Loan Agreement between Pennsylvania Economic Development Financing Authority and The York Water Company, entered into October 8, 2019 and dated as of September 1, 2019

This Loan Agreement dated as of September 1, 2019, between the Pennsylvania Economic Development Financing Authority (the “Issuer”), a public instrumentality of the Commonwealth of Pennsylvania (the “Commonwealth”) and a public body corporate and politic organized and existing under the Pennsylvania Economic Development Financing Law, as amended (the “Act”) of the Commonwealth, and The York Water Company, a Pennsylvania corporation (the “Company”).

WHEREAS, the Act declares that there is a critical need for the production of water suitable for public use and consumption, that in order to insure continuing supplies of water resources at reasonable rates, it is necessary to provide additional means of financing projects directed to such production, and that to protect the health, safety and general welfare of the people of the Commonwealth and to further encourage economic development and efficiency within the Commonwealth by providing basic services and facilities, it is necessary to provide additional or alternative means of financing facilities for the furnishing of water; and

WHEREAS, the Issuer is authorized to enter into agreements providing for the loan financing of “projects” within the meaning of the Act that promote any of the public purposes set forth in the Act; and

WHEREAS, the York County Industrial Development Authority has issued its York County Industrial Development Authority Exempt Facilities Revenue Bonds, Series 2006 (The York Water Company Project) (the “2006 Bonds”) currently outstanding in the aggregate principal amount of $10,500,000 to provide funds to loan to the Company for the financing of (i) a portion of the Company’s 2006 Capital Budget, including, but not limited to the design, acquisition, construction, improvement, renovation, equipping and installation of (a) various structures, including distribution buildings, booster stations, pumping stations, and various plant and ancillary buildings, (b) spillway upgrades, standpipes, transmission and distribution mains, service lines, meters, fire hydrants, and pumping, water treatment and purification equipment, and (c) various other capital improvements, replacements and equipment for the Company’s water system located throughout York County, Pennsylvania, and (ii) the payment of all or a portion of the costs of issuance of the 2006 Bonds (the “2006 Bonds Project”); and

WHEREAS, the Issuer has issued its Exempt Facilities Revenue Bonds, Series 2008B (The York Water Company Project) (the “2008B Bonds”) to provide funds to loan to the Company for the financing of (i) a portion of the Company's 2008 Capital Budget, including, but not limited to the design, acquisition, construction, improvement, extension, renovation, equipping and installation of (a) various structures, including distribution buildings, booster stations, pumping stations, and various plant and ancillary buildings, (b) spillway upgrades, standpipes, transmission and distribution mains, service lines, meters, fire hydrants, water treatment, pumping and purification equipment, and (c) various other capital improvements, replacements and equipment for the Company’s water system located throughout York County and Adams County, Pennsylvania, and (ii) the payment of all or a portion of the costs of issuance of the 2008B Bonds (the “2008B Bonds Project”); and

WHEREAS, the Issuer has issued its Exempt Facilities Revenue Refunding Bonds, Series 2014 (The York Water Company Project) (the “2014 Bonds,” and together with the 2006 Bonds, the “Refunded Bonds”) currently outstanding in the aggregate principal amount of $14,870,000 to provide funds to loan to the Company for the financing of the current refunding of the 2008B Bonds (the “2014 Bonds Project,” and together with the 2006 Bonds Project and 2008B Bonds Project, the “Project”); and

WHEREAS, at the request of the Company, the Issuer has determined to issue $10,500,000 aggregate principal amount of its Exempt Facilities Revenue Refunding Bonds, Series A of 2019 (The York Water Company Project) (the “2019A Bonds”), in order to refund the outstanding 2006 Bonds for debt service savings (the “Series A Refunding Project”); and

WHEREAS, at the request of the Company, the Issuer has determined to issue $14,870,000 aggregate principal amount of its Exempt Facilities Revenue Refunding Bonds, Series B of 2019 (The York Water Company Project) (the “2019B Bonds,” and together with the 2019A Bonds, the “Bonds”) in order to refund the outstanding 2014 Bonds for debt service savings (the “Series B Refunding Project,” and together with the Series A Refunding Project, the “Refunding Project”); and

WHEREAS, the Issuer will enter into this Loan Agreement with the Company, under the terms of which the Company will agree to repay the loan of the proceeds of the Bonds by paying to the Issuer moneys sufficient to pay the principal of, and premium (if any) and interest on the Bonds as the same become due and payable and to pay certain administrative expenses in connection with the Bonds; and

WHEREAS, as security for the payment of said Bonds, the Issuer will assign and pledge to Manufacturers and Traders Trust Company, as trustee (the “Trustee”) under the terms of the Trust Indenture dated as of September 1, 2019 (the “Indenture”) certain rights, title and interest of the Issuer in (i) this Loan Agreement (except for the indemnification rights and expense reimbursement rights contained herein), and (ii) all amounts on deposit from time to time in the various funds created in, and subject to the conditions set forth in, the Indenture;

NOW THEREFORE, in consideration of the covenants and agreements herein made, and subject to the conditions herein set forth, the Issuer and the Company, intending to be legally bound, covenant and agree as follows:

All words and terms as used in this Loan Agreement shall have the same meanings given such words and terms in the Indenture, unless the context or use clearly indicates another or different meaning or intent. In addition, the terms defined in the recitals to this Loan Agreement shall have the meanings set forth therein and the following words and terms as used in this Loan Agreement shall have the following meanings, unless the context or use clearly indicates another or different meaning or intent:

“Bond Resolution” means the resolution of the governing body of the Issuer adopted on August 20, 2019 authorizing the issuance of the Bonds.

“Capitalized Lease” shall mean any lease, the obligation for Rentals with respect to which is required to be capitalized on a balance sheet of the lessee in accordance with generally accepted accounting principles.

“Capitalized Rentals” shall mean as of the date of any determination the amount at which the aggregate Rentals due and to become due under all Capitalized Leases under which the Company is a lessee would be reflected as a liability on a balance sheet of the Company.

“Costs of Issuance” means all costs and expenses incurred by the Issuer, the Local IDA or the Company in connection with the issuance and sale of the Bonds, including without limitation (i) fees and expenses of accountants, attorneys, engineers, credit enhancers and financial advisors, (ii) materials, supplies, and printing and engraving costs, (iii) recording and filing fees, (iv) rating agency fees, (v) the initial and first year’s annual fees and expenses (including, without limitation, counsel fees and expenses) of the Trustee, (vi) any underwriters’ discount or fee and expenses and (vii) the Issuer’s issuance fee and administrative and overhead expenses as provided in Section 6.6 of this Loan Agreement.

“Department” means the Department of Community and Economic Development of the Commonwealth.

“Default” shall mean any event or condition, the occurrence of which would, with the lapse of time or the giving of notice, or both, constitute an Event of Default as defined in Section 8.1 hereof.

“Disqualified Contractor” means a Person which has been suspended or debarred by the Commonwealth under its Contractor Responsibility Program, Management Directive 215.9, as amended or replaced by a successive directive rule, regulation or statute from time to time or has been convicted by a court of competent jurisdiction of a crime for which a term of imprisonment of one year or more could have been imposed, and any Person controlled by a Person which has been so suspended, debarred or convicted.

“Environmental Legal Requirement” shall mean any applicable law relating to public health, safety or the environment, including, without limitation, relating to releases, discharges or emissions to air, water, land or groundwater, to the withdrawal or use of groundwater, to the use and handling of polychlorinated biphenyls or asbestos, to the disposal, treatment, storage or management of solid or hazardous wastes or to exposure to toxic or hazardous materials, to the handling, transportation, discharge or release of gaseous or liquid substances and any regulation, order, notice or demand issued pursuant to such statute or ordinance, in each case applicable to the Property of the Company or the operation, construction or modification of any thereof, including without limitation the following: the Clean Air Act, the Federal Water Pollution Control Act, the Safe Drinking Water Act, the Toxic Substances Control Act, the Comprehensive Environmental Response Compensation and Liability Act as amended by the Superfund Amendments and Reauthorization Act of 1986, the Resource Conservation and Recovery Act as amended by the Solid and Hazardous Waste Amendments of 1984, the Occupational Safety and Health Act, the Emergency Planning and Community Right-to-Know Act of 1986, the Solid Waste Disposal Act, the Pennsylvania Safe Drinking Water Act and any other state statutes addressing similar matters, and any state statute providing for financial responsibility for cleanup or other actions with respect to the release or threatened release of hazardous substances and any state nuisance statute.

(g) judgments in course of appeal or otherwise in contest and secured by sufficient bond or security; or

(h) any right of set-off or banker’s lien in favor of any bank lender or any security interest in favor of any bank lender in deposits, moneys, securities or other property in the possession of or on deposit with, or in transit to, such bank lender or any of its affiliates.

“Favorable Opinion of Bond Counsel” means an opinion of Bond Counsel, or opinions of Co-Bond Counsel, as appropriate, addressed to the Issuer, the Company and the Trustee to the effect that the action proposed to be taken is authorized or permitted by the laws of the Commonwealth and this Indenture and will not, in and of itself, adversely affect any exclusion of interest on the Bonds from gross income of the owners thereof for federal income tax purposes.

“Funded Debt” of any Person shall mean (a) all Indebtedness for borrowed money or which has been incurred in connection with the acquisition of assets in each case having a final maturity of one or more than one year from the date of origin thereof (or which is renewable or extendible at the option of the obligor for a period or periods more than one year from the date of origin), including all payments in respect thereof that are required to be made within one year from the date of any determination of Funded Debt, and (b) all Guaranties of such Indebtedness described in clause (a).

“Guaranties” by any Person shall mean all obligations (other than endorsements in the ordinary course of business of negotiable instruments for deposit or collection) of such Person guaranteeing or in effect, guaranteeing any Indebtedness, dividend or other obligation, of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, including, without limitation, all obligations incurred through an agreement, contingent or otherwise, by such Person: (a) to purchase such Indebtedness or obligation or any Property or assets constituting security therefor, (b) to advance or supply funds (1) for the purchase or payment of such Indebtedness or obligation, (2) to maintain working capital or other balance sheet condition or, otherwise to advance or make available funds for the purchase or payment of such Indebtedness or obligation, or (c) to lease Property or to purchase Securities or other Property or services primarily for the purpose of assuring the owner of such Indebtedness or obligation of the ability of the primary obligor to make payment of the Indebtedness or obligation, or (d) otherwise to assure the owner of the Indebtedness or obligation of the primary obligor against loss in respect thereof. In any computation of the Indebtedness or other liabilities of the obligor under any Guaranty, the Indebtedness or other obligations that are the subject of such Guaranty shall be assumed to be direct obligations of such obligor.

“Indebtedness” of any Person shall mean and include, without duplication, all (a) obligations of such Person for borrowed money or which has been incurred in connection with the acquisition of Property or assets, (b) obligations secured by any lien or other charge upon Property or assets owned by such Person, even though such Person has not assumed or become liable for the payment of such obligations, (c) obligations created or arising under any conditional sale or other title retention agreement with respect to Property acquired by such Person, notwithstanding the fact that the rights and remedies of the seller, lender or lessor under such agreement in the event of default are limited to repossession or sale of Property, and (d) Capitalized Rentals under any Capitalized Lease. For the purpose of computing the “Indebtedness” of any Person, there shall be excluded any particular Indebtedness to the extent that, upon or prior to the maturity thereof, there shall have been deposited with the proper depositary in trust the necessary funds (or evidences of such Indebtedness, if permitted by the instrument creating such Indebtedness) for the payment, redemption or satisfaction of such Indebtedness; and thereafter such funds and evidences of Indebtedness so deposited shall not be included in any computation of the assets of such Person.

“Indemnified Parties” means the Issuer, the Local IDA, the Trustee, the Paying Agent and any of their respective officers, directors, members, commissioners, employees, agents, servants and any other person acting for or on behalf of the Issuer, the Trustee or the Paying Agent.

“Installment Loan Payment(s)” means payments required to be made by the Company to pay the Debt Service on the Bonds, as provided for in Section 6.4(b), (c), (d) and (f) of this Loan Agreement, including the principal of, premium, if any (whether at stated maturity, upon redemption prior to stated maturity, or upon acceleration of stated maturity), and interest on the Bonds when due.

“Loan Agreement” means this Loan Agreement, and all amendments and supplements hereto.

“Local IDA” means the York County Industrial Development Authority, a governmental entity of the Commonwealth in its capacity as an applicant sponsor for the Refunding Project.

“Plant Account” shall mean the plant account under the Pennsylvania Public Utilities Commission Uniform System of Accounts for Water Utilities dated November 21, 1946, as the same may be amended from time to time.

“Person” means an individual, a corporation, a partnership, an association, a joint stock company, a trust, any unincorporated organization, a governmental body or a political subdivision, a municipal corporation, public corporation or any other group or organization of individuals.

“Priority Debt” means Indebtedness of the Company secured by assets not otherwise permitted by clauses (i) through (iii) of Section 7.10(a) or as an Excepted Encumbrance.

“Project” means the facilities described in the recitals hereto and Exhibit A to this Loan Agreement, as amended from time to time as provided herein, and which are being refinanced with the proceeds of the Bonds.

 “Property” or “Properties” shall mean any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible.

“PUC” shall mean the Pennsylvania Public Utility Commission.

“Rentals” shall mean and include all fixed rents (including as such all payments which the lessee is obligated to make to the lessor on termination of the lease or surrender of the Property) payable by the Company, as lessee or sublessee under a lease of real or personal property, but shall be exclusive of any amounts required to be paid by the Company (whether or not designated as rents or additional rents) on account of maintenance, repairs, insurance, taxes and similar charges. Fixed rents under any so-called “percentage leases” shall be computed solely on the basis of the minimum rents, if any, required to be paid by the lessee regardless of sales volume or gross revenues.

“Seasonal Indebtedness” as of the date of any determination thereof shall mean (a) all Indebtedness for money borrowed other than Funded Debt and (b) Guaranties of Seasonal Indebtedness of others.

“Security” or “Securities” shall have the same meaning as in Section 2(1) of the Securities Act of 1933, as amended.

“Unassigned Issuer’s Rights” means all of the rights of the Issuer to receive insurance under Section 4.4 hereof, to inspect the Project under Section 4.11 hereof, to receive payments and to be reimbursed for attorney’s and other fees and expenses under Sections 6.6 and 8.3 hereof, to be held harmless and indemnified under Section 7.1 hereof, to receive information under Section 7.3, and, to the extent provided in this Agreement, to give or withhold consent to or approval of amendments, modifications, and terminations of this Agreement.

“Voting Stock” shall mean Securities of any class or classes, the holders of which are ordinarily, in the absence of contingencies, entitled to elect a majority of the corporate directors (or Persons performing similar functions).

(k) No Defaults.  No event has occurred and no condition exists with respect to the Issuer which would constitute an “Event of Default” as defined in the Indenture or which, with the lapse of time or with the giving of notice or both, would become an “Event of Default” under the Indenture.

(l) Limited Obligations.  The Bonds shall be limited obligations of the Issuer and shall be payable by the Issuer solely out of the Revenues.  The Bonds shall never be payable out of any other funds of the Issuer except the Revenues.  Neither the faith and credit nor the taxing power of the Commonwealth, the Issuer, or any other political corporation, subdivision or agency thereof is pledged to the payment of the principal of and premium, if any, or interest on such Bonds.

(m) Requirements Satisfied.  All requirements and conditions specified in the Act and all other laws and regulations applicable to the adoption of the Bond Resolution, the execution and delivery of this Loan Agreement and the Indenture, and the issuance and delivery of the Bonds will be fulfilled prior to the initial delivery of the Bonds to the purchasers thereof.

The Company makes the following representations as the basis for the undertakings on its part herein contained:

To provide funds for the financing of the Refunding Project, the Issuer will issue the Bonds upon the terms and conditions contained in this Loan Agreement and the Indenture and will loan the proceeds thereof to the Company by causing the Bond proceeds to be applied as provided in Article V hereof.  The Company shall pay all Costs of completing the Refunding Project to the extent that such Costs exceed the loan proceeds, including interest earnings, available therefor.

The Company will repay the loan of the Bond proceeds by making the payments required by Article VI hereof.

The Company shall continue to operate the Project in such manner as to comply in all material respects with the Act and all applicable requirements of federal, state and local laws and the regulations, rules and orders of any federal, state or local agency, board commission or court having jurisdiction over the Project or the operation thereof, including without limitation applicable zoning, planning, building and environmental laws, regulations, rules and orders; provided that the Company shall be deemed in compliance with this Section so long as it is acting with due diligence to correct any violations of any of the foregoing or contesting in good faith any such requirement by appropriate legal proceedings.  The Company shall pay all costs and expenses of operation and maintenance of the Project, including all applicable taxes.  During such period as the Project is operated in accordance with the provisions of this Loan Agreement, the Company will, within the design capabilities thereof, cause the Project to be operated and maintained in accordance with all applicable, valid and enforceable rules and regulations; provided, that the Company reserves the right to contest in good faith any such rules or regulations or the application thereof to the Project.  It is understood and agreed that the Issuer shall have no duties or responsibilities whatsoever with respect to the operation or maintenance of the Project, or the performance of the Project for its designed purposes.

Subject to the provisions of Section 4.6 hereof, the Company agrees to maintain, or cause to be maintained, all necessary insurance with respect to the Project in accordance with its customary insurance practices and the practices of Persons operating similar facilities, which may include self-insurance.  All costs of maintaining insurance with respect to the Project shall be paid by the Company, and the Issuer and the Trustee shall have no obligation or liability in this regard.  All general liability insurance policies relating to the Project site or facilities shall name the Issuer and the Trustee as additional insureds as their interests may appear.

Subject to the provisions of Section 4.6 hereof, the Company agrees that it will (i) maintain, or cause to be maintained, the Project and all of its other properties in as reasonably safe condition as its operations shall permit and (ii) maintain, or cause to be maintained, the Project and all of its other properties in good repair and in good operating condition, ordinary wear and tear excepted, making from time to time all necessary repairs thereto and renewals and replacements thereof material to the integrity of the water system or to the provision of adequate service to the Company’s customers.  All costs of operating and maintaining the Project and all of its other properties shall be paid by the Company, and the Issuer shall have no obligation or liability in this regard.

Although the Company intends to operate, or cause to be operated, the Project for its designed purposes until the date on which no Bonds are Outstanding, subject to the provisions of Section 6.10 hereof, the Company is not required by this Loan Agreement to operate, or cause to be operated, any portion of the Project after the Company shall deem in its sole discretion that such continued operation is not advisable and in such event it is not prohibited by this Loan Agreement from selling, leasing or retiring all or any such portion of the Project.  Subject to the provisions of Section 6.10 hereof, the net proceeds from such sale, lease or other disposition, if any, shall belong to, and may be used for any lawful purpose by, the Company.  Upon discontinuance of operation of the Project in accordance with this Section 4.6, the Company shall be discharged from its obligations to insure, maintain and repair the Project or to cause the Project to be insured, maintained and repaired as set forth in Sections 4.4 and 4.5 hereof.

Subject to the provisions of Sections 4.4 and 6.10 hereof, the net proceeds of any insurance or condemnation award as a result of the destruction or condemnation of the Project or any portion thereof shall belong to, and may be used for any lawful purpose by, the Company.

Throughout the term of this Loan Agreement, the Company shall comply, or cause compliance, with applicable workers’ compensation laws of the Commonwealth.

(a) The Company will promptly pay and discharge all lawful taxes, assessments and governmental charges or levies imposed upon the Company or upon or in respect of all or any part of the Property or business of the Company, all trade accounts payable in accordance with usual and customary business terms, and all claims for work, labor or materials, which if unpaid might become a lien or charge upon any Property of the Company including the Installment Loan Payments; provided the Company shall not be required to pay any such tax, assessment, charge, levy, account payable or claim if (1) the validity, applicability or amount thereof is being contested in good faith by appropriate actions or proceedings which will prevent the forfeiture or sale of any Property of the Company or any material interference with the use thereof by the Company, and (2) the Company shall set aside on its books, reserves deemed by it to be adequate with respect thereto.

(b) The Company will promptly comply with all laws, ordinances or governmental rules and regulations to which it is subject, including without limitation, the Occupational Safety and Health Act of 1970, the Employees Retirement Income Security Act of 1974, as amended, and all Environmental Legal Requirements, the violation of which would materially and adversely affect the Properties, business, prospects, profits or condition (financial or otherwise) of the Company or would result in any lien or charge upon any material portion of the Property of the Company, subject, however, to the Company’s right to contest in good faith the application of any such laws, rules or regulations to the Company or its operations so long as such contest does not result in a material threat to the operation of the Company’s water system or its ability to make the payments due hereunder.

It is recognized that the Issuer’s only source of funds with which to carry out its commitments under the Bonds, the Indenture or this Loan Agreement will be from the proceeds from the sale of the Bonds, the Installment Loan Payments, or from any available income or earnings derived therefrom, or from any funds which otherwise might be made available by the Company; and it is expressly agreed that the Issuer shall have no liability, obligation, or responsibility with respect to this Loan Agreement or the Refunding Project except to the extent of funds available from such sources.  If, for any reason, the proceeds from the sale of the Bonds are not sufficient to pay all the costs of completing the Refunding Project, the Company shall complete the Refunding Project, and the Company shall pay such costs from its own funds, but it shall not be entitled to reimbursement therefor, or to any diminution in or postponement of any payments required to be made by the Company hereunder.

Subject to reasonable security and safety regulations and upon reasonable notice, the Issuer and the Trustee, and their respective agents and representatives, shall have the right during normal business hours to inspect the Project and the books and records of the Company pertaining to the Project; provided, however, that this right is subject to federal, state and local laws and regulations applicable to the site of the Project.  The right of access hereby reserved to the Issuer and the Trustee may be exercised only after such agent or representative shall have executed release of liability and secrecy agreements (to the extent permitted by law, in the case of an Issuer representative) if requested by the Company in the form then currently used by the Company, and nothing contained in this Section or in any other provision of this Loan Agreement shall be construed to entitle the Issuer or the Trustee to any information or inspection involving the confidential expertise of the Company.

In order to provide funds for the Refunding Project, the Issuer, concurrently with the execution of this Loan Agreement, will sell, issue and deliver to the initial purchasers thereof the Bonds, all in accordance with the Indenture.

The obligations of the Company under this Loan Agreement, including specifically the obligation to pay Installment Loan Payments and Administrative Expenses and its obligations under Article VI hereof shall be direct general obligations of the Company.  Prior to or simultaneously with the issuance of the Bonds, the Issuer will assign to the Trustee under the terms of the Indenture all of the Issuer’s right, title, and interest in and to this Loan Agreement including specifically the Installment Loan Payments but excepting all Unassigned Issuer’s Rights.

The Issuer hereby approves the current refunding of the 2006 Bonds with the proceeds of the 2019A Bonds, together with other available funds of the Company, to pay interest accrued on the 2006 Bonds to their date of redemption. The 2006 Bonds will be redeemed on October 8, 2019.

The Issuer hereby approves the current refunding of the 2014 Bonds with the proceeds of the 2019B Bonds, together with other available funds of the Company, to pay interest accrued on the 2014 Bonds to their date of redemption. The 2014 Bonds will be redeemed on October 8, 2019.

The Issuer hereby gives its express written authority to the Company as provided in the Indenture to provide written direction regarding the investment of any Fund held by the Trustee pursuant to the Indenture.

The governing body of the Issuer has adopted the Bond Resolution authorizing the execution of this Loan Agreement and the Indenture and the issuance of the Bonds.  The Company hereby approves the Indenture.  It is hereby agreed that the foregoing approval of the Indenture constitutes the acknowledgment and agreement of the Company that the Bonds, when issued, sold and delivered as provided in the Bond Resolution and the Indenture, will be issued in accordance with and in compliance with this Loan Agreement, notwithstanding any other provisions of this Loan Agreement or any other contract or agreement to the contrary.  Any Registered Owner is entitled to rely fully and unconditionally on the foregoing approval.  Notwithstanding any provisions of this Loan Agreement or any other contract or agreement to the contrary, the Company’s approval of the Indenture shall be the Company’s agreement that all covenants and provisions in this Loan Agreement and the Indenture affecting the Company shall, upon the delivery of the Bonds and the Indenture, become valid and binding covenants and obligations of the Company so long as the Bonds, premium, if any, and the interest thereon are outstanding and unpaid.  Particularly, the obligation of the Company to pay, promptly when due, all Installment Loan Payments specified in this Loan Agreement and the Indenture shall be absolute and unconditional, and said obligation may be enforced as provided in this Loan Agreement and the Indenture.

After the issuance of any Bonds, the Issuer shall not refund any of the Bonds or change or modify the Bonds in any way, except as provided for in the Indenture, without the prior written approval of an Authorized Company Representative; nor shall the Issuer redeem any Bonds prior to the maturity date except upon the written request of an Authorized Company Representative, unless such redemption is required or permitted by the Indenture without such request.

The Issuer, upon the written request of the Company (and provided that the affected Bonds are subject to redemption prior to maturity at the option of the Issuer or the Company, and provided that such request is received in sufficient time prior to the date upon which such redemption is proposed), shall promptly take or cause to be taken all action that may be necessary under the applicable redemption provisions to effect such redemption prior to maturity, to the full extent of funds either made available for such purpose by the Company or already on deposit in the Debt Service Fund and available for such purpose.  The redemption of any Outstanding Bonds prior to maturity at any time shall not relieve the Company of its absolute and unconditional obligation to pay each remaining Installment Loan Payment with respect to any Outstanding Bonds, as specified in the Indenture.  If a redemption of Bonds is required pursuant to the provisions of the Indenture, the Company agrees as provided herein to promptly make Installment Loan Payments sufficient to pay the principal of, premium, if any, and interest on the Bonds due on such redemption date.

The Company shall pay, or cause to be paid, an amount equal to the reasonable and documented fees and charges of the Trustee for services rendered as Trustee or Paying Agent under the Indenture and its reasonable and documented expenses incurred as Trustee under the Indenture, including reasonable and documented fees and expenses of its counsel; the Company shall also reimburse the Trustee for any reasonable and documented costs or expenses properly incurred in discharging its duties under the Indenture.  The Trustee’s right to receive its reasonable fees, charges and expenses hereunder shall be secured by a lien on moneys held by it in the Debt Service Fund and, upon an Event of Default hereunder, the Trustee shall have a right of payment prior to the payment of the owners of the Bonds as provided in Section 8.11 of the Indenture. This Section 6.5 shall survive the payment of all Debt Service due relating to the Bonds and termination of this Loan Agreement and the Indenture.

The Company shall pay or cause to be paid all of the Issuer’s and Local IDA’s reasonable, actual out-of-pocket expenses and costs in connection with the issuance of the Bonds, including, without limitation, all financing, legal, printing, and other expenses and all Costs of Issuance incurred in issuing the Bonds (including the fees and expenses of bond counsel and the Issuer’s financial advisor) and the Issuer’s fee of 0.20% of the principal amount of the Bonds for issuing the Bonds, less an application fee of $50,740.  Also, in the future the Company shall pay to the Issuer upon receipt of statements therefor from time to time, such amounts as are necessary to pay or reimburse the Issuer for its reasonable and necessary expenses and costs attributable to the Bonds and the Project, including, but not limited to, an annual audit/service fee and any amounts incurred by the Issuer in connection with requests related to the Bonds made by the Internal Revenue Service. This Section 6.6 shall survive the payment of all Debt Service due relating to the Bonds and termination of this Loan Agreement and the Indenture.

The obligations of the Company to make the payments required and to perform the covenants contained in Sections 6.4, 6.5, 6.6, 6.9, 6.10, 7.1 and 8.3 and to perform and observe the other agreements on its part contained herein shall be absolute and unconditional and shall not be subject to diminution by set-off, counterclaim, abatement or otherwise.  Until payment of all amounts relating to the Bonds has been made, the Company (a) will not suspend or discontinue any payments provided for in this Loan Agreement, except to the extent the same have been prepaid, (b) will perform and observe all its other agreements contained herein, and (c) except as provided in Section 9.1, will not terminate this Loan Agreement for any cause, including, without limiting the generality of the foregoing, any acts or circumstances that may constitute failure of consideration, sale, loss, eviction or constructive eviction, destruction of or damage to the Project, commercial frustration of purpose, any change in the tax or other laws of the United States of America or of the Commonwealth or any political subdivision of either, or any failure of the Issuer to perform and observe any agreement, whether express or implied, or any duty, liability or obligation arising out of or in connection herewith or with the Indenture.  Nothing contained in this Section shall be construed to release the Issuer from the performance of any of the agreements on its part herein contained and in the event the Issuer shall fail to perform any such agreement on its part, the Company may take such action as the Company may deem necessary to perform or compel performance, provided that no such action shall violate the agreements on the part of the Company contained in this Loan Agreement or postpone or diminish the amounts required to be paid by the Company pursuant to this Loan Agreement.  Upon the issuance and delivery of the Bonds to the initial purchasers thereof, the Company shall have received, and the Issuer shall have given, full and complete consideration for the Company’s obligation hereunder to make Installment Loan Payments.

The Company shall have, and is hereby granted, the option to prepay the amounts required to be paid by the Company under Section 6.4(b) in whole or in part and to direct the Trustee to redeem the Bonds in whole or in part, as the case may be, if the Company determines to exercise any optional redemption rights under the terms of the Bonds or if any of the events described in Article V of the Indenture requiring the redemption of Bonds shall have occurred.  The Company may at any time deliver money, and/or Government Obligations, to the Trustee with written instructions to the Trustee to hold such money, and/or Government Obligations, pursuant to Article X of the Indenture in connection with a discharge of the Indenture.  The Issuer agrees that, at the request at any time of the Company, it will cooperate with the Company to cause the Bonds or any portion thereof to be redeemed, or to cause the Indenture to be discharged, to the extent permitted by the Indenture.

The Company acknowledges receipt of the Indenture and agrees to do and perform all acts and things contemplated in the Indenture to be done or performed by it and to not interfere with the exercise of the power and authority granted to the Trustee in the Indenture.  The Company further agrees to aid in furnishing any documents, certificates or opinions that may be required under the Indenture.

It is the intention of the Company and the Issuer that the interest on the Bonds be excludable from the gross income of the holders thereof for federal income tax purposes by reason of Section 103(a) of the Code, except for any Bond for any period that such Bond is owned by a person who is a “substantial user” of the Project or a “related person” within the meaning of Section 147(a) of the Code, and that substantially all of the proceeds of the Bonds will be used to refinance “facilities for the furnishing of water” within the meaning of Section 142(a)(4) of the Code and any Regulations promulgated with respect thereto.  To that end, the Company and the Issuer (to the extent reasonably within the control of the Issuer) covenant with each other to refrain from any action which would adversely affect, or to take such action to assure, the treatment of the Bonds as obligations described in Section 103(a) of the Code, the interest on which is not includable in the gross income of the holders thereof (other than the income of a “substantial user” of the Project or a “related person” within the meaning of Section 147(a) of the Code) for purposes of federal income taxation.  None of the covenants and agreements herein contained shall require either the Company or the Issuer to enter an appearance or intervene in any administrative, legislative or judicial proceeding in connection with any changes in applicable laws, rules or regulations or in connection with any decisions of any court or administrative agency or other governmental body affecting the taxation of interest on the Bonds.

The Trustee shall not be responsible for any determination or calculation concerning arbitrage rebate with respect to the Bonds, or for determining whether the yield on any investments made in accordance with the Indenture would cause, or whether any other facts exist which would cause, any of the Bonds to become “arbitrage bonds” under Section 148 of the Code.

Pursuant to Section 5.6 of the Indenture, the Company is given the right to purchase Bonds in lieu of redemption.  Provided that, prior to the date that any such Bonds are sold by the Company, the Company shall receive a Favorable Opinion of Bond Counsel.

The Company hereby accepts and agrees to be bound by the Nondiscrimination - Sexual Harassment clause set forth in Exhibit B attached hereto.

SECTION 6.13.  Right to Know.

The Company acknowledges that the Refunding Project is subject to the Right to Know Law set forth in Exhibit C hereto.

The Company agrees, whether or not the transactions contemplated by this Loan Agreement and the Indenture shall be consummated:

In the event that any action or proceeding is brought against any Indemnified Party by reason of any such claim, such action or proceeding shall be defended against by counsel to the Company, unless the Indemnified Party shall determine, upon advice of counsel to the Indemnified Party, that the Indemnified Party’s interests conflict with the interests of Company, in which event the Indemnified Party may select its own counsel.  In the event such defense is by counsel to the Indemnified Party on behalf of the Indemnified Party, the Company shall indemnify the Indemnified Party for reasonable costs of counsel to the Indemnified Party allocated to such defense and charged to the Indemnified Party.  The Company, upon notice from the Indemnified Party, shall resist and defend such an action or proceeding on behalf of the Indemnified Party.  The Indemnified Party shall provide the Company prompt written notice of any claim or suit with respect to which it has a right of indemnity hereunder, but the failure to provide such notice shall not limit or impair the rights of any Indemnified Party hereunder except to the extent that such failure causes actual damage or loss to the Company.  The Indemnified Party shall, at the Company’s expense, provide all reasonable assistance requested by the Company in its defense and/or settlement of any such claim or suit.  Neither party shall settle or pay any such claim or suit without the prior written consent of the other party, which shall not be unreasonably withheld.

The provisions of this Section shall not apply to any claim or liability to the extent resulting from the Indemnified Party’s acts of negligence, bad faith, fraud or deceit or for any claim or liability which the Company was not given the opportunity to contest (except as set forth in the preceding paragraph), due to the negligence of the Indemnified Party.

The Company also agrees to pay the documented expenses (including reasonable attorneys’ fees) of any Indemnified Party in enforcing this Section 7.1.  The provisions of this Section shall survive the payment of the Bonds, the termination of this Loan Agreement, the termination of the Indenture, and, as to the Trustee, the removal or resignation of the Trustee.

The Company agrees that during the term of this Loan Agreement it will maintain its corporate existence, will not dissolve or otherwise dispose of all or substantially all of its assets and will not consolidate with or merge into another corporation; provided, however, that the Company may, without violating the agreement contained in this Section, consolidate with or merge into another corporation, or sell or otherwise transfer to another corporation all or substantially all of its assets as an entirety and thereafter dissolve, if (a) the Issuer consents in writing, which consent shall not be unreasonably withheld (b) the surviving, resulting or transferee corporation, as the case may be, assumes in a writing delivered to the Trustee all of the obligations of the Company herein and under the Tax Documents, and is duly qualified to do business in the Commonwealth, (c) at the time of such consolidation or merger and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing, (d) after giving effect to such consolidation or merger the surviving corporation would be permitted to incur at least $1.00 of additional Funded Debt under the provisions of Section 7.9 hereof, and (e) the provisions of Section 7.6 are satisfied.

The Company will keep proper books of record and account in which full and correct entries will be made of all dealings or transactions of or in relation to the business and affairs of the Company, in accordance with generally accepted accounting principles consistently maintained (except for changes disclosed in the financial statements furnished pursuant to this Section 7.3 and concurred in by the independent public accountants referred to herein), and will furnish to the Trustee and upon request, to the Issuer:

(a) Quarterly Statements.  As soon as available and in any event within 60 days after the end of each quarterly fiscal period (except the last) of each fiscal year, duplicate copies of:

all in reasonable detail and certified as complete and correct, by an authorized financial officer of the Company;

(b) Annual Statements.  As soon as available and in any event within 120 days after the close of each fiscal year of the Company, duplicate copies of:

in each case setting forth in comparative form the consolidated figures for the preceding fiscal year, all in reasonable detail and accompanied by an opinion thereon of a firm of independent public accountants of recognized national standing selected by the Company to the effect that the consolidated financial statements have been prepared in accordance with generally accepted accounting principles consistently applied (except for changes in application in which such accountants concur) and present fairly, in all material respects, the financial condition of the Company and that the examination of such accountants in connection with such financial statements has been made in accordance with generally accepted auditing standards and accordingly, includes such tests of the accounting records and such other auditing procedures as were considered necessary in the circumstances;

To the extent not furnished pursuant to the foregoing provisions of this Section 7.3, the Company agrees to furnish to the Issuer and Trustee, copies of the annual financial statements and other information filed with MSRB pursuant to the Company’s continuing disclosure undertaking referred to in the Bond Purchase Agreement.  Such statements and other information shall be filed with the Issuer and the Trustee within ten (10) days of the filings made pursuant to such continuing disclosure undertaking.

Delivery of reports to the Trustee under this Section 7.4 is for informational purposes only and the Trustee’s receipt of the foregoing shall not imply a duty to review and shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company’s compliance with any of their covenants hereunder.

Except for the assignment and pledge described in the Indenture, the Issuer agrees that it will not attempt to further assign, pledge, transfer or convey its interest in or create any assignment, pledge, lien, charge or encumbrance of any form or nature with respect to the rights and interests herein described.

Upon payment of all Debt Service due relating to the Bonds, and payment of all fees and charges of the Issuer and the Trustee, all as provided in Article X of the Indenture, all references herein to the Bonds and the Trustee shall be ineffective and neither the Issuer, the Local IDA, the Trustee, the Paying Agent nor the holders of any of the Bonds shall thereafter have any rights hereunder and the Company shall have no further obligation hereunder, saving and excepting those that shall have theretofore vested and remain unsatisfied and any right of the Issuer, the Local IDA, the Trustee or the Paying Agent to indemnification under Section 7.1 and payment of fees and costs under Section 6.5, Section 6.6, and Section 8.3, which rights shall survive the payment of all Debt Service due relating to the Bonds and the termination of this Loan Agreement and the Indenture.

(a) The Company shall not assign this Loan Agreement or any interest of the Company herein, either in whole or in part, without the prior written consent of the Trustee, which consent shall be given if the following conditions are fulfilled:

(b) The Company may, subject to the provisions of Section 6.10, lease the Project, in whole or in part, to one or more other Persons, provided that:

(c) The Company shall not sell, assign or otherwise dispose of (whether in one transaction or in a series of transactions) its interest in the Project or any material portion thereof, other than is permitted by Section 7.6(a) and other than leases permitted under Section 7.6(b) or undertake or permit the demolition or removal of the Project or any material portion thereof without the prior written consent of the Issuer; provided that the Company shall be permitted to sell, transfer, assign or otherwise dispose of or remove any portion of the Project which is retired or replaced in the ordinary course of business.

No amendment, change, addition to, or waiver of any of the provisions of this Loan Agreement or the Indenture shall be made except pursuant to Article IX and Article XI of the Indenture.

Notwithstanding anything in this Loan Agreement to the contrary, it is the intention of the parties hereto that no vendor’s lien and/or privilege, mortgage, right of rescission or stipulation for the benefit of a third party shall be created by execution of this Loan Agreement, and if any such lien, privilege, condition, or benefit should be deemed to have been created by execution of this Loan Agreement, they are expressly released, renounced, waived and abandoned by the parties hereto.

(a) The Company will not have outstanding, or in any manner be liable in respect of, any Funded Debt or Seasonal Indebtedness, except the following:

(b) The renewal, extension or refunding of any Funded Debt issued or incurred in accordance with the limitations of this Section 7.9 shall constitute the issuance of additional Funded Debt, which is, in turn, subject to the limitations of the applicable provisions of this Section 7.9, but any Indebtedness paid or defeased from the proceeds of additional Funded Debt may be excluded from outstanding Indebtedness for purposes of this Section 7.9.

(c) Subject to compliance with this Section 7.9, nothing contained in this Agreement shall prohibit the Company from incurring, issuing or permitting to exist any Indebtedness.

(a) The Company will not create or incur, or suffer to be incurred or to exist, any mortgage, pledge, security interest, encumbrance, lien or charge of any kind on its Property or assets, whether now owned or hereafter acquired, or upon any income or profits therefrom, or transfer any Property for the purpose of subjecting the same to the payment of obligations in priority to the payment of its or their general creditors, or acquire or agree to acquire any Property or assets upon conditional sales agreements or other title retention devices, except Excepted Encumbrances; provided, however, that this requirement shall not be applicable to, nor prevent:

(b) In the event any Property or assets of the Company are subject to a lien or charge not otherwise permitted by Section 7.10(a) above to secure any Indebtedness of the Company (for purposes of this Section 7.10, the “Liened Property”), such lien or charge shall nevertheless be deemed permitted if the Company makes effective provision whereby the Bonds shall (so long as any other Indebtedness shall be so secured) be secured (along with any other Indebtedness similarly entitled to be equally and ratably secured) by a direct lien on the Liened Property on parity to the lien or liens securing any and all such other Indebtedness.

(such declarations or payments of dividends, purchases, redemptions or retirements of capital stock and warrants, rights or options, and all such other distributions, conveyances and transfers being herein collectively called “Restricted Payments”), if after giving effect thereto the aggregate amount of Restricted Payments made during the period from and after December 31, 1982 to and including the date of the making of the Restricted Payment in question, would exceed the sum of (1) $1,500,000 plus (2) earned surplus of the Company, on a non-consolidated basis, accumulated after December 31, 1982, determined without any deduction on account of such Restricted Payments, provided, however, that notwithstanding the foregoing, in no event shall the Company make any distribution, conveyance or transfer to any subsidiary or affiliate of any Property constituting the Plant Account.

The Company will not declare any dividend which constitutes a Restricted Payment payable more than 60 days after the date of declaration thereof.

For the purposes of this Section 7.11, the amount of any Restricted Payment declared, paid or distributed in Property of the Company shall be deemed to be the greater of the book value or fair market value (as determined in good faith by the Board of Directors of the Company) of such Property at the time of the making of the Restricted Payment in question.

(c) Upon the occurrence of an Event of Default of which the Trustee has actual knowledge, the Trustee (or in the case of an Event of Default arising out of Unassigned Issuer’s Rights, the Issuer) shall have the power to proceed with any right or remedy granted by the Constitution and laws of the Commonwealth, as it may deem best, including without limitation any suit, action or special proceeding in equity or at law, including mandamus proceedings, for the specific performance of any agreement, obligation or covenant contained herein or for the enforcement of any proper legal or equitable remedy as the Trustee shall deem most effectual to protect the rights of the Registered Owners, including without limitation, acceleration of all amounts payable hereunder; provided, however, any such proceedings shall be subject to the provisions of Section 7.1(c) of the Indenture relating to force majeure.  Upon the occurrence of an Event of Default under Section 7.1(a)(ii) of the Indenture and upon the occurrence of any other Event of Default under the Indenture pursuant to the terms of which the Trustee shall have declared the Bonds immediately due and payable, then all payments required to be made by the Company under Section 6.4(b) (other than interest not yet accrued) shall become immediately due and payable.

(d) Any amounts collected for non-payment of amounts described in Section 6.4 hereof pursuant to actions taken under this Section shall be paid into the Debt Service Fund and applied in accordance with the provisions of the Indenture.

If, in compliance with the requirements of Section 7.2 of the Indenture, the Trustee shall annul an acceleration declared due to any Event of Default under the Indenture, such annulment shall be deemed to also rescind any acceleration of all payments required under Section 6.4.  In case of any such annulment, or in case any proceeding taken by the Trustee on account of any such Event of Default shall have been discontinued or abandoned or determined adversely, then and in every such case the Issuer, the Company, the Trustee and the Registered Owners shall be restored to their former positions and rights hereunder, but no such annulment shall extend to any subsequent or other Event of Default or impair any right consequent thereon.

In the event the Company should default under any of the provisions of this Loan Agreement and the Issuer or the Trustee should employ attorneys or incur other expenses for the collection of payments required hereunder or the enforcement of performance or observance of any obligation or agreement on the part of the Company herein contained, the Company agrees that it will upon demand therefore pay to the Issuer or the Trustee the reasonable fees and expenses of such attorneys and such other expenses so incurred by the Issuer or the Trustee. This Section 8.3 shall survive the payment of all Debt Service due relating to the Bonds and the termination of this Loan Agreement and the Indenture.

The Company shall notify the Trustee and the Issuer in writing immediately if it becomes aware of the occurrence of any Event of Default hereunder or of any fact, condition or event which, with the giving of notice or passage of time or both, would become an Event of Default.

Notwithstanding any other provision hereof, upon the occurrence of an Event of Default arising out of Unassigned Issuer’s Rights, the Issuer reserves the right to exercise or refrain from exercising remedies under the Loan Agreement with respect to such Event of Default and such Event of Default may not be waived or annulled without the prior written consent of the Issuer.

Notwithstanding any other provision of this Loan Agreement to the contrary, the occurrence of a Determination of Taxability caused by any failure by the Company to observe or perform any covenant, condition or agreement on its part to be observed or performed hereunder or under the Indenture or the Tax Compliance Agreement, or caused by the failure of any representation or warranty by the Company herein or in the Tax Compliance Documents to be true and correct, shall not, by itself, be deemed an event of default under this Loan Agreement, provided that the Bonds are redeemed on account of such Determination of Taxability as and to the extent required under the Indenture.

Subject to all provisions hereof which expressly state that the same shall survive termination hereof, this Loan Agreement shall terminate when payment of all Debt Service relating to the Bonds shall have been made and all fees, indemnities, expenses and charges of the Issuer and the Trustee have been fully paid or provision satisfactory to such parties made for such payment.

All notices, approvals, consents, requests and other communications hereunder shall be in writing and shall be deemed to have been given when delivered by hand or overnight courier service or mailed by first class registered or certified mail, return receipt requested, postage prepaid, or sent by telecopy and addressed as follows:

A duplicate copy of each notice, approval, consent, request or other communication given hereunder by the Issuer, the Company or the Trustee to any one of the others shall also be given to all of the others at the address furnished from time to time.  The Issuer, the Company and the Trustee may, by notice given hereunder, designate any further or different addresses to which subsequent notices, approvals, consents, requests or other communications shall be sent or persons to whose attention the same shall be directed.

This Loan Agreement is made for the exclusive benefit of the Issuer, the Trustee, the Paying Agent, the Registered Owners, the Beneficial Owners, the Company, and their respective successors and assigns herein permitted, and not for any other third party or parties; and nothing in this Loan Agreement, expressed or implied, is intended to confer upon any party or parties other than the Issuer, the Trustee, the Paying Agent, the Registered Owners, the Beneficial Owners, the Company, and their respective successors and assigns herein permitted, any rights or remedies under or by reason of this Loan Agreement.

If any provision hereof shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof.

This Loan Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.

The captions and headings herein are for convenience only and in no way define, limit or describe the scope or intent of any provisions hereof.

This Loan Agreement shall be governed by, and construed in accordance with, the laws of the Commonwealth.

If any payment required hereunder is due on a date that is not a Business Day, payment shall be made on the next succeeding Business Day with the same force and effect as if made on the date fixed for such payment, and no interest shall accrue on such amount for the period after such date.

The Company hereby acknowledges that the Bonds are intended to be issued in book-entry form through DTC and that DTC has certain timing requirements and notice requirements.  The Company hereby agrees to make payments and give notices in a manner sufficient to comply from time to time with the DTC requirements, for so long as the Bonds are in book-entry form at DTC and so long as the Company is informed of such requirements.  If, in the judgment of the Company, there are any changes in such DTC requirements that will require the Company to make payments and give notices in a manner materially different than otherwise required under this Agreement, then the Issuer and the Trustee agree to cooperate with any request by the Company to utilize another securities depository for the Bonds or terminate the book-entry only system for the Bonds.

(a) In the exercise of the powers of the Issuer or the Trustee hereunder or under the Indenture, including without limitation the application of moneys and the investment of funds, neither the Issuer or the Trustee nor their members, directors, officers, employees, attorneys or agents shall be accountable to the Company for any action taken or omitted by any of them in good faith and without negligence and with the belief that it is authorized or within the discretion or rights or powers conferred.  The Issuer and the Trustee and their members, directors, officers, employees, attorneys and agents shall be protected in acting upon any paper or document believed to be genuine, and any of them may conclusively rely upon the advice of counsel and may (but need not) require further evidence of any fact or matter before taking any action.  In the event of any default by the Issuer hereunder, the liability of the Issuer to the Company shall be enforceable only out of the Issuer’s interest under this Loan Agreement and there shall be no other recourse for damages by the Company against the Issuer, its members, directors, officers, employees, attorneys and agents, or any of the property now or hereafter owned by it or them.  All covenants, obligations and agreements of the Issuer contained in this Loan Agreement or the Indenture shall be effective to the extent authorized and permitted by applicable law.  No such covenant, obligation or agreement shall be deemed to be a covenant, obligation or agreement of any present or future member, director, officer, employee, attorney or agent of the Issuer, and no official executing the Bonds shall be liable personally on the Bonds or be subject to any personal liability or accountability by reason of the issuance thereof or by reason of the covenants, obligations or agreements of the Issuer contained in this Loan Agreement or the Indenture.

(b) No claim shall be made by the Company or any of the Company’s affiliates against the Issuer or the Trustee or any of their affiliates, directors, employees, attorneys or agents for any special, indirect, consequential or punitive damages in respect of any breach or wrongful conduct (whether or not the claim therefore is based on contract, tort or duty imposed by law), in connection with, arising out of or in any way related to the transactions contemplated by this Loan Agreement, the Indenture or the other financing arrangements entered into in connection with the Project, or any act or omission or event occurring in connection therewith; and the Company hereby waives, releases and agrees not to sue upon any such claim for any such damages, whether or not accrued and whether or not known or suspected to exist in its favor.

IN WITNESS WHEREOF, the Issuer and the Company have caused this Loan Agreement to be executed in their respective names by their authorized officers or representatives and their respective seals to be affixed hereto and have caused its execution hereof to be attested by its authorized officer, all as of the date first above written.

The 2006 Project consisted of the financing of (i) a portion of the Company’s 2006 Capital Budget, including, but not limited to the design, acquisition, construction, improvement, renovation, equipping and installation of (a) various structures, including distribution buildings, booster stations, pumping stations, and various plant and ancillary buildings, (b) spillway upgrades, standpipes, transmission and distribution mains, service lines, meters, fire hydrants, and pumping, water treatment and purification equipment, and (c) various other capital improvements, replacements and equipment for the Company’s water system located throughout York County, Pennsylvania, and (ii) the payment of all or a portion of the costs of issuance of the 2006 Bonds.

The 2008B Project consisted of the financing of (i) a portion of the Company's 2008 Capital Budget, including, but not limited to the design, acquisition, construction, improvement, extension, renovation, equipping and installation of (a) various structures, including distribution buildings, booster stations, pumping stations, and various plant and ancillary buildings, (b) spillway upgrades, standpipes, transmission and distribution mains, service lines, meters, fire hydrants, water treatment, pumping and purification equipment, and (c) various other capital improvements, replacements and equipment for the Company’s water system located throughout York County and Adams County, Pennsylvania, and (ii) the payment of all or a portion of the costs of issuance of the 2008B Bonds.

The 2014 Bonds were issued to currently refund the outstanding Exempt Facilities Revenue Bonds, Series 2008B (The York Water Company Project).

The Contractor agrees:

1. In the hiring of any employee(s) for the manufacture of supplies, performance of work, or any other activity required under the contract or any subcontract, the Contractor, each subcontractor, or any person acting on behalf of the Contractor or subcontractor shall not discriminate by reason of race, gender, creed, color, sexual orientation, gender identity or expression, or in violation of the Pennsylvania Human Relations Act (PHRA) and applicable federal laws, against any citizen of this Commonwealth who is qualified and available to perform the work to which the employment relates.

2. Neither the Contractor nor any subcontractor nor any person on their behalf shall in any manner discriminate by reason of race, gender, creed, color, sexual orientation, gender identity or expression, or in violation of the PHRA and applicable federal laws, against or intimidate any employee involved in the manufacture of supplies, the performance of work, or any other activity required under the contract.

3. Neither the Contractor nor any subcontractor nor any person on their behalf shall in any manner discriminate by reason of race, gender, creed, color, sexual orientation, gender identity or expression, or in violation of the PHRA and applicable federal laws, in the provision of services under the contract.

4. Neither the Contractor nor any subcontractor nor any person on their behalf shall in any manner discriminate against employees by reason of participation in or decision to refrain from participating in labor activities protected under the Public Employee Relations Act, Pennsylvania Labor Relations Act or National Labor Relations Act, as applicable and to the extent determined by entities charged with such Acts’ enforcement, and shall comply with any provision of law establishing organizations as employees’ exclusive representatives.

5. The Contractor and each subcontractor shall establish and maintain a written nondiscrimination and sexual harassment policy and shall inform their employees in writing of the policy. The policy must contain a provision that sexual harassment will not be tolerated and employees who practice it will be disciplined. Posting this Nondiscrimination/Sexual Harassment Clause conspicuously in easily-accessible and well-lighted places customarily frequented by employees and at or near where the contracted services are performed shall satisfy this requirement for employees with an established work site.

6. The Contractor and each subcontractor shall not discriminate by reason of race, gender, creed, color, sexual orientation, gender identity or expression, or in violation of PHRA and applicable federal laws, against any subcontractor or supplier who is qualified to perform the work to which the contract relates.

7. The Contractor and each subcontractor represents that it is presently in compliance with and will maintain compliance with all applicable federal, state, and local laws, regulations and policies relating to nondiscrimination and sexual harassment. The Contractor and each subcontractor further represents that it has filed a Standard Form 100 Employer Information Report (“EEO-1”) with the U.S. Equal Employment Opportunity Commission (“EEOC”) and shall file an annual EEO-1 report with the EEOC as required for employers’ subject to Title VII of the Civil Rights Act of 1964, as amended, that have 100 or more employees and employers that have federal government contracts or first-tier subcontracts and have 50 or more employees. The Contractor and each subcontractor shall, upon request and within the time periods requested by the Commonwealth, furnish all necessary employment documents and records, including EEO-1 reports, and permit access to their books, records, and accounts by the contracting agency and the Bureau of Diversity, Inclusion and Small Business Opportunities for purpose of ascertaining compliance with provisions of this Nondiscrimination/Sexual Harassment Clause.

8. The Contractor shall include the provisions of this Nondiscrimination/Sexual Harassment Clause in every subcontract so that those provisions applicable to subcontractors will be binding upon each subcontractor.

9. The Contractor’s and each subcontractor’s obligations pursuant to these provisions are ongoing from and after the effective date of the contract through the termination date thereof. Accordingly, the Contractor and each subcontractor shall have an obligation to inform the Commonwealth if, at any time during the term of the contract, it becomes aware of any actions or occurrences that would result in violation of these provisions.

10. The Commonwealth may cancel or terminate the contract and all money due or to become due under the contract may be forfeited for a violation of the terms and conditions of this Nondiscrimination/Sexual Harassment Clause. In addition, the agency may proceed with debarment or suspension and may place the Contractor in the Contractor Responsibility File.