BOND PURCHASE AGREEMENT

Note Purchase Agreement

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AQUA AMERICA INC | SOVEREIGN SECURITIES CORPORATION LLC

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Title: BOND PURCHASE AGREEMENT
Governing Law: Pennsylvania Date: 8/4/2005
Industry: Water Utilities Sector: Utilities

BOND PURCHASE AGREEMENT, Parties: aqua america inc , sovereign securities corporation llc

<PAGE>

EXHIBIT 10.36

BOND PURCHASE AGREEMENT

$71,310,000

DELAWARE COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY

$49,540,000 $21,770,000

WATER FACILITIES REVENUE BONDS WATER FACILITIES REVENUE REFUNDING BONDS

(AQUA PENNSYLVANIA, INC. PROJECT) (AQUA PENNSYLVANIA, INC. PROJECT)

SERIES A OF 2005 SERIES B OF 2005

Bond Purchase Agreement dated May 10, 2005, among the DELAWARE COUNTY

INDUSTRIAL DEVELOPMENT AUTHORITY (the "Authority"), AQUA PENNSYLVANIA, INC., a

Pennsylvania corporation (the "Company"), and SOVEREIGN SECURITIES CORPORATION,

LLC, a Pennsylvania limited liability company (the "Underwriter").

1. BACKGROUND.

(a) The Authority proposes to enter into a Financing Agreement (the

"Financing Agreement") dated as of May 1, 2005 with the Company, under which the

Authority will agree to loan to the Company funds to (i) finance certain capital

costs of numerous acquisitions, constructions, modifications, expansions,

installations and replacements of water distribution, treatment and related

operating systems located in the counties of Berks, Bucks, Chester, Delaware and

Montgomery in Pennsylvania (the "2005A Facilities") that are part of the

Company's system (the "System") for the distribution of water to its customers,

and related financing costs (collectively, the "Construction Project"); and (ii)

currently refund (the "Refunding Project") the Authority's Water Facilities

Revenue Bonds (Philadelphia Suburban Water Company Project), Series of 1995 (the

"1995 Bonds"), which were issued to finance certain capital costs of numerous

acquisitions, constructions, modifications, expansions, installations and

replacements of water distribution, treatment and related operating systems

located in the counties of Bucks, Chester, Delaware and Montgomery in

Pennsylvania (the "2005B Facilities" and, together with the 2005A Facilities,

the "Facilities") and pay costs of issuance of the 1995 Bonds. To finance the

loan under the Financing Agreement, the Authority proposes to issue and sell

$49,540,000 aggregate principal amount of Delaware County Industrial Development

Authority Water Facilities Revenue Bonds (Aqua Pennsylvania, Inc. Project),

Series A of 2005 (the "Series A Bonds") and $21,770,000 aggregate principal

amount of Delaware County Industrial Development Authority Water Facilities

Revenue Refunding Bonds (Aqua Pennsylvania, Inc. Project), Series B of 2005 (the

"Series B Bonds" and, together with the Series A Bonds, the "2005 Bonds") to the

Underwriter, who will in turn reoffer the 2005 Bonds for sale to the public.

(b) The 2005 Bonds will be issued pursuant to the Pennsylvania

Economic Development Financing Law, Act of August 23, 1967, P.L. 251, as amended

and supplemented (the "Act"), a resolution adopted by the Authority on April 12,

2005 (the "Authority Resolution") and under a Trust Indenture dated as of May 1,

2005 (the "Trust Indenture"), between the Authority and Wachovia Bank, National

Association, as trustee (the "Trustee"). The 2005 Bonds will have such terms as

are set forth in Schedule I attached hereto.

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The Series A Bonds will be payable out of payments by the Company

under the Financing Agreement, including payments under its two First Mortgage

Bonds issued with respect to the Series A Bonds in the aggregate principal

amount of $49,540,000 (collectively, the "2005A First Mortgage Bond"). The

Series B Bonds will be payable out of payments by the Company under the

Financing Agreement, including payments under its First Mortgage Bond issued

with respect to the Series B Bonds in the principal amount of $21,770,000 (the

"2005B First Mortgage Bond" and, together with the 2005A First Mortgage Bond,

the "First Mortgage Bonds"). The First Mortgage Bonds will be issued under and

secured by the Company's Indenture of Mortgage dated as of January 1, 1941 (the

"Indenture of Mortgage"), from the Company to J.P. Morgan Trust Company,

National Association, as trustee (successor to The Pennsylvania Company for

Insurance on Lives and Granting Annuities, The Pennsylvania Company for Banking

and Trusts, The First Pennsylvania Banking and Trust Company, First Pennsylvania

Bank, N.A., CoreStates Bank, N.A., Mellon Bank, N.A. and Chase Manhattan Trust

Company, National Association) (the "Mortgage Trustee"), as presently amended

and supplemented and as to be further supplemented by a Thirty-Ninth

Supplemental Indenture of Mortgage to be dated as of May 1, 2005 (the

"Thirty-Ninth Supplemental Mortgage," which together with the Indenture of

Mortgage, as amended and supplemented, is referred to hereinafter as the

"Mortgage"). Each First Mortgage Bond will be issued in the same principal

amount and will mature on the same date and bear interest at the same rate as

the series of 2005 Bonds that it secures. All of the Authority's rights under

the Financing Agreement to receive and enforce repayment of its loan to the

Company and to enforce payment of the 2005 Bonds, including all of the

Authority's rights to the First Mortgage Bonds, and all of the Authority's

rights to moneys and securities in the Project Funds, the Revenue Funds and the

Debt Service Funds (and the accounts within all such Funds applicable to the

2005 Bonds) established by the Trust Indenture, except for the Authority's

rights to certain fees and reimbursements for expenses, indemnification and

notice thereunder and rights relating to amendments of and notices under the

Financing Agreement, will be assigned to the Trustee as security for the 2005

Bonds pursuant to the Trust Indenture.

Morgan Trust Company, National Association, as trustee and escrow agent for the

1995 Bonds (the "Escrow Agent") pursuant to an Escrow Deposit Agreement dated as

of May 1, 2005 (the "Escrow Agreement") among the Authority, the Company, the

Escrow Agent and the Trustee. Such proceeds will be invested in United States

Government securities and applied to pay the 1995 Bonds in full on August 15,

2005.

(d) The Construction Project and the Refunding Project

(collectively, the "Project") will finance and refinance, respectively, the

acquisition, construction, installation and equipping of facilities for the

furnishing of water for purposes of Section 142(a)(4) of the Internal Revenue

Code of 1986, as amended (the "Code"), so that the interest on the 2005 Bonds

will not be includable in gross income for federal income tax purposes under the

Code and the Underwriter may offer the 2005 Bonds for sale without registration

under the Securities Act of 1933, as amended (the "1933 Act) or qualification of

the Trust Indenture under the Trust Indenture Act of 1939, as amended (the "1939

Act").

<PAGE>

(e) A Preliminary Official Statement dated April 29, 2005, including

the Appendices thereto and all documents incorporated therein by reference (the

"Preliminary Official Statement"), has been supplied to the parties hereto, and

a final Official Statement to be dated the date hereof, including the Appendices

thereto and all documents incorporated therein by reference, prepared for use in

such offerings will be supplied to the parties hereto as soon as it is

available, subject to Section 10 hereof (such final Official Statement, as it

may be amended or supplemented with the consent of the Authority, the

Underwriter and the Company, is hereinafter referred to as the "Official

Statement").

(f) The 2005 Bonds will be insured by a bond insurance policy (the

"Bond Insurance Policy") issued by Financial Guaranty Insurance Company (the

"Bond Insurer").

2. PURCHASE, SALE AND CLOSING. On the terms and conditions herein set

forth, the Underwriter will buy from the Authority, and the Authority will sell

to the Underwriter, all (but not less than all) of the 2005 Bonds at a purchase

price equal to $70,929,354.65, which is equal to the $71,310,000 aggregate

principal amount of the 2005 Bonds, plus original issue premium of $689,004.65,

less the underwriting discount of $1,069,650. Payment for the 2005 Bonds shall

be made in immediately available funds to the Trustee for the account of the

Authority. Closing (the "Closing") will be at the offices of Ballard Spahr

Andrews & Ingersoll, LLP, Philadelphia, Pennsylvania, bond counsel, at 10:00

a.m., Eastern Daylight Time, on May 19, 2005 or at such other date, time or

place or in such other manner as may be agreed on by the parties hereto. The

2005 Bonds will be delivered as fully registered bonds, with one bond for each

series, each in the aggregate principal amount of the applicable series in the

name of Cede & Co., as nominee for The Depository Trust Company ("DTC"), with

CUSIP numbers printed thereon, and shall conform in all respects to DTC's

Book-Entry Only System. Delivery of the 2005 Bonds to DTC will be made by

delivering the 2005 Bonds to the Trustee utilizing the DTC FAST system. If the

Underwriter so requests, the 2005 Bonds shall be made available to the

Underwriter (prior to their delivery to DTC) in Philadelphia, Pennsylvania at

least three full business days before the Closing for purposes of inspection.

The Underwriter agrees to make a bona fide public offering of the 2005

Bonds at the initial offering prices or yields set forth in the Official

Statement; provided, however, that the Underwriter reserves the right (and the

Authority and the Company hereby expressly acknowledge such right): (i) to make

concessions to dealers; (ii) to effect transactions that stabilize or maintain

the market price of the 2005 Bonds above that which might otherwise prevail in

the open market and to discontinue at any time such stabilizing transactions;

and (iii) to change such initial offering prices, all as the Underwriter shall

deem necessary in connection with the marketing of the 2005 Bonds.

3. AUTHORITY'S REPRESENTATIONS AND WARRANTIES. The Authority makes the

following representations and warranties, all of which shall survive Closing;

that:

(a) The Authority is a body politic and corporate, duly created and

existing under the Constitution and laws of the Commonwealth of Pennsylvania

(the "Commonwealth"), and has, and at the date of Closing will have, full legal

right, power and authority to: (i) enter into this Bond Purchase Agreement; (ii)

execute and deliver the 2005 Bonds, the Trust Indenture, the Financing

Agreement, this Bond Purchase Agreement, the Escrow Agreement and the

Authority's tax certificate and the other various certificates executed by the

Authority in connection therewith (collectively, with the Authority Resolution,

the "Authority Financing Documents"); (iii) issue, sell and deliver the 2005

Bonds to the Underwriter as provided herein; and (iv) carry out and consummate

the transactions contemplated by the Authority Financing Documents and the

Official Statement to be carried out and/or consummated by it;

<PAGE>

(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;

relates to the Authority), "THE AUTHORITY" and "ABSENCE OF MATERIAL LITIGATION"

(solely insofar as the information set forth therein relates to the Authority)

contained in the Preliminary Official Statement as of its date did not contain

any untrue statement of a material fact or omit to state any material fact

required to be stated therein or necessary in order to make the statements

contained therein, in the light of the circumstances under which they were made,

not misleading;

(d) The sections entitled "INTRODUCTORY STATEMENT" (insofar as it

relates to the Authority), "THE AUTHORITY" and "ABSENCE OF MATERIAL LITIGATION"

(solely insofar as the information set forth therein relates to the Authority)

contained in the Official Statement as of its date does not or will not contain

any untrue statement of a material fact or omit to state any material fact

required to be stated therein or necessary in order to make the statements

contained therein, in the light of the circumstances under which they were made,

not misleading;

(e) The Authority has complied, and will at the Closing be in

compliance, in all material respects with the provisions of the Act;

(f) The Authority has duly authorized and approved the Preliminary

Official Statement and the Official Statement; and has duly authorized and

approved the execution and delivery of, and the performance by the Authority of

the obligations on its part contained in, the Authority Financing Documents;

(g) To the best of the knowledge of the officer of the Authority

executing this Bond Purchase Agreement, the Authority is not in material breach

of or in default under any applicable law or administrative regulation of the

Commonwealth or the United States; and the execution and delivery of the

Authority Financing Documents, and compliance with the provisions of each

thereof, do not and will not conflict with or constitute a breach of or default

under any existing law, administrative regulation, judgment, decree, loan

agreement, note, resolution, agreement or other instrument to which the

Authority is a party or is otherwise subject;

(h) All approvals, consents and orders of any governmental

authority, board, agency or commission having jurisdiction that would constitute

a condition precedent to the Authority's legal ability to issue the 2005 Bonds

or to the Authority's performance of its obligations hereunder and under the

Authority Financing Documents have been obtained or will be obtained prior to

the Closing;

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(i) The 2005 Bonds, when issued, authenticated and delivered in

accordance with the Trust Indenture and sold to the Underwriter as provided

herein, will be validly issued and will be valid and binding limited obligations

of the Authority enforceable against the Authority in accordance with their

terms (except as enforcement of remedies may be limited by bankruptcy,

insolvency, reorganization, moratorium or other laws or legal or equitable

principles affecting the enforcement of creditors' rights ("Creditors' Rights

Limitations"));

(j) The terms and provisions of the Authority Financing Documents

when executed and delivered by the respective parties thereto will constitute

the valid, legal and binding obligations of the Authority enforceable against

the Authority in accordance with their respective terms (except as enforcement

of remedies may be limited by Creditors' Rights Limitations);

(k) There is no action, suit, proceeding, inquiry or investigation,

at law or in equity, before or by any court, or public board or body, pending

or, to the knowledge of the Authority after due inquiry, threatened against the

Authority, affecting the existence of the Authority or the titles of its

officers to their respective offices or seeking to prohibit, restrain or enjoin

the sale, issuance or delivery of the 2005 Bonds or of the revenues or assets of

the Authority pledged or to be pledged to pay the principal of and interest on

the 2005 Bonds, or the pledge thereof, or in any way contesting or affecting the

validity or enforceability of the Authority Financing Documents or contesting in

any way the completeness or accuracy of the Preliminary Official Statement or

the Official Statement, or contesting the power or authority of the Authority

with respect to the issuance of the 2005 Bonds or the execution, delivery or

performance of any of the Authority Financing Documents, wherein an unfavorable

decision, ruling or finding would affect in any way the validity or

enforceability of any of the Authority Financing Documents;

(l) The net proceeds received from the 2005 Bonds and applied in

accordance with the Trust Indenture and Financing Agreement shall be used in

accordance with the Act as described in the Official Statement;

(m) The Authority has not been notified of any listing or proposed

listing by the Internal Revenue Service to the effect that the Authority is a

bond issuer whose arbitrage certifications may not be relied upon; and

(n) Any certificate signed by any of the authorized officers of the

Authority and delivered to the Underwriter shall be deemed a representation and

warranty by the Authority to the Underwriter as to the statements made therein.

4. COMPANY'S REPRESENTATIONS AND WARRANTIES. The Company makes the

following representations and warranties on and as of the date hereof and as of

the date of Closing, all of which will survive the Closing:

(a) The Company has not sustained since December 31, 2004 any

material loss or interference with its business from fire, explosion, flood or

other calamity, whether or not covered by insurance, or from any labor dispute

or court or governmental action, order or decree; and since the respective dates

as of which information is given in the Official Statement, there have not been

any material changes in the outstanding capital stock or the long-term debt of

the Company or any material adverse change, or a development involving a

prospective material adverse change, in or affecting the general affairs,

management, financial position, stockholders' equity or results of operations of

the Company, otherwise than as set forth or contemplated in the Official

Statement;

<PAGE>

(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;

when issued and delivered as contemplated by this Bond Purchase Agreement, will

have been duly executed, authenticated, issued and delivered and will constitute

a valid and legally binding obligation of the Company entitled to the benefits

provided by the Mortgage;

(d) The Original Indenture has been duly authorized, executed and

delivered by the Company, and the Thirty-Ninth Supplemental Mortgage has been

duly authorized by the Company. When the Thirty-Ninth Supplemental Mortgage, in

substantially the form approved by the Company, has been executed and delivered

by the Company and assuming due authorization and execution by the Mortgage

Trustee, and recorded as required by law, the Mortgage (i) will constitute a

valid and legally binding instrument enforceable against the Company in

accordance with its terms except as enforceability may be limited by Creditors'

Rights Limitations; (ii) will constitute a direct, valid and enforceable first

mortgage lien (except as enforceability of such lien may be limited by

Creditors' Rights Limitations) upon all of the properties and assets of the

Company (not heretofore released as provided for in the Mortgage) specifically

or generally described or referred to in the Mortgage as being subject to the

lien thereof, excepting permitted liens under the Mortgage and excepting

property and assets that the Mortgage expressly excludes from the lien thereof;

and (iii) and will create a mortgage upon all properties and assets acquired by

the Company after the execution and delivery of the Thirty-Ninth Supplemental

Mortgage and required to be subjected to the lien of the Mortgage pursuant

thereto when so acquired, except for permitted liens under the Mortgage. The

Original Indenture has been and the Thirty-Ninth Supplemental Mortgage will be

duly filed, recorded or registered in each place in the Commonwealth in which

such filing, recording or registration was or is required to protect and

preserve the lien of the Mortgage; and all necessary approvals of regulatory

authorities, commissions and other governmental bodies having jurisdiction over

the Company required to subject the mortgaged properties and assets or trust

estate (as defined in the Mortgage) to the lien of the Mortgage have been duly

obtained;

(e) In each of the following cases with such exceptions as are not

material and do not interfere with the conduct of the business of the Company,

the Company has good and marketable title to (i) all of its real property

currently held in fee simple; and (ii) all of its other interests in real

property (other than certain rights of way, easements, occupancy rights,

riparian and flowage rights, licenses, leaseholds, and real property interests

of a similar nature). In each case such title is free and clear of all liens,

encumbrances and defects except such as may be described in the Official

Statement, the lien of the Mortgage, permitted liens under the Mortgage or such

as do not materially affect the value of such property and do not interfere with

the use made and proposed to be made of such property by the Company. Any real

property and buildings held under lease by the Company are held by it under

valid, subsisting and enforceable leases with such exceptions as are not

material and do not interfere with the use made and proposed to be made of such

property and buildings by the Company;

<PAGE>

(f) In each of the following cases except for such exceptions that

are not material and do not interfere with the conduct of the business of the

Company, the Company has all licenses, franchises, permits, authorizations,

rights, approvals, consents and orders of all governmental authorities or

agencies necessary for the ownership or lease of the properties owned or leased

by it and for the operation of the business carried on by it as described in the

Official Statement, and all water rights, riparian rights, easements, rights of

way and other similar interests and rights described or referred to in the

Mortgage necessary for the operation of the business carried on by it as

described in the Official Statement. Except as otherwise set forth in the

Official Statement, all such licenses, franchises, permits, orders,

authorizations, rights, approvals and consents are in full force and effect and

contain no unduly burdensome provisions; except as otherwise set forth in the

Official Statement, there are no legal or governmental proceedings pending or,

to its knowledge after due inquiry, threatened that would result in a material

modification, suspension or revocation thereof. The Company has the legal power

to exercise the rights of eminent domain for the purposes of conducting its

water utility operations;

(g) The issue and sale of the 2005 Bonds, the issue and delivery of

the First Mortgage Bonds and the compliance by the Company with all of the

applicable provisions of the First Mortgage Bonds and the Mortgage and the

execution, delivery and performance by the Company of the Thirty-Ninth

Supplemental Mortgage, the Financing Agreement, this Bond Purchase Agreement,

the Escrow Agreement and the Continuing Disclosure Agreement will not conflict

with or result in a breach of any of the terms or provisions of, or constitute a

default under, or result in the creation or imposition of any lien, charge or

encumbrance (other than the lien of the Mortgage) upon any of the property or

assets of the Company pursuant to the terms of any indenture, mortgage, deed of

trust, loan agreement or other agreement or instrument to which the Company is a

party or by which the Company is bound or to which any of the property or assets

of the Company are subject, nor will such action result in a violation of the

provisions of the Articles of Incorporation, as amended, or the Bylaws of the

Company or any statute or any order, rule or regulation of any court or

governmental agency or body having jurisdiction over the Company or any of its

property. No consent, approval, authorization, order, registration or

qualification of or with any court or any such regulatory authority or other

governmental body (other than those already obtained) is required to be obtained

by the Company for the issue and sale of the 2005 Bonds, the issue and delivery

of the First Mortgage Bonds, the execution, delivery and performance by the

Company of this Bond Purchase Agreement, the Financing Agreement, the

Thirty-Ninth Supplemental Mortgage, the First Mortgage Bonds, the Escrow

Agreement and the Continuing Disclosure Agreement, or the consummation by the

Company of the other transactions contemplated by this Bond Purchase Agreement

or the Mortgage;

(h) The Pennsylvania Public Utility Commission by order has duly

authorized the issuance and delivery of the First Mortgage Bonds on terms not

inconsistent with this Bond Purchase Agreement;

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(i) The Company is not a holding company, a registered holding

company or an affiliate of a registered holding company within the meaning of

the Public Utility Holding Company Act of 1935, as amended;

(j) There are no legal or governmental proceedings pending to which

the Company is a party or to which any property of the Company is subject, other

than as set forth in the Official Statement and other than litigation incident

to the kind of business conducted by the Company, wherein an unfavorable ruling,

decision or finding is likely that would have a material adverse effect on the

financial position, stockholders' equity or results of operations of the

Company; and, to the best of the Company's knowledge after due diligence, no

such proceedings are threatened by governmental authorities or threatened by

others;

(k) (i) The Project consists of either land or property of a

character subject to depreciation for federal income tax purposes and will be

used to furnish water that is or will be made available to members of the

general public (including electric utility, industrial, agricultural, or

commercial users); (ii) the rates for the furnishing or sale of the water have

been established or approved by a State or political subdivision thereof, by an

agency or instrumentality of the United States, or by a public service or public

utility commission or other similar body of any State or political subdivision

thereof; and (iii) all other information supplied by the Company to the

Underwriter with respect to the exclusion from gross income pursuant to Section

103 of the Code of the interest on the 2005 Bonds is correct and complete;

(l) The Company has not, within the immediately preceding ten (10)

years, defaulted in the payment of principal or interest on any of its bonds,

notes or other securities, or any legally authorized obligation issued by it;

and

(m) The information with respect to the Company and the Project and

the descriptions of the First Mortgage Bonds and the Mortgage contained in the

Preliminary Official Statement and the Official Statement (including appendices

A and B thereto) do not contain an untrue statement of a material fact or omit

to state a material fact necessary to make such information and descriptions, in

the light of the circumstances under which they were made, not misleading.

5. AUTHORITY'S COVENANTS. The Authority will:

(a) furnish such information, execute such instruments and take such

other action in cooperation with the Underwriter as the Underwriter may

reasonably request to qualify the 2005 Bonds for offer and sale under the Blue

Sky or other securities laws and regulations of such states and other

jurisdictions in the United States of America as the Underwriter may designate

and will assist, if necessary therefor, in the continuance of such

qualifications in effect so long as required for distribution of the 2005 Bonds;

provided, however, that the Authority shall in no event be required to file a

general consent to suit or service of process or to qualify as a foreign

corporation or as a dealer in securities in any such state or other

jurisdiction;

(b) not, on its part, amend or supplement the Official Statement

without prior notice to and the consent of the Underwriter and the Company and

will advise the Underwriter and the Company promptly of the institution of any

proceedings by any governmental agency or otherwise affecting the use of the

Official Statement in connection with the offer and sale of the 2005 Bonds; and

<PAGE>

action with regard to which the Authority may exercise control) which would

result in the loss of the exclusion from gross income for federal income tax

purposes of interest on the 2005 Bonds referred to under the caption "TAX

MATTERS" in the Official Statement.

6. COMPANY'S COVENANTS. The Company agrees that it will:

(a) refrain from knowingly taking any actions (and from permitting

any action with regard to which the Company may exercise control) that would

result in the loss of the exclusion from gross income for federal tax purposes

of interest on the 2005 Bonds;

(b) indemnify and hold harmless the Authority, its members,

directors, officers, agents, attorneys, and employees and the Underwriter, its

officers, directors, officials, agents, attorneys, employees, and each person,

if any, who controls the Underwriter within the meaning of Section 15 of the

1933 Act or Section 20 of the Securities Exchange Act of 1934, as amended (the

"1934 Act"), from and against all losses, claims, damages, liabilities and

expenses, joint or several, to which the Authority and the Underwriter, or

either of them, or any of their respective members, directors, officers, agents,

attorneys, and employees and each person, if any, who controls the Underwriter

within the meaning of the 1933 Act or 1934 Act as aforedescribed may become

subject, under federal laws or regulations, or otherwise, insofar as such

losses, claims, damages, liabilities and expenses (or actions in respect

thereof) arise out of or are based upon: (i) a breach of the Company's

representations included in this Agreement; (ii) any untrue statement or alleged

untrue statement of any material fact pertaining to the Project or the Company

set forth in the Official Statement, the Preliminary Official Statement or any

amendment to either; or (iii) the willful or negligent omission of (or the

alleged omission to state) a material fact in the Official Statement, in the

Preliminary Official Statement, or in any amendment or supplement to either, as

such fact is required to be stated therein or necessary to make the statements

therein that pertain to the Company or the Project not misleading in the light

of the circumstances under which they were made; or (iv) arising by virtue of

the failure to register the 2005 Bonds under the 1933 Act or the failure to

qualify the Indenture under the 1939 Act; or (v) arising by virtue of any audit

or investigation conducted by a state or federal agency, department or entity

questioning, among other things, the tax-exempt status of the 2005 Bonds;

as of May 1, 2005 to be entered into between the Company and the Trustee (the

"Continuing Disclosure Agreement"), to provide annual reports and notices of

certain material events in accordance with Rule 15c2-12 under the 1934 Act, as

amended ("Rule 15c2-12"). A description of this undertaking and the Continuing

Disclosure Agreement is set forth in the Preliminary Official Statement and will

also be set forth in the Final Official Statement; and

(d) not amend or supplement the Official Statement without prior

notice to, and the consent of, the Underwriter, and will advise the Underwriter

and the Authority promptly of the institution of any proceedings by any

governmental agency or otherwise affecting the use of the Official Statement in

connection with the offer and the sale of the 2005 Bonds.

<PAGE>

7. UNDERWRITER'S COVENANT AND REPRESENTATIONS AND WARRANTIES.

(a) By acceptance hereof the Underwriter agrees to indemnify and

hold harmless the Authority, its members, directors, officers, agents,

attorneys, and employees and the Company, its officers, directors, agents,

attorneys, and employees and each person if any, who controls the Company within

the meaning of Section 15 of the 1933 Act against all or several claims, losses,

damages, liabilities and expenses asserted against them, or any of them, at law

or in equity, in connection with (i) the offering and sale of the 2005 Bonds on

the grounds that the information under the caption "UNDERWRITING" in the

Preliminary Official Statement or the Official Statement (or any supplement or

amendment to said information) contains an untrue or allegedly untrue statement

of a material fact or omits or allegedly omits to state any material fact

necessary to make the statements therein not misleading in the light of the

circumstances under which they were made (it being understood that the

Underwriter furnished only the information under such "UNDERWRITING" heading),

or (ii) failure on the part of the Underwriter to deliver an Official Statement

to any purchaser. The Underwriter will reimburse any legal or other expenses

reasonably incurred by a party, person or entity indemnifiable under this

Section 7 in connection with investigating or defending any such loss, claim,

damage, liability or action. This indemnity agreement will be in addition to any

liability that the Underwriter may otherwise have. The Underwriter shall not be

liable for any settlement of, any such action effected without its consent.

(b) The Underwriter will be paid an underwriting discount of

$1,069,650 with respect to the 2005 Bonds. In connection with any investment of

proceeds of the Bonds, the Underwriter has not been paid a fee, paid a fee or

caused a fee to be paid (and will not be paid a fee, pay a fee or cause a fee to

be paid) to any other person, company, partnership, entity or the like in

connection with any such investments. Moreover, the Underwriter has no reason to

believe that any person, company, partnership, entity or the like received a fee

(or will receive a fee) from the provider of any such investments, except as has

been expressly disclosed in writing to the Authority on or prior to the date

hereof.

the veracity of the certification in clause (b) above on the date hereof as a

condition precedent to lending the proceeds of the 2005 Bonds to the Company.

(d) The Underwriter agrees to deliver the certificate attached

hereto as Exhibit E to the Authority on the date of the Closing.

8. NOTICE OF INDEMNIFICATION; SETTLEMENT. Promptly after a party,

person or entity indemnifiable under Section 6 or 7 of this Bond Purchase

Agreement (an "Indemnitee") receives notice of the commencement of any audit,

investigation or action against such Indemnitee in respect of which indemnity is

to be sought by the Indemnitee against the Company or an Underwriter, as the

case may be (the "Indemnifying Party"), the Indemnitee will notify the

Indemnifying Party in writing of such action, and the Indemnifying Party may

assume the defense thereof, including the employment of counsel and the payment

of all expenses; but the omission so to notify the Indemnifying Party will not

relieve the Indemnifying Party from any liability that it may have to the

Indemnitee otherwise than hereunder. The Indemnifying Party shall not be liable

for any settlement of any such action effected without its consent, but if

settled with the consent of the Indemnifying Party or if there is a final

judgment for the plaintiff in any such action, the Indemnifying Party will

indemnify and hold harmless the Indemnitee from and against any loss or

liability by reason of such settlement or judgment. The indemnity agreements

contained in this Bond Purchase Agreement (i) shall include reimbursement for

expenses reasonably incurred by an Indemnitee in investigating the claim and in

defending it if the Indemnifying Party declines to assume the defense and (ii)

shall survive delivery of the 2005 Bonds. Notwithstanding the foregoing, in the

event of an investigation or audit by the Internal Revenue Service or the

Securities and Exchange Commission or any other state or federal agency,

department, or entity with respect to the 2005 Bonds, the Authority shall have

the right and duty to undertake its own defense, including the employment of

counsel, with full power to litigate, compromise or settle the same on its own

behalf, and the Company agrees that it will indemnify and hold the Authority

harmless for all costs and expenses, including, but not limited to, attorney

fees and expenses and costs, of any such settlement.

<PAGE>

9. EQUITABLE CONTRIBUTION. If the indemnification provided for in

Section 6(b) of this Bond Purchase Agreement is unavailable to the Underwriter

(or any controlling person thereof) in respect of any losses, claims, damages or

liabilities referred to therein, then the Company shall, in lieu of indemnifying

the Underwriter, contribute to the amount paid or payable by the Underwriter as

a result of such losses, claims, damages or liabilities in such proportion as is

appropriate to reflect the relative benefits received by the Company and the

Underwriter, respectively, from the offering of the 2005 Bonds. If, however, the

allocation provided by the immediately preceding sentence is not permitted by

applicable law, then the Company shall contribute to such amount paid or payable

by the Underwriter in such proportion as is appropriate to reflect not only such

relative benefits but also the relative fault of the Company and the

Underwriter, respectively, in connection with the statements or omission which

resulted in such losses, claims, damages or liabilities, as well as any other

relevant equitable considerations. The relative benefit received by the Company

or the Underwriter shall be deemed to be in the same proportion as the total

proceeds from the offering (before deducting issuance costs and expenses other

than underwriting fees and commissions) received by the Company, on the one

hand, bear to the total underwriting fees and commissions received by the

Underwriter, on the other hand. The relative fault shall be determined by

reference to, among other things, whether the untrue or alleged untrue statement

of a material fact or the omission or alleged omission to state a material fact

related to information supplied by the Company or the Underwriter and the

parties' relative intent, knowledge, access to information and opportunity to

correct or prevent such statement or omission. The Company and the Underwriter

agree that it would not be just and equitable if contribution pursuant to this

Section 9 were determined by pro rata allocation or by any other method of

allocation that does not take account of the equitable considerations referred

to above in this Section 9. The amount paid or payable by the Underwriter as a

result of the losses, claims, damages or liabilities referred to above in this

Section 9 shall be deemed to include any reasonable legal or other expenses

reasonably incurred by the Underwriter in connection with investigating or

defending any such action or claim. Notwithstanding the provisions of this

Section 9, the Underwriter shall not be required to contribute any amount in

excess of the amount by which the total price at which the 2005 Bonds

underwritten by it and distributed to the public were offered to the public

exceeds the amount of any damages that the Underwriter has otherwise been

required to pay by reason of such untrue or allegedly untrue statement or

omission or alleged omission.

<PAGE>

10. OFFICIAL STATEMENT; PUBLIC OFFERING.

(a) In order to enable the Underwriter to comply with Rule 15c2-12:

(i) the Company has prepared (or caused to be prepared) the Preliminary Official

Statement, which the Company and the Authority (but, in the case of the

Authority, only with respect to the information therein under the headings "THE

AUTHORITY" and, insofar as they relate to the Authority, "INTRODUCTORY

STATEMENT" and "ABSENCE OF MATERIAL LITIGATION") deem final and complete as of

its date except for certain "Permitted Omissions" as described in Rule 15c2-12;

(ii) the Company shall provide to the Underwriter sufficient copies of the

Official Statement in sufficient time to accompany any confirmation that

requires payment from any customer and in any event within seven business days

after the date of this Bond Purchase Agreement; and (iii) of which the Company

has or gains knowledge would render the Official Statement misleading in any

material respect in the period from the date of its delivery to the Underwriter

by the Company (as that phrase is defined in Rule 15c2-12) then the Company

shall promptly give the Underwriter notice thereof. The Authority and the

Company hereby authorize the use of the Preliminary Official Statement and the

Official Statement by the Underwriter in connection with the offering of the

2005 Bonds.

(b) After the Closing, and until the Underwriter has informed the

Authority and the Company that the Underwriter has sold all the 2005 Bonds, the

Authority and the Company will not adopt or distribute any amendment of or

supplement to the Official Statement, except with the prior written consent of

the Underwriter; and if any event relating to or affecting the Authority, the

Company or the 2005 Bonds shall occur, the result of which shall make it

necessary, in the opinion of the Underwriter, to amend or supplement the

Official Statement in order to make it not misleading in the light of the

circumstances existing at that time, the Company shall forthwith prepare, and

the Company and the Authority shall approve for distribution, a reasonable

number of copies of an amendment of or supplement to the Official Statement, in

form and substance reasonably satisfactory to the Underwriter, so that the

Official Statement then will not contain any untrue statement of a material fact

or omit to state a material fact necessary to make the statements therein, in

the light of the circumstances existing at that time, not misleading. The

Authority shall cooperate with the Company in the issuance and distribution of

any such amendment or supplement.

Nationally Recognized Municipal Securities Information Repository ("NRMSIR") and

the Municipal Securities Rulemaking Board ("MSRB") with a copy of the Official

Statement for filing in accordance with Rule 15c2-12, and inform the Authority

and the Company in writing as to (i) the date and place of such filing and (ii)

the date of the end of the underwriting period.

11. CONDITIONS OF UNDERWRITER'S AND AUTHORITY'S OBLIGATIONS. The

Underwriter's obligations to purchase and pay for the 2005 Bonds and the

Authority's obligation to issue and deliver the 2005 Bonds are subject to

fulfillment of the following conditions at or before Closing:

(a) The representations of the Authority and the Company herein

shall be true in all material respects on and as of the date of the Closing and

shall be confirmed by appropriate certificates at Closing;

<PAGE>

(b) Neither the Authority nor the Company shall be in default in the

performance of any of their respective covenants herein;

(i) An opinion of Ballard Spahr Andrews & Ingersoll, 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 Ballard Spahr Andrews & 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 Dilworth Paxson 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 Saul Ewing LLP, counsel for the Underwriter,

in form and substance reasonably satisfactory to the Underwriter;

(vi) An opinion of legal counsel to the Bond Insurer in form

and substance reasonably satisfactory to Bond Counsel and the

Underwriter, relating to the enforceability of the Bond Insurance

Policy and the information concerning the Bond Insurer in the

Official Statement;

(vii) An agreed upon procedures letter dated the date of the

Official Statement and addressed to the Company from the Company's

auditor with respect to financial information set forth in Appendix

A to the Official Statement, in form and substance reasonably

satisfactory to the Underwriter;

(viii) A certificate dated the date of Closing executed by the

Chairman of the Authority to the effect that:

(A) the representations and warranties of the Authority

contained herein, to the best of the knowledge of such

Chairman, are true and correct in all material respects as of

the date of Closing; and

(B) to the best of the knowledge of such Chairman, the

Authority has complied in all material respects with all

agreements executed by the Authority in connection with

issuance of the 2005 Bonds and satisfied in all material

respects the Authority's covenants contained in Section 5

herein and all of the conditions on its part to be performed

or satisfied at or prior to the Closing;

<PAGE>

(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

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 Finan

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