Exhibit 10.43
CONSTRUCTION AND FINANCING AGREEMENT
between
BUCKS COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY
and
PENNSYLVANIA SUBURBAN WATER COMPANY
Dated as of June 1, 2002
================================================================================
Relating to
$25,000,000 aggregate principal amount of
Bucks County Industrial Development Authority
Water Facilities Revenue Bonds
(Pennsylvania Suburban Water Company Project)
Series of 2002
================================================================================
SUBSTANTIALLY ALL OF THE RIGHTS OF THE BUCKS COUNTY INDUSTRIAL DEVELOPMENT
AUTHORITY IN AND TO THIS AGREEMENT HAVE BEEN ASSIGNED TO WACHOVIA BANK, NATIONAL
ASSOCIATION, AS TRUSTEE UNDER THE TRUST INDENTURE DATED AS OF JUNE 1, 2002
BETWEEN SAID AUTHORITY AND SAID TRUSTEE.
TABLE OF CONTENTS
ARTICLE I.........................................................................................................2
DEFINITIONS....................................................................................................2
SECTION 1.01................................................................................................2
ARTICLE II........................................................................................................3
REPRESENTATIONS AND FINDINGS...................................................................................3
SECTION 2.01. Representations and Warranties of the Authority..............................................3
SECTION 2.02. Representation and Warranties of the Compa...................................................4
SECTION 2.03. Findings of the Authority....................................................................4
ARTICLE III.......................................................................................................4
COMPLETION OF THE FACILITIES; ISSUANCE OF THE 2002 BONDS.......................................................4
SECTION 3.01. Portions of Project Completed................................................................4
SECTION 3.02. Acquisition, Etc., of the Facilities; Completion.............................................4
SECTION 3.03. Issuance of Bonds............................................................................5
SECTION 3.04. Payments From Construction Fund..............................................................5
SECTION 3.05. Requisitions.................................................................................5
SECTION 3.06. Plans and Specifications.....................................................................5
SECTION 3.07. Completion of Project........................................................................6
SECTION 3.08. Company to Pay Additional Amounts If Required................................................6
SECTION 3.09. Investment of Amounts in the Construction Fund...............................................6
ARTICLE IV........................................................................................................6
LOAN AND OTHER AMOUNTS.........................................................................................6
SECTION 4.01. Loan by Authority to Company.................................................................6
SECTION 4.02. Repayment of Loan and Other Amounts..........................................................6
SECTION 4.03. Security For Payment.........................................................................8
SECTION 4.04. Assignment to Trustee........................................................................8
SECTION 4.05. Operation and Maintenance....................................................................9
SECTION 4.06. Insurance....................................................................................9
SECTION 4.07. Liens........................................................................................9
SECTION 4.08. Facilities Used For Purpose of the Act.......................................................9
SECTION 4.09. Payment of Certain Costs....................................................................10
SECTION 4.10. Obligation to Make Payments Absolute........................................................10
ARTICLE V........................................................................................................10
SPECIAL COVENANTS.............................................................................................10
SECTION 5.01. No Warranty.................................................................................10
SECTION 5.02. Company to Maintain Corporate Existence, Etc................................................10
SECTION 5.03. Operation of Facilities; Maintenance of Licenses and Permits................................11
SECTION 5.04. Additional Permits..........................................................................11
SECTION 5.05. Authority to Maintain Corporate Existence, Etc..............................................11
SECTION 5.06. Compliance With Continuing Disclosure Agreement.............................................11
SECTION 5.07. Certain Tax Covenants.......................................................................11
SECTION 5.08. Financial Statements and Other Reporting Requirements of the Company........................12
SECTION 5.09. Nondiscrimination Provisions................................................................12
ARTICLE VI.......................................................................................................12
ASSIGNMENT, LEASING AND SALE OF FACILITIES....................................................................12
SECTION 6.01. Assignment, Lease and Sale of Facilities....................................................12
SECTION 6.02. Assignment of Rights Under Agreement........................................................13
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ARTICLE VII......................................................................................................14
EVENTS OF DEFAULT AND REMEDIES................................................................................14
SECTION 7.01. Events of Default...........................................................................14
SECTION 7.02. Remedies....................................................................................15
SECTION 7.03. Remedies Not Exclusive......................................................................15
SECTION 7.04. Reimbursement of Fees and Expenses..........................................................16
SECTION 7.05. Waivers of Breaches.........................................................................16
ARTICLE VIII.....................................................................................................16
MISCELLANEOUS.................................................................................................16
SECTION 8.01. Termination.................................................................................16
SECTION 8.02. Notices.....................................................................................16
SECTION 8.03. Benefit of Agreement........................................................................17
SECTION 8.04. Amendments..................................................................................17
SECTION 8.05. Counterparts................................................................................17
SECTION 8.06. Invalidity of Certain Clauses...............................................................17
SECTION 8.07. Governing Law...............................................................................17
SECTION 8.08. Indemnification.............................................................................17
SECTION 8.09. Limitation of Rights Against Authority......................................................19
SECTION 8.10. Limitation of Recourse Against Authority....................................................20
EXHIBIT "A" DESCRIPTION OF THE FACILITIES.......................................................................A-1
EXHIBIT "B" NONDISCRIMINATION PROVISIONS........................................................................B-1
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CONSTRUCTION AND FINANCING AGREEMENT
THIS CONSTRUCTION AND FINANCING AGREEMENT, dated as of June 1, 2002 (as
it may be amended, supplemented or otherwise modified and in effect from time to
time, this "Agreement"), by and between the BUCKS COUNTY INDUSTRIAL DEVELOPMENT
AUTHORITY, a body corporate and politic organized and existing under and by
virtue of the laws of the Commonwealth of Pennsylvania (the "Authority"), and
PENNSYLVANIA SUBURBAN WATER COMPANY, a corporation organized and existing under
the laws of the Commonwealth of Pennsylvania (the "Company").
WITNESSETH:
WHEREAS, the Authority was organized pursuant to the Economic
Development Financing Law of the Commonwealth of Pennsylvania, Act of August 23,
1967, P.L. 251, as amended (the "Act"), which Act declares it to be the policy
of the Commonwealth of Pennsylvania (the "Commonwealth") to promote the health,
safety, morals, employment, business opportunities and general welfare of the
people thereof by providing for the creation of industrial and commercial
development authorities which shall exist and operate as public
instrumentalities of the Commonwealth for the public purpose of alleviating
unemployment, maintaining employment at a high level, eliminating and preventing
blight and eliminating or reducing air and water pollution, and creating and
developing business opportunities by the construction, improvement,
rehabilitation, revitalization and financing of industrial, commercial,
manufacturing and research and development enterprises; and
WHEREAS, the Act declares that every authority incorporated under it
shall be for the purpose of acquiring, holding, constructing, improving,
maintaining, owning, financing and leasing, as lessor or as lessee, among other
things, facilities for the furnishing of water; and
WHEREAS, the Company is engaged primarily in the activity, under the
regulatory control of the Pennsylvania Public Utility Commission, of furnishing
water available on reasonable demand to members of the general public; and
WHEREAS, the Authority adopted resolutions on May 2, 2002 providing for
the issuance and sale by the Authority of its revenue bonds to provide funds to
pay all or a portion of (i) the costs of the acquisition, construction,
installation and equipping of the Facilities (as defined in the Indenture
hereinafter mentioned and as described in Exhibit A hereto) and (ii) the costs
of issuance relating thereto; and
WHEREAS , in connection with the issuance by the Authority of its
revenue bonds to provide funds for the cost of the Facilities, the Company is to
enter into this Agreement under which the Authority agrees to loan funds to the
Company for the construction and installation of the Facilities and the Company
agrees to pay to the Authority, in repayment of the loan, amounts sufficient to
pay the principal of and interest on such revenue bonds as and when due; and
WHEREAS, the Company has commenced the acquisition, construction,
installation and equipping of certain of the Facilities; and
WHEREAS, the Company now desires that the Authority proceed with the
issuance and sale of its revenue bonds to provide the funds to pay the costs of
the Project (as defined in the Indenture) and related financing costs; and
WHEREAS, the Authority has authorized the issuance and sale of up to
$25,000,000 aggregate principal amount of its Water Facilities Revenue Bonds
(Pennsylvania Suburban Water Company Project), Series of 2002 (the "2002
Bonds"), the proceeds of which shall be applied to pay and to reimburse the
Company for its payment of the costs of the Project and related financing costs;
and
WHEREAS, the 2002 Bonds are to be issued under and secured by a Trust
Indenture, dated as of June 1, 2002 (as it may be amended, supplemented or
otherwise modified and in effect from time to time, the "Indenture"), between
the Authority and Wachovia Bank, National Association, a national banking
association organized and existing under the laws of the United States of
America and having a corporate trust office and place of business in
Philadelphia, Pennsylvania, as trustee ("Trustee"); and
WHEREAS, the proceedings to be undertaken by the Authority in respect
of the acquisition, construction, installation and equipping of the Facilities
and the financing thereof have been approved by the Secretary of the Department
of Community and Economic Development of the Commonwealth;
NOW, THEREFORE, the parties hereto, intending to be legally bound
hereby and in consideration of the mutual covenants hereinafter contained, DO
HEREBY AGREE as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Terms defined in the preambles hereof shall have the
meanings ascribed thereto in such preambles. Other capitalized terms used herein
and not otherwise defined herein shall have the meanings ascribed thereto in the
Indenture.
For all purposes of this Agreement, the terms defined in this Article I
shall have the respective meanings herein specified, unless the context clearly
otherwise requires:
"Completion Date" shall mean the date of completion of acquisition,
construction, installation and equipping of the Facilities, as that date shall
be certified pursuant to Section 3.07 hereof.
"Event of Default" shall mean any of the events specified as such under
Section 7.01 hereof.
"Loan" shall mean the financing provided by the Authority to the
Company pursuant to Section 4.01 hereof to provide funds for and toward the
Costs of the Project.
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"Loan Repayments" shall mean the payments to be made by the Company to
the Authority pursuant to Section 4.02(a) hereof.
"Plans and Specifications" shall mean the plans and specifications
prepared for the Facilities, duly certified by an Authorized Company
Representative and on file at the principal office of the Company in Bryn Mawr,
Pennsylvania, as the same may be revised from time to time prior to the
Completion Date in accordance with Section 3.06 of this Agreement.
ARTICLE II
REPRESENTATIONS AND FINDINGS
SECTION 2.01. Representations and Warranties of the Authority. The
Authority makes the following representations as the basis for the undertakings
on the part of the Company herein contained:
(a) The Authority is a public instrumentality of the
Commonwealth and a public body corporate and politic organized and existing
under and pursuant to the Act.
(b) The Authority has full power and authority to enter into
this Agreement and to perform and observe the agreements and covenants on its
part contained herein, and by proper corporate action has duly authorized the
execution and delivery hereof. The execution and delivery of this Agreement by
the Authority and the performance of its obligations hereunder, do not and will
not violate or constitute a default under the Authority's Articles of
Incorporation or bylaws or any agreement, indenture, mortgage, lease, note or
other obligation or instrument or order or regulation of any court or
administrative agency binding upon the Authority.
(c) Under existing law, no taxes on income or profits are
imposed on the Authority.
(d) As required by the Act, the Secretary of the Department of
Community and Economic Development of the Commonwealth has determined that the
Facilities and the financing thereof are in apparent conformity with the Act and
any regulations, statements of policy, guidelines or rulings promulgated
pursuant to the Act, and said Secretary has, by instrument dated February 28,
2002, approved the same and certified such approval to the Authority.
SECTION 2.02. Representation and Warranties of the Company The Company
makes the following representations as the basis for the undertakings on the
part of the Authority herein contained:
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the Commonwealth, and has all
required corporate power and authority to enter into this Agreement and to
perform and observe the agreements and covenants on its part contained herein.
The Company by proper corporate action has duly authorized the execution and
delivery of this Agreement. The execution and delivery of this Agreement by the
Company and the performance of its obligations hereunder do not and will not
violate or
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constitute a default under the Corporation's articles of incorporation or bylaws
or any agreement, indenture, mortgage, lease, note or other obligation or
instrument or any order of any court or administrative agency binding upon the
Company.
(b) The "cost" of the Project, as defined in the Act, is
estimated by the Company as of the date hereof to be not less than $25,000,000.
(c) The Facilities are to be located in the Counties of Bucks,
Berks, Chester, Delaware and ▇▇▇▇▇▇▇▇▇▇ Counties in the Commonwealth, and within
the authorized service area of the Company.
SECTION 2.03. Findings of the Authority. The Authority hereby confirms
its findings that:
(a) The Company is of a nature and size and is engaged in
activities which require substantial capital, is financially responsible to
assume all obligations prescribed by the Authority and the Act and is qualified
to be an "occupant" for purposes of the Act.
(b) The Project to be undertaken by the Authority hereunder
will promote the purposes of the Act by protecting the health, safety and
general welfare of the people of the Commonwealth and encouraging economic
development within the Commonwealth through the provision of basic services and
facilities, thereby alleviating unemployment, maintaining employment at a high
level and creating and developing business opportunities.
ARTICLE III
COMPLETION OF THE FACILITIES; ISSUANCE OF THE 2002 BONDS
SECTION 3.01. Portions of Project Completed The acquisition or
construction of certain of the Facilities has been commenced and, in some cases,
completed.
SECTION 3.02. Acquisition, Etc., of the Facilities; Completion The
Company will cause the acquisition, construction, installation and equipping of
the Facilities to be completed with all reasonable dispatch substantially in
accordance with the Plans and Specifications. In order to effectuate the
purposes of this Agreement, the Company will make, execute, acknowledge and
deliver, or cause to be made, executed, acknowledged and delivered, all such
contracts, orders, receipts, writings and instructions, in the name of the
Company or otherwise, with or to other Persons, and in general do or cause to be
done all such other things, as may be requisite or proper for acquiring,
constructing, installing and equipping the Facilities and fulfilling the
obligations of the Company under this Agreement.
The Company will maintain such records in connection with the
acquisition, construction, installation and equipping of the Facilities as to
permit ready identification of the Facilities and the Cost thereof.
SECTION 3.03. Issuance of Bonds. In order to provide funds for payment
of the Cost of the Project the Authority will issue and sell the 2002 Bonds and
deliver the proceeds thereof
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to the Trustee. A sum equal to the accrued interest, if any, paid by the initial
purchasers of the 2002 Bonds shall be deposited in the Debt Service Fund and the
balance of the proceeds received from said sale shall be deposited in the
Construction Fund. The Company hereby approves all of the terms, provisions and
other details of the 2002 Bonds and the Indenture.
SECTION 3.04. Payments From Construction Fund. In the Indenture, the
Authority has authorized and directed the Trustee to make payments from the
Construction Fund to pay the Cost of the Project upon receipt of Requisitions
signed by an Authorized Company Representative, setting forth the matters
required pursuant to Exhibit "B" to the Indenture.
SECTION 3.05. Requisitions. The Company will cause such Requisitions to
be submitted to the Trustee as may be necessary to effect payments out of the
Construction Fund in accordance with the provisions of the Indenture; provided,
however, that the Company will not submit any Requisition for payment of any
item not properly included in the "cost" of the Project as defined in the Act or
not properly included in the "Cost" of the Project as defined in the Indenture
or which, if paid, would result in less than 95% of the proceeds from the 2002
Bonds being used to acquire, construct, install and equip the Facilities.
SECTION 3.06. Plans and Specifications. The Company may revise the
Plans and Specifications, which revisions may add structures, equipment,
fixtures and machinery not described in Exhibit A hereto, and which revisions
may effect modifications of structures, equipment, fixtures and machinery
described therein, at any time and from time to time prior to the Completion
Date, provided that in the case of a change amounting to $100,000 or more, (a)
an Authorized Company Representative shall certify to the Trustee that the
Facilities provided for by the revised Plans and Specifications will constitute
facilities for the furnishing of water meeting the requirements of Section 142
(a) (4) of the Code; and (b) the Trustee shall be furnished with a Favorable
Opinion of Recognized Bond Counsel that the revision of the Plans and
Specifications and the expenditure of moneys from the Construction Fund to pay
the Cost of the Project in accordance with the revised Plans and Specifications
will not adversely affect the exclusion of interest on the 2002 Bonds from gross
proceeds of the holders thereof for federal income purposes.
SECTION 3.07. Completion of Project. When the Project has been
completed, the Company shall so notify the Authority and the Trustee by a
certificate of an Authorized Company Representative. Such certificate shall
establish the Completion Date and shall state that, except for amounts retained
by the Trustee at the Company's direction for any Costs of the Project not then
due and payable or the liability for payment of which is being contested or
disputed by the Company: (a) acquisition, construction, installation and
equipping of the Facilities have been completed substantially in accordance with
the Plans and Specifications, and all labor, services, materials and supplies
used therefor have been paid for; and (b) all other facilities necessary in
connection with the Facilities have been constructed, installed and equipped in
accordance with the Plans and Specifications, and all costs and expenses
incurred in connection therewith have been paid. Notwithstanding the foregoing,
such certificate may state that it is given without prejudice to any rights
against third parties which exist at the date thereof or which may subsequently
come into being.
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SECTION 3.08. Company to Pay Additional Amounts If Required. If the
moneys in the Construction Fund shall not be sufficient to pay the Costs of the
Project in full, the Company will complete the Facilities and pay all Costs of
the Project in excess of the moneys available therefor in the Construction Fund.
The Authority does not make any warranty, either express or implied, that the
moneys which will be paid into the Construction Fund will be sufficient to pay
the Costs of the Project. If the Company shall pay any portion of the Costs of
the Project pursuant to the provisions of this Section, it shall not be entitled
to any reimbursement therefor from the Authority, the Trustee or the holders of
any of the 2002 Bonds, nor shall it be entitled to any diminution in or
postponement of the Loan Repayments required in Section 4.02 hereof to be paid
by the Company.
SECTION 3.09. Investment of Amounts in the Construction Fund. Any
moneys held in the Construction Fund shall be invested or reinvested as provided
in Article VI of the Indenture. The Company shall not request any investment of
such moneys which would be in violation of the covenant of the Authority
contained in the final paragraph of Section 6.03 of the Indenture.
ARTICLE IV
LOAN AND OTHER AMOUNTS
SECTION 4.01. Loan by Authority to Company. Concurrently with the
execution and delivery of this Agreement and at the request of the Company, the
Authority is issuing the 2002 Bonds under the Indenture. The Authority hereby
agrees to make a loan to the Company in the principal amount of $25,000,000,
such amount being equal to the aggregate principal amount of the 2002 Bonds, and
the deposit by the Authority of the proceeds of the sale of the 2002 Bonds in
accordance with Section 3.03 hereof shall be deemed to constitute the advance by
the Authority to the Company of the full principal amount of the Loan.
SECTION 4.02. Repayment of Loan and Other Amounts. (a) Loan Repayments.
The Company shall pay to the Authority, as and for the repayment of the Loan,
(i) on the second Business Day prior to each Interest Payment Date, maturity
date or date established for the redemption of the 2002 Bonds, as the case may
be, an amount which, together with other moneys available for the purpose in the
Debt Service Fund under the Indenture, will equal the sum of (x) the interest
which will become due on such date on the 2002 Bonds; plus (y) the principal
amount of the 2002 Bonds, if any, maturing on such date; plus (z) the principal
amount of and premium, if any, on the 2002 Bonds, if any, to be redeemed on such
date; and (ii) on any date on which the 2002 Bonds shall be declared to be and
shall become due and payable prior to their stated maturity pursuant to the
provisions of the Indenture, an aggregate amount equal to the sum of the
principal or redemption price of and interest so becoming due and payable on the
2002 Bonds (all of the foregoing are collectively referred to herein as the
"Loan Repayments").
Nothing herein contained shall be construed as imposing on the
Authority or on the Trustee any duty or responsibility of giving any prior
notice to the Company of the due date of any Loan Repayment hereunder, or of the
amount on deposit in the Debt Service Fund, or of the amount of any credits
available to the Company against any Loan Repayment, and failure by the
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Company to receive any such prior notice, even if customarily given by the
Authority or the Trustee, shall not relieve the Company of its obligation to
make any Loan Repayment when it is due and payable.
All such payments shall be made in funds which will be immediately
available funds at the place of payment on the payment date in question. The
Company shall have the option to make prepayment, from time to time, in whole or
in part, of any amount due as aforesaid on account of the Loan, together with
interest accrued and to accrue with respect to such prepayment. The Authority
shall direct the Trustee in writing to apply such prepayments to the purchase or
redemption of 2002 Bonds in such manner, consistent with the provisions of the
Indenture, as may be directed by the Company.
In the event the Company shall fail to make any of the payments
required in this Section, the item or payment so in default shall continue as an
obligation of the Company until the amount in default shall have been fully
paid, and the Company will pay the same with interest thereon from the due date
until paid at the highest rate per annum borne by the 2002 Bonds.
The obligation of the Company to make Loan Repayments hereunder is
subject to acceleration as set forth in Section 7.02 hereof.
It is the intent of this Agreement that the Company shall make Loan
Repayments hereunder at such times and in such amounts as shall be sufficient to
enable the Authority to make full and timely payment of principal or Redemption
Price of, and interest on, the 2002 Bonds. Accordingly, notwithstanding any
other provision hereof to the contrary, if for any reason the amounts paid by
the Company pursuant to this Section 4.02(a) or pursuant to the other provisions
of this Agreement, together with any other amounts available therefor under the
Indenture, are at any time insufficient to make payments of the principal or
Redemption Price of and interest on the 2002 Bonds when due, whether at
maturity, upon redemption, by acceleration or otherwise, the Company will
forthwith pay to the Trustee the amount required to make up such deficiency.
(b) Other Amounts. The Company agrees to make additional payments as
follows:
(i) to the Authority on the date of issuance and delivery of
the 2002 Bonds, a loan closing fee of $20,000 and a $2,000 application fee, and
to the Authority upon its submission of an invoice therefor to the Company from
time to time, an annual fee and a termination fee of such amount as the
Authority may customarily charge from time to time;
(ii) to the Authority upon its written request at any time, an
amount equal to the reasonable expenses incurred by the Authority in enforcing
the provisions of this Agreement or the Indenture, or incurred in defending any
action or proceeding with respect to the Facilities, this Agreement, the Tax
Compliance Agreement or the Indenture and not otherwise required to be paid by
the Company under this Agreement;
(iii) to the Trustee upon its written request, an amount equal
to the reasonable fees and charges of the Trustee for its services and the
reasonable expenses incurred by it in connection with the Indenture and this
Agreement (including without limitation the reasonable
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fees and expenses of any attorneys retained by the Trustee), in accordance with
any separate agreement between the Company and the Trustee with respect thereto;
and
(iv) to the Trustee, for deposit to the credit of the Rebate
Fund established under the Indenture, any amount required to be deposited in the
Rebate Fund pursuant to the Indenture and the Tax Compliance Agreement at the
times required under the Indenture and the Tax Compliance Agreement.
SECTION 4.03. Security For Payment. To further secure the obligation of
the Company to make Loan Repayments, the Company will execute and deliver its
First Mortgage Bond under the Mortgage Indenture in such principal amounts and
with such interest rate, interest payment and maturity dates and redemption
provisions as may correspond to such provisions of the 2002 Bonds issued and
sold by the Authority. Contemporaneously with the execution and delivery of this
Agreement the Company is executing and delivering, as security for its
obligation to make Loan Repayments, its First Mortgage Bond which contains
provisions with respect to interest rate, interest payment and maturity dates,
redemption and acceleration of maturity corresponding to such provisions of the
2002 Bonds.
SECTION 4.04. Assignment to Trustee. It is understood and agreed that
the obligations of the Company to make the Loan Repayments under this Agreement
and the payments under the First Mortgage Bond are to be assigned and pledged by
the Authority to the Trustee. The Company consents to such assignment and pledge
and agrees that, as to the Trustee, its obligation to make such Loan Repayments
and the payments required under the First Mortgage Bond shall be absolute and
unconditional and shall not be subject to any defense (other than full and
indefeasible payment) or to any right of set off, counterclaim or recoupment
arising out of any breach by the Authority of any obligation to the Company,
whether hereunder or otherwise, or out of any indebtedness or liability at any
time owing to the Company by the Authority.
The Authority hereby directs the Company and the Company agrees to pay
to the Trustee at its designated corporate office in Philadelphia, Pennsylvania
or Charlotte, North Carolina, all Loan Repayments pursuant to this Agreement and
the payments required under the First Mortgage Bond.
SECTION 4.05. Operation and Maintenance. The Company shall maintain,
preserve, and keep the Facilities or cause the Facilities to be maintained,
preserved and kept, with the appurtenances and every part and parcel thereof, in
good repair, working order and condition and, from time to time, will make or
cause to be made all such repairs, replacements and renewals as it deems
necessary. The Authority shall not operate the Facilities or have any obligation
to maintain them.
The Company shall have the privilege of remodeling the Facilities or
making substitutions, modifications and improvements to the Facilities from time
to time as it, in its discretion, may deem to be desirable for its uses and
purposes, the cost of which remodeling, substitutions, modifications and
improvements shall be paid by the Company and the same shall be the property of
the Company and be included under the terms of this Agreement as part of the
Facilities.
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SECTION 4.06. Insurance. At all times during the term of this Agreement
the Company will keep the Facilities continuously insured in accordance with the
requirements of the Mortgage Indenture.
SECTION 4.07. Liens. The Company will pay or cause to be discharged or
make adequate provision to satisfy and discharge, within sixty (60) days after
the same shall accrue, any lien or charge (other than Permitted Encumbrances)
upon any Loan Repayments hereunder or upon the First Mortgage Bond and all
lawful claims or demands which, if unpaid, might be or become a lien upon any
Loan Repayments hereunder or upon the First Mortgage Bond. Notwithstanding the
foregoing, if the Company shall first notify the Authority and Trustee of its
intention so to do, the Company may in good faith contest any such lien or
charge or claim or demand in appropriate legal proceedings, and in such event
may permit the items so contested to remain undischarged and unsatisfied during
the period of such contest and any appeal therefrom, unless the Authority or the
Trustee shall notify the Company in writing that, in the opinion of Counsel, by
nonpayment of any such items the lien of the Indenture as to the Loan Repayments
or as to the First Mortgage Bond shall be materially endangered, in which event
the Company shall promptly pay and cause to be satisfied and discharged all such
unpaid items. The Authority will cooperate fully with the Company in any such
contest.
SECTION 4.08. Facilities Used For Purpose of the Act. So long as the
Company operates the Facilities, they will be used for purposes permitted by the
Act and as facilities for the furnishing of water.
SECTION 4.09. Payment of Certain Costs. The Company shall pay or cause
to be paid all of the expenses of operation of the Facilities, including,
without limitation, the cost of all necessary and proper repairs, replacements
and renewals made pursuant to Section 4.05 hereof.
SECTION 4.10. Obligation to Make Payments Absolute. The obligations of
the Company to make the Loan Repayments and other payments required pursuant to
this Agreement and to perform and observe the other agreements contained herein
shall be absolute and unconditional until such time as the principal of,
premium, if any, and interest on the 2002 Bonds are paid in full. The Company
will not suspend or discontinue, or permit the suspension or discontinuance of,
any payment provided for in this Agreement or the performance or observance of
any of the Company's obligations hereunder, for any reason or cause whatsoever,
including (without limiting the generality of the foregoing), any destruction of
or damage to, or any condemnation or taking by any public or private entity of,
all or any portion of the Facilities; the occurrence of any Final Determination
of Taxability with respect to any of the 2002 Bonds; any acts or circumstances
which may constitute failure of consideration or commercial frustration of
purpose; any change in the tax or other laws or administrative rulings of or
administrative actions by the United States or the Commonwealth or any political
subdivision of either; or any failure of the Authority, the Trustee, any other
Paying Agent or the Bond Insurer to perform and to observe any agreement,
whether express or implied, or any duty, liability or obligation, arising out of
or connected with this Agreement, the Indenture, the Financial Guaranty
Insurance Policy, the Tax Compliance Agreement or the 2002 Bonds, as the case
may be.
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ARTICLE V
SPECIAL COVENANTS
SECTION 5.01. No Warranty. The Authority makes no warranty, either
express or implied, as to the actual or designed capacity of the Facilities, as
to the suitability of the Facilities for the purposes specified in this
Agreement, or that the Facilities will be suitable for the Company's purposes or
needs.
SECTION 5.02. Company to Maintain Corporate Existence, Etc. The Company
shall maintain its corporate existence and its qualification to do business in
the Commonwealth, will not dissolve or otherwise dispose of all or substantially
all its assets and will not consolidate with or merge into another corporation
except as provided in this Section 5.02; provided, however, that the Company may
consolidate with or merge into another corporation, or sell or otherwise
transfer to another Company all or substantially all its assets as an entirety
and thereafter dissolve, if (a) the successor corporation assumes in writing all
the obligations of the Company in the Agreement and in the First Mortgage Bond,
(b) the Company delivers to the Authority, the Trustee and the Bond Insurer a
Favorable Opinion of Recognized Bond Counsel with respect to such action, and
(c) the successor corporation shall either qualify to do business in the
Commonwealth or file with the Trustee a consent to service of process in the
Commonwealth in form satisfactory to the Trustee if such successor is not a
Pennsylvania corporation.
If consolidation, merger or sale or other transfer is made as permitted
by this Section, the provisions of this Section shall continue in full force and
effect and no further consolidation, merger or sale or other transfer shall be
made except in compliance with the provisions of this Section.
SECTION 5.03. Operation of Facilities; Maintenance of Licenses and
Permits. The Company shall operate the Facilities as part of its system for the
furnishing of water to the general public at rates approved by the Public
Utility Commission of the Commonwealth, and to that end will maintain in force
and effect the requisite franchises, operating rights, certificates of public
convenience and all necessary tariffs, licenses and permits.
SECTION 5.04. Additional Permits. In the event it may be necessary for
the proper performance of this Agreement on the part of the Authority or the
Company that any application or applications for any permit or license to do or
to perform certain things be made to any governmental or other agency by the
Company or the Authority, the Company and the Authority shall execute upon the
request of the other such application or applications.
SECTION 5.05. Authority to Maintain Corporate Existence, Etc. The
Authority will maintain its corporate existence and duly will procure any
necessary renewals and extensions thereof; will use its best efforts to
maintain, preserve and renew all its rights, powers, privileges and franchises;
and will comply with all valid acts, rules, regulations, orders and directions
of any legislative, executive, administrative or judicial body applicable to the
Project and the 2002 Bonds. The Authority further covenants that it will not
voluntarily or knowingly take or fail to
10
take any action that would result in the loss of any exemption from taxes which
it presently enjoys or to which it may subsequently become entitled.
SECTION 5.06. Compliance With Continuing Disclosure Agreement. The
Company hereby covenants and agrees that it will comply with and carry out all
of the provisions of the Continuing Disclosure Agreement. Notwithstanding any
other provision of this Agreement, failure of the Company to comply with the
Continuing Disclosure Agreement shall not be considered an Event of Default
hereunder or under the Indenture. However, the Trustee may (and, at the request
of any Participating Underwriter (as defined in the Continuing Disclosure
Agreement) or the holders of at least 25% aggregate principal amount in
Outstanding 2002 Bonds and provision of indemnity satisfactory to the Trustee in
its sole discretion, shall) or any Bondholder may, take such actions as may be
necessary and appropriate, including seeking specific performance by court
order, to cause the Company to comply with its obligations under this Section
5.06 and the Continuing Disclosure Agreement.
SECTION 5.07. Certain Tax Covenants. The Company will comply with all
provisions of the Tax Compliance Agreement applicable to it. The Company will
not take any action or fail to take any action (including the requirement to
make rebate payments to the United States as required under Section 148(f) of
the Code and the Tax Compliance Agreement and the obligations described in 5.05
of the Indenture) which would cause the 2002 Bonds to be "arbitrage bonds"
within the meaning of Sections 103(b) and 148(a) of the Code or would otherwise
cause interest on the 2002 Bonds to be includible in the gross income of the
holders thereof for federal income tax purposes (except with respect to the
interest on the 2002 Bonds during any period when such Bonds are held by a
"substantial user" of the Facilities financed by the 2002 Bonds or a "related
person" within the meaning of Section 147(a) of the Code); provided, however,
that if the Trustee receives an opinion of Recognized Bond Counsel that any
action or failure to take action will cause the interest on the 2002 Bonds to be
included in the gross income of Bondholders for federal income tax purposes, no
Event of Default shall be deemed to have occurred unless and until there is a
Final Determination of Taxability.
SECTION 5.08. Financial Statements and Other Reporting Requirements of
the Company. The Company shall furnish to the Authority, the Trustee and the
Bond Insurer within 120 days after the end of the Company's fiscal year copies
of the Company's audited financial statements for such fiscal year. The Company
shall also furnish to the Bond Insurer such additional information as the Bond
Insurer may reasonably request from time to time. The Company will permit the
Bond Insurer to discuss the affairs, finances and accounts of the Company or any
information the Bond Insurer may reasonably request regarding the security for
the 2002 Bonds with appropriate officers of the Company. The Company will permit
the Bond Insurer to have access to the Facilities and to have access to and to
make copies of all books and records relating to the 2002 Bonds at any
reasonable time.
SECTION 5.09. Nondiscrimination Provisions. In connection with the
Project and the operation of the Facilities, the Company shall comply with the
nondiscrimination provisions attached to this Agreement as Exhibit B and by this
reference made a part hereof.
11
ARTICLE VI
ASSIGNMENT, LEASING AND SALE OF FACILITIES
SECTION 6.01. Assignment, Lease and Sale of Facilities. The Company
shall not sell, lease or otherwise dispose of or encumber the Facilities except
as permitted in the Mortgage Indenture and in this Agreement. This Agreement may
be assigned in whole or in part and the Facilities may be sold or leased as a
whole or in part by the Company, subject, however, to the following conditions:
(a) The Company may sell or otherwise dispose of any
machinery, fixtures, apparatus, tools, instruments or other movable property
constituting part of the Facilities (collectively, "Moveable Property") which
the Company deems no longer to be needed or useful in its operation of the
Facilities; provided, that if the original cost of acquisition of such
machinery, fixtures, apparatus, tools, instruments or other movable property was
more than $100,000, the Company shall, in writing, certify to the Authority that
such items are no longer needed or useful in its operation of the Facilities.
Any proceeds thereof shall be paid to the Trustee for deposit in the
Construction Fund and used to purchase replacements for the Moveable Property
sold or disposed of pursuant to this Section 6.01(a) or within six (6) months of
the date of issuance of the 2002 Bonds, to finance any other capital
expenditure.
(b) No sale, assignment or leasing (other than pursuant to
Section 5.02 hereof) shall relieve the Company from primary liability for any of
its obligations hereunder, and in the event of any such sale, assignment or
leasing the Company shall continue to remain primarily liable for all Loan
Repayments and all other payment obligations under this Agreement and for
performance and observance of the other agreements on its part herein provided.
(c) The purchaser, assignee or lessee from the Company shall
assume the obligations of the Company hereunder to the extent of the interest
assigned or leased.
(d) The Company shall, at least fifteen (15) days prior to the
delivery thereof, furnish or cause to be furnished to the Authority, for its
information only, a true and complete copy of each such proposed sale agreement,
assignment or lease, as the case may be, and shall furnish to the Authority and
the Trustee an executed copy thereof following execution.
(e) The Company shall pay the Authority's and the Trustee's
reasonable costs and expenses incurred, and the reasonable fees charged thereby,
in connection with such sale, assignment or lease.
(f) The Company shall furnish to the Trustee a Favorable
Opinion to the effect that the proposed sale, assignment or lease, as the case
may be, is permissible under this Agreement, the Mortgage Indenture and the Act
and will not adversely affect the exclusion of interest on the 2002 Bonds from
gross income of the holders thereof from federal income tax purposes; provided,
however, that if in connection with such proposed sale, assignment or lease of
the Facilities or a portion thereof, the Company shall, within sixty (60) days
of such sale, assignment or lease, replace such Facilities or such portion
thereof with property which, in the judgment of the Trustee, is substantially
similar to the Facilities being sold, assigned or leased, then the Company shall
not be required to furnish a Favorable Opinion pursuant to this
12
subsection (f) and, upon such replacement, such property shall be deemed to
constitute the Facilities hereunder.
SECTION 6.02. Assignment of Rights Under Agreement. The Authority shall
assign its rights under and interest in this Agreement (except for the
Authority's Reserve Rights), and will pledge and assign all Loan Repayments and
security therefor, including the First Mortgage Bond of the Company pledged as
security therefor, and receipts and revenues receivable under or pursuant to
this Agreement, and income earned by the investment of funds held under the
Indenture, to the Trustee pursuant to the Indenture as security for payment of
the principal of, premium, if any, and interest on the Bonds.
Except as provided in this Section 6.02, the Authority will not
otherwise sell, assign, transfer, convey or dispose of the revenues from the
Facilities or the Loan Repayments or the First Mortgage Bond during the term of
this Agreement, nor will it take any action which may reasonably be construed as
tending to cause or induce the levy of special assessments against the
Facilities or such revenues or the First Mortgage Bond, nor will it create or
suffer to be created any lien or charge upon the Facilities or such revenues or
the First Mortgage Bond except Permitted Encumbrances.
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
SECTION 7.01. Events of Default. (a) Subject to the provisions set
forth in Section 7.01(c) hereof, each of the following shall be an "Event of
Default" under this Agreement, and the terms " Event of Default " or " Default "
shall mean, whenever they are used in this Agreement, any one or more of the
following events:
(i) Failure by the Company to pay when due any Loan
Repayments; or
(ii) Failure by the Company to pay when due any
payment required to be made under this Agreement other than Loan
Repayments, which failure shall continue for a period of sixty (60)
days after written notice, specifying such failure and requesting that
it be remedied, is given to the Company by the Authority or the
Trustee, unless the Company is contesting in good faith its obligation
to make the payment or the Authority and the Trustee shall agree in
writing to an extension of such time prior to the expiration of such
period; or
(iii) Failure by the Company to observe and perform
any covenant, condition or agreement on its part to be observed or
performed, other than as referred to in subsections (i) and (ii) of
this Section, which failure shall continue for a period of sixty (60)
days after written notice, specifying such failure and requesting that
it be remedied, is given to the Company by the Authority or the
Trustee, unless the Authority and the Trustee shall agree in writing to
an extension of such time prior to the expiration of such period; or
13
(iv) The dissolution or liquidation of the Company or
the filing by the Company of a voluntary petition under the laws of the
United States relating to bankruptcy or failure by the Company promptly
to procure the dismissal of an involuntary petition in bankruptcy filed
against it, or an assignment by the Company for the benefit of its
creditors, or the entry by the Company into an agreement of composition
with its creditors, or the appointment by a court of competent
jurisdiction of a receiver for the Company. The term "dissolution or
liquidation of the Company" as used in this subsection shall not be
construed to include the cessation of the corporate existence of the
Company resulting either from a merger or consolidation of the Company
into or with another Company or a dissolution or liquidation of the
Company following a transfer of all or substantially all its assets as
an entirety under the conditions permitting such actions contained in
Section 5.02 hereof.
(b) A failure by the Authority to observe or perform any
covenant or agreement herein contained on its part to be observed or performed
shall not constitute an Event of Default hereunder, but the Company shall be
entitled to enforce the observance and performance by the Authority of any of
its covenants or agreements herein contained by such remedies at law or in
equity as it deems desirable, subject to the limitation of liability set forth
in Section 8.10 hereof.
(c) The foregoing provisions of this Section are subject to
the following limitations: if by reason of acts of God; strikes, lockouts or
other industrial disturbances; acts of public enemies; orders of any kind of the
government of the United States or of the Commonwealth or any department,
agency, political subdivision or official of either of them, or any civil or
military authority; insurrections; riots; epidemics; landslides; lightning;
earthquakes; fires; hurricanes; storms; floods; washouts; droughts; arrests;
restraint of government and people; civil disturbances; explosions; breakage or
accident to machinery; partial or entire failure of utilities; or any cause or
event not reasonably within the control of the Company, the Company is unable in
whole or in part to carry out its agreements herein contained, the Company shall
not be deemed in default during the continuance of such inability.
The Company agrees to use its best efforts to remedy with all
reasonable dispatch the cause or causes preventing it from carrying out its
agreements; provided, however, that the settlement of strikes, lockouts and
other industrial disturbances shall be entirely within the discretion of the
Company, and the Company shall not be required to make settlement of strikes,
lockouts and other industrial disturbances by acceding to the demands of the
opposing party or parties when such course, in the judgment of the Company, is
unfavorable to the Company.
This Section 7.01(c) shall not apply to any Event of Default described
in Section 7.01(a)(i) or 7.01(a)(ii), and any failure of the Company to perform
its obligations under Section 4.02 hereof shall constitute an Event of Default
regardless of the reason for such failure to perform.
SECTION 7.02. Remedies. Whenever any Event of Default hereof shall have
happened and be continuing, any one or more of the following remedial steps may
be taken:
(a) The Trustee, as the assignee of the Authority, at its
option, may declare the unpaid principal balance of the Loan to be immediately
due and payable, whereupon the same,
14
together with all other amounts due from the Company then accrued and unpaid,
shall become immediately due and payable; and
(b) The Trustee, as the assignee of the Authority, may take
any action at law or in equity to collect the payments then due and thereafter
to become due or to enforce performance and observance of any obligation,
agreement or covenant of the Company under this Agreement and under the First
Mortgage Bond. All amounts collected pursuant to action taken under this Section
shall be applied in accordance with the Indenture.
SECTION 7.03. Remedies Not Exclusive. No remedy conferred upon or
reserved to the Authority by this Agreement is intended to be exclusive of any
other available remedy or remedies, but each and every such remedy shall be
cumulative and shall be in addition to every other remedy given under this
Agreement or now or hereafter existing at law or in equity or by statute. No
delay or omission to exercise any right or power accruing upon any default shall
impair any such right or power or shall be construed to be a waiver thereof, but
any such right and power may be exercised from time to time and as often as may
be deemed expedient. In order to entitle the Authority to exercise any remedy
reserved to it in this Article, it shall not be necessary to give any notice
other than such notice as may be herein expressly required.
SECTION 7.04. Reimbursement of Fees and Expenses. If the Company shall
default under any of the provisions of this Agreement and the Authority shall
employ attorneys or incur other expenses for the collection of Loan Repayments
or for the enforcement of performance or observance of any obligation or
agreement on the part of the Company contained in this Agreement or in the First
Mortgage Bond, the Company, on demand therefor, will reimburse the Authority for
reasonable fees and expenses of such attorneys and such other reasonable
expenses so incurred.
SECTION 7.05. Waivers of Breaches. In the event any agreement contained
in this Agreement shall be breached by either party and such breach shall
thereafter be waived by the other party, such waiver shall be limited to the
particular breach so waived and shall not be deemed to waive any other breach
hereunder. In view of the assignment of the Authority's rights under this
Agreement to the Trustee under the Indenture, the Authority shall have no power
to exercise any right hereunder or waive any default hereunder by the Company
(other than in respect of the Authority's Reserved Rights) without the written
consent of the Trustee to such exercise or waiver, or, if the maturity of the
Outstanding 2002 Bonds shall have been accelerated pursuant to the Indentures,
the consent of the holders of a majority in principal amount of the 2002 Bonds
then Outstanding. In the event any default by the Company hereunder shall have
been waived as a default under the Indenture by the holders of the requisite
majority in principal amount of the 2002 Bonds, no consent of the Trustee shall
be required, and the Authority shall be obligated to waive the Company's default
hereunder.
15
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Termination. This Agreement shall terminate upon payment
in full of the 2002 Bonds (including interest and premium, if any, thereon), or
the making of provision for payment thereof in accordance with the provisions of
the Indenture, and payment of all other amounts owing to the Authority and the
Trustee hereunder and under the Indenture.
Any amounts, other than amounts being held for payment of the 2002
Bonds or other payments referred to in the preceding sentence, then remaining in
the Debt Service Fund and other Funds established under the Indenture shall
belong to and be paid to the Company by the Trustee.
SECTION 8.02. Notices. All notices hereunder shall be given in the
manner and to the locations specified in Section 14.08 of the Indenture with
respect to notices given thereunder.
SECTION 8.03. Benefit of Agreement. This Agreement shall inure to the
benefit of and shall be binding upon the Authority, the Company and the Trustee
and their respective successors and assigns.
SECTION 8.04. Amendments. This Agreement may be amended in any respect
but only by written agreement of the parties hereto and subject to the
additional requirements relating to such amendments set forth in the Indenture.
Any provision of this Agreement expressly recognizing or granting rights in or
to the Bond Insurer may not be amended in any manner which affects the rights of
the Bond Insurer hereunder without the prior written consent of the Bond
Insurer.
SECTION 8.05. Counterparts. This Agreement may be executed in any
number of counterparts, each of which, when so executed and delivered shall be
an original, but all such counterparts shall together constitute but one and the
same Agreement.
SECTION 8.06. Invalidity of Certain Clauses. If any clause, provision
or section of this Agreement be held illegal or invalid by any court, the
invalidity of such clause, provision or section shall not affect any of the
remaining clauses, provisions or sections hereof, and this Agreement shall be
construed and enforced as if such illegal or invalid clause, provision or
section had not been contained herein. In case any agreement or obligation
contained in this Agreement be held to be in violation of law, then such
agreement or obligation shall be deemed to be the agreement or obligation of the
Authority or the Company, as the case may be, only to the extent permitted by
law.
SECTION 8.07. Governing Law. The laws of the Commonwealth shall govern
the construction and interpretation of this Agreement.
SECTION 8.08. Indemnification.
(a) The Company agrees that at all times it will protect and
hold the Authority and its officers, members, employees and agents (including,
but not limited to, the Authority's
16
legal counsel), past, present and future, harmless and indemnified from and
against all claims for losses, damages or injuries to the Trustee or others,
including death, personal injury and property damage or loss, arising during the
term hereof or during any other period when the Authority has, had or shall have
any interest in the Facilities or arising out of the use thereof or any activity
conducted thereon or in any other manner connected therewith, directly or
indirectly, including but not limited to claims arising out of the acquisition,
construction, installation, equipping and operation of the Facilities; and the
Authority and said officers, members, employees and agents shall not be liable
for any loss, damage or injury to the person or property of the Company or its
agents, servants or employees or any other Person who or that may be upon the
Facilities or damaged or injured as a result of any condition existing or
activity occurring upon the Facilities or any other matter connected directly or
indirectly therewith due to any act or negligence of any Person, excepting only
willful misconduct or gross negligence of the Authority, and said officers,
agents, members or employees.
(b) The Company hereby covenants and agrees that it will
indemnify and hold the Trustee and its directors, officers, agents and employees
(collectively, the "Indemnitees") harmless from and against any and all claims,
liabilities, losses, damages, fines, penalties, and expenses, including
out-of-pocket, incidental expenses, reasonable legal fees and expenses and the
costs and expenses of defending or preparing to defend against any claim
(collectively "Losses") that may be imposed on, incurred by, or asserted
against, the Indemnitees or any of them for following any instruction or other
direction upon which the Trustee is authorized to rely pursuant to the terms of
this Agreement and the Indenture. In addition to and not in limitation of the
immediately preceding sentence, the Company also covenants and agrees to
indemnify and hold the Indemnitees and each of them harmless from and against
any and all Losses that may be imposed on, incurred by, or asserted against the
Indemnitees or any of them in connection with or arising out of the Trustee's
performance under this Agreement and the Indenture, provided the Trustee has not
acted with negligence or engaged in willful misconduct. The provisions of this
Section 8.08(b) shall survive the termination of this Agreement and the
Indenture, the defeasance of the 2002 Bonds and the resignation or removal of
the Trustee for any reason.
(c) The Company shall indemnify, hold harmless and defend the
Authority and the Trustee and the respective officers, members, directors,
employees and agents (including, but not limited to, the Authority's and the
Trustee's legal counsel) of each of them, past, present and future, against all
loss, costs, damages, expenses, suits, judgments, actions and liabilities of
whatever nature, including, specifically, (i) any liability under any state or
federal securities laws (including but not limited to reasonable attorneys fees,
litigation and court costs, amounts paid in settlement and amounts paid to
discharge judgments) and (ii) any and all costs and expense arising out of, or
from, any state or federal environmental laws (including, without limitation,
costs of remediation, reasonable attorney's fees and expenses, litigation and
court costs, amounts paid in settlement and amounts paid to discharge
judgments), directly or indirectly resulting from or arising out of or related
to: (A) the design, construction, installation, operation, use, occupancy,
maintenance or ownership of the Facilities (including compliance with laws,
ordinances and rules and regulations of public authorities relating thereto); or
(B) any statements or representations with respect to Company, the Project, this
Agreement, the 2002 Bonds, the Indenture or any other document or instrument
delivered in connection with the issuance of the 2002 Bonds (including any
statements or representations made in connection with the offer or sale thereof)
made or given to the Authority, the Trustee or any underwriters or purchasers of
17
any of the 2002 Bonds, by the Company or any of its directors, officers, agents
or employees, including but not limited to, statements or representations of
facts, financial information or corporate affairs.
The Company also will pay and discharge and indemnify and hold harmless
the Authority and the Trustee from (i) any lien or charge upon payments by the
Company to the Authority and the Trustee under this Agreement, and (ii) any
taxes (including, without limitation, any ad valorem taxes and sales taxes,
assessments, impositions and other charges) in respect of any portion of the
Facilities.
If any such claim is asserted, or any such lien or charge upon
payments, or any such taxes, assessments, impositions or other charges are
sought to be imposed, the Authority or the Trustee will give prompt notice to
the Company, and the Company shall have the sole right and duty to assume, and
will assume, the defense thereof, with full power to litigate, compromise or
settle the same in its sole discretion.
(d) The Company releases the Authority and the Trustee from,
agrees that the Authority and the Trustee shall not be liable for, and agrees to
indemnify and hold the Authority and the Trustee and their agents, employees and
servants, harmless from, any liability arising out of the construction of the
Facilities or the Loan. If any such claim is asserted, the Authority or the
Trustee will give prompt notice to the Company and the Company will assume the
defense thereof, with full power to litigate, compromise or settle the claim in
its sole discretion. The Company will reimburse the Authority or the Trustee, as
the case may be, for all direct costs, including reasonable attorney's fees and
expenses properly incurred in connection therewith.
(e) If the indemnification provided herein is for any reason
determined to be unavailable to the Authority or the Trustee, then, with respect
to any such loss, claim, demand or liability, including expenses in connection
therewith, the Authority and the Trustee, as appropriate, shall be entitled as a
matter of right to contribution by the Company. The amount of each contribution
shall be in such proportion as is appropriate to reflect relative culpability of
the parties.
(f) The Company shall not make any claim against the
Authority, nor shall the Authority be liable for any damage or injury to any
property of the Company or any other Person on the Facilities or to any part of
the Facilities due to any cause whatsoever, nor will the Company resist the
Authority's claim to indemnification on the ground that the right to such claim
is not set forth herein with sufficient particularity.
(g) The obligations and liabilities of the Company under this
Section 8.08 shall survive the termination of this Agreement and the payment of
the 2002 Bonds.
SECTION 8.09. Limitation of Rights Against Authority.
(a) The Company hereby expressly acknowledges that the
Authority is a conduit issuer and that all of the right, title and interest of
the Authority in and to this Agreement are to be assigned to the Trustee (except
for the Authority's Reserved Rights), naming the Trustee its true and lawful
attorney for and in its name to enforce the terms and conditions of this
Agreement. Notwithstanding any other provision contained herein, the Company
hereby
18
expressly agrees, acknowledges and covenants that to the extent practicable it
shall duly and punctually perform or cause to be performed each and every duty
and obligation of the Authority hereunder and under the Indenture.
(b) The Company shall neither ▇▇▇ the Authority, or any of its
members, officers, agents or employees, past, present or future, for any costs,
damages, expenses, suits, judgments, liabilities, claims, losses, demands,
actions or nonactions based upon this financing or sustained in connection with
or as a result of this financing, nor will be Company ever raise as a defense in
any proceedings whatsoever that the Authority is a true party in interest.
Notwithstanding any other provisions of this Agreement, the Company
shall be entitled to (i) bring an action of specific performance against the
Authority to compel any action required to be taken by the Authority hereunder
or an action to enjoin the Authority from performing any action prohibited by
this instrument, but no such action shall in any way impose pecuniary liability
against the Authority or any of its members, officers, agents or employees,
past, present and future, (ii) join the Authority in any litigation if such
joinder is necessary to pursue any of the Company's rights, provided that prior
to such joinder, the Company shall post such security as the Authority may
require to further protect the Authority from loss and (iii) pecuniary
remuneration from the Authority for damage or loss suffered by Company by reason
of the willful misconduct of the Authority or any of its members, officers,
agents or employees, past, present or future.
SECTION 8.10. Limitation of Recourse Against Authority
(a) In the event of any default by the Authority hereunder,
and notwithstanding any provision or obligation to the contrary herein set
forth, the liability of the Authority, its incorporator, officers, members,
agents and employees, past, present or future, shall be limited to its interest
in the Trust Estate and the lien of any judgment shall be restricted thereto.
Other than as set forth hereinabove in this Section 8.10, there shall be no
other recourse for damages of any kind or nature by the Company or any other
Person against the Authority, its incorporator, officers, members, agents and
employees, past, present or future, or any of the property or other assets nor
or hereafter owned by it or them, either directly or indirectly; and all such
recourse or liability is hereby expressly waived and released as a condition of
and in consideration of execution and delivery of this Agreement by the
Authority.
(b) No recourse under or upon any obligation, covenant or
agreement contained herein or in any 2002 Bond shall be had against the
Authority or any member, officer, employee or agent, past, present or future, of
the Authority or of any successor of the Authority under this Agreement, any
other agreement, any rule of law, statute or constitutional provision, or by
enforcement of any assessment or by any legal or equitable proceeding or
otherwise, it being expressly agreed and understood that the obligations of the
Authority hereunder, and under the 2002 Bonds and elsewhere, are solely
corporate obligations of the Authority to the extent specifically limited in the
Act and that no personal liability whatsoever shall attach to or shall be
incurred by the Authority or such members, officers, employees or agents, past,
present or future, of the Authority or of any successor of the Authority, or any
of them, because of such indebtedness or by reason of any obligation, covenant
or agreement contained herein, in the 2002 Bonds on implied therefrom.
19
SECTION 8.11. Reorganization; Liquidation.
The Company hereby agrees that any reorganization or liquidation plan
with respect to the Company must be acceptable to the Bond Insurer.
20
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
BUCKS COUNTY INDUSTRIAL
DEVELOPMENT AUTHORITY
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------------------
Chairman
PENNSYLVANIA SUBURBAN
WATER COMPANY
By: ▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------------------
Vice President and Treasurer
[Signature Page to Construction and Financing Agreement]
21
EXHIBIT "A"
DESCRIPTION OF THE FACILITIES
(Attached)
A-1
The Facilities consist of, generally, facilities for the furnishing of
water that are part of the Company's system for the collection, treatment and
distribution of water to its customers, including pipelines, reservoirs, ▇▇▇▇▇
and related equipment and facilities as follows:
Berks County Project: Replacement of water main from Cold Run Rd to
Mill Rd, ▇▇▇▇▇▇▇ Township.
Bucks County Project: A. Replace of water mains from/in: Church St to
State Rd to Maryland Ave, Bristol Borough; Fayette Dr from Old Orchard Lane to
New Chestnut and Fayette Dr to Bath Rd, Bristol Township; Neshaminy Rd from
Newportville Rd to Bristol Pike, Bristol Township; ▇▇▇▇▇▇▇▇▇▇ Ave to ▇▇▇▇▇▇▇▇ ▇▇
and Temple Rd, Bristol Township; and ▇▇▇▇▇▇ St from Runway Rd to Headly St,
Bristol Township; B. upgrade existing ▇▇▇▇▇ at Edgely and ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇; and C. replace front substation and replace "B" pump motor at
Neshaminy Plant, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Project: A. Replace water mains from/in: Walnut Ave to
▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇; ▇▇▇▇▇▇▇, from Tulip Dr to Lilac Dr, Honey Brook
Township; Springton Court Trailer Park, West Brandywine Township; Rt 100 from
Cedar Rd to Rt ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇; ▇▇▇▇▇▇▇ ▇▇ from New St to
Brandywine St, West ▇▇▇▇▇▇▇ Borough; West Lafayette St from High St to New St,
West ▇▇▇▇▇▇▇ Borough; Rosedale Ave from South New St to Cambridge Rd, West
Goshen Township; ▇▇▇▇▇▇▇ ▇▇ from South Walnut Rd to Oakbourne Rd, Westtown
Township; Old Lincoln Highway from Village to Central Ave, Willistown Township;
B. tie-in water mains from/in: Rt 926 from New St to Birmingham Rd, Birmingham
Township; Dilworthtown Rd to Penn Oaks Country Club, Thornbury Township; Ship Rd
from Hunters La to ▇▇▇▇ Terrace, West Whiteland Township; C. construct
additional water tank at ▇▇▇▇▇▇▇ ▇▇, Echo Hill Development, Franklin Township;
D. construct well facility at Newark New London Rd, Franklin Township; E.
construct internal improvements at ▇▇▇▇▇▇▇▇▇ Creek Plant East, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇; F. construct booster station at Eagle, Upper Uwchlan
Township; and G. construct water tank and booster station at Rt 82, ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Project: A. Replace water mains from/in: ▇▇▇▇▇ ▇▇, from
Golfview Ave to Hill Crest Rd, Haverford Township; Lansdowne Ave, from Drexel
Ave to Balfour Circle, Lansdowne Borough; Media Line Rd, from Old Cedar Grove Rd
to Penn View Ave, Newtown Township; Gulph Creek Rd, from King of Prussia Rd to
Cricket Rd, Radnor Township; North Ave, from Providence Rd to Bellvue Ave,
Springfield Township; ▇▇▇▇▇ Ave, from Springfield Rd to Forest Ln, Springfield
Township; Woodland Ave, from ▇▇▇▇▇▇ ▇▇ to ▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇; ▇▇▇
Ave, from Powhattan Dr to Seminole St, Tinicum Township; 1st St, from LaGrange
Ave to ▇▇▇▇▇▇▇ Ave, Tinicum Township; ▇▇▇▇▇▇▇ Blvd, from Summit Ave to Keystone
Ave, Upper ▇▇▇▇▇ Township; Childs Ave, from Township Line Rd to ▇▇▇▇▇▇▇ Ave,
Upper ▇▇▇▇▇ Township; State Rd, from Hilltop Rd to Sellers Ave, Upper ▇▇▇▇▇
Township; ▇▇▇▇▇▇ ▇▇, from Lansdowne Ave to Wycombe Ave, Yeadon Borough; B.
tie-in water mains from: Paxon Hollow Rd, from Bridlebrook Ln to Trout Dr,
▇▇▇▇▇▇ Township; ▇▇▇▇▇▇▇ ▇▇, from Providence Rd to Chester Rd, Nether Providence
Township; C. clean and line water mains from: Lincoln Ave to ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇; ▇▇▇▇▇▇▇▇▇▇ Rd to Poplar Rd, Haverford Township; Winding Way to Newtown
Rd, Newtown Township; ▇▇▇▇▇▇▇▇▇ ▇▇ to Burmont Rd,
A-2
Upper ▇▇▇▇▇ Township; Glenwood Ave to Providence Rd, Upper ▇▇▇▇▇ Township;
Highland Ave to Windermere Ave, Upper ▇▇▇▇▇ Township; D. install water mains
from ▇▇▇▇▇▇▇ ▇▇ to Westminster Dr, Nether Providence; E. tie-in water mains
from/in: Gradyville Rd to Sommerset Ave, Newtown Township; F. install booster
pipeline in Media Line Rd, Newtown Township; G. install regulators at Industrial
Highway (Rt. 921) at ▇▇▇▇▇▇▇ Ave, ▇▇▇▇▇▇ Township; H. interconnect water main
from Industrial Highway (Rt. 921) and SEPTA Airport line overpass to the former
Tinicum Island Rd, Tinicum Township; I. construct booster station at ▇▇▇▇▇▇ ▇▇,
Media Borough; J. install inverters for sendout pumps, install basin outlet
troughs, install flocculators and baffles, and install chlorine scrubbers at
▇▇▇▇▇▇ Plant, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇; K. upgrade booster station
at Baltimore Pike and West Ave, Springfield Township; and L. replace pumps "E",
"C" and "A" at ▇▇▇▇ Creek Plant, ▇▇▇ ▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇.
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Project: A. Replace water mains from/in: Huntingdon
Pk, from Old Huntingdon Pk to Fox Chase Rd, Abington Township; Tyson Ave, from
▇▇▇▇▇ Ave to Edge ▇▇▇▇ ▇▇, Abington Township; Jenkintown Rd, from ▇▇▇▇▇▇▇ Ave to
Cedar St, Abington Township; Old York Rd, from Susquehanna Rd to railroad tracks
south of The Fairway, Abington Township; ▇▇▇▇▇▇▇▇▇ ▇▇, from Church Rd to
Township Line, Cheltenham Township; ▇▇▇▇▇ St, from Carmel Ave to Railroad Ave,
Cheltenham Township; Wynnewood Rd, from Winchester Rd to City Line Ave, Lower
Merion Township; Washington Ln, from Welsh Rd to north of Hydrant ▇▇-▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇; ▇▇▇▇▇▇▇▇▇ Rd, from ▇▇▇▇▇▇▇▇▇▇ Ave to ▇▇▇▇▇▇▇ Ave, Narberth
Borough; ▇▇▇▇▇▇▇ St, from Ehrenport to ▇▇▇▇▇ St, Springfield Township; County
Line Rd, from Gulph Rd to Quarry Rd, Upper Merion Township; B. tie-in water
mains from/in: Pine Rd, from Lamplighter Rd to Byberry Ave, Lower ▇▇▇▇▇▇▇▇
Township; ▇▇▇▇▇▇▇▇▇ ▇▇ to ▇▇▇▇▇ ▇▇, Upper Merion Township; C. clean and line
water mains from: ▇▇▇▇▇▇▇ ▇▇ to Keswick Ave, Abington Township; Warwick Rd to
▇▇▇▇▇▇▇ ▇▇, Lower Merion Township; Church Rd to ▇▇▇▇▇▇▇ Rd, Springfield
Township; D. relocate water main from Rt 202 to ▇-▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ for
PennDot Rt 202 construction; E. replace and relocate water main at Bethlehem
Pike over RR tracks between Summit Ave and Lafayette Ave., Whitemarsh Township
for PennDot bridge construction; F. replace and relocate water main from SR73 to
Church Rd, Abington Township for PennDot road reconstruction; G. extend water
main to Church Rd at Willow Grove Ave, Abington Township; H. relocate water
mains in SR-73 to Township Line Rd, Cheltenham Township for PennDot road
reconstruction; I. interconnect water main in Cheltenham Ave from ▇▇▇▇▇▇ St to
the Cheltenham booster station, Cheltenham Township; J. upgrade Scada system at
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇; K. construct two additional ▇▇▇▇▇ on
▇▇▇▇▇ Tract #1 & #2, Perkiomen Township; and L. construct water tank and booster
station Perkiomen Township; ▇▇▇▇ ▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇.
A-3
EXHIBIT "B"
NONDISCRIMINATION PROVISIONS
During the term of this Agreement, the Company agrees as to itself and
each tenant of the Project controlling, controlled by or under common control
with the Company (each of the Company and each such tenant, a "Contractor") as
follows:
1. Contractor shall not discriminate against any employee,
applicant for employment, independent contractor or any other Person because of
race, color, religious creed, handicap, ancestry, national origin, age or sex.
Contractor shall take affirmative action to insure that applicants are employed,
and that employees or agents are treated during employment, without regard to
their race, color, religious creed, handicap, ancestry, national origin, age or
sex. Such affirmative action shall include, but not limited to: employment,
upgrading, demotion or transfer, recruitment or recruitment advertising; layoff
or termination; rates of pay or other forms of compensation; and selection for
training. Contractors shall post in conspicuous places available to employees,
agents, applicants for employment and other Persons a notice to be provided by
the contracting agency setting forth these nondiscrimination provisions.
2. Contractor shall in advertisements or requests for
employment placed by it or on its behalf, state that all qualified applicants
will receive consideration for employment without regard to race, color,
religious creed, handicap, ancestry, national origin, age or sex.
3. Contractor shall send each to labor union or workers'
representative with which it has a collective bargaining agreement or other
contract or understanding, a notice advising said labor union or workers'
representative of its commitment to these nondiscrimination provisions. Similar
notice shall be sent to every other source of recruitment regularly utilized by
Contractor.
4. It shall be no defense to a finding of noncompliance with
these nondiscrimination provisions that Contractor has delegated some of its
employment practices to any union, training program or other source of
recruitment which prevents it from meeting its obligations. However, if the
evidence indicates that Contractor was not on notice of the third-party
discrimination or made a good faith effort to correct it, such factor shall be
considered a mitigating circumstance in determining appropriate sanctions.
5. Where the practices of a union or of any training program
or other program of recruitment will result in the exclusion of minority group
Persons, so that Contractor will be unable to meet its obligations under these
nondiscrimination provisions, Contractor shall then employ and fill vacancies
through other nondiscriminatory employment procedures.
6. Contractor shall comply with all state and federal laws
prohibiting discrimination in hiring or employment opportunities. In the event
of Contractor's noncompliance with these nondiscrimination provisions or with
any such laws, an Event of Default under this Agreement shall be deemed to have
occurred and Contractor may be declared temporarily ineligible for further
Commonwealth of Pennsylvania contracts, and other sanctions may be imposed and
remedies invoked.
B-1
7. Contractor shall furnish all necessary employment documents
and records to, and permit access to its books, records and accounts by, the
Issuer for purposes of investigation to ascertain compliance with these
nondiscrimination provisions. If Contractor does not possess documents or
records reflecting the necessary information requested, it shall furnish such
information on reporting forms supplied by the Issuer.
8. Contractor shall actively recruit minority subcontractors
and women subcontractors or subcontractors with substantial minority or women
representation among their employees.
9. Contractor shall include these nondiscrimination provisions
in every subcontract, so that such provisions will be binding upon each
subcontractor.
10. Contractor obligations under these nondiscrimination
provisions are limited to Contractor's facilities within Pennsylvania or, where
the contract is for purchase of goods manufactured outside of Pennsylvania, the
facilities at which such goods are actually produced
B-2