EXHIBIT 10.31 BOND PURCHASE AGREEMENT

Note Purchase Agreement

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Title: EXHIBIT 10.31 BOND PURCHASE AGREEMENT
Governing Law: Pennsylvania Date: 3/15/2005
Industry: Water Utilities

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EXHIBIT 10.31

BOND PURCHASE AGREEMENT

$14,000,000

NORTHUMBERLAND COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY

WATER FACILITIES REVENUE REFUNDING BONDS

(AQUA PENNSYLVANIA, INC. PROJECT)

SERIES OF 2004

Bond Purchase Agreement dated November 16, 2004, among the

NORTHUMBERLAND 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 November 15, 2004 with the

Company, under which the Authority will agree to loan to the Company funds to

currently refund (the " Project") the Authority's Exempt Facilities Revenue

Bonds (Roaring Creek Water Company Project) Series of 1993 (the "1993 Bonds"),

which were issued to finance the construction of an eight (8) million gallon per

day treatment facility, an interconnecting water main, and laboratory and

service facilities, located in Northumberland and Columbia Counties

(collectively, the "Facilities") and pay all costs of issuance of the 1993

Bonds. To finance the loan under the Financing Agreement, the Authority proposes

to issue and sell $14,000,000 aggregate principal amount of Northumberland

County Industrial Development Authority Water Facilities Revenue Refunding

Bonds, (Aqua Pennsylvania, Inc. Project) Series of 2004 (the "2004 Bonds") to

the Underwriter, who will in turn reoffer the 2004 Bonds for sale to the public.

(b) The 2004 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"), resolutions adopted by the

Authority on September 20, 2004 (the "Authority Resolution") and under a Trust

Indenture dated as of November 15, 2004 (the "Trust Indenture"), between the

Authority and Wachovia Bank, National Association, as trustee (the "Trustee").

The 2004 Bonds will have such terms as are set forth in Schedule I attached

hereto.

The 2004 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 2004 Bonds in the principal amount of $14,000,000

(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 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)

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(the "Mortgage Trustee"), as presently amended and supplemented and as to be

further supplemented by a Thirty-Eighth Supplemental Indenture of Mortgage to be

dated as of November 15, 2004 (the "Thirty-Eighth 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 date and bear

interest at the rate of the 2004 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 2004 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 Fund, the Revenue Fund and the

Debt Service Fund (and the accounts within all such Funds applicable to the 2004

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 2004 Bonds

pursuant to the Trust Indenture.

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 2004 Bonds for sale without registration under the

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

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

(d) A Preliminary Official Statement dated November 9, 2004,

including theAppendices 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 as of 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").

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 2004 Bonds at a

purchase price equal to $14,000,000, consisting of the aggregate principal

amount of the 2004 Bonds. The Underwriter will be paid an Underwriting fee of

$210,000.00 by the Company for its services rendered under this Agreement.

Payment 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 November 30, 2004 or at such other

date, time or place or in such other manner as may be agreed on by the parties

hereto. The 2004 Bonds will be delivered as a single, fully registered Bond, in

the aggregate principal amount of the Bonds for in the name of Cede & Co., as

nominee for The Depository Trust Company ("DTC"), with a CUSIP number printed

thereon, and shall conform in all respects to DTC's Book-Entry Only System.

Delivery of the 2004 Bonds will be made at the office of DTC in New York, New

York (or such other location as is acceptable to the Underwriter). If the

Underwriter so requests, the 2004 Bonds shall be made available to the

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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 2004

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 2004 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 2004 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 2004 Bonds, the Trust

Indenture, the Financing 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 2004 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;

(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.

as it relates to the Authority) and "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) and "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) To the extent required by law, the Authority has duly

authorized and approved the Preliminary Official Statement and the Official

Statement; and has duly authorized

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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 2004 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 2004 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 2004 Bonds or of the

revenues or assets of the Authority pledged or to be pledged to pay the

principal of and interest on the 2004 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 2004

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 2004 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, all of which will survive the Closing:

(a) The Company has not sustained since September 30, 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.

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-Eighth Supplemental

Mortgage has been duly authorized by the Company. When the Thirty-Eighth

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

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properties and assets acquired by the Company after the execution and delivery

of the Thirty-Eighth 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-Eighth

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.

(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 2004 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 Thirty-Eighth

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

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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 for the issue

and sale of the 2004 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 Thirty-Eighth 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.

(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) (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 2004 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 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

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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 2004 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 2004 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

2004 Bonds; and

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 2004 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 2004 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

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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 2004 Bonds under the 1933 Act

or the failure to qualify the Indenture under the 1939 Act;

Agreement dated November 15, 2004 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 2004 Bonds.

7. UNDERWRITER'S COVENANT. 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 2004 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.

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 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

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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 2004 Bonds.

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 2004 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 2004 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. 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 it relates to the Authority, "INTRODUCTORY

STATEMENT") deem final and com

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