$47,830,000
CHESTER COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY
Water Facilities Revenue
Bonds
(Aqua Pennsylvania, Inc. Project)
Series A of 2007
Bond Purchase Agreement dated December 21,
2006, among the CHESTER 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”).
(a) The Authority proposes to enter into a
Financing Agreement (the “Financing Agreement”) dated
as of January 1, 2007 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, Bucks, Delaware and
Montgomery 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 $47,830,000 aggregate principal amount
of Chester County Industrial Development Authority Water Facilities
Revenue Bonds (Aqua Pennsylvania, Inc. Project), Series A of
2007 (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”), resolutions adopted by the Authority on
November 15, 2006 and December 18, 2006 (collectively,
the “Authority Resolution”) and under a Trust Indenture
dated as of January 1, 2007 (the “Trust
Indenture”), between the Authority and U.S. Bank National
Association, as trustee (the “Trustee”). The Bonds will
have such terms as are set forth in Schedule I attached
hereto.
The Bonds will be payable out of payments by the
Company under the Financing Agreement, including payments under its
First Mortgage Bond, 5.00% Series due 2040 in the principal amount
of $23,915,000 (the “2040 First Mortgage Bond”); and
its First Mortgage Bond, 5.00% Series due 2041 in the principal
amount of $23,915,000 (the “2041 First Mortgage Bond”
and along with the 2040 First Mortgage Bond collectively, the
“First Mortgage Bonds”) issued with respect to the
Bonds. The First Mortgage Bonds will be issued under and secured by
the Company’s Indenture of Mortgage dated as of
January 1, 1941 (the “Indenture of Mortgage”),
from the Company to The Bank of New York Trust Company, N.A.,
trustee
(successor to
The Pennsylvania Company for Insurance on Lives and Granting
Annuities, The Pennsylvania Company for Banking and Trusts, The
First Pennsylvania Banking and Trust Company, First Pennsylvania
Bank, N.A., CoreStates Bank, N.A., Mellon Bank, N.A., Chase
Manhattan Trust Company, National Association and J.P. Morgan Trust
Company, National Association) (the “Mortgage
Trustee”), as presently amended and supplemented and as to be
further supplemented by a Forty-first Supplemental Indenture of
Mortgage to be dated as of January 1, 2007 (the
“Forty-first Supplemental Mortgage,” which together
with the Indenture of Mortgage, as amended and supplemented, is
referred to hereinafter as the “Mortgage”). Each First
Mortgage Bond will be issued in the same aggregate principal amount
and will mature on the same date and bear interest at the same rate
as the Bonds that they secure. All of the Authority’s rights
under the Financing Agreement to receive and enforce repayment of
its loan to the Company and to enforce payment of the Bonds,
including all of the Authority’s rights to the First Mortgage
Bonds, and all of the Authority’s rights to moneys and
securities in the Project Funds, the Revenue Funds and the Debt
Service Funds (and the accounts within all such Funds applicable to
the Bonds) established by the Trust Indenture, except for the
Authority’s rights to certain fees and reimbursements for
expenses, indemnification and notice thereunder and rights relating
to amendments of and notices under the Financing Agreement, will be
assigned to the Trustee as security for the Bonds pursuant to the
Trust Indenture.
(c) The Project will finance the
acquisition, construction, installation and equipping of facilities
for the furnishing of water for purposes of Section 142(a)(4)
of the Internal Revenue Code of 1986, as amended (the
“Code”), so that the interest on the Bonds will not be
includable in gross income for federal income tax purposes under
the Code and the Underwriter may offer the Bonds for sale without
registration under the Securities Act of 1933, as amended (the
“1933 Act”) or qualification of the Trust Indenture
under the Trust Indenture Act of 1939, as amended (the “1939
Act”).
(d) A Preliminary Official Statement dated
December 15, 2006, 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 $49,282,118.80, which is equal to the $47,830,000.00
aggregate principal amount of the Bonds, plus original issue
premium of $2,169,568.80 less the underwriting discount of
$717,450.00. 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
Ballard Spahr Andrews & Ingersoll, LLP, Philadelphia,
Pennsylvania, bond counsel, at 10:00 a.m., Eastern Daylight
Time, on January 16, 2007 or at
such other
date, time or place or in such other manner as may be agreed on by
the parties hereto. The Bonds will be delivered as fully registered
bonds in the aggregate principal amount of $47,830,000 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.
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;
(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;
(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, 2005 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 Bonds have been duly
authorized; and, when issued and delivered as contemplated by this
Bond Purchase Agreement, will have been duly executed,
authenticated, issued and delivered and will constitute valid and
legally binding obligations of the Company entitled to the benefits
provided by the Mortgage;
(d) The Original Indenture has been duly
authorized, executed and delivered by the Company, and the
Forty-first Supplemental Mortgage has been duly authorized by the
Company. When the Forty-first 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 Forty-First
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 Forty-First 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 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 Bonds and the compliance
by the Company with all of the applicable provisions of the First
Mortgage Bonds and the Mortgage and the execution, delivery and
performance by the Company of the Forty-first Supplemental
Mortgage, the Financing Agreement, this Bond Purchase Agreement and
the Continuing Disclosure Agreement will not conflict with or
result in a breach of any of the terms or provisions of, or
constitute a default under, or result in the creation or imposition
of any lien, charge or encumbrance (other than the lien of the
Mortgage) upon any of the property or assets of the Company
pursuant to the terms of any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument to which the
Company is a party or by which the Company is bound or to which any
of the property or assets of the Company are subject, nor will such
action result in a violation of the provisions of the Articles of
Incorporation, as amended, or the Bylaws of the Company or any
statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or
any of its property. No consent, approval, authorization, order,
registration or qualification of or with any court or any such
regulatory authority or other governmental body (other than those
already obtained) is required to be obtained by the Company for the
issue and sale of the Bonds, the issue and delivery of the First
Mortgage Bonds, the execution, delivery and performance by the
Company of this Bond Purchase Agreement, the Financing Agreement,
the Forty-first Supplemental Mortgage, the First Mortgage Bonds and
the Continuing Disclosure Agreement, or the consummation by the
Company of the other transactions contemplated by this Bond
Purchase Agreement or the Mortgage, except for the issuance and
registration by the Commonwealth Public Utility Commission of a
Securities Certificate authorizing the incurring of the debt
evidenced by the First Mortgage Bonds;
(h) The Company has applied to the
Pennsylvania Public Utility Commission for an order to authorize
the issuance and delivery of the First Mortgage Bonds 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
(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 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: (i) a breach of the
Company’s representations included in this Agreement;
(ii) any untrue statement or alleged untrue statement of any
material fact pertaining to the Project or the Company set forth in
the Official Statement, the Preliminary Official Statement or any
amendment to either; (iii) the willful or negligent omission
of (or the alleged omission to state) a material fact in the
Official Statement, 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; (iv) or
arising by virtue of the failure to register the Bonds under the
1933 Act or the failure to qualify the Indenture under the 1939
Act; (v) or 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;
(c) undertake, pursuant to the Continuing
Disclosure Agreement dated as of January 1, 2007 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;
(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; and
(e) take all actions reasonably necessary
to obtain the issuance and registration of a Securities Certificate
with respect to the debt to be evidenced by the First Mortgage
Bonds from the Commonwealth Public Utility Commission by no later
than January 13, 2007.
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 $717,450.00 with respect to the
Bonds.
(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. 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 and the Municipal Securities Rulemaking
Board with a copy of the Official Statement for filing in
accordance with Rule 15c2-12, and inform the Authority and the
Company in writing as to the date and place of such filing and the
date of the end of the underwriting period.
11. 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 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 Conrad O’Brien
Gellman & Rohn, P.C., 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 Stradley, Ronon, Stevens
& Young, 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
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
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