 1, 2005 (the "Escrow Agreement") among the Authority, the Company, the
Escrow Agent and the Trustee. Such proceeds will be invested in United States
Government securities and applied to pay the 1995 Bonds in full on August 15,
2005.
(d) The Construction Project and the Refunding Project
(collectively, the "Project") will finance and refinance, respectively, 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 2005 Bonds
will not be includable in gross income for federal income tax purposes under the
Code and the Underwriter may offer the 2005 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").
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(e) A Preliminary Official Statement dated April 29, 2005, 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").
(f) The 2005 Bonds will be insured by a bond insurance policy (the
"Bond Insurance Policy") issued by Financial Guaranty Insurance Company (the
"Bond Insurer").
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 2005 Bonds at a purchase
price equal to $70,929,354.65, which is equal to the $71,310,000 aggregate
principal amount of the 2005 Bonds, plus original issue premium of $689,004.65,
less the underwriting discount of $1,069,650. Payment for the 2005 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 Daylight Time, on May 19, 2005 or at such other date, time or
place or in such other manner as may be agreed on by the parties hereto. The
2005 Bonds will be delivered as fully registered bonds, with one bond for each
series, each in the aggregate principal amount of the applicable series 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 2005 Bonds to DTC will be made by
delivering the 2005 Bonds to the Trustee utilizing the DTC FAST system. If the
Underwriter so requests, the 2005 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.
The Underwriter agrees to make a bona fide public offering of the 2005
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): (i) to make
concessions to dealers; (ii) to effect transactions that stabilize or maintain
the market price of the 2005 Bonds above that which might otherwise prevail in
the open market and to discontinue at any time such stabilizing transactions;
and (iii) to change such initial offering prices, all as the Underwriter shall
deem necessary in connection with the marketing of the 2005 Bonds.
3. AUTHORITY'S REPRESENTATIONS AND WARRANTIES. The Authority makes the
following representations and warranties, all of which shall survive Closing;
that:
(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: (i) enter into this Bond Purchase Agreement; (ii)
execute and deliver the 2005 Bonds, the Trust Indenture, the Financing
Agreement, this Bond Purchase Agreement, the Escrow 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"); (iii) issue, sell and deliver the 2005
Bonds to the Underwriter as provided herein; and (iv) 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;
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(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 the light of the circumstances under which they were made,
not misleading;
(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 officer of the Authority
executing this Bond Purchase Agreement, 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 2005 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;
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(i) The 2005 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 of remedies may be limited 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 2005 Bonds or of the revenues or assets of
the Authority pledged or to be pledged to pay the principal of and interest on
the 2005 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 2005 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;
(l) The net proceeds received from the 2005 Bonds and applied in
accordance with the Trust Indenture and Financing Agreement shall be used in
accordance with the Act as described in the Official Statement;
(m) The Authority has not been notified of any listing or proposed
listing by the Internal Revenue Service to the effect that the Authority is a
bond issuer whose arbitrage certifications may not be relied upon; and
(n) 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.
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, 2004 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, stockholders' equity or results of operations of
the Company, otherwise than as set forth or contemplated in the Official
Statement;
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(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) Each First Mortgage Bond has 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
a valid and legally binding obligation of the Company entitled to the benefits
provided by the Mortgage;
(d) The Original Indenture has been duly authorized, executed and
delivered by the Company, and the Thirty-Ninth Supplemental Mortgage has been
duly authorized by the Company. When the Thirty-Ninth Supplemental Mortgage, in
substantially the form approved by the Company, 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 (i) will constitute a
valid and legally binding instrument enforceable against the Company in
accordance with its terms except as enforceability may be limited by Creditors'
Rights Limitations; (ii) will constitute a direct, valid and enforceable first
mortgage lien (except as enforceability of such lien may be limited 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 (iii) and will create a mortgage upon all properties and assets acquired by
the Company after the execution and delivery of the Thirty-Ninth 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
Original Indenture has been and the Thirty-Ninth 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;
(e) In each of the following cases 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 (i) all of its real property
currently held in fee simple; and (ii) 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;
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(f) In each of the following cases except for such exceptions that
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 its knowledge 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 2005 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 Thirty-Ninth
Supplemental Mortgage, the Financing Agreement, this Bond Purchase Agreement,
the Escrow 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 2005 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
Thirty-Ninth Supplemental Mortgage, the First Mortgage Bonds, the Escrow
Agreement and the Continuing Disclosure Agreement, or the consummation by the
Company of the other transactions contemplated by this Bond Purchase Agreement
or the Mortgage;
(h) The Pennsylvania Public Utility Commission by order has duly
authorized the issuance and delivery of the First Mortgage Bonds on terms not
inconsistent with this Bond Purchase Agreement;
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(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 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; 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) (i) 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); (ii) 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 (iii) 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 2005 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;
and
(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 an untrue statement of a material fact or omit
to state a material fact necessary to make such information and descriptions, in
the light of the circumstances under which they were made, not misleading.
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 2005 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 2005 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 2005 Bonds; and
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(c) refrain from knowingly taking any action (and permitting any
action with regard to which the Authority may exercise control) which would
result in the loss of the exclusion from gross income for federal income tax
purposes of interest on the 2005 Bonds referred to under the caption "TAX
MATTERS" in the Official Statement.
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 2005 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; or (iii) the willful or negligent omission of (or the
alleged omission to state) a material fact in the Official Statement, in the
Preliminary Official Statement, or in 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; or (iv) arising by virtue of
the failure to register the 2005 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 2005 Bonds;
(c) undertake, pursuant to the Continuing Disclosure Agreement dated
as of May 1, 2005 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"). A description of this undertaking and the Continuing
Disclosure Agreement is set forth in the Preliminary Official Statement and will
also be set forth in the Final Official Statement; and
(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 2005 Bonds.
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7. UNDERWRITER'S COVENANT AND REPRESENTATIONS AND WARRANTIES.
(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 (i) the offering and sale of the 2005 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 (ii) 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
$1,069,650 with respect to the 2005 Bonds. In connection with any investment of
proceeds of the Bonds, the Underwriter has not been paid a fee, paid a fee or
caused a fee to be paid (and will not be paid a fee, pay a fee or cause a fee to
be paid) to any other person, company, partnership, entity or the like in
connection with any such investments. Moreover, the Underwriter has no reason to
believe that any person, company, partnership, entity or the like received a fee
(or will receive a fee) from the provider of any such investments, except as has
been expressly disclosed in writing to the Authority on or prior to the date
hereof.
(c) The Underwriter acknowledges that the Authority is relying upon
the veracity of the certification in clause (b) above on the date hereof as a
condition precedent to lending the proceeds of the 2005 Bonds to the Company.
(d) The Underwriter agrees to deliver the certificate attached
hereto as Exhibit E to the Authority on the date of the Closing.
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 omission 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 (i) 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 (ii)
shall survive delivery of the 2005 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 2005 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
harmless for all costs and expenses, including, but not limited to, attorney
fees and expenses and costs, of any such settlement.
10
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 2005 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 by which the total price at which the 2005 Bonds
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages that the Underwriter has otherwise been
required to pay by reason of such untrue or allegedly untrue statement or
omission or alleged omission.
11
10. OFFICIAL STATEMENT; PUBLIC OFFERING.
(a) In order to enable the Underwriter to comply with Rule 15c2-12:
(i) the Company has prepared (or caused to be prepared) the Preliminary Official
Statement, which the Company and the Authority (but, 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;
(ii) 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; and (iii) of which the Company
has or gains knowledge would render the Official Statement misleading in any
material respect in the period from the date of its delivery to the Underwriter
by the Company (as that phrase is defined in Rule 15c2-12) then the Company
shall promptly give the Underwriter 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
2005 Bonds.
(b) After the Closing, and until the Underwriter has informed the
Authority and the Company that the Underwriter has sold all the 2005 Bonds, 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; and if any event relating to or affecting the Authority, the
Company or the 2005 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 ("NRMSIR") and
the Municipal Securities Rulemaking Board ("MSRB") 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 (i) the date and place of such filing and (ii)
the date of the end of the underwriting period.
11. CONDITIONS OF UNDERWRITER'S AND AUTHORITY'S OBLIGATIONS. The
Underwriter's obligations to purchase and pay for the 2005 Bonds and the
Authority's obligation to issue and deliver the 2005 Bonds are subject to
fulfillment of the following conditions at or before Closing:
(a) The representations of the Authority and the Company herein
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;
12
(b) Neither the Authority nor the Company 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 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 Blank Rome LLP, counsel for the Authority,
dated the date of Closing, substantially in the form attached as
Exhibit C hereto, addressed to the Underwriter and in form and
substance reasonably satisfactory to the Underwriter 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, in form and substance reasonably satisfactory to the
Underwriter and to Bond Counsel;
(v) An opinion of Xxxx Xxxxx LLP, counsel for the Underwriter,
in form and substance reasonably satisfactory to the Underwriter;
(vi) An opinion of legal counsel to the Bond Insurer in form
and substance reasonably satisfactory to Bond Counsel and the
Underwriter, relating to the enforceability of the Bond Insurance
Policy and the information concerning the Bond Insurer in the
Official Statement;
(vii) An agreed upon procedures letter dated the date of the
Official Statement and addressed to the Company from the Company's
auditor with respect to financial information set forth in Appendix
A to the Official Statement, in form and substance reasonably
satisfactory to the Underwriter;
(viii) A certificate dated the date of Closing executed by the
Chairman of the Authority to the effect that:
(A) the representations and warranties of the Authority
contained herein, to the best of the knowledge of such
Chairman, are true and correct in all material respects as of
the date of Closing; and
(B) to the best of the knowledge of such Chairman, the
Authority has complied in all material respects with all
agreements executed by the Authority in connection with
issuance of the 2005 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;
13
(ix) A certificate dated the date of Closing executed by the
chief financial officer of the Company to the effect that:
(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 the Bond Purchase Agreement that is required to be
disclosed in the Official Statement in order to make the
statements and information therein not misleading in any
material respect;
(x) Two executed copies of the Trust Indenture, the Financing
Agreement, the Bond Purchase Agreement, the Thirty-Ninth
Supplemental Mortgage, the Escrow Agreement and the Continuing
Disclosure Agreement and specimen copies of the First Mortgage
Bonds;
(xi) Two copies of the Articles of Incorporation and By-laws
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
Thirty-Ninth Supplemental Mortgage, the Escrow Agreement, 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;
(xii) Two copies of the Authority Resolution;
(xiii) 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, consenting to the use of the
financial statements prepared by such firm and all references to
such firm contained in the Preliminary Official Statement and the
Official Statement;
(xiv) Evidence of the issuance of the Bond Insurance Policy by
the Bond Insurer, which policy shall unconditionally and irrevocably
guarantee the payment when due of the principal of and interest on
the 2005 Bonds;
14
(xv) Evidence satisfactory to the Underwriter of a rating of
"AAA" 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;
(xvi) Evidence satisfactory to Bond Counsel and the
Underwriter of the receipt by the Authority of a Preliminary
Allocation relating to the Series A Bonds 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 2005 Bonds with the Pennsylvania Public
Utility Commission;
(xvii) A copy of the verification report prepared by the
verification agent with respect to the sufficiency of the escrow
established under the Escrow Agreement; and
(xviii) Such additional documentation as the Underwriter or
its counsel or Bond Counsel may reasonably request to evidence
compliance with applicable law and the validity of the 2005 Bonds,
the Financing Agreement, the Trust Indenture, this Bond Purchase
Agreement, the Mortgage, the First Mortgage Bonds, the Escrow
Agreement and the Continuing Disclosure Agreement, and to evidence
that the interest on the 2005 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 2005
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; and
(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 2005
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.
12. EVENTS PERMITTING THE UNDERWRITER TO TERMINATE. The Underwriter may
terminate its obligation to purchase the 2005 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 2005
Bonds so as to materially impair the marketability or materially lower the
market price of the 2005 Bonds; or
15
(b) Any action by the Securities and Exchange Commission or a court
that would require registration of the 2005 Bonds or the First Mortgage Bonds
under the 1933 Act or qualification of the Indenture under the 1939 Act; or
(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 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 2005 Bonds; or
(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; or
(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 2005 Bonds, which, in the reasonable judgment of the
Underwriter, would materially impair the marketability or materially lower the
market price of the 2005 Bonds; or
(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 2005 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, except for the
payment of such costs of issuance described in Section 13 hereof which are due
and payable, the Company.
13. EXPENSES. All expenses and costs of the authorization, issuance,
sale and delivery of the 2005 Bonds including, without limitation, accrued
interest and redemption premium due on the 1995 Bonds, the preparation of and
furnishing to the Underwriter of the Preliminary Official Statement and the
Official Statement, the preparation and execution of the 2005 Bonds, the
Financing Agreement, the Trust Indenture, the First Mortgage Bonds, the
Thirty-Ninth Supplemental Mortgage, the Escrow Agreement, the Continuing
Disclosure Agreement and this Bond Purchase Agreement, the Insurance Policy
premium, 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 2005 Bonds for sale
under the securities laws of various jurisdictions and preparing Blue Sky and
legal investment memoranda, shall be paid by the Company from funds contributed
by the Company and not from proceeds of the 2005 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 2005 Bonds.
16
14. 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. 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 LLC
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: Xxxxx Xxx Xxxx,
Vice President, Treasurer & Rate Counsel
Fax #: (000) 000-0000
Email: xxxxxx@xxxxxxxxxxx.xxx
The Authority:
Delaware County Industrial Development Authority
000 Xxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxx, Xxxxxxxxxxxx 00000
Attention: J. Xxxxxxx Xxxxxxx, Commerce Director
Fax #: (000) 000-0000
Email: xxxx@xxxxxxx.xxx
16. 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.
17
17. 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 and 8 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.
18. LIMITATIONS ON LIABILITY. No personal recourse shall be had for any
claim based on this Bond Purchase Agreement or the 2005 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.
18
IN WITNESS WHEREOF, the Authority, the Company and the Underwriter have
caused their duly authorized Underwriters to execute and deliver this Bond
Purchase Agreement as of the date first written above.
DELAWARE COUNTY INDUSTRIAL
DEVELOPMENT AUTHORITY
By: XXXXX XXXXXXX
-------------------------------
Xxxxx Xxxxxxx
Chairman
AQUA PENNSYLVANIA , INC.
By: XXXXX X. XXXX
-----------------------------------------
Xxxxx X. Xxxx
Vice President, Treasurer and Rate Counsel
SOVEREIGN SECURITIES CORPORATION,
LLC
By: XXXXXX X. XXXXXX, III
-----------------------------------------
Xxxxxx X. Xxxxxx, III
Managing Director
SCHEDULE I
Terms of Bonds
Dated Date: May 19, 2005
Series Maturity Date Principal Amount Rate of Interest Price Yield
------ ------------- ---------------- ---------------- ----- -----
A November 1, 2037 $24,165,000 5.00% 100.970 4.88%
A November 1, 2038 25,375,000 5.00% 100.889 4.89%
B November 1, 2036 21,770,000 5.00% 101.052 4.87%
Interest Payment Dates: May 1 and November 1, commencing November 1, 2005
Redemption Provisions:
The 2005 Bonds are subject to redemption as follows:
OPTIONAL REDEMPTION - SERIES A BONDS. The Series A Bonds are subject to
optional redemption prior to maturity by the Authority, at the direction of the
Company, on or after November 1, 2015, as a whole or in part at any time, at a
redemption price equal to one hundred percent (100%) of the principal amount
thereof, plus interest accrued to the date fixed for redemption.
OPTIONAL REDEMPTION - SERIES B BONDS. The Series B Bonds are subject to
optional redemption prior to maturity by the Authority, at the direction of the
Company, on or after November 1, 2015, as a whole or in part at any time, at a
redemption price equal to one hundred percent (100%) of the principal amount
thereof, plus interest accrued to the date fixed for redemption.
EXTRAORDINARY OPTIONAL REDEMPTION - SERIES A BONDS. The Series A 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 Series A 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 2005A 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 2005A Facilities or the taking by condemnation of
any part, use or control of the 2005A 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 2005A 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 2005A Facilities, or (2) the continued operation of the 2005A
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.
EXTRAORDINARY OPTIONAL REDEMPTION - SERIES B BONDS. The Series B 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 Series B 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 2005B 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 2005B Facilities or the taking by condemnation of
any part, use or control of the 2005B 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 2005B 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 2005B Facilities, or (2) the continued operation of the 2005B
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 - SERIES A BONDS. The Series A 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
Construction 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
Series A Project Fund to the Series A Debt Service Fund pursuant to the Trust
Indenture, at a Redemption Price of 100% of the principal amount of the Series A
Bonds to be redeemed, plus accrued interest thereon to the date fixed for
redemption.
EXHIBIT A
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:
Re: $49,540,000 aggregate principal amount of Delaware County
Industrial Development Authority Water Facilities Revenue Bonds
(Aqua Pennsylvania, Inc. Project) Series A of 2005 and
$21,770,000 aggregate principal amount of Delaware County
Industrial Development Authority Water Facilities Revenue
Refunding Bonds (Aqua Pennsylvania, Inc. Project) Series B of
2005
----------------------------------------------------------------
Ladies and Gentlemen:
We have acted as Bond Counsel to the Delaware County
Industrial Development Authority (the "Authority") in connection with the
issuance and sale of its $49,540,000 aggregate principal amount of Delaware
County Industrial Development Authority Water Facilities Revenue Bonds (Aqua
Pennsylvania, Inc. Project) Series A of 2005 (the "Series A Bonds") and its
$21,770,000 aggregate principal amount of Delaware County Industrial Development
Authority Water Facilities Revenue Refunding Bonds (Aqua Pennsylvania, Inc.
Project) Series B of 2005 (the "Series B Bonds" and, together with the Series A
Bonds, the "Bonds"). The Series A 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 Berks, Bucks, Chester, Delaware and Xxxxxxxxxx (the "2005 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 Berks, Bucks, Chester, Delaware and Xxxxxxxxxx. The Series B Bonds are being
issued by the Authority at the request of the Company to provide for the current
refunding of $22,000,000 outstanding principal amount of the Authority's Exempt
Facilities Revenue Bonds (Philadelphia Suburban Water Company Project) Series of
1995 (the "1995 Bonds"). The 1995 Bonds were issued at the request of the
Company to finance facilities located in the Pennsylvania Counties of Bucks,
Chester, Delaware and Xxxxxxxxxx (the "1995 Project Facilities" and, together
with the 2005 Project Facilities, 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 Bucks, Chester, Delaware and
Xxxxxxxxxx.
The Bonds are issuable in fully registered form, and are being
issued under the Trust Indenture dated as of May 1, 2005 (the "Indenture")
between the Authority and Wachovia Bank, National Association, as trustee (the
"Trustee"). The Authority and the Company are entering into a Financing
Agreement dated as of May 1, 2005 (the "Financing Agreement"), pursuant to which
the Authority will lend the proceeds of the Bonds to the Company to (i) finance
the 2005 Project Facilities and (ii) currently refund the 1995 Bonds.
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 (i) its First Mortgage Bond, 5.00%
Series, due 2038, and its First Mortgage Bond 5.00% Series, due 2037
(collectively, the "Series A First Mortgage Bonds") in an aggregate principal
amount equal to the principal amount of the Series A Bonds and with principal,
premium and interest payments corresponding to the principal, premium and
interest payments on the Series A Bonds and (ii) its First Mortgage Bond, 5.00%
Series, due 2036 (the "Series B First Mortgage Bond" and, together with the
Series A Mortgage Bonds, the "First Mortgage Bonds") in the principal amount
equal to the principal amount of the Series B Bonds and with principal, premium
and interest payments corresponding to the principal, premium and interest
payments on the Series B 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.
The Internal Revenue Code of 1986, as amended (the "Code")
establishes certain requirements which must be met on a continuing basis
subsequent to the issuance and delivery of the Bonds for interest on the Bonds
to be excluded from the gross income of the holders thereof for federal income
tax purposes. For the purposes of the opinion set forth below, we have relied on
representations of the Authority and the Company with respect to the application
of the proceeds of the Bonds and the 1995 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 2005 and an executed Water Facilities
Revenue Refunding Bond (Aqua Pennsylvania, Inc. Project) Series B of 2005, each
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.
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. Bond Counsel expresses 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 County of Delaware or 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
May 19, 2005
Sovereign Securities Corporation, LLC
0000 Xxxxxx Xxxxxx
Xxxxxx Xxxxxx - Xxxxxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Re: $49,540,000 aggregate principal amount of Delaware County
Industrial Development Authority Water Facilities Revenue Bonds
(Aqua Pennsylvania, Inc. Project), Series A of 2005; and
$21,770,000 aggregate principal amount of Delaware County
Industrial Development Authority Water Facilities Revenue Bonds
(Aqua Pennsylvania, Inc. Project), Series B of 2005
----------------------------------------------------------------
Ladies and Gentlemen:
Reference is made to our opinion as bond counsel identified as
Closing Item No. __ 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
herein with the same meanings ascribed to them in the Official Statement dated
May 10, 2005 (the "Official Statement") prepared in connection with the public
offering of the Bonds.
Based on the review described in our bond opinion, it is our
opinion that:
1. The Bond Purchase Agreement dated May 10, 2005 (the "Bond
Purchase Agreement"), among you, the Company and the Authority 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. The information in the Official Statement under the
captions: "INTRODUCTORY STATEMENT - Description of the Bonds" and "- Security
for the Bonds," "THE BONDS" (other than the information under the sub-caption
"Book-Entry Only System") and "SECURITY FOR THE BONDS" (other than the
information under the sub-captions "The Mortgage" and "Additional Parity
Indebtedness") and the information set forth in Appendix C to the Official
Statement (other than information under the headings "THE FIRST MORTGAGE BONDS
AND THE MORTGAGE"), 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 information set forth in
Appendix E to the Official Statement accurately reflect our firm's opinion with
respect to the matters discussed therein in all material respects.
B-1
3. 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.
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-2
C-4
858497.8 8/2/05
EXHIBIT C
FORM OF OPINION OF COUNSEL FOR THE AUTHORITY
May 19, 2005
Delaware County Industrial Development Xxxxxxx Xxxxx Xxxxxxx & Ingersoll
Authority Mellon Bank Center
000 X. Xxxxx Xxxxxx 0000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxx 000 Xxxxx, XX 00000 Xxxxxxxxxxxx, XX 00000
Sovereign Securities Corporation, LLC
0000 Xxxxxx Xxxxxx
Xxxxxx Xxxxxx - Xxxxxxxxx
Xxxxxxxxxxxx, XX 00000
Re: Delaware County Industrial Development Authority, $49,540,000
Water Facilities Revenue Bonds (Aqua Pennsylvania, Inc. Project)
Series A of 2005 and $21,770,000 Water Facilities Revenue
Refunding Bonds (Aqua Pennsylvania, Inc. Project) Series B of
2005 (collectively, the "Bonds")
----------------------------------------------------------------
Ladies and Gentlemen:
We have acted as counsel to the Delaware County Industrial Development
Authority ("Authority") in connection with the authorization, execution and
issuance by the Authority of the captioned Bonds ("Bonds"). This opinion is
being rendered pursuant to Section 11(c)(iii) of the Bond Purchase Agreement,
dated May 10, 2005 (the "Bond Purchase Agreement") by and among Sovereign
Securities Corporation, LLC ("Underwriter"), Aqua Pennsylvania, Inc.
("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, we have examined the Pennsylvania
Economic Development Financing Law, 73 P.S. xx.xx. 371 et seq., as amended
("Act"); the Resolution of the Authority relating to the Bonds adopted on April
22, 2005 ("Resolution"), and such other documents, certificates and records of
the Authority and other instruments and matters of law as we have deemed
necessary to enable us to express the opinion set forth below, including,
without limitation, original counterparts or certified copies of the Trust
Indenture, dated as of May 1, 2005 ("Indenture"), between the Authority and
Wachovia Bank, National Association, as trustee ("Trustee"), the Financing
Agreement, dated as of May 1, 2005 ("Financing Agreement"), between the
Authority and the Borrower), the Escrow Deposit Agreement dated the date hereof
("Escrow Agreement") among the Authority, the Borrower, the Trustee and X.X.
Xxxxxx Trust Company, National Association, as escrow agent and the Bond
Purchase Agreement. The Indenture, the Loan Agreement, the Escrow Agreement and
the Bond Purchase Agreement are collectively referred to herein as the
"Authority Documents".
C-1
We 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.
We 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, we 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, we have relied upon
certificates and representations of officers and representatives of the
Authority or of other public officials, without independent investigation.
We have not made any independent investigation in rendering this
opinion other than the examination described above. Our opinion is therefore
qualified in all respects by the scope of that examination.
Our 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 might
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, we are of the opinion that:
1. The Authority is a body corporate and politic constituting an
instrumentality of the Commonwealth and is duly created and 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 a 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 our
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 us, or, to our 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 our 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
finding would materially and adversely affect the obligations of the Authority
under the Bonds.
5. The Authority has approved the distribution of the Preliminary
Official Statement dated April 29, 2005 and the Official Statement dated May 10,
2005 ("Official Statement") by the Underwriter in connection with the offering
of the Bonds.
6. The information contained in the Official Statement under the
heading "INTRODUCTORY STATEMENT - The Authority" and "THE AUTHORITY" has been
reviewed by us and nothing has come to our attention which would lead us 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 processing 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; (e) relating to indemnification; and
(f) relating to confession of judgment.
We 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 the County of Delaware, Pennsylvania or any
other political subdivision thereof nor do the Bonds pledge the credit of the
Commonwealth or the County of Delaware, Pennsylvania or any other 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.
C-3
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. We make no
undertaking to supplement this opinion if facts or circumstances hereafter come
to our 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 the prior written consent in each instance of a partner of the
undersigned firm.
Very truly yours,
BLANK ROME LLP
C-4
EXHIBIT D
FORM OF OPINIONS OF THE COMPANY'S LEGAL COUNSEL AND THE
COMPANY'S SENIOR VICE PRESIDENT - LAW AND ADMINISTRATION
May 19, 2005
Delaware County Industrial Development Authority
000 Xxxx Xxxxxx, Xxxxx 000
Xxxxx, XX 00000
Sovereign Securities Corporation, LLC
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Re: $49,540,000 Aggregate Principal Amount of Delaware County
Industrial Development Authority Water Facilities Revenue Bonds
(Aqua Pennsylvania, Inc. Project), Series A of 2005 and
$21,770,000 Aggregate Principal Amount of Delaware County
Industrial Development Authority Water Facilities Revenue
Refunding Bonds (Aqua Pennsylvania, Inc. Project), Series B of
2005
---------------------------------------------------------------
Ladies and Gentlemen:
We have acted as counsel to Aqua Pennsylvania, Inc. (the "Company") in
connection with (i) the issuance by Delaware County Industrial Development
Authority (the "Authority"), and the sale to Sovereign Securities Corporation,
LLC pursuant to that certain Bond Purchase Agreement dated May 10, 2005 (the
"Purchase Agreement"), of $49,540,000 aggregate principal amount of Delaware
County Industrial Development Authority Water Facilities Revenue Bonds (Aqua
Pennsylvania, Inc.), Series A of 2005 and $21,770,000 aggregate principal amount
of Delaware County Industrial Development Authority Water Facilities Revenue
Refunding Bonds (Aqua Pennsylvania, Inc. Project), Series B of 2005
(collectively, the "Authority Bonds"), and (ii) the issuance and delivery of
$24,165,000 principal amount of the Company's First Mortgage Bond, 5.00% Series
due 2037, $25,375,000 principal amount of the Company's First Mortgage Bond,
5.00% due 2038, and $21,770,000 principal amount of the Company's First Mortgage
Bond, 5.00% Series due 2036 (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 Thirty-Ninth Supplemental Indenture dated as of May 1, 2005 (the
"Thirty-Ninth Supplemental Indenture") under which X.X. Xxxxxx Trust Company,
National Association is 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 Thirty-Ninth
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 May 1, 2005 (the
"Financing Agreement") between the Authority and the Company;
(f) the Continuing Disclosure Agreement dated as of May 1, 2005
(the "Continuing Disclosure Agreement") between the Company
and Wachovia Bank, National Association, as trustee for the
Authority Bonds (the "Trustee");
(g) the Escrow Deposit Agreement dated as of May 1, 2005 (the
"Escrow Agreement") among the Authority, the Company, the
Trustee and X.X. Xxxxxx Trust Company, National Association,
as trustee and escrow agent for the bonds being refunded by
the Series B of 2005 Authority Bonds;
(h) the Official Statement relating to the Authority Bonds dated
May 10, 2005 (the "Official Statement");
(i) 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;
(j) a Subsistence Certificate from the Secretary of the
Commonwealth with respect to the Company;
(k) executed counterparts of the Original Mortgage and of the
Thirty-Ninth Supplemental Indenture supplemental thereto and
evidence satisfactory to us of the due recordation thereof in
the Counties of Adams, Berks, Bradford, Bucks, Carbon,
Xxxxxxx, Columbia, Cumberland, Delaware, Forest, Juniata,
Lackawanna, Xxxxxxxx, Luzerne, Mercer, Monroe, Xxxxxxxxxx,
Northampton, Northumberland, Pike, Schuylkill, Xxxxxx,
Susquehanna, Xxxxx and Wyoming, Pennsylvania;
(l) 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;
D-2
(m) the First Mortgage Bonds delivered to the Trustee at the
Closing held today;
(n) the certificates of the Company and other documents delivered
to the Mortgage Trustee at the Closing;
(o) a certificate of the Company and various bringdown title
searches by Commonwealth Land Title Insurance Company in the
Counties of Adams, Berks, Bradford, Bucks, Carbon, Xxxxxxx,
Columbia, Cumberland, Delaware, Forest, Juniata, Lackawanna,
Xxxxxxxx, 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
(p) various certificates of officers of the Company relating to
title to real property and the priority of any lien thereon.
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 Thirty-Ninth Supplemental Indenture, the
Financing Agreement, the First Mortgage Bonds, the Escrow Agreement, 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. ss.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
the best of 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.
D-3
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 power (corporate and other) 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 Purchase Agreement, the Financing Agreement, the First Mortgage
Bonds, the Thirty-Ninth Supplemental Indenture, the Escrow Agreement and the
Continuing Disclosure Agreement. The execution, delivery and performance by the
Company of the Financing Agreement, the Bond Purchase Agreement, the First
Mortgage Bonds, the Thirty-Ninth Supplemental Indenture, the Escrow Agreement
and the Continuing Disclosure Agreement have been duly authorized by all
requisite corporate action.
3. The Purchase Agreement, the Financing Agreement, the Escrow
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. Each First Mortgage Bond has 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; the Original Mortgage, either separately or
as an exhibit to the Thirty-Fifth Supplemental Indenture dated as of January 1,
2002 or the Thirty-Eighth Supplemental Indenture dated as of November 15, 2004,
and the Thirty-Ninth Supplemental Indenture have been properly recorded in the
Counties of Adams, Berks, Bradford, Bucks, Carbon, Xxxxxxx, Columbia,
Cumberland, Delaware, Forest, Juniata, Lackawanna, Xxxxxxxx, 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 rights) described in the Mortgage as
subject to the lien thereof.
D-4
7. In each of the following cases 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.
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 may be 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.
D-5
(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 of
Pennsylvania.
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-6
[Letterhead of Aqua Pennsylvania]
May 19, 2005
Sovereign Securities Corporation, LLC
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Re: $49,540,000 Aggregate Principal Amount of Delaware County
Industrial Development Authority Water Facilities Revenue Bonds
(Aqua Pennsylvania, Inc. Project), Series A of 2005 and
$21,770,000 Aggregate Principal Amount of Delaware County
Industrial Development Authority Water Facilities Revenue
Refunding Bonds (Aqua Pennsylvania, Inc. Project), Series B of
2005 (collectively, the "Authority Bonds")
---------------------------------------------------------------
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 May
10, 2005 (the "Purchase Agreement") among the Authority, the Underwriter and the
Company (f/k/a 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 Thirty-Ninth 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;
D-7
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. In each of the following cases 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 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; (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 and
contain no unduly burdensome provisions; (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 Thirty-Ninth Supplemental
Mortgage, the Financing Agreement, the Purchase Agreement, the Escrow 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 Thirty-Ninth
Supplemental Mortgage, the First Mortgage Bonds, the Escrow Agreement and the
Continuing Disclosure Agreement, or the consummation of the other transactions
contemplated by the Purchase Agreement or the Mortgage.
D-8
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 X.X. Xxxxxx Trust Company,
National Association, as successor in interest), as trustee (the "Trustee") and
the thirty-nine indentures supplemental thereto, including the Thirty-Ninth
Supplemental Indenture dated as of May 1, 2005 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.
D-9
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.
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,
Xxx X. Xxxxx
D-10
EXHIBIT E
CERTIFICATE OF UNDERWRITER
Reference is made to the Bond Purchase Agreement dated May 10, 2005
(the "Agreement") among Delaware County Industrial Development Authority (the
"Authority"), Aqua Pennsylvania, Inc. and Sovereign Securities Corporation, LLC
(the "Underwriter") with respect to the Authority's Water Facilities Revenue
Bonds (Aqua Pennsylvania, Inc. Project), Series A of 2005 and Water Facilities
Revenue Bonds (Aqua Pennsylvania, Inc. Project), Series B of 2005 (collectively,
the "2005 Bonds").
The Underwriter hereby certifies as follows:
The Underwriter will be paid an underwriting discount of $1,069,650
with respect to the 2005 Bonds. In connection with any investment of proceeds of
the Bonds, the Underwriter has not been paid a fee, paid a fee or caused a fee
to be paid (and will not be paid a fee, pay a fee or cause a fee to be paid) to
any other person, company, partnership, entity or the like in connection with
any such investments. Moreover, the Underwriter has no reason to believe that
any person, company, partnership, entity or the like received a fee (or will
receive a fee) from the provider of any such investments, except as has been
expressly disclosed in writing to the Authority on or prior to the date hereof.
This Certificate of Underwriter is executed and delivered on May 19,
2005.
SOVEREIGN SECURITIES CORPORATION, LLC
By:
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Xxxxxx X. Xxxxxx, III
Managing Director
