Exhibit 10.37
BOND PURCHASE AGREEMENT
$24,675,000
DELAWARE COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY
WATER FACILITIES REVENUE BONDS
(AQUA PENNSYLVANIA INC. PROJECT)
SERIES C OF 2005
Bond Purchase Agreement dated December 21, 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 December 15, 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 Chester, Delaware and
Xxxxxxxxxx in Pennsylvania (the "Facilities") that are part of the Company's
system (the "System") for the distribution of water to its customers, and (ii)
pay related financing costs (collectively, the "Project"). To finance the loan
under the Financing Agreement, the Authority proposes to issue and sell
$24,675,000 aggregate principal amount of Delaware County Industrial Development
Authority Water Facilities Revenue Bonds (Aqua Pennsylvania, Inc. Project),
Series C of 2005 (the "Bonds") to the Underwriter, who will in turn reoffer the
Bonds for sale to the public.
(b) The Bonds will be issued pursuant to the Pennsylvania Economic
Development Financing Law, Act of August 23, 1967, P.L. 251, as amended and
supplemented (the "Act"), a resolution adopted by the Authority on November 18,
2005 (the "Authority Resolution") and under a Trust Indenture dated as of
December 15, 2005 (the "Trust Indenture"), between the Authority and Wachovia
Bank, National Association, as trustee (the "Trustee"). The Bonds will have such
terms as are set forth in Schedule I attached hereto.
The Bonds will be payable out of payments by the Company under the
Financing Agreement, including payments under its First Mortgage Bond issued
with respect to the Bonds in the aggregate principal amount of $24,675,000 (the
"First Mortgage Bond"). The First Mortgage Bond 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 Fortieth Supplemental
Indenture of Mortgage to be dated as of December 15, 2005 (the "Fortieth
Supplemental Mortgage," which together with the Indenture of Mortgage, as
amended and supplemented, is referred to hereinafter as the "Mortgage"). The
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 Bonds that it
secures. All of the Authority's rights under the Financing Agreement to receive
and enforce repayment of its loan to the Company and to enforce payment of the
Bonds, including all of the Authority's rights to the First Mortgage Bond, and
all of the Authority's rights to moneys and securities in the Project Funds, the
Revenue Funds and the Debt Service Funds (and the accounts within all such Funds
applicable to the Bonds) established by the Trust Indenture, except for the
Authority's rights to certain fees and reimbursements for expenses,
indemnification and notice thereunder and rights relating to amendments of and
notices under the Financing Agreement, will be assigned to the Trustee as
security for the Bonds pursuant to the Trust Indenture.
(c) The Project will finance the acquisition, construction,
installation and equipping of facilities for the furnishing of water for
purposes of Section 142(a)(4) of the Internal Revenue Code of 1986, as amended
(the "Code"), so that the interest on the Bonds will not be includable in gross
income for federal income tax purposes under the Code and the Underwriter may
offer the Bonds for sale without registration under the Securities Act of 1933,
as amended (the "1933 Act) or qualification of the Trust Indenture under the
Trust Indenture Act of 1939, as amended (the "1939 Act").
(d) A Preliminary Official Statement dated December 16, 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").
(e) The 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 Bonds at a purchase price
equal to $24,627,624, which is equal to the $24,675,000 aggregate principal
amount of the Bonds, plus original issue premium of $322,749, less the
underwriting discount of $370,125. Payment for the Bonds shall be made in
immediately available funds to the Trustee for the account of the Authority.
Closing (the "Closing") will be at the offices of Xxxxxxx Xxxxx Xxxxxxx &
Xxxxxxxxx, LLP, Philadelphia, Pennsylvania, bond counsel, at 10:00 a.m., Eastern
Daylight Time, on December 28, 2005 or at such other date, time or place or in
such other manner as may be agreed on by the parties hereto. The Bonds will be
delivered as one fully registered bond in the aggregate principal amount of
$24,675,000 in the name of Cede & Co., as nominee for The Depository Trust
Company ("DTC"), with CUSIP numbers printed thereon, and shall conform in all
respects to DTC's Book-Entry Only System. Delivery of the Bonds to DTC will be
made by delivering the Bonds to the Trustee utilizing the DTC FAST system. If
the Underwriter so requests, the Bonds shall be made available to the
Underwriter (prior to their delivery to DTC) in Philadelphia, Pennsylvania at
least three full business days before the Closing for purposes of inspection.
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The Underwriter agrees to make a bona fide public offering of the Bonds
at the initial offering prices or yields set forth in the Official Statement;
provided, however, that the Underwriter reserves the right (and the Authority
and the Company hereby expressly acknowledge such right): to make concessions to
dealers; to effect transactions that stabilize or maintain the market price of
the Bonds above that which might otherwise prevail in the open market and to
discontinue at any time such stabilizing transactions; and to change such
initial offering prices, all as the Underwriter shall deem necessary in
connection with the marketing of the Bonds.
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: enter into this Bond Purchase Agreement; execute
and deliver the Bonds, the Trust Indenture, the Financing Agreement, this Bond
Purchase Agreement and the Authority's tax certificate and the other various
certificates executed by the Authority in connection therewith (collectively,
with the Authority Resolution, the "Authority Financing Documents"); issue, sell
and deliver the Bonds to the Underwriter as provided herein; and carry out and
consummate the transactions contemplated by the Authority Financing Documents
and the Official Statement to be carried out and/or consummated by it;
(b) The Authority Resolution was duly adopted at a public meeting of
the Authority at which a quorum was present and acted throughout; and the
Authority Resolution is in full force and effect and has not been amended,
repealed or superseded in any way;
(c) The sections entitled "INTRODUCTORY STATEMENT" (insofar as it
relates to the Authority), "THE AUTHORITY" and "ABSENCE OF MATERIAL LITIGATION"
(solely insofar as the information set forth therein relates to the Authority)
contained in the Preliminary Official Statement as of its date did not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
contained therein, in the light of the circumstances under which they were made,
not misleading;
(d) The sections entitled "INTRODUCTORY STATEMENT" (insofar as it
relates to the Authority), "THE AUTHORITY" and "ABSENCE OF MATERIAL LITIGATION"
(solely insofar as the information set forth therein relates to the Authority)
contained in the Official Statement as of its date does not or will not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
contained therein, in the light of the circumstances under which they were made,
not misleading;
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(e) The Authority has complied, and will at the Closing be in
compliance, in all material respects with the provisions of the Act;
(f) The Authority has duly authorized and approved the Preliminary
Official Statement and the Official Statement; and has duly authorized and
approved the execution and delivery of, and the performance by the Authority of
the obligations on its part contained in, the Authority Financing Documents;
(g) To the best of the knowledge of the 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 Bonds or to
the Authority's performance of its obligations hereunder and under the Authority
Financing Documents have been obtained or will be obtained prior to the Closing;
(i) The Bonds, when issued, authenticated and delivered in accordance
with the Trust Indenture and sold to the Underwriter as provided herein, will be
validly issued and will be valid and binding limited obligations of the
Authority enforceable against the Authority in accordance with their terms
(except as enforcement 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 Bonds or of the revenues or assets of the
Authority pledged or to be pledged to pay the principal of and interest on the
Bonds, or the pledge thereof, or in any way contesting or affecting the validity
or enforceability of the Authority Financing Documents or contesting in any way
the completeness or accuracy of the Preliminary Official Statement or the
Official Statement, or contesting the power or authority of the Authority with
respect to the issuance of the Bonds or the execution, delivery or performance
of any of the Authority Financing Documents, wherein an unfavorable decision,
ruling or finding would affect in any way the validity or enforceability of any
of the Authority Financing Documents;
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(l) The net proceeds received from the Bonds and applied in accordance
with the Trust Indenture and 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;
(b) The Company was organized, is in good standing and subsists as a
corporation under the laws of the Commonwealth, with power (corporate and other)
to own its properties and conduct its business as described in the Official
Statement;
(c) The First Mortgage 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 Fortieth Supplemental Mortgage has been duly
authorized by the Company. When the Fortieth 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 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; 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 will create a
mortgage upon all properties and assets acquired by the Company after the
execution and delivery of the Fortieth 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
Fortieth Supplemental Mortgage will be duly filed, recorded or registered in
each place in the Commonwealth in which such filing, recording or registration
was or is required to protect and preserve the lien of the Mortgage; and all
necessary approvals of regulatory authorities, commissions and other
governmental bodies having jurisdiction over the Company required to subject the
mortgaged properties and assets or trust estate (as defined in the Mortgage) to
the lien of the Mortgage have been duly obtained;
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(e) 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; and all of its other interests in real property (other than
certain rights of way, easements, occupancy rights, riparian and flowage rights,
licenses, leaseholds, and real property interests of a similar nature). In each
case such title is free and clear of all liens, encumbrances and defects except
such as may be described in the Official Statement, the lien of the Mortgage,
permitted liens under the Mortgage or such as do not materially affect the value
of such property and do not interfere with the use made and proposed to be made
of such property by the Company. Any real property and buildings held under
lease by the Company are held by it under valid, subsisting and enforceable
leases with such exceptions as are not material and do not interfere with the
use made and proposed to be made of such property and buildings by the Company;
(f) 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 Bonds, the issue and delivery of the
First Mortgage Bond and the compliance by the Company with all of the applicable
provisions of the First Mortgage Bond and the Mortgage and the execution,
delivery and performance by the Company of the Fortieth Supplemental Mortgage,
the Financing Agreement, this Bond Purchase Agreement and the Continuing
Disclosure Agreement will not conflict with or result in a breach of any of the
terms or provisions of, or constitute a default under, or result in the creation
or imposition of any lien, charge or encumbrance (other than the lien of the
Mortgage) upon any of the property or assets of the Company pursuant to the
terms of any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company is a party or by which the Company
is bound or to which any of the property or assets of the Company are subject,
nor will such action result in a violation of the provisions of the Articles of
Incorporation, as amended, or the Bylaws of the Company or any statute or any
order, rule or regulation of any court or governmental agency or body having
jurisdiction over the Company or any of its property. No consent, approval,
authorization, order, registration or qualification of or with any court or any
such regulatory authority or other governmental body (other than those already
obtained) is required to be obtained by the Company for the issue and sale of
the Bonds, the issue and delivery of the First Mortgage Bond, the execution,
delivery and performance by the Company of this Bond Purchase Agreement, the
Financing Agreement, the Fortieth Supplemental Mortgage, the First Mortgage Bond
and the Continuing Disclosure Agreement, or the consummation by the Company of
the other transactions contemplated by this Bond Purchase Agreement or the
Mortgage;
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(h) The Pennsylvania Public Utility Commission by order has duly
authorized the issuance and delivery of the First Mortgage Bond on terms not
inconsistent with this Bond Purchase Agreement;
(i) The Company is not a holding company, a registered holding company
or an affiliate of a registered holding company within the meaning of the Public
Utility Holding Company Act of 1935, as amended;
(j) There are no legal or governmental proceedings pending to which the
Company is a party or to which any property of the Company is subject, other
than as set forth in the Official Statement 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) The Project consists of either land or property of a character
subject to depreciation for federal income tax purposes and will be used to
furnish water that is or will be made available to members of the general public
(including electric utility, industrial, agricultural, or commercial users); the
rates for the furnishing or sale of the water have been established or approved
by a State or political subdivision thereof, by an agency or instrumentality of
the United States, or by a public service or public utility commission or other
similar body of any State or political subdivision thereof; and all other
information supplied by the Company to the Underwriter with respect to the
exclusion from gross income pursuant to Section 103 of the Code of the interest
on the Bonds is correct and complete;
(l) The Company has not, within the immediately preceding ten (10)
years, defaulted in the payment of principal or interest on any of its bonds,
notes or other securities, or any legally authorized obligation issued by it;
and
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(m) The information with respect to the Company and the Project and the
descriptions of the First Mortgage Bond 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 Bonds for offer and sale under the Blue Sky or
other securities laws and regulations of such states and other jurisdictions in
the United States of America as the Underwriter may designate and will assist,
if necessary therefor, in the continuance of such qualifications in effect so
long as required for distribution of the Bonds; provided, however, that the
Authority shall in no event be required to file a general consent to suit or
service of process or to qualify as a foreign corporation or as a dealer in
securities in any such state or other jurisdiction;
(b) not, on its part, amend or supplement the Official Statement
without prior notice to and the consent of the Underwriter and the Company and
will advise the Underwriter and the Company promptly of the institution of any
proceedings by any governmental agency or otherwise affecting the use of the
Official Statement in connection with the offer and sale of the Bonds; and
(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 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 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: a breach of the Company's representations included in this
Agreement; 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 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 Bonds under the
1933 Act or the failure to qualify the Indenture under the 1939 Act; or (v)
arising by virtue of any audit or investigation conducted by a state or federal
agency, department or entity questioning, among other things, the tax-exempt
status of the Bonds;
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(c) undertake, pursuant to the Continuing Disclosure Agreement dated as
of December 15, 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 Bonds.
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 the offering and sale of the Bonds on the grounds
that the information under the caption "UNDERWRITING" in the Preliminary
Official Statement or the Official Statement (or any supplement or amendment to
said information) contains an untrue or allegedly untrue statement of a material
fact or omits or allegedly omits to state any material fact necessary to make
the statements therein not misleading in the light of the circumstances under
which they were made (it being understood that the Underwriter furnished only
the information under such "UNDERWRITING" heading), or failure on the part of
the Underwriter to deliver an Official Statement to any purchaser. The
Underwriter will reimburse any legal or other expenses reasonably incurred by a
party, person or entity indemnifiable under this Section 7 in connection with
investigating or defending any such loss, claim, damage, liability or action.
This indemnity agreement will be in addition to any liability that the
Underwriter may otherwise have. The Underwriter shall not be liable for any
settlement of, any such action effected without its consent.
(b) The Underwriter will be paid an underwriting discount of $370,125
with respect to the Bonds.
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(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 Bonds to the Company.
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 shall include reimbursement for
expenses reasonably incurred by an Indemnitee in investigating the claim and in
defending it if the Indemnifying Party declines to assume the defense and shall
survive delivery of the Bonds. Notwithstanding the foregoing, in the event of an
investigation or audit by the Internal Revenue Service or the Securities and
Exchange Commission or any other state or federal agency, department, or entity
with respect to the Bonds, the Authority shall have the right and duty to
undertake its own defense, including the employment of counsel, with full power
to litigate, compromise or settle the same on its own behalf, and the Company
agrees that it will indemnify and hold the Authority harmless for all costs and
expenses, including, but not limited to, attorney fees and expenses and costs,
of any such settlement.
9. EQUITABLE CONTRIBUTION. If the indemnification provided for in
Section 6(b) of this Bond Purchase Agreement is unavailable to the Underwriter
(or any controlling person thereof) in respect of any losses, claims, damages or
liabilities referred to therein, then the Company shall, in lieu of indemnifying
the Underwriter, contribute to the amount paid or payable by the Underwriter as
a result of such losses, claims, damages or liabilities in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Underwriter, respectively, from the offering of the Bonds. If, however, the
allocation provided by the immediately preceding sentence is not permitted by
applicable law, then the Company shall contribute to such amount paid or payable
by the Underwriter in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company and the
Underwriter, respectively, in connection with the statements or omission which
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative benefit received by the Company
or the Underwriter shall be deemed to be in the same proportion as the total
proceeds from the offering (before deducting issuance costs and expenses other
than underwriting fees and commissions) received by the Company, on the one
hand, bear to the total underwriting fees and commissions received by the
Underwriter, on the other hand. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
related to information supplied by the Company or the Underwriter and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company and the Underwriter
agree that it would not be just and equitable if contribution pursuant to this
Section 9 were determined by pro rata allocation or by any other method of
allocation that does not take account of the equitable considerations referred
to above in this Section 9. The amount paid or payable by the Underwriter as a
result of the losses, claims, damages or liabilities referred to above in this
Section 9 shall be deemed to include any reasonable legal or other expenses
reasonably incurred by the Underwriter in connection with investigating or
defending any such action or claim. Notwithstanding the provisions of this
Section 9, the Underwriter shall not be required to contribute any amount in
excess of the amount by which the total price at which the 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.
10
10. OFFICIAL STATEMENT; PUBLIC OFFERING.
(a) In order to enable the Underwriter to comply with Rule 15c2-12: the
Company has prepared (or caused to be prepared) the Preliminary Official
Statement, which the Company and the Authority (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;
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 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 Bonds.
(b) After the Closing, and until the Underwriter has informed the
Authority and the Company that the Underwriter has sold all the 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 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 the date and place of such filing and the date
of the end of the underwriting period.
11
11. CONDITIONS OF UNDERWRITER'S AND AUTHORITY'S OBLIGATIONS. The
Underwriter's obligations to purchase and pay for the Bonds and the Authority's
obligation to issue and deliver the Bonds are subject to fulfillment of the
following conditions at or before Closing:
(a) The representations of the Authority and the Company herein shall
be true in all material respects on and as of the date of the Closing and shall
be confirmed by appropriate certificates at Closing;
(b) Neither the Authority nor the Company 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;
12
(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 Company's auditor and 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 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;
(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 Fortieth Supplemental
Mortgage and the Continuing Disclosure Agreement and specimen copies of
the First Mortgage Bond;
(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 Bond, the Fortieth
Supplemental Mortgage, the Continuing Disclosure Agreement and the
incurrence of indebtedness with respect thereto and all transactions
described in the Official Statement and contemplated by this Bond
Purchase Agreement, all certified by its Secretary or Assistant
Secretary;
13
(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
Bonds;
(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 Bonds from the Pennsylvania Department of Community and
Economic Development and of the registration of a Securities
Certificate relating to the First Mortgage Bond and the Bonds with the
Pennsylvania Public Utility Commission; and
(xvii) 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 Bonds, the Financing
Agreement, the Trust Indenture, this Bond Purchase Agreement, the
Mortgage, the First Mortgage Bond and the Continuing Disclosure
Agreement, and to evidence that the interest on the Bonds is not
includable in gross income under the Code and the status of the
offering under the 1933 Act and the 1939 Act;
(d) At Closing there shall not have been any material adverse change in
the financial condition of the Company or any adverse development concerning the
business or assets of the Company that would result in a material adverse change
in the prospective financial condition or results of operations of the Company
from that described in the Official Statement, which, in the judgment of the
Underwriter, makes it inadvisable to proceed with the sale of the Bonds; and the
Underwriter shall have received certificates of the Company certifying that no
such material adverse change has occurred or, if such a change has occurred,
full information with respect thereto; 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 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.
14
12. EVENTS PERMITTING THE UNDERWRITER TO TERMINATE. The Underwriter may
terminate its obligation to purchase the Bonds at any time before Closing if any
of the following occurs:
(a) A legislative, executive or regulatory action or proposed action,
or a court decision, which in the reasonable judgment of the Underwriter casts
sufficient doubt on the legality of, or the exclusion from gross income for
federal income tax purposes of interest on, obligations such as the Bonds so as
to materially impair the marketability or materially lower the market price of
the Bonds; or
(b) Any action by the Securities and Exchange Commission or a court
that would require registration of the Bonds or the First Mortgage Bond 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 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 Bonds, which, in the reasonable judgment of the Underwriter,
would materially impair the marketability or materially lower the market price
of the 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 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.
15
13. EXPENSES. All expenses and costs of the authorization, issuance,
sale and delivery of the Bonds including, without limitation, accrued interest,
the preparation of and furnishing to the Underwriter of the Preliminary Official
Statement and the Official Statement, the preparation and execution of the
Bonds, the Financing Agreement, the Trust Indenture, the First Mortgage Bond,
the Fortieth Supplemental Mortgage, 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 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 from
proceeds of the Bonds. The Authority shall, bear no out-of-pocket expense in
connection with the transactions contemplated by this Bond Purchase Agreement.
The Underwriter will pay all other expenses of the Underwriter in connection
with the public offering of the Bonds.
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
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. 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 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.
17
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: /s/ Xxxxx Xxxxxxx
-------------------------------------------
Chairman
AQUA PENNSYLVANIA , INC.
By: /s/ Xxxxx X. Xxxx
-------------------------------------------
Vice President, Treasurer and Rate Counsel
SOVEREIGN SECURITIES CORPORATION, LLC
By: /s/ Xxxxxx X. Xxxxxx, III
-------------------------------------------
Xxxxxx X. Xxxxxx, III
Managing Director
SCHEDULE I
Terms of Bonds
Dated Date: December 22, 2005
Series Maturity Date Principal Amount Rate of Interest Yield
------ ------------- ---------------- ---------------- ------
C February 1, 2035 $24,675,000 5.00% 4.820%
Interest Payment Dates: February 1 and August 1, commencing February 1, 2006
Redemption Provisions:
The Bonds are subject to redemption as follows:
OPTIONAL REDEMPTION. The Bonds are subject to optional redemption prior
to maturity by the Authority, at the direction of the Company, on or after
February 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. The Bonds are subject to redemption,
at any time prior to maturity, at the option of the Authority, upon the
direction of the Company, in whole, at a Redemption Price of 100% of the
principal amount of the Bonds to be redeemed, plus interest accrued thereon to
the date fixed for redemption, if any of the following events shall have
occurred:
(a) The damage or destruction of all or substantially all of
the Facilities to such extent, that, in the reasonable opinion of the Company,
the repair and restoration thereof would not be economical; or
(b) the taking by condemnation, or the threat thereof, of all
or substantially all of the Facilities or the taking by condemnation of any
part, use or control of the Facilities so as to render them unsatisfactory to
the Company for their intended use; or
(c) in the Company's reasonable opinion, (1) unreasonable
burdens or excessive liabilities shall have been imposed upon the Company with
respect to the Facilities or the operation thereof, including, but not limited
to, federal, state or other ad valorem, property, income or other taxes not
being imposed on the date of the Agreement other than ad valorem property taxes
presently levied upon privately owned property used for the same general
purposes as the Facilities, or (2) the continued operation of the Facilities is
impractical, uneconomical or undesirable for any reason.
Schedule 1-I
Any such redemption shall be on any date within 180 days following the
occurrence of one of the events listed above permitting the exercise of the
option.
SPECIAL MANDATORY REDEMPTION. The Bonds are subject to mandatory
redemption, in part, on the first interest payment date for which notice can be
given in accordance with the Trust Indenture after the Project has been
completed and the certificate of the Company with respect thereto required by
the Financing Agreement has been filed with the Authority and the Trustee, to
the extent of any amounts transferred from the Project Fund to the Debt Service
Fund pursuant to the Trust Indenture, at a Redemption Price of 100% of the
principal amount of the Bonds to be redeemed, plus accrued interest thereon to
the date fixed for redemption.
Schedule 1-I
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:
December 28, 2005
Delaware County Industrial Development Authority Wachovia Bank, National Association, as Trustee
000 Xxxx Xxxxx Xxxxxx, Xxxxx 000 000 Xxxxx Xxxxx Xxxxxx
Xxxxx, Xxxxxxxxxxxx 00000 Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Sovereign Securities Corporation, LLC Aqua Pennsylvania, Inc.
0000 Xxxxxx Xxxxxx 762 Lancaster Avenue
Centre Square - Concourse Bryn Mawr, Pennsylvania 19010
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Re: $24,675,000 aggregate principal amount of Delaware
County Industrial Development Authority Water
Facilities Revenue Bonds (Aqua Pennsylvania, Inc.
Project) Series C 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 $24,675,000 aggregate principal amount of Delaware
County Industrial Development Authority Water Facilities Revenue Bonds (Aqua
Pennsylvania, Inc. Project) Series C of 2005 (the "Bonds"). The Bonds are being
issued by the Authority at the request of Aqua Pennsylvania, Inc., as successor
to Philadelphia Suburban Water Company (the "Company"), to finance facilities
located in the Pennsylvania Counties of Chester, Delaware and Xxxxxxxxxx (the
"Project Facilities") for the furnishing of water which is made available on
reasonable demand to members of the general public in portions of the
Pennsylvania Counties of Chester, Delaware and Xxxxxxxxxx.
The Bonds are issuable in fully registered form, and are being
issued under the Trust Indenture dated as of December 15, 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 December 15, 2005 (the "Financing Agreement"), pursuant to
which the Authority will lend the proceeds of the Bonds to the Company to
finance the Project Facilities.
In satisfaction of its obligation under the Financing
Agreement with respect to the Bonds, the Company, concurrently with the issuance
of the Bonds, is delivering to the Trustee its First Mortgage Bond, 5.00% Series
C due 2035 (the "First Mortgage Bond") in the principal amount equal to the
principal amount of the Bonds. The Authority has assigned its interests under
the Financing Agreement with respect to the Bonds, including its right to
receive the First Mortgage Bond and the payments thereunder, to the Trustee for
the benefit of the holders of the Bonds.
A-1
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, 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 Bond, the other documents listed in the closing memorandum filed
with the Trustee and an executed Water Facilities Revenue Bond (Aqua
Pennsylvania, Inc. Project) Series C of 2005 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.
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 Bond 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.
A-2
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. We express no opinion as to these matters.
6. Under the existing laws of the Commonwealth of Pennsylvania
as enacted and construed on the date of initial delivery of the Bonds, interest
on the Bonds is exempt from Pennsylvania personal income tax and Pennsylvania
corporate net income tax, and the Bonds are exempt from personal property taxes
in Pennsylvania.
We do not express any opinion herein as to the adequacy or
accuracy of the Official Statement of the Authority pertaining to the offering
of the Bonds.
We call your attention to the fact that the Authority's
obligation to make payments in respect of the Bonds is limited to moneys
received from payments to be made by the Company pursuant to the First Mortgage
Bond 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
December 28, 2005
Sovereign Securities Corporation, LLC
0000 Xxxxxx Xxxxxx
Xxxxxx Xxxxxx - Xxxxxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Re: $24,675,000 aggregate principal amount of Delaware
County Industrial Development Authority Water
Facilities Revenue Bonds, (Aqua Pennsylvania, Inc.
Project), Series C 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
December 21, 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 December 21, 2005 (the
"Bond Purchase Agreement"), among you, the Company and the Authority relating to
the Bonds has been duly authorized, executed and delivered by the Authority and
constitutes the legal, valid and binding obligation of the Authority enforceable
against the Authority in accordance with its terms, except as enforceability
thereof may be limited by bankruptcy, insolvency or similar laws affecting the
enforcement of creditors' rights generally and general principles of equity.
2. 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" as to which we express no view) and the information set forth in
Appendix C to the Official Statement (other than information under the headings
"THE FIRST MORTGAGE BOND AND THE MORTGAGE" as to which we express no view),
insofar as such information purports to summarize provisions of the Bonds, the
Indenture and the Agreement, fairly and accurately summarize such information in
all material respects. The information in the Official Statement under the
caption "TAX MATTERS" and the 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.
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-1
EXHIBIT C
FORM OF OPINION OF COUNSEL FOR THE AUTHORITY
December 28, 2005
Delaware County Industrial Development Authority Xxxxxxx Xxxxx Xxxxxxx & Ingersoll
000 X. Xxxxx Xxxxxx Xxxxxx Xxxx Xxxxxx
Xxxxx 000 Xxxxx, XX 00000 0000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, XX 00000
Sovereign Securities Corporation, LLC
0000 Xxxxxx Xxxxxx
Xxxxxx Xxxxxx - Xxxxxxxxx
Xxxxxxxxxxxx, XX 00000
Re: $24,675,000 aggregate principal amount of Delaware
County Industrial Development Authority Water
Facilities Revenue Bonds (Aqua Pennsylvania, Inc.
Project) Series C of 2005
---------------------------------------------------
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 December 21, 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
November 18, 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 December 15, 2005 ("Indenture"), between the Authority
and Wachovia Bank, National Association, as trustee ("Trustee"), the Financing
Agreement, dated as of December 15, 2005 ("Financing Agreement"), between the
Authority and the Borrower) and the Bond Purchase Agreement. The Indenture, the
Loan Agreement and the Bond Purchase Agreement are collectively referred to
herein as the "Authority Documents".
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.
C-1
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.
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.
C-2
5. The Authority has approved the distribution of the Preliminary
Official Statement dated December 16, 2005 and the Official Statement dated
December 21, 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.
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-3
EXHIBIT D
FORM OF OPINIONS OF THE COMPANY'S LEGAL COUNSEL AND THE
COMPANY'S SENIOR VICE PRESIDENT - LAW AND ADMINISTRATION
December 28, 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: $24,675,000 aggregate principal amount of Delaware
County Industrial Development Authority Water
Facilities Revenue Bonds (Aqua Pennsylvania, Inc.
Project) Series C 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 December 21, 2005
(the "Purchase Agreement"), of $24,675,000 aggregate principal amount of
Delaware County Industrial Development Authority Water Facilities Revenue Bonds
(Aqua Pennsylvania, Inc.), Series C of 2005 (the "Authority Bonds"), and (ii)
the issuance and delivery of $24,675,000 principal amount of the Company's First
Mortgage Bond, 5.00% Series due 2035 (the "First Mortgage Bond"), 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
Fortieth Supplemental Indenture dated as of December 15, 2005 (the "Fortieth
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.
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;
D-1
(c) resolutions of the Board of Directors of the Company
authorizing the execution and delivery of the Purchase
Agreement, the Financing Agreement, the Fortieth Supplemental
Indenture, the First Mortgage Bond, the Continuing Disclosure
Agreement and the Official Statement;
(d) the Purchase Agreement;
(e) the Financing Agreement dated as of December 15, 2005 (the
"Financing Agreement") between the Authority and the Company;
(f) the Continuing Disclosure Agreement dated as of December 15,
2005 (the "Continuing Disclosure Agreement") between the
Company and Wachovia Bank, National Association, as trustee
for the Authority Bonds (the "Trustee");
(g) the Official Statement relating to the Authority Bonds dated
December 21, 2005 (the "Official Statement");
(h) the Securities Certificate relating to the issue and sale of
the First Mortgage Bond, filed by the Company with the
Pennsylvania Public Utility Commission pursuant to the
provisions of Chapter 19 of the Pennsylvania Public Utility
Code, and a copy of the Order of the Public Utility Commission
registering such Securities Certificate, certified by the
Secretary of the Pennsylvania Public Utility Commission;
(i) a Subsistence Certificate from the Secretary of the
Commonwealth with respect to the Company;
(j) executed counterparts of the Original Mortgage and of the
Fortieth 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;
(k) the documents delivered to the Mortgage Trustee in connection
with the authentication of the First Mortgage Bond pursuant to
the provisions of Sections 2(B) and 3 of Article IV of the
Original Mortgage;
(l) the First Mortgage Bond delivered to the Trustee at the
Closing held today;
(m) the certificates of the Company and other documents delivered
to the Mortgage Trustee at the Closing;
(n) a certificate of the Company and various bringdown title
searches of various title companies in the Counties of Adams,
Berks, Bradford, Bucks, Carbon, Xxxxxxx, Columbia, 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
(o) various certificates of officers of the Company relating to
title to real property and the priority of any lien thereon.
D-2
In rendering this opinion, we have assumed that all signatures on
documents and instruments examined by us are genuine (except signatures of the
Company on the Purchase Agreement, the Fortieth Supplemental Indenture, the
Financing Agreement, the First Mortgage Bond 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.
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
Bond, the Fortieth Supplemental Indenture and the Continuing Disclosure
Agreement. The execution, delivery and performance by the Company of the
Financing Agreement, the Bond Purchase Agreement, the First Mortgage Bond, the
Fortieth Supplemental Indenture and the Continuing Disclosure Agreement have
been duly authorized by all requisite corporate action.
D-3
3. The Purchase Agreement, the Financing Agreement and the Continuing
Disclosure Agreement constitute legal, valid and binding obligations of the
Company, enforceable against the Company in accordance with their respective
terms.
4. The First Mortgage 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 Bond is 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 Fortieth Supplemental Indenture dated as of December 15, 2005 has 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.
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.
D-4
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 Bond 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 Bond 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 Bond 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.
(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.
D-5
(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 Bond 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]
December 28, 2005
Sovereign Securities Corporation, LLC
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Re: $24,675,000 aggregate principal amount of Delaware County
Industrial Development Authority Water Facilities Revenue
Bonds (Aqua Pennsylvania, Inc. Project) Series C of 2005
----------------------------------------------------------
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
December 21, 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 Fortieth 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;
v. the due authorization, execution and delivery of the
Mortgage by or on behalf of the party thereto other than the Company;
D-7
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 Bond and the compliance by the Company with all of the applicable
provisions of the First Mortgage Bond and the Mortgage; and the execution,
delivery and performance by the Company of the Fortieth Supplemental Mortgage,
the Financing Agreement, the Purchase Agreement and the Continuing Disclosure
Agreement will not materially conflict with or result in a material breach of
any of the terms or provisions of, or constitute a material default under, or
result in the creation or imposition of any material lien, charge or encumbrance
(other than the lien of the Mortgage) upon any of the property or assets of the
Company pursuant to the terms of, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company is a party or by
which the Company is bound or to which any of the property or assets of the
Company is subject, nor will such action result in a violation of the provisions
of the Articles of Incorporation, as amended, or the Bylaws of the Company or
any statute or any order, rule or regulation of any court or governmental agency
or body having jurisdiction over the Company or any of its property. No consent,
approval, authorization, order, registration or qualification of or with any
court or any such regulatory authority or other governmental body not already
obtained is required for the issue and delivery of the First Mortgage Bond, the
execution, delivery and performance of the Purchase Agreement, the Financing
Agreement, the Fortieth Supplemental Mortgage, the First Mortgage Bond, 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 forty indentures supplemental thereto, including the Fortieth Supplemental
Indenture dated as of December 15, 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
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