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EXHIBIT 10.3

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REIMBURSEMENT, CREDIT AND SECURITY AGREEMENT
 
Between
 
THE YORK WATER COMPANY
 
and
 
PNC BANK, NATIONAL ASSOCIATION
 
Dated as of
 
May 1, 2008
 
$12,000,000
Pennsylvania Economic Development Financing Authority
Exempt Facilities Revenue Refunding Bonds,
Series A of 2008
(The York Water Company Project)
 

 
 

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TABLE OF CONTENTS
 
 
ARTICLE I DEFINITIONS 
 
Section 1.01  Definitions.

 
Section 1.02  Accounting Principles.

 
Section 1.03  Rules of Construction.

 
Section 1.04  Incorporation of Recitals.

 
ARTICLE II LETTER OF CREDIT AND REIMBURSEMENT 
 
Section 2.01  Issuance of Letter of Credit.

 
Section 2.02  Reimbursement and Other Payments.

 
Section 2.03  Transfer; Reduction; Reinstatement.

 
Section 2.04  Nature of Obligations.

 
Section 2.05  Indemnification.

 
ARTICLE III SECURITY 
 
Section 3.01  Security and Subrogation under Indenture.

 
Section 3.02  Pledge of Rights to Certain Funds and Investments.

 
Section 3.03  Pledged Bonds.

 
ARTICLE IV CONDITIONS PRECEDENT 
 
Section 4.01  Closing Fee.

 
Section 4.02  Documentation.

 
Section 4.03  Issuance of Bonds.

 
ARTICLE V REPRESENTATIONS AND WARRANTIES 
 
Section 5.01  Existence.

 
Section 5.02  Power, Authorization and No Conflicts.

 
Section 5.03  Governmental and Other Approvals.

 
Section 5.04  Validity, Binding Effect and Enforceability.

 
Section 5.05  No Litigation.

 
Section 5.06  No Violations.

 
Section 5.07  Reserved.

 
Section 5.08  No Liens.

 
Section 5.09  Reserved.

 
Section 5.10  Financial Condition; No Material Adverse Change.

 
Section 5.11  Plans and Benefit Arrangements.

 
Section 5.12  Environmental Compliance.

 
Section 5.13  Disclosure.

 
Section 5.14  Anti-Terrorism Laws.

 
Section 5.15  Incorporation of Representations and Warranties by Reference.

 
Section 5.16  Use of Proceeds; Margin Stock; Section 20 Subsidiaries.

 
Section 5.17  Material Adverse Change.

 
Section 5.18  Condition of and Title to Assets; Status of Leases.

 
Section 5.19  Insurance.

 
Section 5.20  Taxes.

 
Section 5.21  No Event of Default; Compliance with Instruments.

 
Section 5.22  Patents, Trademarks, Copyrights, Licenses, Etc.

 
ARTICLE VI GENERAL COVENANTS 
 
Section 6.01  Maintenance of Existence.

 
Section 6.02  Compliance with Laws, Etc.

 
Section 6.03  Maintenance of Insurance.

 
Section 6.04  Compliance with Bond Documents and Other Contracts.

 
Section 6.05  Visitation Rights.

 
Section 6.06  Keeping of Books.

 
Section 6.07  Maintenance of Properties.

 
Section 6.08  Reporting Requirements.

 
Section 6.09  Consent Under Bond Documents.

 
Section 6.10  Reserved.

 
Section 6.11  Payment of Indebtedness.

 
Section 6.12  Environmental Covenants.

 
Section 6.13  Financial Covenants.

 
Section 6.14  Payments of Taxes and Other Charges.

 
Section 6.15  Reserved.

 
Section 6.16  Reserved.

 
Section 6.17  ERISA.

 
Section 6.18  Amendments to Bond Documents.

 
Section 6.19  Liens and Encumbrances.

 
Section 6.20  Change in Business.

 
Section 6.21  Limitation on Optional Calls.

 
Section 6.22  Reserved.

 
Section 6.23  Anti-Terrorism Laws.

 
ARTICLE VII RESERVED
 
ARTICLE VIII DEFAULTS AND REMEDIES
 
Section 8.01  Defaults.

 
Section 8.02  Remedies.

 
Section 8.03  Waivers; Consents.

 
Section 8.04  No Waiver; Remedies Cumulative.

 
Section 8.05  Set-Off.

 
ARTICLE IX GENERAL PROVISIONS
 
Section 9.01  Notices.

 
Section 9.02  Successors and Assigns.

 
Section 9.03  Survival of Covenants.

 
Section 9.04  Counterparts.

 
Section 9.05  Costs, Expenses and Taxes.

 
Section 9.06  Amendments and Waivers.

 
Section 9.07  Severability; Interest Limitation.

 
Section 9.08  Complete Agreement.

 
Section 9.09  Participation.

 
Section 9.10  Governing Law and Jurisdiction.

 
Section 9.11  Headings.

 
Section 9.12  WAIVER OF JURY TRIAL.

 
 

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EXHIBITS
 
A           Form of Letter of Credit
B           Requirements for Opinions of Counsel
 

 
 

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REIMBURSEMENT, CREDIT AND SECURITY AGREEMENT
 
THIS REIMBURSEMENT, CREDIT AND SECURITY AGREEMENT (this "Agreement"), made as of
the 1st day of May, 2008, between THE YORK WATER COMPANY (the "Borrower"), a
corporation organized and existing under the laws of the Commonwealth of
Pennsylvania, and PNC BANK, NATIONAL ASSOCIATION (the "Bank"), a national
banking association.
 
RECITALS:
 
A.           The Pennsylvania Economic Development Financing Authority (the
"Issuer") has issued its Exempt Facilities Revenue Refunding Bonds, Series A of
2008 (The York Water Company Project) in the aggregate principal amount of
$12,000,000 (the "Bonds") under a Trust Indenture dated as of May 1, 2008 (the
"Indenture") between the Issuer and Manufacturers and Traders Trust Company, as
Trustee (including any successor trustee, the "Trustee").
 
B.           Pursuant to a Loan Agreement dated as of May 1, 2008 between the
Issuer and the Borrower (the "Loan Agreement"), the proceeds of the Bonds are
being applied to refund the Issuer's previously issued Exempt Facilities Revenue
Bonds Series B of 2004 (The York Water Company Project) in the outstanding
principal amount of $12,000,000.  Under the Loan Agreement, the Borrower is
obligated to make loan payments to the Trustee in amounts and at the times
corresponding to the debt service and other payments required in respect of the
Bonds.
 
C.           In order to facilitate the issuance and sale of the Bonds and to
enhance the marketability of the Bonds and thereby achieve interest cost savings
and other savings to the Borrower, the Borrower has asked the Bank to issue its
Irrevocable Letter of Credit (together with any substitute letter of credit
issued pursuant to the terms hereof, the "Letter of Credit") to the Trustee for
the account of the Borrower authorizing the Trustee to make one or more draws on
the Bank up to an aggregate of $12,185,425 (as reduced and reinstated from time
to time in accordance with the provisions of the Letter of Credit, the "Letter
of Credit Amount"), of which originally (i) $12,000,000 shall be in respect of
principal of the Bonds (as more fully defined in Section 1.01, the "Principal
Component", and (ii) $185,425 (as more fully defined in Section 1.01, the
"Interest Component") shall be in respect of accrued interest on the Bonds.  The
purpose of the Letter of Credit is to provide funds for the payment of principal
of and interest on the Bonds and the purchase price of Bonds which have been
tendered pursuant to the tender option provisions thereof and of the Indenture
to the extent remarketing proceeds or other funds are not available therefor in
accordance with the provisions of the Indenture.
 
D.           The Bank is willing to issue the Letter of Credit upon the terms
and conditions hereinafter set forth.
 
NOW THEREFORE, in consideration of the foregoing and the undertakings herein set
forth and intending to be legally bound, the Borrower and the Bank hereby agree
as follows:
 
ARTICLE I
 
DEFINITIONS
 
Section 1.01 Definitions.
 
(a) Terms Defined in Recitals.  In this Agreement (except as otherwise expressly
provided for or unless the context otherwise requires), the following terms have
the meanings specified in the foregoing recitals:
 
Agreement
Bank
Bonds
Borrower
Indenture
Interest Component
Issuer
Letter of Credit
Letter of Credit Amount
Loan Agreement
Principal Component
Trustee
 
(b) Other Defined Terms.  The following terms shall have the meanings specified
in this Article, unless the context otherwise requires:
 
"Affiliate" means (i) any Person included with the Borrower in a controlled
group of corporations within the meaning of Section 414(b) of the Code and
(ii) any trade or business (whether or not incorporated or for-profit) which is
under common control with the Borrower within the meaning of Section 414(c) of
the Code.
 
"Alternate Credit Facility" shall have the meaning assigned to such term in the
Indenture.
 
"Anti-Terrorism Laws" shall mean any Laws relating to terrorism or money
laundering, including Executive Order No. 13224, the USA Patriot Act, the Laws
comprising or implementing the Bank Secrecy Act, and the Laws administered by
the United States Treasury Department's Office of Foreign Asset Control (as any
of the foregoing Laws may from time to time be amended, renewed, extended, or
replaced).
 
"Authorized Person" means the President and Chief Executive Officer or the Chief
Financial Officer and Treasurer of the Borrower.
 
"Bank Documents" means this Agreement, the Letter of Credit and any other
agreements or instruments relating to this Agreement or the Letter of Credit.
 
"Base Rate" shall mean a fluctuating rate of interest per annum, calculated on
the basis of a 360-day year, and the actual number of days, equal to the higher
of the Prime Rate or the Overnight Effective Federal Funds Rate for such day
plus .50%.
 
"Benefit Arrangement" shall mean at any time an "employee benefit plan," within
the meaning of Section 3(3) of ERISA, which is neither a Plan nor a
Multiemployer Plan and which is maintained, sponsored or otherwise contributed
to by any member of the ERISA Group.
 
"Blocked Person" shall have the meaning ascribed to such term in Section 5.14.
 
"Bond Documents" means the Bonds, the Indenture, the Letter of Credit, the Loan
Agreement, the Remarketing Agreement and any other agreements or instruments
relating thereto.
 
"Business Day" means any day other than (i) a Saturday or Sunday, (ii) a day on
which commercial banking institutions in Pittsburgh, Pennsylvania or in any
other city where either the principal corporate trust office of the Trustee or
the office of the Bank at which drafts are to be presented under the Letter of
Credit is located are required or authorized by law (including executive order)
to close or on which any such office is closed for reasons not related to
financial condition, or (iii) a day on which the New York Stock Exchange is
closed.
 
"Code" means the Internal Revenue Code of 1986 and the rules and regulations
thereunder, including any amendments and successor provisions thereto.
 
"Contamination" means the uncontained presence of Hazardous Substances at the
Borrower's Facilities, or arising from the Premises, which may require
remediation under any applicable Law.
 
"Date of Issuance" means the date on which the Letter of Credit is issued upon
request of the Borrower pursuant to Section 2.01.
 
"Default" means any event or occurrence that, with the giving of notice, the
passage of time or both, would become an Event of Default.
 
"Default Rate" shall mean a fluctuating rate of interest equal to the Base Rate
plus two (2%) percent per annum.
 
"Drawing" has the meaning assigned to that term in the Letter of Credit.
 
"Drawing Date" means the date on which the Bank honors a Drawing.
 
"Environmental Complaint" shall mean any written complaint setting forth a cause
of action for personal or property damage, natural resource damage or equitable
relief, order, notice of violation, citation, request for information issued
pursuant to any Environmental Laws by an Official Body, subpoena or other
written notice of any type relating to, arising out of, or issued pursuant to,
any of the Environmental Laws or any Environmental Conditions, as the case may
be.
 
"Environmental Conditions" shall mean any conditions of the environment,
including the workplace, the ocean, natural resources (including flora or
fauna), soil, surface water, groundwater, any actual or potential drinking water
supply sources, substrata or the ambient air, relating to or arising out of, or
caused by, the use, handling, storage, treatment, recycling, generation,
transportation, release, spilling, leaking, pumping, emptying, discharging,
injecting, escaping, leaching, disposal, dumping, threatened release or other
management or mismanagement of Regulated Substances resulting from the use of,
or operations on, any Premises.
 
"Environmental Laws" means all provisions of Laws, permits, licenses, awards and
standards promulgated by any Official Body relating to pollution or protection
of human health or the environment or employee safety in the work place.
 
"ERISA" means the Employee Retirement Income Security Act of 1974, as it may
from time to time be amended, supplemented or otherwise modified, or any
successor legislation, and the rules and regulations thereunder.
 
"ERISA Group" shall mean, at any time, the Borrower and all members of a
controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control and all other entities which, together with
the Borrower, are treated as a single employer under Section 414 of the Internal
Revenue Code.
 
"Event of Default" shall have the meaning assigned to such term in Section 8.01.
 
"Executive Order No. 13224" shall mean the Executive Order No. 13224 on
Terrorist Financing, effective September 24, 2001, as the same has been, or
shall hereafter be, renewed, extended, amended or replaced.
 
"Expiration Date" has the meaning assigned to such term in the Letter of Credit.
 
"Final Payment Drawing" has the meaning assigned to such term in the Letter of
Credit.
 
"Financial Statements" means the Borrower's consolidated and consolidating
balance sheets and statements of income and cash flows for the year or quarter
prepared in accordance with GAAP on a basis consistent with prior years, unless
specifically noted thereon.
 
"Fiscal Year" means the annual accounting year of the Borrower, which currently
begins on January 1 in each calendar year.
 
"Funded Debt" shall have the meaning set forth in Section 6.13.
 
"GAAP" means generally accepted accounting principles consistently applied on a
consistent basis both as to classification of items and amounts.
 
"Indebtedness" means individually and collectively (i) all obligations and
indebtedness of the Borrower for borrowed money including but not limited to the
Obligations; (ii) all obligations of the Borrower evidenced by bonds,
debentures, notes, or similar instruments; (iii) all obligations of the Borrower
under conditional sale or other title retention agreements relating to property
purchased by the Borrower; (iv) all obligations of the Borrower issued or
assumed as the deferred purchase price of property or services; (v) all
obligations of the Borrower under capitalized leases; (vi) all obligations of
the Borrower with respect to letters of credit (including the Letter of Credit),
whether matured or contingent; (vii) all obligations of the Borrower under any
agreement or arrangement designed to provide protection against fluctuations in
interest rates; (viii) all obligations of others secured by any Lien on property
or assets owned or acquired by the Borrower, whether or not the obligations
secured thereby have been assumed; and (ix) all guaranties of the Borrower;
provided, however, that "Indebtedness" shall not include the Borrower's accounts
payable incurred in the ordinary course of business if those accounts payable do
not constitute obligations to repay borrowed money.
 
"Indemnified Party" shall have the meaning assigned to such term in
Section 2.05.
 
"Ineligible Securities" shall mean any security which may not be underwritten or
dealt in by member banks of the Federal Reserve System under Section 16 of the
Banking Act of 1933 (12 U.S.C. Section 24, Seventh), as amended.
 
"Interest Component" shall have the meaning assigned to such term in the Letter
of Credit.
 
"Interest Trigger Date" shall have the meaning assigned to such term in
Section 2.02(b)(i).
 
"Interest Drawing" shall have the meaning assigned to such term in the Letter of
Credit.
 
"Law" means any law, statute, rule, regulation, treaty, ordinance, order, writ,
injunction, decree, judgment, guideline, directive or decision of any Official
Body, including any Environmental Law, whether in existence on the date hereof
or whether issued, enacted or adopted after the date hereof, and any change
therein or in the interpretation or application thereof following the date
hereof.
 
"Letter of Credit Fee" shall have the meaning set forth in Section 2.02(d).
 
"LIBOR" shall mean, for each Reset Date, the interest rate per annum determined
by the Bank by dividing (i) the rate which appears on the Bloomberg Page BBAM1
(or on such other substitute Bloomberg page that displays rates at which US
dollar deposits are offered by leading banks in the London interbank deposit
market), or the rate which is quoted by another source selected by the Bank
which has been approved by the British Bankers’ Association as an authorized
information vendor for the purpose of displaying rates at which US dollar
deposits are offered by leading banks in the London interbank deposit market (an
"Alternate Source"), at approximately 11:00 a.m., London time, two (2) Business
Days prior to such Reset Date, as the one (1) month London interbank offered
rate for U.S. Dollars commencing on such Reset Date (or if there shall at any
time, for any reason, no longer exist a Bloomberg Page BBAM1 (or any substitute
page) or any Alternate Source, a comparable replacement rate determined by the
Bank at such time (which determination shall be conclusive absent manifest
error)), by (ii) a number equal to 1.00 minus the LIBOR Reserve
Percentage.  LIBOR shall be adjusted on and as of (a) each Reset Date, and
(b) the effective date of any change in the LIBOR Reserve Percentage.  The Bank
shall give prompt notice to the Borrower of LIBOR as determined or adjusted in
accordance herewith, which determination shall be conclusive absent manifest
error.
 
"LIBOR Reserve Percentage" shall mean the maximum effective percentage in effect
on such day as prescribed by the Board of Governors of the Federal Reserve
System (or any successor) for determining the reserve requirements (including,
without limitation, supplemental, marginal and emergency reserve requirements)
with respect to eurocurrency funding (currently referred to as "Eurocurrency
liabilities").
 
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever (including any conditional sale or other title retention agreement,
any capitalized lease having substantially the same economic effect as any of
the foregoing, and the filing of any financing statement under the Uniform
Commercial Code or comparable law of any jurisdiction).
 
"Liquidity Drawing" has the meaning assigned to such term in the Letter of
Credit.
 
"Liquidity Period" means the period beginning on the date hereof and terminating
on the first to occur of (i) the Expiration Date, or (ii) the first date on
which there are no longer any Bonds Outstanding other than Bonds secured by an
Alternate Credit Facility.
 
"Material Adverse Change" means any set of circumstances or events which (i) has
or could reasonably be expected to have any material adverse effect whatsoever
upon the validity or enforceability of any of the Transaction Documents, (ii) is
or could reasonably be expected to be material and adverse to the business,
properties, assets, financial condition, results of operations or prospects of
the Borrower, (iii) impairs materially or could reasonably be expected to impair
materially the ability of the Borrower to duly and punctually pay or perform the
Obligations, or (iv) impairs materially or could reasonably be expected to
impair materially the ability of the Bank to enforce the Bank's legal remedies
pursuant to any of the Bank Documents.
 
"Multiemployer Plan" shall mean any employee benefit plan which is a
"multiemployer plan" within the meaning of Section 4001(a)(3) of ERISA and to
which the Borrower or any member of the ERISA Group is then making or accruing
an obligation to make contributions or, within the preceding five Plan years,
has made or had an obligation to make such contributions.
 
"Multiple Employer Plan" shall mean a Plan which has two or more contributing
sponsors (including the Borrower or any member of the ERISA Group) at least two
of whom are not under common control, as such a plan is described in
Sections 4063 and 4064 of ERISA.
 
"Net Income" shall have the meaning given it in Section 6.13.
 
"Obligations" means all loans, advances, debts, liabilities, obligations,
covenants and duties owing from the Borrower to the Bank or to any other direct
or indirect subsidiary of The PNC Financial Services Group, Inc., of every kind
or nature, present or future (including any interest accruing thereon after
maturity, or after the filing of any petition in bankruptcy, or the commencement
of any insolvency, reorganization or like proceeding relating to the Borrower,
whether or not a claim for post-filing or post-petition interest is allowed in
such proceeding), including those evidenced by or described in the Bank
Documents, whether or not evidenced by any note, guaranty or other instrument,
whether arising under any agreement, instrument or document, whether or not for
the payment of money, whether arising by reason of an extension of credit,
opening of a letter of credit, loan, equipment lease or guarantee, under any
interest or currency swap, future, option or other interest rate protection or
similar agreement, or in any other manner, whether arising out of overdrafts on
deposit or other accounts or electronic funds transfers (whether through
automated clearing houses or otherwise) or out of the Bank's non-receipt of or
inability to collect funds or otherwise not being made whole in connection with
depository transfer check or other similar arrangements, whether direct or
indirect (including those acquired by assignment or participation), absolute or
contingent, joint or several, due or to become due, now existing or hereafter
arising, and any amendments, extensions, renewals or increases and all costs and
expenses of the Bank incurred in the documentation, negotiation, modification,
enforcement, collection or otherwise in connection with any of the foregoing,
including reasonable attorney's fees and expenses.
 
"Official Body" means any national, federal, state, local or other government or
political subdivision or any agency, authority, bureau, central bank,
commission, department or instrumentality of either, or any court, tribunal,
grand jury or arbitrator, in each case whether foreign or domestic.
 
"Outstanding" when applied to the Bonds shall have the meaning assigned to such
term in the Indenture.
 
"Overnight Effective Federal Funds Rate" for any day shall mean the rate per
annum (based on a year of 360 days and actual days elapsed and rounded to the
nearest 1/100 of 1%) announced by the Federal Reserve Bank of New York (or any
successor) on such day as being the weighted average of the rates on overnight
federal funds transactions arranged by federal funds brokers on the previous
trading day, as computed and announced by such Federal Reserve Bank (or any
successor) in substantially the same manner as such Federal Reserve Bank
computes and announced the weighted average it refers to as the "Federal Funds
Effective Rate" as of the date of this Agreement, provided, if such Federal
Reserve Bank (or its successor) does not announce such rate on any day, the
"Federal Funds Effective Rate" for such day shall be the Federal Funds Effective
Rate for the last day on which such rate was announced.
 
"Participating Banks" shall have the meaning assigned to such term in
Section 9.09.
 
"PBGC" means the Pension Benefit Guaranty Corporation established pursuant to
ERISA.
 
"Permitted Liens" means:
 
(i)           Liens in favor of the Bank; and
 
(ii)           Excepted Encumbrances as defined in the Loan Agreement.
 
"Person" shall mean any individual, sole proprietorship, corporation,
partnership, limited liability company, association, joint-stock company, trust,
unincorporated organization, association, joint venture, Official Body or agency
thereof, or any other entity.
 
"Plan" shall mean at any time an employee pension benefit plan (including a
Multiple Employer Plan, but not a Multiemployer Plan) which is covered by Title
IV of ERISA or is subject to the minimum funding standards under Section 412 of
the Internal Revenue Code and either (i) is maintained by any member of the
ERISA Group for employees of any member of the ERISA Group or (ii) has at any
time within the preceding five years been maintained by any entity which was at
such time a member of the ERISA Group for employees of any entity which was at
such time a member of the ERISA Group.
 
"Pledged Bonds" means any Bonds delivered to or for the account of the Bank in
connection with a Liquidity Drawing under the Letter of Credit.
 
"Premises" shall mean any real property owned or leased by the Borrower.
 
"Prime Rate" means the rate of interest publicly announced by the Bank from time
to time as the Prime Rate of the Bank effective in Pittsburgh, Pennsylvania,
adjusted as of the date of an announcement in Pittsburgh, Pennsylvania of any
change in such Prime Rate.  The Prime Rate is determined from time to time by
the Bank as a means of pricing some loans to its borrowers and neither is tied
to any external rate of interest or index, nor necessarily reflects the lowest
rate of interest actually charged by the Bank to any particular class or
category of customer.  If and when the Prime Rate changes, the rate of interest
with respect to any amounts hereunder to which the Prime Rate applies will
change automatically without notice to the Borrower, effective on the date of
any such change.
 
"Principal Component" shall have the meaning assigned to such term in the Letter
of Credit.
 
"Principal Drawing" shall have the meaning assigned to such term in the Letter
of Credit.
 
"Prohibited Transaction" shall mean any prohibited transaction as defined in
Section 4975 of the Internal Revenue Code or Section 406 of ERISA for which
neither an individual nor a class exemption has been issued by the United States
Department of Labor.
 
"Regulated Substances" means any substance, including any solid, liquid,
semisolid, gaseous, thermal, thoriated or radioactive material, refuse, garbage,
wastes, chemicals, petroleum products, by-products, coproducts, impurities,
dust, scrap, heavy metals, defined as a "hazardous substance," "pollutant,"
"pollution," "contaminant," "hazardous or toxic substance," "extremely hazardous
substance," "toxic chemical," "toxic waste," "hazardous waste," "industrial
waste," "residual waste," "solid waste," "municipal waste," "mixed waste,"
"infectious waste," "chemotherapeutic waste," "medical waste," or regulated
substance or any related materials, substances or wastes as now or hereafter
defined pursuant to any Environmental Laws or other directives of any Official
Body, the generation, manufacture, extraction, processing, distribution,
treatment, storage, disposal, transport, recycling, reclamation, use, reuse,
spilling, leaking, dumping, injection, pumping, leaching, emptying, discharge,
escape, release or other management or mismanagement of which is regulated by
the Environmental Laws.
 
"Remarketing Agent" means PNC Capital Markets LLC, and any successor in such
capacity pursuant to the Indenture.
 
"Remarketing Agreement" means the Remarketing Agent's agreement with the
Borrower to perform its duties as Remarketing Agent under the Indenture.
 
"Reset Date" shall mean (i) an Interest Trigger Date, and (ii) subject to the
proviso below, the first day of every month thereafter, provided that: (a) if
any such day is not a Business Day, then the first succeeding day that is a
Business Day shall instead apply, unless that day falls in the next succeeding
calendar month, in which case the next preceding day that is a Business Day
shall instead apply, and (b) if any such day is a day of a calendar month for
which there is no numerically corresponding day in certain other months (each, a
"Non-Conforming Month"), then any Reset Date that falls within a Non-Conforming
Month shall be the last day of such Non-Conforming Month.
 
"Scheduled Expiration Date" has the meaning assigned to such term in the Letter
of Credit.
 
"Section 20 Subsidiary" means the Subsidiary of the bank holding company
controlling the Bank, which Subsidiary has been granted authority by the Federal
Reserve Board to underwrite and deal in certain Ineligible Securities.
 
"State" means the Commonwealth of Pennsylvania.
 
"Transaction Documents" means the Bank Documents and the Bond Documents, and all
extensions, renewals, amendments, substitutions and replacements to and of any
of the foregoing.
 
"Uniform Commercial Code" means the Uniform Commercial Code as adopted and in
effect from time to time in the State, except when the provisions of the Uniform
Commercial Code as adopted in another jurisdiction are applicable due to the
location of any Collateral in such other jurisdiction.
 
"USA Patriot Act" shall mean the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001,
Public Law 107-56, as the same has been, or shall hereafter be, renewed,
extended, amended or replaced.
 
Section 1.02 Accounting Principles
 
.  Except as otherwise provided in this Agreement, all computations and
determinations as to accounting or financial matters and all financial
statements to be delivered pursuant to this Agreement shall be made and prepared
in accordance with GAAP (including principles of consolidation where
appropriate), and all accounting or financial terms shall have the meanings
ascribed to such terms by GAAP; provided, however, that all accounting terms
used in Article VI shall have the meaning given to such terms under GAAP as in
effect on the date hereof applied on a basis consistent with those used in
preparing the Financial Statements referred to in Section 6.08.  In the event of
any change after the date hereof in GAAP, and if such change would result in the
inability to determine compliance with the financial covenants (if any) set
forth in Article VI based upon the Borrower's regularly prepared financial
statements by reason of the preceding sentence, then the parties hereto agree to
endeavor, in good faith, to agree upon an amendment to this Agreement that would
adjust such financial covenants in a manner that would not affect the substance
thereof, but would allow compliance therewith to be determined in accordance
with the Borrower's financial statements at that time.
 
Section 1.03 Rules of Construction.
 
(i) Except as otherwise specified, all references in any Bank Document (A) to
any Person shall be deemed to include such Person's heirs, executors,
administrators, successors and assigns, (B) to any Law shall be deemed
references to such Law as the same may have been or may be amended, supplemented
or replaced from time to time, and (C) to any Transaction Document defined or
referred to herein shall be deemed references to such Transaction Document as
the terms thereof may have been or may be amended, supplemented, waived or
otherwise modified from time to time.
 
(ii) When used in any Bank Document, the words "herein", "hereof" and
"hereunder" and words of similar import shall refer to such Bank Document as a
whole and not to any particular provision of such Bank Document, and the words
"Article", "Section", "Subsection", "Schedule", "Exhibit" and "Annex" shall
refer to Articles, Sections and Subsections of, and Schedules, Exhibits and
Annexes to, such Bank Document, unless otherwise specified.
 
(iii) When used in any Bank Document, the word "including" means "including
without limitation".
 
(iv) Whenever the context so requires, in all Bank Documents the use of or
reference to any gender includes the masculine, feminine and neuter genders, and
all terms used in the singular shall have comparable meanings when used in the
plural, and vice versa.
 
(v) All references in any Bank Document to any time of the day shall be
references to Eastern standard time or Eastern daylight savings time, as in
effect in the State on such day.
 
Section 1.04 Incorporation of Recitals.
 
  The recitals at the beginning of this Agreement or any other Bank Documents
are incorporated into and made a material part of this Agreement or such other
Bank Document, as the case may be.
 
ARTICLE II
 
LETTER OF CREDIT AND REIMBURSEMENT
 
Section 2.01 Issuance of Letter of Credit.
 
  The Borrower hereby requests the Bank to issue the Letter of Credit to the
Trustee.  Subject to the conditions precedent hereinafter set forth, the Bank
will issue to the Trustee pursuant to the request of the Borrower, on the date
of execution and delivery of this Agreement, the Letter of Credit in the Letter
of Credit Amount and substantially in the form attached hereto as
Exhibit A.  The Interest Component of the Letter of Credit has been established
on the basis of 47 days' interest on the Bonds and a 365-day year, at an assumed
maximum interest rate of 12% per annum.  The Letter of Credit shall be effective
on the Date of Issuance and shall expire at 5:00 p.m. on the Expiration
Date.  On or prior to the initial anniversary date of the Letter of Credit and
on each anniversary date thereafter, the Bank may elect, at its sole option, to
extend the Scheduled Expiration Date with respect to the Letter of Credit for
one (1) additional year, it being understood that the Bank shall have no
obligation to grant any such extension.  The Bank shall notify the Borrower, in
writing, at least ninety (90) days prior to the Scheduled Expiration Date in the
event the Bank does not grant any such extension.  Any such extension shall be
subject to the mutual agreement of the Borrower and the Bank as to any fees to
be applicable to the period of extension.  All Drawings will be paid with the
Bank's own funds.
 
Section 2.02 Reimbursement and Other Payments.
 
(a) Reimbursement.  The Borrower hereby agrees to pay or cause to be paid to the
Bank:
 
(i) a sum equal to each amount drawn under the Letter of Credit by an Interest
Drawing or a Principal Drawing (in each case for interest or principal due on
the Bonds other than by reason of a Liquidity Drawing), on the same Business Day
after such Drawing is honored;
 
(ii) a sum equal to each amount drawn against the Interest Component of the
Letter of Credit Amount by a Liquidity Drawing (A) in the case of any such
amount drawn on an Interest Payment Date (as defined in the Indenture) of the
Bonds being purchased with the proceeds of such Liquidity Drawing on the same
Business Day after such Drawing is honored, and (B) in all other cases, on the
first to occur of (1) the fourteenth (14) month anniversary of the date on which
said Drawing is honored, (2) the date on which the Bonds purchased with the
proceeds of such Liquidity Drawing, after the Bank has honored such Drawing, are
remarketed by the Remarketing Agent and the proceeds thereof delivered to the
Trustee, (3) the date on which the Bonds purchased with the proceeds of such
Liquidity Drawing are redeemed or otherwise paid in full, (4) the date the
Liquidity Period terminates, or (5) the occurrence of an Event of Default;
 
(iii) a sum equal to each amount drawn against the Principal Component of the
Letter of Credit Amount by a Liquidity Drawing, on the first to occur of (A) the
fourteenth (14) month anniversary of the date of which said Drawing is honored,
(B) the date on which the Bonds purchased with the proceeds of such Liquidity
Drawing, after the Bank has honored such Drawing, are remarketed by the
Remarketing Agent and the proceeds thereof are delivered to the Trustee, (C) the
date on which the Bonds purchased with the proceeds of Liquidity Drawing, after
the Bank has honored such Drawing, are redeemed or otherwise paid in full,
(D) the date the Liquidity Period terminates, or (E) the occurrence of an Event
of Default; and
 
(iv) a sum equal to each amount drawn under the Letter of Credit by Final
Payment drawing, on the same Business Day after such Drawing is honored.
 
The Bank agrees to give telephonic notice to the Borrower on the day that the
Bank receives notice from the Trustee for each Drawing.
 
(b) Interest; Default Rate
 
(i) All sums payable to the Bank under Section 2.02(a) shall bear interest, from
the Drawing Date until such sums are paid in full (it being understood and
agreed that any sum paid to the Bank after 3:00 p.m. on a Business Day shall
bear interest as if it was paid at 9:00 a.m. on the next following Business
Day), at a fluctuating rate per annum (computed for the actual number of days
elapsed, based on a 360 day year) equal to the Base Rate; provided that any sum
payable to the Bank under subparagraph (ii) (B) or (iii) of Section 2.02(a)
which is outstanding in excess of five (5) days (the "Interest Trigger Date")
shall thereafter bear interest at a fluctuating rate per annum (computed for the
actual number of days elapsed, based on a 360 day year) equal to the lesser of
(i) the Base Rate or (ii) LIBOR in effect on each Reset Date plus one and one
half percent (1.5%), as determined by the Bank on the Interest Trigger Date,
until such sum or interest and all other amounts due and payable under this
Agreement have been paid in full.  Interest accruing pursuant to this
Section 2.02(b) shall be due and payable on the first Business Day of each
calendar month after the Drawing Date and on the date the respective sum is
paid.  All payments under Sections 2.02(a) and 2.02(b) shall be applied first to
the payment of interest due and payable under this Section 2.02(b) and then to
the reduction of the principal balance of sums due and payable under
Section 2.02(a).
 
(ii) Upon the occurrence and during the continuance of an Event of Default,
(a) any sum payable to the Bank hereunder shall bear interest at the Default
Rate, and (b) the Letter of Credit Fee shall be increased to two and three
quarters of one percent (2.75%) per annum.  The Default Rate and the increased
Letter of Credit Fee payable hereunder shall accrue before and after any
judgment has been entered.  The Borrower acknowledges that the increased Letter
of Credit Fee and the Default Rate provided for herein reflect, among other
things, the fact that, upon default, the Letter of Credit shall have become a
substantially greater risk given its default status and that the Bank is
entitled to additional compensation for such risk.
 
(c) Closing Fee.  On the date of execution hereof, the Borrower shall pay to the
Bank a closing fee of $5,000.
 
(d) Commitment Fees.  On June 1, 2008 and monthly in arrears on the first day of
each month thereafter so long as any credit remains available to the Trustee
under the Letter of Credit and on the Expiration Date or in the event the
Borrower obtains an Alternate Credit Facility, the Borrower shall pay to the
Bank, upon receipt of the Bank's invoice therefor,  a Letter of Credit
commitment fee (the "Letter of Credit Fee") computed at the rate of three
quarters of one percent (.75%) per annum on the average daily Letter of Credit
Amount during the preceding month (or portion thereof in the case of the first
such payment and in the case of a termination of the Letter of Credit on a day
other than the last day of a month); provided that for purposes of computing
such average daily Letter of Credit Amount the Letter of Credit Amount shall be
treated as having been reinstated with respect to Interest Drawings on the day
the Bank received reimbursement therefor, unless the Bank has given written
notice to the Trustee pursuant to paragraph 5 of the Letter of Credit that such
reinstatement shall not occur.  Computations of Letter of Credit commitment fees
under this Section shall be for the actual number of days in the applicable
period, based on a 360 day year.
 
(e) Transaction and Transfer Charges and Expenses.  The Borrower shall pay to
the Bank all reasonable transaction charges that the Bank may make for Drawings
under the Letter of Credit, including without limitation a negotiation/payment
fee of $100.  Such transaction charges shall be payable monthly at the same
times as the fees described in Section 2.02(d) hereof are payable, upon
submission to the Borrower by the Bank of the Bank's bill therefor.  In
addition, the Borrower shall pay to the Bank on demand any and all reasonable
charges and expenses which the Bank may pay or incur relative to the Letter of
Credit including without limitation a billing fee of $50 (not applicable if a
direct deposit account of the Borrower is debited by the Bank), and an amendment
fee of $100.  The Borrower shall pay to the Bank upon each transfer of the
Letter of Credit in accordance with its terms a transfer fee equal to $500,
together with any and all costs and expenses of the Bank incurred in connection
with such transfer.
 
(f) Increased Costs.
 
(i) If after the date of this Agreement any enactment, promulgation or adoption
of or change in any applicable foreign or domestic law, treaty regulation or
rule or in the interpretation or administration thereof by any Official Body
charged with the interpretation or administration thereof, or compliance by the
Bank with any guideline, request or directive issued after the date hereof
(whether or not having the force of law) of any such Official Body, shall either
(A) impose, modify or deem applicable any reserve, special deposit, capital,
compulsory loan, FDIC insurance assessment or similar requirement (including
without limitation a guideline, request or directive which affects the manner in
which the Bank allocates capital resources to its commitments, including its
obligations under this Agreement and the Letter of Credit), (B) subject the Bank
to any tax, deduction or withholding or change the basis of taxation of the Bank
(other than a change in a rate of tax based on overall net income of the Bank),
(C) cause or deem letters of credit to be assets held by the Bank and/or
deposits on its books, or (D) impose on the Bank any other condition regarding
this Agreement or the Letter of Credit, and the result of any event referred to
in clause (A), (B), (C) or (D) of this sentence shall be to increase the direct
or indirect cost to the Bank of issuing or maintaining the Letter of Credit or
the Bank's obligations under this Agreement or to reduce the amounts receivable
by the Bank hereunder or to reduce the rate of return on the capital of the Bank
in connection with this Agreement (which increase in costs, reduction in amounts
receivable or reduction in rate of return shall be determined by the Bank's
reasonable allocation of such cost increase, reduction in amounts receivable or
reduction in rate of return resulting from such event), then within ten (10)
Business Days after written demand by the Bank, the Borrower shall pay to the
Bank, from time to time as specified by the Bank, additional amounts that in the
aggregate shall be sufficient to compensate the Bank for such increased cost,
reduction in amounts receivable or reduction in rate of return.  A certificate
as to such increased cost, reduction in amounts receivable or reduction in rate
of return submitted by the Bank to the Borrower setting forth the Bank's
calculation thereof, shall in absence of manifest error, be conclusive and
binding for all purposes.
 
(ii) If after the date of this Agreement the Bank shall have determined that any
enactment, promulgation or adoption of or change in any applicable foreign or
domestic law, regulation, rule or guideline regarding capital adequacy, or in
the interpretation or administration thereof, by any Official Body charged with
the interpretation or administration thereof, or compliance by the Bank (or any
controlling affiliate) with any guideline, request or directive regarding
capital adequacy (whether or not having the force of law and whether or not
failure to comply thereunder would be unlawful) of any such Official Body,
affects or would affect the amount of capital required or expected to be
maintained by the Bank (or any controlling affiliate) and the Bank determines,
on the basis of reasonable allocations, that the amount of such capital is
increased by or is based on its issuance or maintenance of the Letter of Credit
or the Bank's obligations under this Agreement, then, within ten (10) Business
Days after demand by the Bank, the Borrower shall pay to the Bank, from time to
time as specified by the Bank, additional amounts sufficient to compensate the
Bank therefor.  A certificate as to such additional amounts submitted to the
Borrower by the Bank setting forth the Bank's calculation thereof, shall, in the
absence of manifest error, be conclusive and binding for all purposes.
 
(iii) In addition, the Borrower agrees to indemnify the Bank against any
liabilities, losses or expenses (including, without limitation, loss of margin,
any loss or expense sustained or incurred in liquidating or employing deposits
from third parties, and any loss or expense incurred in connection with funds
acquired to effect, fund or maintain any amounts hereunder (or any part thereof)
bearing interest based on LIBOR) which the Bank sustains or incurs as a
consequence of either (i) the Borrower’s failure to make a payment on the due
date thereof, (ii) the Borrower’s revocation (expressly, by later inconsistent
notices or otherwise) in whole or in part of any notice given to Bank to
request, convert, renew or prepay any amounts bearing interest based on LIBOR,
or (iii) the Borrower’s payment or prepayment (whether voluntary, after
acceleration of obligations hereunder or otherwise) or conversion of any amounts
bearing interest based on LIBOR on a day other than the regularly scheduled due
date therefor.  A notice as to any amounts payable pursuant to this paragraph
given to the Borrower by the Bank shall, in the absence of manifest error, be
conclusive and shall be payable upon demand. The Borrower’s indemnification
obligations hereunder shall survive the payment in full of all amounts payable
hereunder.
 
(g) LIBOR Unascertainable.  If the Bank determines (which determination shall be
final and conclusive) that, by reason of circumstances affecting the eurodollar
market generally, deposits in dollars (in the applicable amounts) are not being
offered to banks in the eurodollar market for the selected term, or adequate
means do not exist for ascertaining LIBOR, then the Bank shall give notice
thereof to the Borrower.  Thereafter, until the Bank notifies the Borrower that
the circumstances giving rise to such suspension no longer exist, (a) the
availability of LIBOR shall be suspended, and (b) the interest rate for all
amounts outstanding under this Agreement to which LIBOR would otherwise apply
shall be converted on the next succeeding Reset Date to a rate of interest per
annum equal to the Base Rate.
 
In addition, if, after the date of this Agreement, the Bank shall determine
(which determination shall be final and conclusive) that any enactment,
promulgation or adoption of or any change in any applicable law, rule or
regulation, or any change in the interpretation or administration thereof by a
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by the Bank with any
guideline, request or directive (whether or not having the force of law) of any
such authority, central bank or comparable agency shall make it unlawful or
impossible for the Bank to make or maintain or fund loans based on LIBOR, the
Bank shall notify the Borrower.  Upon receipt of such notice, until the Bank
notifies the Borrower that the circumstances giving rise to such determination
no longer apply, (a) the availability of LIBOR shall be suspended, and (b) the
interest rate on all amounts outstanding under this Agreement shall be converted
to the Base Rate either (i) on the next succeeding Reset Date if the Bank may
lawfully continue to maintain or fund loans based on LIBOR to such day, or
(ii) immediately if the Bank may not lawfully continue to maintain or fund loans
based on LIBOR.
 
(h) General Interest Accrual; Place of Payment.  Except as otherwise provided in
Section 2.02(a) or (b), all payments to the Bank under this Agreement shall be
accompanied by interest thereon, from the date such payments become due until
they are paid in full, at a fluctuating rate per annum (computed for the actual
number of days elapsed, based on a 360-day year) equal to the sum of the Base
Rate; provided during the existence of any Event of Default, any amount which is
due and payable to the Bank under this Agreement shall thereafter bear interest
at a fluctuating rate per annum (computed for the actual number of days elapsed,
based on a 360-day year) equal to the Default Rate.  All payments by the
Borrower to the Bank under this Agreement shall be made in lawful currency of
the United States at the Bank at 3rd Floor, Firstside Center, 500 Fifth Avenue,
Pittsburgh, PA 15219 Attention: Trade Services Operations, or at such other
address and to the attention of such other person as the Bank may stipulate by
written notice to the Borrower, or by a wire transfer in immediately available
funds from the Borrower to the Bank in accordance with written wire instructions
given to the Borrower by the Bank.  All reimbursement payments under
Section 2.02(a) shall be made in immediately available funds.
 
Section 2.03 Transfer; Reduction; Reinstatement.
 
(a) Transfer.  The Letter of Credit may be transferred in accordance with
paragraph 8 of the Letter of Credit.
 
(b) Reduction.  The Letter of Credit Amount and the respective Principal
Component and Interest Component thereof shall be automatically reduced as
specified in paragraph 5 of the Letter of Credit.  With respect to any
reductions of the Letter of Credit Amount pursuant to the terms of the Letter of
Credit as a result of Bonds ceasing to be Outstanding, the Bank shall have the
right, at its option, to require the Trustee to promptly surrender the
outstanding Letter of Credit to the Bank and to accept in substitution therefor
a letter of credit in the form of Exhibit A attached hereto, dated the date of
such substitution, for an amount equal to the Letter of Credit Amount as so
reduced, but otherwise having terms identical to the then outstanding Letter of
Credit.
 
(c) Reinstatement.  In the event of an Interest Drawing under the Letter of
Credit, the Interest Component of the Letter of Credit Amount shall, as provided
in paragraph 5(a) of the Letter of Credit and subject to the conditions therein
set forth, be automatically reinstated by an amount equal to the amount of such
drawing.  In the event of a Liquidity Drawing under the Letter of Credit, the
Principal Component and Interest Component of the Letter of Credit Amount shall,
as provided in paragraph 5(b) of the Letter of Credit, be reinstated with
respect to such drawing (A) automatically when and to the extent that (i) the
Bank has received reimbursement for such drawing in immediately available funds
(or the Trustee has received immediately available funds which, pursuant to
Section 2B.1(g) or Section 2B.2(f) of the Indenture, as applicable, the Trustee
will immediately remit to the Bank as reimbursement for such drawing), and
(ii) the Trustee has delivered a certificate to the Bank in respect of such
reinstatement in the form required by paragraph 5(b) of the Letter of Credit, or
(B) when and to the extent the Bank, at its option, upon the Borrower's request,
advises the Trustee in writing that such reinstatement shall occur, it being
understood that the Bank shall have no obligation to grant any such
reinstatement except as set forth in clause (A) of this sentence.
 
Section 2.04 Nature of Obligations.
 
(a) The Borrower's obligations to the Bank under this Agreement are absolute,
unconditional, and irrevocable, and shall be payable in accordance with the
terms hereof irrespective of any one or more of the following circumstances:
 
(i) the form, validity, sufficiency, accuracy, enforceability, genuineness, or
effect, or any lack thereof, of the Letter of Credit or any draft, this
Agreement, any other Bank Document, or any other document, instrument, or
agreement presented in connection with or relating to any of the foregoing,
including any signatures or endorsements thereon, even if any such documents,
instruments, or agreements should in fact prove to be invalid, insufficient,
inaccurate, fraudulent, or forged and even if the Bank or any of its
correspondents shall have been notified thereof;
 
(ii) any failure of any draft to bear reference or adequate reference to the
Letter of Credit or of any document to accompany a draft or any failure to
forward any document separately from a related draft;
 
(iii) errors, omissions, interruptions, or delays in transmission or delivery of
the Letter of Credit, draft, message, document, or advice, whether transmitted
by courier, mail, or hand, or by facsimile, cable, telex, telegraph, or other
telecommunication, or otherwise, whether or not encrypted;
 
(iv) errors in interpretation of technical terms or in translation, and the Bank
and its correspondents may transmit terms of the Letter of Credit and related
documents and drafts without translation;
 
(v) any claim or basis for a claim for breach of warranty by the Borrower or the
Bank against any beneficiary of the Letter of Credit or the existence of any
claim, setoff, defense, or other right that the Borrower may have at any time
against any beneficiary or any successor thereof, any transferee of the Letter
of Credit, the Bank or any correspondent or agent thereof, or any other Person,
whether in connection with the underlying transaction or any unrelated
transaction or other matter;
 
(vi) any payment or other honor by the Bank against a draft or other document
presented under the Letter of Credit containing one or more material or
consequential discrepancies which causes such presentation to not comply
substantially with the terms or conditions of the Letter of Credit and the Bank
has notified the Borrower (orally or in writing by facsimile transmission or
otherwise) of such discrepancy unless (A) the Bank receives from the Borrower
notice in writing, within one (1) Business Day after the Borrower received
notice of the discrepancy from the Bank, of the Borrower's objection to such
discrepancy, and (B) the Borrower takes all reasonable steps to mitigate any
loss;
 
(vii) any failure of the Bank to issue the Letter of Credit in the form
requested by the Borrower, unless the Bank receives written notice from the
Borrower of such failure within one (1) Business Day after the Borrower shall
have received (by facsimile transmission or otherwise) a copy of the Letter of
Credit and such error is material and consequential;
 
(viii) any payment or other honor under the Letter of Credit that is made after
the expiration thereof if such date of expiration occurs during a force majeure
affecting the office of the Bank or the office of any other bank through which
payment is to be made under such Letter of Credit; or
 
(ix) any action or inaction, including failure or compulsion to pay or accept a
draft, taken or suffered by the Bank or any of its correspondents in connection
with the Letter of Credit, draft, document, or property and resulting from any
censorship, law, regulation, order, control, restriction, or the like rightfully
or wrongly exercised by any de facto or de jure domestic or foreign Official
Body or other purported authority or from any other cause beyond the Bank's
control or the control of the Bank's correspondents or their respective agents,
or for any loss or damage to the Borrower or anyone else or to any property of
the Borrower or anyone else resulting from any such failure to pay or accept.
 
(b) The Bank is authorized to honor any draft without regard to, and without any
duty on the Bank's part to inquire into, any underlying transaction or any
disputes or controversies between Borrower and any beneficiary of the Letter of
Credit or any other Person or the respective rights, duties, or liabilities of
any of them or whether any facts or occurrences represented in any of the
documents presented under the Letter of Credit are true or correct or whether
any draft or document related to the Letter of Credit is forged or fraudulent or
whether honor of a presentation under the Letter of Credit would facilitate a
fraud or misrepresentation, notwithstanding that the Bank may have assisted the
Borrower in the preparation of the wording of the Letter of Credit or any drafts
or other documents required to be presented thereunder or that the Bank may be
aware of any underlying transaction or familiar with any of the parties thereto.
 
(c) The Borrower is responsible to the Bank for all obligations imposed upon the
Bank with respect to the Letter of Credit and all related drafts and
documents.  The Borrower agrees that any action, inaction, or omission by the
Bank, any correspondent of the Bank, or their respective agents under or in
connection with the Letter of Credit or any related drafts or documents shall be
binding on the Borrower, shall not diminish or impair any obligations of the
Borrower hereunder, and shall not put the Bank or the Bank's correspondent or
their respective agents under any resulting liability to the Borrower in the
absence of gross negligence or willful misconduct.  Without limiting the
generality of the foregoing, the Bank and each of the Bank's correspondents and
their respective agents:
 
(i) may rely on any oral, telephonic, telegraphic, facsimile, electronic,
written, or other communication believed in good faith by the Bank, any
correspondent of the Bank, or any agent of either to have been authorized or
given by or on behalf of the Borrower;
 
(ii) shall not be responsible for the identity or authority of any signer or the
form, accuracy, genuineness, falsification, or legal effect of any draft or
other document presented under the Letter of Credit if such draft or document
appears on its face to be in order;
 
(iii) shall not be responsible for any acts or omissions by or the solvency of
any beneficiary of the Letter of Credit or any other Person having any role in
any underlying transaction relating to the Letter of Credit;
 
(iv) may accept or pay, as complying with the terms and conditions of the Letter
of Credit, any draft or other document appearing on its face substantially to
comply with the terms and conditions of the Letter of Credit;
 
(v) may disregard (A) any requirement stated in the Letter of Credit that any
draft or other document be presented to it at a particular hour or place, and
(B) any discrepancies in any presentation under the Letter of Credit that do not
reflect a reduction in the value of any beneficiary's performance to the
Borrower in the related underlying transaction;
 
(vi) may accept as a draft any written or electronic demand or request for
payment or honor under the Letter of Credit regardless of the legal sufficiency
of such demand or request as a negotiable instrument;
 
(vii) shall not be responsible for the effectiveness or suitability of the
Letter of Credit for any purpose of the Borrower or for any acts or omissions of
the users of the Letter of Credit;
 
(viii) shall not be liable to the Borrower for any consequential, punitive, or
special damages, or for any damages resulting from any change in the value of
any goods or other property to which an underlying transaction relates;
 
(ix) may honor a previously dishonored presentation under the Letter of Credit,
whether pursuant to court order, to settle or compromise any claim that it
wrongfully dishonored, or otherwise, and shall be entitled to reimbursement to
the same extent as if it had initially honored, plus reimbursement of any
interest paid by it;
 
(x) may honor, upon receipt, any drawing that is payable upon presentation of a
statement advising negotiation or payment (even if such statement indicates that
a draft or other document is being separately delivered) and shall not be liable
for any failure of any draft or other document to arrive or to conform in any
way with the draft or other document referred to in the statement or any
underlying contract; and
 
(xi) may pay any paying or negotiating bank (designated or permitted by the
Letter of Credit) claiming that it rightfully honored under the laws or
practices of the place where it is located.
 
(d) In the event the Borrower or any other Person seeks to forestall or enjoin
the honoring by the Bank of a presentation under the Letter of Credit, the Bank
shall have no obligation to delay or refuse to honor the presentation until
validly so ordered by a court of competent jurisdiction, and all costs and
expenses of the Bank relating thereto (including reasonable attorneys' fees and
other related expenses) shall be borne by  the Borrower notwithstanding what
party prevails in any such action.
 
(e) Neither the Bank nor any correspondent of the Bank nor any of their
respective agents shall be responsible or liable to the Borrower for or as a
result of any of the circumstances described in this Section 2.04, and the
Borrower assumes all risks and responsibility for each of the circumstances
addressed in this Section 2.04.
 
Section 2.05 Indemnification.
 
(a) The Borrower shall indemnify and hold the Bank, any parent entity of the
Bank, the Bank's and such parent's affiliates and subsidiaries, and each of
their respective agent, officers, directors, shareholders, and employees (each,
an "Indemnified Party") harmless from and against any and all claims,
liabilities, losses, damages, taxes (excluding taxes imposed on the net income
of any Indemnified Party), fees, duties, levies, imposts deductions, charges,
withholdings, penalties, interest, judgments, costs, and expenses, including
reasonable attorneys' fees and related costs (including those fees and costs of
counsel employed by the Indemnified Parties), that may be incurred by or
asserted or awarded against any Indemnified Party, in any case arising out of or
in connection or by reason of, or in connection with the preparation for a
defense of, any investigation, litigation, or proceeding arising out of or in
connection with or by reason of:
 
(i) The Letter of Credit, any draft, any underlying transaction, or this
Agreement or any other Bank Documents;
 
(ii) any payment or action taken in connection with the Letter of Credit
(including any action or proceeding seeking to restrain any drawing under the
Letter of Credit or to compel or restrain the payment of any amount or the
taking of any other action under the Letter of Credit or any Bank Document or to
obtain similar relief (including by way of interpleader, declaratory judgment,
attachment, or otherwise) and regardless who is the prevailing party in any such
action or proceeding;
 
(iii) the enforcement of the Bank Documents or the collection or sale of any
property or other collateral, or any act or omission in connection therewith;
 
(iv) any occurrence or circumstance described in Section 2.04 hereof or any
breach by the Borrower of any representation, warranty, covenant, term or
condition in or the occurrence of an Event of Default under any Bank Document,
the Loan Agreement or the Bond Documents; and
 
(v) any act or omission of any de jure or de facto Official Body or other cause
beyond the control of the Bank, except to the extent such claim, liability,
loss, damage, tax (excluding taxes imposed on the net income of the Bank), fees,
duties, levies, imposts, deductions, charges, withholdings, penalty, interest,
judgment, cost, or expense is found by a final judgment of a court of competent
jurisdiction to have resulted from the gross negligence or willful misconduct of
the Bank.
 
(b) The Bank shall have no liability to the Borrower or any other Person as a
result of any tender of Bonds resulting from any reduction of the credit rating
of the Bank or any deterioration in the Bank's financial condition, and the
Borrower hereby indemnities and holds harmless each Indemnified Party from any
and all claims, damages, losses, liabilities, costs or expenses relating to the
Borrower or the Bonds which any Indemnified Party may incur in connection
therewith.  No reduction on the credit rating of the Bank or deterioration in
the Bank's financial condition shall reduce or in any way diminish the
obligations of the Borrower to the Bank under this Agreement and the other Bank
Documents, including without limitation the Borrower's obligation to pay Letter
of Credit commitment fees to the Bank and to reimburse the Bank for any drawing
under the Letter of Credit.
 
(c) Nothing in this Section 2.05 is intended to limit the Borrower's
reimbursement obligations contained in Section 2.02(a).  The obligations of the
Borrower under this Section 2.05 shall survive the termination of this
Agreement.
 
ARTICLE III
 
SECURITY
 
Section 3.01 Security and Subrogation under Indenture.
 
  The Borrower and the Bank intend that (a) the Bank will have the security and
benefit of the Bond Documents as provided in the Indenture and (b) in the event
of one or more draws under the Letter of Credit and the application thereof to
the payment of Bonds, the Bank will be subrogated pro tanto to the rights of the
Trustee and the holders of such Bonds under the Bond Documents and in and to all
funds (except redemption funds) and security held by the Trustee under the
Indenture for the payment of the principal of and interest on such Bonds,
including without limitation all loan funds, construction funds, project funds,
escrow funds, revenue funds, operation funds, debt service funds, reserve funds
and other funds (except redemption funds) and securities and other instruments
comprising investments thereof. In addition, the Bank shall have any and all
other subrogation rights available to the Bank at law and in equity.
 
Section 3.02 Pledge of Rights to Certain Funds and Investments.
 
  To secure the Borrower's obligations to the Bank under this Agreement, the
Borrower hereby pledges to the Bank, and grants to the Bank a security interest
in, all of the Borrower's right, title and interest in and to all funds (except
redemption funds) and investments thereof now or hereafter held by the Trustee
under the Indenture as security for the payment of the Bonds, including without
limitation any and all loan funds, construction funds, project funds, escrow
funds, revenue funds, operations funds, debt service funds, reserve funds and
other funds and securities and other instruments comprising investments thereof
and interest and other income derived therefrom held as security for the payment
of the Bonds, such pledge, assignment and grant being under and subject only to
the rights of the Trustee under the Indenture.  The Borrower covenants and
agrees that it will defend the Bank's rights and security interests created by
this Section against the claims and demands of all Persons.  In addition to its
other rights and remedies under the Transaction Documents, the Bank shall have
all the rights and remedies of a secured party under the Uniform Commercial Code
or other applicable law with respect to the security interests created by this
Section.  The Bank's rights under this Section are in addition to, and not in
lieu of, its rights described in Section 3.01.
 
Section 3.03 Pledged Bonds.
 
(a) Pledge.  To secure the Borrower's obligations to the Bank under this
Agreement and the Bank Documents, the Borrower hereby pledges and assigns to the
Bank, and grants to the Bank a security interest in, all of the Borrower's
right, title and interest, now owned or hereafter acquired, in and to any and
all unremarketed Pledged Bonds (together with all income therefrom and proceeds
thereof) purchased pursuant to the Indenture with the proceeds of a Liquidity
Drawing presented under the Letter of Credit for which neither (i) full
reimbursement has been made to the Bank nor (ii) the Trustee holds sufficient
funds which, pursuant to the Indenture, the Trustee is required to apply on
behalf of the Borrower to reimburse the Bank in full for such Liquidity Drawing
on the date such Liquidity Drawing is paid by the Bank.  Such unremarketed
Pledged Bonds shall be pledged to the Bank, registered in its name as pledgee of
the Borrower and delivered to and held by the Trustee as agent for the Bank
under this Section 3.03 or, at the option of the Bank by written notice to the
Borrower and the Trustee, the Pledged Bonds specified in such notice shall be
delivered to and held by the Bank; provided that, if the Pledged Bonds are held
in uncertificated form pursuant to an agreement with the Depository Trust
Company, or a successor securities depository, then such pledge to the Bank
shall be recorded in the registration books maintained by the Trustee and in the
records of ownership maintained by the securities depository and any participant
through which such Pledged Bonds are held.
 
(b) Pledged Bond Payments. Any principal of and interest on Pledged Bonds which
becomes due and payable (including any due-bills received upon purchase thereof
pursuant to the record date provisions of the Indenture or the Bonds) shall be
paid to the Bank.  All sums of money so paid to the Bank in respect of Pledged
Bonds shall be credited against the obligation of the Borrower to reimburse the
Bank, with interest, under Section 2.02(a) for the amount drawn under a
Liquidity Drawing to fund the purchase of such Pledged Bonds pursuant to the
Indenture.
 
(c) Release of Pledged Bonds.  If the Borrower pays or causes to be paid in full
its obligation under Section 2.02(a) for the reimbursement of the amount (or
allocable portion thereof) drawn with a Liquidity Drawing to fund the purchase
of Pledged Bonds pursuant to Article 2B of the Indenture (or if the Trustee has
received immediately available funds which, pursuant to Section 2B.1(g) or
2B.2(f) of the Indenture, the Trustee is required to pay over promptly to the
Bank in an amount sufficient to pay the Borrower's reimbursement obligation
under Section 2.02(a) with respect to the amount drawn with such Liquidity
Drawing to fund the purchase of such Pledged Bonds), and provided no Default or
Event of Default has occurred and is continuing, the Bank will release from the
pledge of this Agreement and will deliver, or cause its agent to deliver, such
Pledged Bonds (if held in certificated form) to such Person or Persons as the
Trustee or the Borrower may direct.  An amount equal to the principal of, plus
accrued interest on, such Pledged Bonds shall be presumed (absent notice to the
contrary) to be an "amount sufficient" for purposes of this Section 3.03(c) and,
upon receipt of such amount by the Trustee for payment to the Bank as aforesaid,
the Trustee shall be authorized, upon receipt of the Bank's written confirmation
of the reinstatement of the Letter of Credit relating to the Pledged Bonds, to
deliver such Pledged Bonds as aforesaid free from the pledge of this Agreement.
 
(d) No Liability of Bank.  The Bank shall not be liable for failure to collect
or realize upon the obligations secured by the Pledged Bonds or any collateral
security or guarantee therefor, or any part thereof, or for any delay in so
doing, and the Bank shall not be under any obligation to take any action
whatsoever with regard thereto.
 
(e) Representations; Rights and Remedies.  The Borrower represents and warrants
to the Bank that the pledge, assignment and delivery of Pledged Bonds pursuant
to this Section 3.03 will create a valid first lien on and a first perfected
security interest in, all right, title and interest of the Borrower in and to
the Pledged Bonds, and the proceeds thereof. The Borrower covenants and agrees
that it will defend the Bank's right, title and security interest in and to the
Pledged Bonds and the proceeds thereof against the claims and demands of all
persons.  In addition to its other rights and remedies under the Transaction
Documents, the Bank shall have the rights and remedies of a secured party under
the Uniform Commercial Code or other applicable law with respect to the security
interests created by this Section.
 
ARTICLE IV
 
CONDITIONS PRECEDENT
 
The obligation of the Bank to issue the Letter of Credit and enter into the Bank
Documents is subject to the receipt of or satisfaction of each of the following
documents, matters and conditions, all of which must be satisfactory to the Bank
in form and substance:
 
Section 4.01 Closing Fee.
 
  On the date of execution and delivery hereof, the Borrower shall pay to the
Bank the Letter of Credit closing fee due pursuant to Section 2.02(c).
 
Section 4.02 Documentation.
 
  The Bank shall have received each of the following, in form and substance
satisfactory to the Bank:
 
(a) Bank Documents.  Fully-executed copies of each of the Bank Documents,  and
all schedules thereto prepared by the Borrower;
 
(b) Bond Documents.  True and correct copies of the executed Bond Documents and
all documentation delivered in connection therewith;
 
(c) Formation and Authorization Documents.  For the Borrower the following
formation and authorization documents:
 
(i) Corporate Resolutions.  A copy, duly certified as true, correct, complete
and in effect by its secretary or assistant secretary as of the date hereof, of
resolutions of its board of directors authorizing the transactions described in
the Transaction Documents and the execution and delivery of and performance
under the Transaction Documents and all other documents required to accomplish
and implement the foregoing;
 
(ii) Articles of Incorporation.  A copy of its articles and/or certificate of
Incorporation and all amendments, duly certified as of a recent date by the
Secretary of State of the state of its incorporation;
 
(iii) Good Standing Certificates.  A good standing certificate issued as of a
recent date by the Secretary of State of the state of its incorporation;
 
(iv) Bylaws.  A copy of its bylaws and all amendments, certified as true,
complete, correct and in effect by its secretary or assistant secretary; and
 
(v) Incumbency Certificate.  An incumbency certificate executed by its secretary
or assistant secretary dated as of the date hereof certifying the names and
offices held by the officers of such corporation who are authorized on behalf of
such corporation to execute the Bank Documents to be executed by it, together
with true signatures of such officers.
 
(d) Closing Certificate.  A certificate of an Authorized Person dated as of the
date of execution and delivery hereof stating that (i) the representations and
warranties contained in Article V and in the other Bank Documents are true and
correct, (ii) no Default or Event of Default has occurred and is continuing, and
(iii) no Material Adverse Change has occurred and is continuing;
 
(e) Lien Searches.  Results of Uniform Commercial Code, judgment and lien
searches for the Borrower, with results satisfactory to the Bank;
 
(f) Opinion of Borrower's Counsel.  An opinion of Morgan Lewis, counsel to the
Borrower, which opinion may be issued, where indicated, in reasonable reliance
upon certifications, opinions and other documentation derived from Official
Bodies and others having particular access to materials and information
necessary to reach the conclusions expressed in such opinion, covering the
matters described in Exhibit B hereto;
 
(g) Other Opinions.  Opinions of Saul Ewing LLP, bond counsel, and of the Office
of Chief Counsel of the Pennsylvania Department of Community and Economic
Development, each addressed to the Bank, covering such matters as to the Issuer
and the Bond Documents as the Bank may reasonably request;
 
(h) Issuer's Certificate.  A certificate or certificates of the officers of the
Issuer covering such matters as to the Issuer and the Bond Documents as the Bank
may reasonably request;
 
(i) Financial Statements.  Audited Financial Statements of the Borrower for the
Fiscal Year ended December 31, 2007.
 
(j) Consents.  All consents of Official Bodies which are required in connection
with the transactions contemplated by the Transaction Documents;
 
(k) Other Conditions.  Such other documents, certificates, approvals, assurances
and opinions as are listed in the closing memorandum filed with the Trustee in
connection with the issuance of the Bonds, or as listed on a closing checklist
prepared by the Bank's counsel, or as the Bank or its counsel may reasonably
request; and
 
(l) Payment of Fees.  Payment of all fees due to the Bank on the date hereof, if
any, and payment of all fees and out-of-pocket costs incurred by the Bank's
counsel in connection herewith.
 
Section 4.03 Issuance of Bonds.
 
  On the date of execution and delivery hereof, all conditions precedent to the
issuance and original sale of the Bonds shall have been satisfied and the Bonds
shall have been duly issued and delivered.  The Bonds shall provide for
amortization as set forth in the Indenture.
 
ARTICLE V
 
REPRESENTATIONS AND WARRANTIES
 
To induce the Bank to enter into this Agreement and issue the Letter of Credit,
the Borrower hereby makes the following representations and warranties to the
Bank, all of which shall be continuing in nature and shall survive the execution
and delivery of this Agreement and the issuance of the Letter of Credit:
 
Section 5.01 Existence.
 
  The Borrower is a corporation, duly organized, validly existing and in good
standing under the laws of the State.  The Borrower has all necessary permits,
licenses, certifications and qualifications to conduct its business as it is
presently being conducted, and has complied in all material respects with all
applicable requirements of all Official Bodies, to operate its facilities as
they are presently being operated.
 
Section 5.02 Power, Authorization and No Conflicts.
 
  The execution, delivery and performance by the Borrower of the Transaction
Documents are within the Borrower's powers, have been duly authorized by all
necessary corporate action of the Borrower and do not contravene the Articles of
Incorporation or bylaws  of the Borrower or any Law or judgment applicable to
the Borrower or any agreement, contractual or other restriction binding on or
affecting the Borrower or any of its properties.
 
Section 5.03 Governmental and Other Approvals.
 
  No authorization, approval or other action by, and no notice to or filing
with, any Official Body is required for the due execution, delivery and
performance by the Borrower of the Transaction Documents, except such as have
been obtained.
 
Section 5.04 Validity, Binding Effect and Enforceability.
 
  The Transaction Documents are the legal, valid and binding obligations of the
Borrower, enforceable against the Borrower in accordance with their terms,
subject to the application by a court of general principles of equity and to the
effect of any applicable bankruptcy, insolvency, reorganization, moratorium or
similar law affecting creditors' rights generally or limiting the right of
specific performance.
 
Section 5.05 No Litigation.
 
  There is no pending action or proceeding before any Official Body against or
involving the Borrower and, to the best knowledge of the Borrower, there is no
threatened action or proceeding affecting the Borrower before any Official Body
which has resulted in, or may reasonably be expected to result in, a Material
Adverse Change.
 
Section 5.06 No Violations.
 
  The Borrower is not in any material way in breach of or in default under
(a) any applicable Law of any Official Body or any applicable judgment or decree
or (b) any loan agreement, indenture, lease, sublease, bond, note, resolution,
agreement or other agreement or instrument to which it is a party or otherwise
bound or subject, and no event has occurred and is continuing which, with the
passage of time or the giving of notice or both, would constitute an event of
default under any such instrument except for violations, if any, which the
Borrower has disclosed to the Bank in writing, is proceeding in good faith to
remove or correct and which have not and are not reasonably expected to result
in a Material Adverse Change.  The Borrower has no knowledge of any violation,
nor is there any notice or other record of any violation, of any zoning,
subdivision, environmental, building or other statute, ordinance, regulation,
restrictive covenant or other restriction applicable to the Premises except for
violations, if any, which the Borrower has disclosed to the Bank in writing, is
proceeding in good faith to remove or correct and which have not and are not
reasonably expected to result in a Material Adverse Change.
 
Section 5.07 Reserved.
 

 
Section 5.08 No Liens.
 
  There exist no Liens against the Premises (including statutory and other Liens
of mechanics, workmen, contractors, subcontractors, suppliers, taxing
authorities and others) or any personal property of the Borrower, except for
Permitted Liens; and the Borrower has not made a contract or arrangement of any
kind, the performance of which by the other party thereto could give rise to a
Lien on the Premises by operation of law or otherwise, except for Permitted
Liens.
 
Section 5.09 Reserved.
 
Section 5.10 Financial Condition; No Material Adverse Change.
 
(a) Annual Financial Statements. The balance sheet of the Borrower as of
December 31, 2007 and the related statements of income and changes in financial
position of the Borrower for the Fiscal Year then ended (i) have been prepared
in accordance with GAAP, (ii) have been examined by Beard Miller Company, LLP,
Certified Public Accountants, (iii) are complete and correct and present fairly
the financial condition and results of operations of the Borrower as of and for
the period covered thereby, and (iv) accurately reflect all liabilities,
including contingent liabilities, of the Borrower as of the date thereof.
 
(b) Interim Financial Statements. The balance sheet of the Borrower as of
March 31, 2008 and the related statement of income for the three (3) months
ended March 31, 2008 (i) have been prepared in accordance with GAAP, (ii) are
complete and correct and present fairly the financial condition and results of
operations of the Borrower as of March 31, 2008 and for the period covered
thereby, and (iii) accurately reflect all liabilities, including contingent
liabilities, of the Borrower as of the date thereof.
 
(c) Material Adverse Changes. Since December 31, 2007, the Borrower has
conducted its operations in the ordinary course of business, and no Material
Adverse Change has occurred.
 
Section 5.11 Plans and Benefit Arrangements.
 

 
(a) The Borrower and each other member of the ERISA Group are in compliance in
all material respects with any applicable provisions of ERISA with respect to
all Benefit Arrangements, Plans and Multiemployer Plans.  There has been no
Prohibited Transaction with respect to any Benefit Arrangement or any Plan or,
to the best knowledge of the Borrower, with respect to any Multiemployer Plan or
Multiple Employer Plan, which could result in any material liability of the
Borrower or any other member of the ERISA Group.  The Borrower and all other
members of the ERISA Group have made when due any and all payments required to
be made under any agreement relating to a Multiemployer Plan or a Multiple
Employer Plan or any Law pertaining thereto.  With respect to each Plan and
Multiemployer Plan, the Borrower and each other member of the ERISA Group
(i) have fulfilled in all material respects their obligations under the minimum
funding standards of ERISA, (ii) have not incurred any liability to the PBGC,
and (iii) have not had asserted against them any penalty for failure to fulfill
the minimum funding requirements of ERISA.
 
(b) To the best of the Borrower's knowledge, each Multiemployer Plan and
Multiple Employer Plan is able to pay benefits thereunder when due.
 
(c) Neither the Borrower nor any other member of the ERISA Group has instituted
or intends to institute proceedings to terminate any Plan.
 
(d) No event requiring notice to the PBGC under Section 302(f)(4)(A) of ERISA
has occurred or is reasonably expected to occur with respect to any Plan, and no
amendment with respect to which security is required under Section 307 of ERISA
has been made or is reasonably expected to be made to any Plan.
 
(e) The aggregate actuarial present value of all accumulated benefit obligations
(whether or not vested) under each Plan, as disclosed in, and as of the date of,
the most recent actuarial report for such Plan, does not exceed the aggregate
fair market value of the assets of such Plan.
 
(f) Neither the Borrower nor any other member of the ERISA Group has incurred or
reasonably expects to incur any material withdrawal liability under ERISA to any
Multiemployer Plan or Multiple Employer Plan.  Neither the Borrower nor any
other member of the ERISA Group has been notified by any Multiemployer Plan or
Multiple Employer Plan that such Multiemployer Plan or Multiple Employer Plan
has been terminated within the meaning of Title IV of ERISA and, to the best
knowledge of the Borrower, no Multiemployer Plan or Multiple Employer Plan is
reasonably expected to be reorganized or terminated, within the meaning of
Title IV of ERISA.
 
(g) To the extent that any Benefit Arrangement is insured, the Borrower and all
other members of the ERISA Group have paid when due all premiums required to be
paid for all periods through the Closing Date.  To the extent that any Benefit
Arrangement is funded other than with insurance, the Borrower and all other
members of the ERISA Group have made when due all contributions required to be
paid for all periods through the Closing Date.
 
(h) All Plans, Benefit Arrangements and Multiemployer Plans have been
administered in accordance with their terms and applicable Law.
 
Section 5.12 Environmental Compliance.
 

 
(a) The Borrower has not received any Environmental Complaint from any Official
Body or private Person alleging that the Borrower or any prior or subsequent
owner of any of the Borrower's Facilities is a potentially responsible party
under the Comprehensive Environmental Response, Cleanup and Liability Act,
42 U.S.C. § 9601 et seq., and the Borrower has no reason to believe that such an
Environmental Complaint might be received.  There are no pending or, to the
Borrower's knowledge, threatened Environmental Complaints relating to any prior
or subsequent owner of the Premises pertaining to, or arising out of, any
Environmental Conditions.
 
(b) There are no circumstances at, on or under the Premises that constitute a
breach of or non-compliance with any of the Environmental Laws, and there are no
past or present Environmental Conditions at, on or under any of the Premises or,
to the Borrower's knowledge, at, on or under adjacent property, that prevent
compliance with the Environmental Laws at the Premises.
 
(c) Neither the Premises nor any structures, improvements, equipment, fixtures,
activities or facilities thereon or thereunder contain or use Regulated
Substances except in compliance with Environmental Laws.  There are no
processes, facilities, operations, equipment or other activities at, on or under
the Premises, or, to the Borrower's knowledge, at, on or under adjacent
property, that currently result in the release or threatened release of
Regulated Substances onto any of the Premises, except to the extent that such
releases or threatened releases are not a breach of or otherwise not a violation
of the Environmental Laws.
 
(d) There are no aboveground storage tanks, underground storage tanks or
underground piping associated with such tanks, used for the management of
Regulated Substances at, on or under the Premises that (i) do not have, to the
extent required by Environmental Laws, a full operational secondary containment
system in place, and (ii) are not otherwise in compliance with all Environmental
Laws.  There are no abandoned underground storage tanks or underground piping
associated with such tanks, previously used for the management of Regulated
Substances at, on or under any of the Premises that have not either been closed
in place in accordance with Environmental Laws or removed in compliance with all
applicable Environmental Laws and no contamination associated with the use of
such tanks exists on any of the Premises that is not in compliance with
Environmental Laws.
 
(e) The Borrower has all material permits, licenses, authorizations, plans and
approvals necessary under the Environmental Laws for the conduct of its business
as presently conducted.  The Borrower has submitted all material notices,
reports and other filings required by the Environmental Laws to be submitted to
an Official Body which pertain to past and current operations on the Premises.
 
(f) All past and present on-site generation, storage, processing, treatment,
recycling, reclamation, disposal or other use or management of Regulated
Substances at, on, or under any of the Premises and all off-site transportation,
storage, processing, treatment, recycling, reclamation, disposal or other use or
management of Regulated Substances have been done in accordance with the
Environmental Laws.
 
Section 5.13 Disclosure.
 
  None of the Transaction Documents contains any untrue statement of a material
fact respecting the Borrower or omits to state a material fact respecting the
Borrower necessary in order to make the statements contained herein and therein,
in the light of the circumstances in which they were made, not
misleading.  There is no fact known to the Borrower which has resulted in or
which may reasonably be expected to result in a Material Adverse Change which
has not been set forth in the Bank Documents or in the other documents,
certificates and statements furnished to the Bank by or on behalf of the
Borrower prior to the date of execution and delivery of this Agreement in
connection with the transactions contemplated hereby.
 
Section 5.14 Anti-Terrorism Laws.
 
(a) General.  Neither the Borrower nor any subsidiary of the Borrower is in
violation of any Anti-Terrorism Law or engages in or conspires to engage in any
transaction that evades or avoids, or has the purpose of evading or avoiding, or
attempts to violate, any of the prohibitions set forth in any Anti-Terrorism
Law.
 
(b) Executive Order No. 13224.  Neither the Borrower nor any subsidiary of the
Borrower, or their respective agents acting or benefiting in any capacity in
connection with the Letter of Credit or other transactions hereunder, is any of
the following (each a "Blocked Person"):
 
(i) a Person that is listed in the annex to, or is otherwise subject to the
provisions of, the Executive Order No. 13224;
 
(ii) a Person owned or controlled by, or acting for or on behalf of, any Person
that is listed in the annex to, or is otherwise subject to the provisions of,
the Executive Order No. 13224;
 
(iii) a Person or entity with which the Bank is prohibited from dealing or
otherwise engaging in any transaction by any Anti-Terrorism Law;
 
(iv) a Person or entity that commits, threatens or conspires to commit or
supports "terrorism" as defined in the Executive Order No. 13224;
 
(v) a Person or entity that is named as a "specially designated national" on the
most current list published by the United States Treasury Department Office of
Foreign Asset Control at its official website or any replacement website or
other replacement official publication of such list, or
 
(vi) a person or entity who is affiliated or associated with a person or entity
listed above.
 
Neither the Borrower nor, to the knowledge of the Borrower, any of its agents
acting in any capacity in connection with the Letter of Credit or other
transactions hereunder (i) conducts any business or engages in making or
receiving any contribution of funds, goods or services to or for the benefit of
any Blocked Person, or (ii) deals in, or otherwise engages in any transaction
relating to, any property or interests in property blocked pursuant to the
Executive Order No. 13224.
 
Section 5.15 Incorporation of Representations and Warranties by Reference.
 
  The Borrower hereby makes to the Bank the same representations and warranties
as are made by the Borrower and set forth in the Bank Documents and Bond
Documents, which representations and warranties, as well as the related defined
terms contained therein, are hereby incorporated by reference with the same
effect as if each and every such representation and warranty and defined term
were set forth herein in its entirety.  No amendment to such representations and
warranties or defined terms made pursuant thereto shall be effective to amend
such representations and warranties and defined terms as incorporated by
reference herein without the consent of the Bank.
 
Section 5.16 Use of Proceeds; Margin Stock; Section 20 Subsidiaries.
 
(a) General.  The Borrower intends to use the proceeds from the sale of the
Bonds in accordance with the terms of the Bond Documents.
 
(b) Margin Stock.  The Borrower does not engage or intend to engage principally,
or as one of its important activities, in the business of extending credit for
the purpose, immediately, incidentally or ultimately, of purchasing or carrying
margin stock (within the meaning of Regulation U).  No part of the proceeds of
any Loan has been or will be used, immediately, incidentally or ultimately, to
purchase or carry any margin stock or to extend credit to others for the purpose
of purchasing or carrying any margin stock or to refund indebtedness originally
incurred for such purpose, or for any purpose which entails a violation of or
which is inconsistent with the provisions of the regulations of the Board of
Governors of the Federal Reserve System.  The Borrower does not hold or intend
to hold margin stock in such amounts that more than twenty-five percent (25%) of
the reasonable value of the assets of the Borrower are or will be represented by
margin stock.
 
(c) Section 20 Subsidiaries.  The Borrower does not intend to use and shall not
use any portion of the proceeds of the Bonds, directly or indirectly
(i) knowingly to purchase any Ineligible Securities from a Section 20 Subsidiary
during any period in which such Section 20 Subsidiary makes a market in such
Ineligible Securities, (ii) knowingly to purchase during the underwriting or
placement period Ineligible Securities being underwritten or privately placed by
a Section 20 Subsidiary, or (iii) to make payments of principal or interest on
Ineligible Securities underwritten or privately placed by a Section 20
Subsidiary and issued by or for the benefit of the Borrower or any Affiliate of
the Borrower.
 
Section 5.17 Material Adverse Change.
 
  Since the date of the most recent Financial Statements delivered to the Bank,
there has been no Material Adverse Change.
 
Section 5.18 Condition of and Title to Assets; Status of Leases.
 
  The Borrower has good title to its properties, assets and leases.  As of the
date hereof none of the assets of the Borrower are subject to any Lien except
for existing Permitted Liens.  All of the assets and properties of the Borrower
that are necessary for the operation of its businesses are in good working
condition, ordinary wear and tear excepted, and are able to serve the functions
for which they are currently being used.  The Borrower is not in default under,
and to the best of its knowledge no other party thereto is in default under, any
material lease to which the Borrower is a party.
 
Section 5.19 Insurance.
 
  The Borrower currently maintains insurance which meets or exceeds the
requirements of Section 6.03 and the applicable insurance requirements set forth
in the other Bank Documents, and such insurance is provided by reputable and
financially sound insurers and is of such types and at least in such amounts as
are customarily carried, and insures against such risks as are customarily
insured against, by similar businesses similarly situated and owning, leasing
and operating similar properties to those owned, leased and operated by the
Borrower.  All of such insurance policies are valid and in full force and
effect.  No notice has been given or claim made, and, to the Borrower's
knowledge, no grounds exist to cancel or avoid any of such policies or to reduce
the coverage provided thereby.
 
Section 5.20 Taxes.
 
  All federal, state, local and other tax returns required to have been filed by
the Borrower have been filed, and payment or adequate provision has been made
for the payment of all taxes, fees, assessments and other governmental charges
which have or may become due pursuant to said returns or to assessments
received, except to the extent that such taxes, fees, assessments and other
charges are being contested in good faith by appropriate proceedings diligently
conducted and for which such reserves or other appropriate provisions, if any,
as shall be required by GAAP shall have been made.  There are no agreements or
waivers extending the statutory period of limitations applicable to any federal
income tax return of the Borrower for any period.
 
Section 5.21 No Event of Default; Compliance with Instruments.
 
  No Default or Event of Default has occurred and is continuing, or will occur
or exist after giving effect to the extensions of credit to be made pursuant to
any of the Transaction Documents.  The Borrower is not in violation of (i) any
term of its certificate of incorporation, bylaws, certificate of limited
partnership, partnership agreement, certificate of formation, limited liability
company agreement or other organizational documents or (ii) any agreement or
instrument to which it is a party or by which it or any of its properties may be
subject or bound where such violation has resulted in or may be reasonably
likely to result in a Material Adverse Change.
 
Section 5.22 Patents, Trademarks, Copyrights, Licenses, Etc.
 
  The Borrower owns or possesses all the material patents, trademarks, service
marks, trade names, copyrights, licenses, registrations, franchises, permits and
rights necessary to own and operate its properties and to carry on its business
as presently conducted and planned to be conducted, without known possible,
alleged or actual conflict with the rights of others.
 
ARTICLE VI
 
GENERAL COVENANTS
 
So long as any amount is available under the Letter of Credit, the Liquidity
Period has not terminated or any amount is due and owing to the Bank hereunder,
the Borrower covenants that, except to the extent the Bank shall otherwise
consent in writing, each of the following covenants shall be performed and
complied with by the Borrower:
 
Section 6.01 Maintenance of Existence.
 
  The Borrower will maintain its existence, rights and privileges and its
qualification to do business in the State.
 
Section 6.02 Compliance with Laws, Etc.
 
  The Borrower will comply in all material respects with all applicable Laws of
any Official Body, except for any such Laws which the Borrower is contesting in
good faith by appropriate proceedings and the noncompliance with which during
such contest would not result in a Material Adverse Change if the result of such
contest were adverse to the Borrower.
 
Section 6.03 Maintenance of Insurance.
 
  The Borrower will maintain at all times adequate insurance to the satisfaction
of the Bank with insurers acceptable to the Bank against such risks of loss as
are customarily insured against and in amounts customarily carried by persons
owning, leasing or operating similar properties, including, but not limited to,
fire and theft and extended coverage insurance in an amount at least equal to
the total full insurable value of the Borrower's insurable property, provided
that the amount of such insurance shall at all times be sufficient to prevent
the Borrower from becoming a co- insurer under the terms of any insurance
policy.  Each such insurance policy covering properties, if any, pledged as
collateral for the Borrower's obligations hereunder shall have a long form
lender's loss payable endorsement in favor of the Bank, providing for at least
thirty (30) days written notice to the Bank prior to cancellation and, in this
regard, the Borrower shall cause a certificate of insurance to be delivered to
the Bank prior to the issuance of the Letter of Credit and no later than thirty
(30) days prior to the expiration of any such insurance coverage.  The Borrower
will also keep itself adequately insured at all times against liability on
account of injury to persons or property and comply with the insurance
provisions of all applicable workers' compensation laws and will effect all such
insurance under valid and enforceable policies issued by insurers of recognized
responsibility.
 
Section 6.04 Compliance with Bond Documents and Other Contracts.
 
  The Borrower will comply with all of its covenants and agreements under the
Bond Documents, as the same may hereafter be amended or supplemented from time
to time, and comply with, or cause to be complied with, all material
requirements and conditions of all material contracts and insurance policies
which relate to the Borrower.
 
Section 6.05 Visitation Rights.
 
  The Borrower will, at any reasonable time and from time to time, permit the
Bank or its agents or representatives to examine and make copies of an abstracts
from the records and books of account of, and visit the properties of, the
Borrower, and to discuss the affairs, finances and accounts of the Borrower with
the officers and accountants of the Borrower.
 
Section 6.06 Keeping of Books.
 
  The Borrower will keep proper books of record and account, in which full and
correct entries shall be made of financial transactions and the assets and
operations of the Borrower in accordance with GAAP, and have a complete audit of
such books of record and account made by certified public accountants acceptable
to the Bank for each Fiscal Year.
 
Section 6.07 Maintenance of Properties.
 
  The Borrower will maintain and preserve all of its properties in good working
order and condition, ordinary wear and tear excepted; not permit, commit or
suffer any waste of any of its properties; not use or permit the use of any of
its properties for any unlawful purpose or permit any nuisance to exist thereon.
 
Section 6.08 Reporting Requirements.
 
  The Borrower will furnish or cause to be furnished to the Bank the following
in form satisfactory to the Bank:
 
(a) Quarterly Financial Statements. As soon as available and in any event within
forty-five (45) days after the end of the first three quarters of each Fiscal
Year of the Borrower:
 
(i) the Borrower's Financial Statements for the quarter, together with
comparative figures for the corresponding period of the prior year, certified,
subject to ordinary and usual year-end adjustment, by the chief financial
officer of the Borrower;
 
(ii) a computation by a financial officer of the Borrower as of the end of such
fiscal quarter and for the twelve (12) month period then ended of the Borrower's
compliance with the financial covenants in Section 6.13, certified and by such
officer to be accurate and complete and made in accordance with this Agreement;
and
 
(iii) a certificate signed by an officer of the Borrower stating that (A) during
such fiscal quarter the Borrower has delivered and performed all of its
covenants and agreements set forth in the Transaction Documents, except as
disclosed in such certificate, and (B) no Default or Event of Default has
occurred and is continuing, except as disclosed in such certificate.
 
(b) Annual Financial Statements. As soon as available and in any event within
one hundred twenty (120) days after the close of each Fiscal Year of the
Borrower:
 
(i) the Borrower's Financial Statements and tax returns for the year, together
with statements of changes in consolidated financial position certified without
qualification as to scope, by a certified public accountant acceptable to the
Bank;
 
(ii) computations by a financial officer  of the Borrower as of the end of such
Fiscal Year and for such Fiscal Year of the Borrower's compliance with the terms
of Section 6.13, certified by such officer to be accurate and complete and made
in accordance with this Agreement; and.
 
(iii) a certificate signed by an officer of the Borrower stating that (A) during
such Fiscal Year the Borrower has observed and performed all of its covenants
and agreements set forth in this Agreement and the Bond Documents, except as
disclosed in such certificate, and (B) neither any Event of Default nor any
event which, with the giving of notice or lapse of time or both, would
constitute an Event of Default has occurred or is continuing, except as
disclosed in such certificate.
 
(c) Management Letters. Upon receipt thereof by the Borrower, copies of any
letter or report with respect to the management, operations or properties of the
Borrower submitted to the Borrower by its accountants in connection with any
annual or interim audit of the Borrower's accounts, and a copy of any written
response of the Borrower to any such letter or report;
 
(d) Notice of Litigation and Proceedings. As soon as possible and in any event
within thirty (30) days after receipt of notice thereof, notice of any pending
or threatened litigation, investigation or other proceeding involving the
Borrower (i) which could result in a Material Adverse Change or (ii) wherein the
potential damages, in the reasonable judgment of the Borrower based upon the
advice of counsel experienced in such matters, are not fully covered by the
insurance policies maintained by the Borrower (except for the deductible amounts
applicable to such policies);
 
(e) Notice of Material Adverse Change. As soon as possible, notice of any
Material Adverse Change;
 
(f) Notice of Default. As soon as possible and in any event within fifteen (15)
days after the occurrence of any Default or Event of Default, a statement of an
officer of the Borrower setting forth the details of such Default or Event of
Default and the action which the Borrower has or is taking or proposes to take
with respect thereto; and
 
(g) Other Information. Such other information respecting the operations and
properties, financial or otherwise, of the Borrower as the Bank may from time to
time reasonably request.
 
Section 6.09 Consent Under Bond Documents.
 
  The Borrower will obtain the consent of the Bank whenever the consent of the
Trustee is required to be obtained under the Bond Documents.
 
Section 6.10 Reserved.
 
Section 6.11 Payment of Indebtedness.
 
  The Borrower will make full and timely payment of the principal of and
interest on all Indebtedness of the Borrower, whether now existing or hereafter
arising, and comply in all material respects with all covenants and agreements
set forth in agreements evidencing Indebtedness of the Borrower.
 
Section 6.12 Environmental Covenants.
 
  The Borrower will cause all activities at the Premises during the term of this
Agreement to be conducted in compliance with all Environmental Laws.  The
Borrower will cause permits, licenses or approvals to be obtained and will cause
all notifications to be made, as required by Environmental Laws, and will, at
all times, cause compliance with the terms and conditions of any such approvals
or notifications.  During the term of this Agreement, if requested by the Bank,
the Borrower will provide to the Bank copies of (i) applications or other
materials submitted to any Official Body in compliance with Environmental Laws,
(ii) any notifications submitted to any Person pursuant to Environmental Laws,
(iii) any permit, license, approval, amendment or modification thereto granted
pursuant to Environmental Laws, (iv) any record or manifest required to be
maintained pursuant to Environmental Laws, and (v) any correspondence, notice of
violation, summons, order, complaint or other document received by the Borrower,
its lessees, sublessees or assigns, pertaining to compliance with any
Environmental Laws.
 
Section 6.13 Financial Covenants.
 
  At all times during the term hereof, the Borrower shall comply with the
following financial covenants:
 
(a) Minimum Equity to Capitalization
Ratio.                                                                                                The
Borrower will maintain a ratio of shareholders' equity in Borrower divided by
the sum of shareholders' equity in Borrower plus Funded Debt, all as determined
and consolidated in accordance with GAAP, of not less than 38%, as of the end of
each fiscal quarter for the quarter then ending.
 
(b) Minimum Interest Coverage Ratio. The Borrower will maintain a ratio of the
sum of Net Income plus interest expense plus income tax expense divided by
interest expense, all as determined and consolidated in accordance with GAAP, of
not less than 1.80 to 1.00, as of the end of each fiscal quarter for the four
(4) quarters then ending.
 
For purposes of this Section 6.13, the following terms shall have the following
meanings:
 
(i) "Net Income" means, with respect to a specified twelve (12) month period,
all operating and nonoperating income, less all operating and non-operating
expenses, including depreciation, amortization and interest expenses, as
determined and consolidated in accordance with GAAP.  In calculating Net Income,
there shall be excluded extraordinary gains and losses, any revenues and
expenses from disposition of capital assets and insurance policies (other than
business interruption insurance proceeds) and condemnation awards).
 
(ii) "Funded Debt" shall mean all obligations for the payment of money,
incurred, assumed or guaranteed by the Borrower, whether due and payable in all
events, or upon the performance of work, the possession of property as lessee or
the rendering of services by others, including the Bonds.
 
Section 6.14 Payments of Taxes and Other Charges.
 
  The Borrower will pay or cause to be paid all taxes, assessments and other
governmental charges to which the Borrower or its properties are or shall be
subject before such charges become delinquent, except that no such charge need
be paid for so long as its validity or amount shall be contested in good faith
by appropriate proceedings duly prosecuted and the Borrower shall have set up on
its books such reserve with respect thereto as shall be dictated by sound
accounting practices.
 
Section 6.15 Reserved.
 
Section 6.16 Reserved.
 
Section 6.17 ERISA.
 
  The Borrower shall not:
 
(a) fail to satisfy the minimum funding requirements of ERISA and the Internal
Revenue Code with respect to any Plan;
 
(b) request a minimum funding waiver from the Internal Revenue Service with
respect to any Plan;
 
(c) engage in a Prohibited Transaction with any Plan, Benefit Arrangement or
Multiemployer Plan which, alone or in conjunction with any other circumstances
or set of circumstances resulting in liability under ERISA, would constitute a
Material Adverse Change;
 
(d) permit the aggregate actuarial present value of all accumulated benefit
obligations (whether or not vested) under each Plan, as disclosed in the most
recent actuarial report completed with respect to such Plan, to exceed, as of
any actuarial valuation date, the fair market value of the assets of such Plan;
 
(e) fail to make when due any contribution to any Multiemployer Plan that the
Borrower or any member of the ERISA Group may be required to make under any
agreement relating to such Multiemployer Plan, or any Law pertaining thereto;
 
(f) withdraw (completely or partially) from any Multiemployer Plan or withdraw
(or be deemed under Section 4062(e) of ERISA to withdraw) from any Multiple
Employer Plan, where any such withdrawal is likely to result in a material
liability of the Borrower or any member of the ERISA Group;
 
(g) terminate, or institute proceedings to terminate, any Plan, where such
termination is likely to result in a material liability to the Borrower or any
member of the ERISA Group;
 
(h) make any amendment to any Plan with respect to which security is required
under Section 307 of ERISA; or
 
(i) fail to give any and all notices and make all disclosures and governmental
filings required under ERISA or the Internal Revenue Code, where such failure is
likely to result in a material adverse change.
 
Section 6.18 Amendments to Bond Documents.
 
  The Borrower will not consent to or enter into any amendment of, supplement to
or replacement of the Bond Documents without the consent of the Bank.
 
Section 6.19 Liens and Encumbrances.
 
  The Borrower will not create, assume, incur or suffer to exist any Liens with
respect to any of its property or assets, whether real, personal, mixed, or
tangible or intangible, and whether now owned or hereafter acquired, or upon any
income or profits therefrom, except Permitted Liens, provided the foregoing
restriction shall not apply to or prevent (a) the pledges or deposits described
in Section 6.10(a)(1), (3) and (4) of the Loan Agreement or (b) any judgment in
the course of appeal or otherwise in contest or stay of legal proceedings, which
judgment or stay is secured by sufficient bond or security.
 
Section 6.20 Change in Business.
 
  The Borrower will not make or permit any material change in the nature of its
business as carried on as of the date hereof.
 
Section 6.21 Limitation on Optional Calls.
 
  The Borrower will not exercise its rights under the Bond Documents to direct
the Issuer to call the Bonds for any optional redemption thereof, unless the
Borrower first demonstrates to the reasonable satisfaction of the Bank that at
the time of such redemption the Bank will be fully reimbursed for all drawings
on the Letter of Credit in connection with such redemption.
 
Section 6.22 Reserved.
 

 
Section 6.23 Anti-Terrorism Laws.
 
  The Borrower and its Affiliates and agents shall not (i) conduct any business
or engage in any transaction or dealing with any Blocked Person, including the
making or receiving any contribution of funds, goods or services to or for the
benefit of any Blocked Person, (ii) deal in, or otherwise engage in any
transaction relating to, any property or interests in property blocked pursuant
to the Executive Order No. 13224; or (iii) engage in or conspire to engage in
any transaction that evades or avoids, or has the purpose of evading or
avoiding, or attempts to violate, any of the prohibitions set forth in the
Executive Order No. 13224, the USA Patriot Act or any other Anti-Terrorism
Law.  The Borrower shall deliver to the Bank any certification or other
reasonable evidence requested from time to time by the Bank in its sole
discretion, confirming the Borrower's compliance with this Section 6.23.
 
ARTICLE VII
 
RESERVED
 
ARTICLE VIII
 
DEFAULTS AND REMEDIES
 
Section 8.01 Defaults.
 
  Each of the following shall constitute an event of default hereunder ("Event
of Default"):
 
(a) Certain Payments Under Agreement.  Failure by the Borrower to make or cause
to be made when due any payment under this Agreement as (i) reimbursement for a
Drawing, (ii) a Letter of Credit commitment fee, or (iii) interest on any such
Drawing or commitment fee;
 
(b) Other Payments Under Bank Documents.  Failure by the Borrower to make any
other payment within ten (10) days of the date when it is due under this
Agreement or any other Bank Document;
 
(c) Certain Covenants.  Failure by the Borrower to perform or comply with its
covenants contained in Section 6.05 (Visitation Rights) or Section 6.13
(Financial Covenants);
 
(d) Other Covenants.  Failure by the Borrower to perform or comply with any of
the other terms or conditions contained in any Bank Document and continuance of
such failure for thirty (30) days after the earlier of written notice from the
Bank to the Borrower, or such longer period to which Bank may agree in the case
of a default not curable by the exercise of due diligence within such thirty
(30) day period, or the Borrower has knowledge that such failure has occurred,
provided that the Borrower shall have commenced to cure such default within such
thirty (30) day period and shall complete such cure as quickly as reasonably
possible with the exercise of due diligence;
 
(e) Representations and Warranties. Any of the representations or warranties of
the Borrower set forth in any Bank Document or any other document furnished to
the Bank pursuant to the terms hereof is false or misleading in any material
respect;
 
(f) Invalidity, Etc. Any material provision of any Bank Document shall at any
time for any reason cease to be valid and binding on the Borrower or shall be
declared to be null and void, or shall be violative of any applicable Law
relating to a maximum amount of interest permitted to be contracted for, charged
or received, or the validity or enforceability thereof shall be contested by the
Borrower or any Official Body, or the Borrower shall deny that it has any or
further liability or obligation under any Bank Document;
 
(g) Events of Default Under Other Transaction Documents. The occurrence of an
Event of Default as defined in the Indenture or the Loan Agreement;
 
(h) Bankruptcy, Insolvency, Etc. The Borrower shall (i) apply for or consent to
the appointment of a receiver, trustee, liquidator or the like of the Borrower
or of property of the Borrower, or (ii) admit in writing the inability of the
Borrower, to pay its debts generally as they become due, or (iii) make a general
assignment for the benefit of creditors, or (iv) be adjudicated a bankrupt or
insolvent, or (v) commence a voluntary case under the United States Bankruptcy
Code or file a voluntary petition or answer seeking reorganization, an
arrangement with creditors or an order for relief or seeking to take advantage
of any insolvency law or file an answer admitting the material allegations of a
petition filed against the Borrower in any bankruptcy, reorganization or
insolvency proceeding, or action of the Borrower shall be taken for the purpose
of effecting any of the foregoing, or (vi) have instituted against it, if
without the application, approval or consent of the Borrower, a proceeding in
any court of competent jurisdiction, under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking in respect of the
Borrower an order for relief or an adjudication in bankruptcy, reorganization,
dissolution, winding up or liquidation, a composition or arrangement with
creditors, a readjustment of debts, the appointment of a trustee, receiver,
liquidator or custodian or the like of the Borrower or of all or any substantial
part of the assets of the Borrower or other like relief in respect thereof under
any bankruptcy or insolvency law, and, if such proceeding is being contested by
the Borrower in good faith, the same shall (A) result in the entry of an order
for relief or any such adjudication or appointment or (B) remain undismissed and
undischarged for a period of sixty (60) days;
 
(i) Dissolution; Cessation of Business.  The Borrower terminates its existence,
ceases to exist, dissolves, permanently ceases operations or abandons the
operation of any of its material businesses or facilities.
 
(j) Litigation and Proceedings. Any litigation or administrative or other
proceeding ensues, and is not dismissed within thirty (30) days, involving the
Borrower or any instrument, contract or document delivered to the Bank in
compliance with this Agreement, and the adverse result of such litigation or
proceeding would, in the Bank's reasonable opinion, result in a Material Adverse
Change;
 
(k) Reserved.
 
(l) Reserved.
 
(m) Insurance. The Borrower fails to maintain in full force and effect any of
the hazard or other insurance required pursuant to this Agreement and the other
Bank Documents and continuance of such failure for ten (10) days;
 
(n) ERISA Matters. There occurs a "reportable event" or a "prohibited
transaction" on the part of the Borrower under ERISA which remains uncured for a
period of thirty (30) days;
 
(o) Tax Liens. A tax Lien shall be levied against the Borrower or its property,
and the Borrower shall not satisfy such tax Lien within five (5) days of such
levy, or the Borrower shall fail to promptly and diligently contest the validity
or amount of such tax Lien in good faith by appropriate proceedings;
 
(p) Judgments. The entry of a final judgment in an amount in excess of $500,000
against the Borrower and the failure of the Borrower to discharge such judgment
within ten (10) days of the entry thereof;
 
(q) Other Indebtedness. A default with respect to any other Indebtedness in
excess of $500,000 in the aggregate of the Borrower, if the effect of such
default is to cause or permit the acceleration of such Indebtedness;
 
(r) Other Agreements with Bank. The occurrence of a default under any other
agreement between the Borrower and the Bank; or
 
(s) Material Adverse Change. The occurrence of any Material Adverse Change.
 
Section 8.02 Remedies.
 
  If an Event of Default has occurred and is continuing uncured, the Bank may at
its option take all or any of the following actions:
 
(a) Notify the Trustee of such Event of Default, direct the Trustee to declare
an Event of Default, as defined in the Indenture, and direct the Trustee in
writing to call the Bonds for mandatory purchase pursuant to the Indenture or to
direct the Trustee to draw on the Letter of Credit, declare the principal of the
outstanding Bonds, together with interest accrued thereon, to be due and payable
immediately, and direct the Trustee to exercise remedies under the Bond
Documents;
 
(b) Declare the Borrower's Obligations hereunder to be, whereupon the same shall
become, immediately due and payable;
 
(c) Require the Borrower to deposit with the Bank as additional collateral for
the Borrower's obligations under this Agreement, cash, cash equivalent and
remarketable securities having market value of not less than the Letter of
Credit Amount, as determined by the Bank; or
 
(d) Exercise, or cause to be exercised, any and all such remedies as it may have
under any of the Bank Documents, or at law or in equity.
 
Section 8.03 Waivers; Consents.
 
  No waiver of, or consent with respect to, any provision of this Agreement or
any other Bank Document shall in any event be effective unless the same shall be
in writing and signed by the Bank, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
it was given.
 
Section 8.04 No Waiver; Remedies Cumulative.
 
  No failure on the part of the Bank to exercise, and no delay in exercising,
any right under this Agreement or any other Bank Document shall operate as a
waiver thereof; and no single or partial exercise of any right hereunder shall
preclude any other or further exercise thereof or the exercise of any other
right.  The remedies herein provided are cumulative and not exclusive of any
remedies available under any other document or at law or in equity.
 
Section 8.05 Set-Off.
 
  Upon the occurrence and during the continuance of any Event of Default, the
Bank is hereby authorized at any time and from time to time without notice to
the Borrower (any such notice being expressly waived by the Borrower) and, to
the fullest extent permitted by law, to set off and to apply any and all
balances, credits, deposits (general or special, time or demand, provisional or
final), accounts or monies at any time held and other indebtedness at any time
owing by the Bank to or for the account of the Borrower against any and all of
the Obligations of the Borrower now or hereafter existing under this Agreement
or any other Bank Document, whether or not the Bank shall have made any demand
hereunder or thereunder and although such obligations may be contingent or
unmatured.  The rights of the Bank under this Section are in addition to other
rights and remedies (including, without limitation, other rights of set-off)
which the Bank may have.
 
ARTICLE IX
 
GENERAL PROVISIONS
 
Section 9.01 Notices.
 
  All notices and other communications provided for hereunder shall be in
writing and deemed to have been given or made when:  (i) actually delivered by
hand, or (ii) when received, if sent by telecopier, nationally recognized
overnight courier or other authenticated delivery service, charges prepaid, and
addressed as follows:
 
 
If to the Bank:

 
 
PNC Bank, National Association

 
 
4242 Carlisle Pike, 3rd Floor

 
 
Camp Hill, PA 17011

 
 
Attention:  Mary Balciar

 
 
Telecopier No.:  (717) 739-2387

 
 
with a copy to:

 
 
PNC Bank, National Association

 
 
3rd Floor Firstside Center

 
 
500 First Avenue

 
 
Pittsburgh, Pennsylvania 15219

 
 
Attention:  Trade Services Operations

 
 
Telecopier No.:  (412) 705-0966

 
 
If to the Borrower:

 
 
The York Water Company

 
 
130 East Market Street

 
 
York, PA 17401

 
 
Attention:  Chief Financial Officer

 
 
Telecopier No.:  (717) 718-3090

 
 
If to the Trustee:

 
 
Manufacturers and Traders Trust Company

 
 
213 Market Street

 
 
Harrisburg, Pennsylvania 17401

 
 
Attention:  Corporate Trust Department

 
 
Telecopier No.:  (717) 231-2615

 
 
If to the Remarketing Agent:

 
 
PNC Capital Markets, Inc.

 
 
1600 Market Street, 21st Floor

 
 
Philadelphia, Pennsylvania 19103

 
 
Attention:  Manager-Remarketing Desk

 
Telecopier:
(215) 585-1463

 
Any such notice to the Bank shall refer to this Agreement and to the Letter of
Credit by its number.  Either party hereto and the Trustee and the Remarketing
Agent may change the address to which notices to it are to be sent by written
notice given to the other Persons listed in this Section.
 
Section 9.02 Successors and Assigns.
 
  This Agreement shall inure to the benefit of and shall be binding upon the
parties hereto and their respective successors and assigns.  The Borrower may
not assign its rights under this Agreement without the prior written consent of
the Bank.  The Bank will not assign its obligations under the Letter of Credit
without the prior written confirmation of the rating of the Bonds by the agency
rating the Bonds.  The Borrower and the Bank intend that no other Person shall
have any claim or interest under this Agreement or right of action hereon or
hereunder.
 
Section 9.03 Survival of Covenants.
 
  All covenants made by the Borrower herein and in the other Bank Documents
shall survive the delivery of this Agreement and the Letter of Credit and any
advances under the Letter of Credit.
 
Section 9.04 Counterparts.
 
  Each Bank Document may be signed in any number of counterpart copies and by
the parties to such Bank Document on separate counterparts, but all such copies
shall constitute one and the same agreement.  Delivery of an executed
counterpart of a signature page to any Bank Document by facsimile transmission
shall be as effective as delivery of a manually executed counterpart.  Any party
executing any Bank Document by facsimile transmission shall promptly deliver a
manually executed counterpart; provided that the failure to do so shall not
affect the validity of the counterpart executed and delivered by facsimile
transmission.
 
Section 9.05 Costs, Expenses and Taxes.
 
  The Borrower agrees to pay on demand all costs and expenses of the Bank in
connection with the preparation, execution, delivery and administration of the
Transaction Documents or any amendments, supplements or waivers thereto,
including, without limitation, the reasonable fees and expenses of counsel for
the Bank with respect thereto and with respect to advising the Bank as to its
rights and responsibilities under the Transaction Documents, and all costs and
expenses, if any, including without limitation reasonable counsel fees and
expenses of the Bank, in connection with the enforcement of such documents.  In
addition, the Borrower shall pay any and all stamp and other taxes and fees
payable or determined to be payable in connection with the execution and
delivery of the Transaction Documents and any other documents which may be
required by the Bank hereunder and agrees to indemnify and to hold the Bank
harmless from and against any and all liabilities with respect to or resulting
from any delay in paying or omission to pay such taxes and fees.
 
Section 9.06 Amendments and Waivers.
 
  This Agreement and the other Bank Documents may be amended only by an
instrument in writing executed by all parties to such Bank Document.  The
provisions of any Bank Document may be waived only by a writing executed by the
Bank.  No amendment of this Section 9.06 may be made without the prior written
consent of the Trustee.  The Rating Agency (as defined in the Indenture), if it
has rated and continues to rate the Bonds, shall receive prior written notice of
all amendments.
 
Section 9.07 Severability; Interest Limitation.
 
  If any provision hereof is found by a court of competent jurisdiction to be
prohibited or unenforceable in any jurisdiction, it shall be ineffective as to
such jurisdiction only to the extent of such prohibition or unenforceability,
and such prohibition or unenforceability shall not invalidate the balance of
such provision as to such jurisdiction to the extent it is not prohibited or
unenforceable, nor invalidate such provision in any other jurisdiction, nor
invalidate the other provisions hereof, all of which shall be liberally
construed in favor of the Bank in order to effect the provisions of this
Agreement.  Notwithstanding anything to the contrary herein contained, the total
liability of the Borrower for payment of interest pursuant hereto shall not
exceed the maximum amount, if any, of such interest permitted by applicable Law
to be contracted for, charged or received, and if any payments by the Borrower
to the Bank include interest in excess of such a maximum amount, the Bank shall
apply such excess to the reduction of the unpaid principal amount due pursuant
hereto, or if none is due, such excess shall be refunded to the Borrower;
provided that, to the extent permitted by applicable Law, in the event the
interest is not collected, is applied to principal or is refunded pursuant to
this sentence and interest thereafter payable pursuant hereto shall be less than
such maximum amount, then such interest thereafter so payable shall be increased
up to such maximum amount to the extent necessary to recover the amount of
interest, if any, theretofore uncollected, applied to principal or refunded
pursuant to this sentence.  Any such application or refund shall not cure or
waive any Event of Default.  In determining whether or not any interest payable
under this Agreement exceeds the highest rate permitted by law, any nonprincipal
payment (except payments specifically stated in this Agreement to be "interest")
shall be deemed, to the extent permitted by applicable law, to be an expense,
fee, premium or penalty rather than interest.
 
Section 9.08 Complete Agreement.
 
  Taken together with the other Bank Documents and any other instruments and
documents delivered in compliance herewith, this Agreement is a complete
memorandum of the agreement of the Borrower and the Bank.
 
Section 9.09 Participation.
 
  Notwithstanding any other provision of this Agreement, the Borrower
understands that the Bank may at any time enter into participation agreements
with one or more participating banks ("Participating Banks") whereby the Bank
will allocate to the Participating Banks certain percentages of the funding
obligations of the Bank under the Letter of Credit.  The Borrower agrees to
assist the Bank in obtaining Participating Banks, including, without limitation,
the submission of any additional information requested by any potential
Participating Bank.  Nothing contained in this Section 9.09 shall affect the
Bank's obligations and liabilities under the Letter of Credit.
 
Section 9.10 Governing Law and Jurisdiction.
 
  This Agreement has been delivered to and accepted by the Bank and will be
deemed to be made in the State.  This Agreement will be interpreted and the
rights and liabilities of the parties hereto determined in accordance with the
laws of the State, excluding its conflict of laws rules.  The Borrower hereby
agrees to the jurisdiction of any state or federal court located within the
county where the Bank's office indicated in Section 9.01 is situated, or such
other venue as the Bank chooses, and consents that all service of process be
sent by nationally recognized overnight courier service directed to the Borrower
at the Borrower's address set forth herein for notices and service so made will
be deemed to be completed on the Business Day after deposit with such courier;
provided that nothing contained in this Agreement will prevent the Bank from
bringing any action or exercising any rights against any security or against the
Borrower individually, or against any property of the Borrower within any other
state or nation to enforce any award or judgment obtained in the venue provided
above, or such other venue as the Bank chooses.  The Borrower waives any
objection to venue and any objection based on a more convenient forum in any
action instituted under this Agreement.
 
Section 9.11 Headings.
 
  Section headings in this Agreement are included herein for convenience of
reference only and shall not constitute a part of this Agreement of any other
purpose.
 
Section 9.12 WAIVER OF JURY TRIAL.
 
  THE BORROWER AND THE BANK WAIVE THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT MATTER OF THIS AGREEMENT OR
ANY OF THE OTHER BANK DOCUMENTS OR ANY OF THE TRANSACTIONS RELATED TO ANY OF THE
BANK DOCUMENTS.  THIS WAIVER IS KNOWINGLY, INTENTIONALLY AND VOLUNTARILY MADE BY
THE BORROWER AND THE BANK AND THE BORROWER AND THE BANK ACKNOWLEDGE THAT NEITHER
THE BORROWER NOR THE BANK NOR ANY PERSON ACTING ON BEHALF OF THE BORROWER OR THE
BANK HAS MADE ANY REPRESENTATIONS OF FACT TO INDUCE THIS WAIVER OF TRIAL BY JURY
OR IN ANY WAY TO MODIFY OR NULLIFY ITS EFFECT.  THE BORROWER AND THE BANK
FURTHER ACKNOWLEDGE THAT THEY HAVE BEEN REPRESENTED (OR HAVE HAD THE OPPORTUNITY
TO BE REPRESENTED) IN THE SIGNING OF THIS AGREEMENT AND IN THE MAKING OF THIS
WAIVER BY INDEPENDENT LEGAL COUNSEL, SELECTED OF THEIR OWN FREE WILL, AND THAT
THEY HAVE HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL.  THE BORROWER
AND THE BANK FURTHER ACKNOWLEDGE THAT THEY HAVE READ AND UNDERSTAND THE MEANING
OF THIS WAIVER PROVISION.
 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
 

 
 

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[SIGNATURE PAGE TO REIMBURSEMENT, CREDIT AND SECURITY AGREEMENT]
 
IN WITNESS WHEREOF, the Borrower and the Bank have caused this Reimbursement,
Credit and Security Agreement to be duly executed and delivered as of the date
first above written.
 

 
THE YORK WATER COMPANY
 
ATTEST/WITNESS:
      By:/s/Bruce C. McIntosh
By:
/s/Jeffrey R. Hines   Bruce C. McIntosh    Jeffrey R. Hines   Secretary   
President and CEO  
 
     

  PNC BANK, NATIONAL ASSOCIATION          
 
By:
/s/Mary R. Balciar        Mary R. Balciar       Vice President          

 
 
 
 
 

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EXHIBIT A
 
FORM OF PNC BANK, NATIONAL ASSOCIATION
 
IRREVOCABLE LETTER OF CREDIT
 
May 7, 2008
 
Irrevocable Letter of Credit No. 18109378-00-000
 
Manufacturers and Traders Trust Company
 
213 Market Street
 
Harrisburg, Pennsylvania 17101
 
Attn:                      Corporate Trust Department
 
Re:
$12,000,000 Pennsylvania Economic Development

 
 
Financing Authority

 
 
Exempt Facilities Revenue Refunding Bonds, Series A of 2008

 
 
(The York Water Company Project) (the "Bonds")

 
Gentlemen:
 
1.           At the request and for the account of THE YORK WATER COMPANY (the
"Borrower"), we (the "Bank") establish in your favor as Trustee under the Trust
Indenture dated as of May 1, 2008 (as the same has been and may from time to
time be supplemented or amended, the "Indenture") for the benefit of the
Bondholders (as defined in the Indenture) between the Pennsylvania Economic
Development Financing Authority (the "Issuer") and you, pursuant to which the
Bonds are being issued for the benefit of the Borrower, this irrevocable letter
of credit (this "Letter of Credit") in the aggregate amount of $12,185,425 (as
from time to time reduced and reinstated as provided in this Letter of Credit,
the "Letter of Credit Amount").  Such Letter of Credit Amount shall be available
for drawing by you as set forth below in amounts not to exceed (a) $12,000,000
(as from time to time reduced and reinstated as provided in this Letter of
Credit, the "Principal Component") with respect to unpaid principal of the Bonds
and (b) $185,425 (as from time to time reduced and reinstated as provided in
this Letter of Credit, the "Interest Component") with respect to accrued
interest on the Bonds.
 
2.           This Letter of Credit shall expire at 5:00 p.m. local time in
Pittsburgh, Pennsylvania, on the date (the "Expiration Date") which is the
earliest of: (a) May 6, 2011, unless extended by us (the "Scheduled Expiration
Date") (it being understood that we shall be under no obligation herein to grant
any such extension), (b) the date of payment of a Final Payment Drawing (as
defined below), (c) the date on which we receive a certificate from you on the
form of Annex 7 attached hereto, appropriately completed and executed, to the
effect that there are no Outstanding Bonds (as defined in the Indenture) other
than Bonds secured by an Alternate Credit Facility (as defined in the Indenture)
or (d) the date when you surrender this Letter of Credit to the Bank for
cancellation.  You agree to surrender this Letter of Credit to us, and not to
make any Drawing, after the Expiration Date.
 
3.           Subject to the provisions of this Letter of Credit, demands for
payment under this Letter of Credit may be made by you from time to time prior
to the Expiration Date by presentation of your certificate in the form of
(a) Annex 1 hereto, appropriately completed and executed, in the case of a
drawing for interest on the Bonds under Section 2C.2 of the Indenture (an
"Interest Drawing"), (b) Annex 2 hereto, appropriately completed and executed,
in the case of a drawing for principal of the Bonds under Section 2C.2 (if less
than all of the Outstanding Bonds are being redeemed) of the Indenture (a
"Principal Drawing"), (c) Annex 3 hereto, appropriately completed and executed,
in the case of a drawing for the purchase price of any Bonds under Section 2B.5
of the Indenture (a "Liquidity Drawing"), and (d) Annex 4 hereto, appropriately
completed and executed, in the case of a final drawing for principal of and/or
interest on all Outstanding Bonds (as defined in the Indenture) due upon
purchase, redemption or payment at maturity under Section 2B.5 or 2C.2 (if all
of the Outstanding Bonds are being purchased upon a mandatory tender or
redeemed) of the Indenture or upon acceleration of the Outstanding Bonds under
Section 7.2 of the Indenture (the "Final Payment Drawing") (each such demand and
presentation, a "Drawing").  Payment against conforming documents presented
under this Letter of Credit prior to 12:00 noon on any Business Day shall be
made by us at or before 10:00 a.m. on the next succeeding Business Day or, in
the case of presentation after 12:00 noon, at or before 3:00 p.m. on the next
succeeding Business Day; provided, however, that with respect to a Liquidity
Drawing, payment against conforming documents presented under this Letter of
Credit prior to 11:00 a.m. on any Business Day shall be made by us at or before
3:00 p.m. on the same Business Day.  If requested by you, payment under this
Letter of Credit may be made by deposit of immediately available funds into a
designated account that you maintain with us, a wire transfer of immediately
available funds or by our check, all in accordance with your
instructions.  Partial drawings are permitted under this Letter of Credit.  All
payments by us under this Letter of Credit will be made with our own funds.
 
4.           As used in this Letter of Credit "Business Day" means any day other
than (i) a Saturday or Sunday, (ii) a day on which commercial banking
institutions in Pittsburgh, Pennsylvania or in any other city where either the
principal corporate trust office of the Trustee or the office of the Bank at
which drafts are to be presented under the Letter of Credit is located are
required or authorized by law (including executive order) to close or on which
any such office is closed for reasons not related to financial condition, or
(iii) a day on which the New York Stock Exchange is closed.  References to any
time of day shall refer to Eastern standard time or Eastern daylight savings
time, as in effect in Pittsburgh, Pennsylvania on such day.
 
5.           Each Drawing honored by us under this Letter of Credit shall
immediately reduce the Principal Component or the Interest Component (as the
case may be) by the amount of such payment, and the Letter of Credit Amount
available hereunder shall also be correspondingly reduced.  Upon such honor, our
obligations in respect of such Drawing shall be discharged, and we shall have no
further obligation in respect of such Drawing. The Principal Component and the
Interest Component (and correspondingly the Letter of Credit Amount) so reduced
shall be reinstated only as follows:
 
(a)           In the case of a reduction resulting from payment against an
Interest Drawing, the Interest Component shall be reinstated automatically as of
our opening of business in Pittsburgh, Pennsylvania on the tenth (10th) Business
Day following the date of such payment by an amount equal to the amount of such
Interest Drawing, unless you shall have received notice from us in writing not
later than the close of business on the ninth (9th) Business Day following the
date of such payment that such reinstatement shall not occur because an Event of
Default has occurred under the Reimbursement, Credit and Security Agreement
dated as of May 1, 2008 between the Borrower and us.
 
(b)           In the case of a reduction resulting from payment against a
Liquidity Drawing with regard to any Bonds, the Principal Component and, if
applicable, the Interest Component with respect to such Bonds shall be
reinstated (i) automatically when and to the extent that both (A) we have
received reimbursement for such drawing in immediately available funds from the
Borrower (or you have received immediately available funds which, pursuant to
Section 2B.1(g) or 2B.2(f) of the Indenture, you will immediately remit to us as
reimbursement for such drawing, such funds to be remitted to the attention of
our Letter of Credit Department stating that they are repayments for Liquidity
Drawings drawn under PNC Bank, National Association Irrevocable Letter of Credit
No. 18109378-00-000) and (B) you have delivered to us a certificate in respect
of such reinstatement in the form of Annex 5 attached hereto, appropriately
completed and executed, or (ii) when and to the extent that we, at our option,
upon the Borrower's request, otherwise advise you in writing that such
reinstatement shall occur, it being understood that we shall have no obligation
to grant any such reinstatement except as provided in clause (i) of this
sentence.  We will give telephonic confirmation (to be further confirmed in
writing) to you of each reinstatement pursuant to clause (i) of the preceding
sentence.
 
(c)           The Principal Component and the Interest Component shall otherwise
be reinstated as we may from time to time notify you in writing.
 
6.           The Letter of Credit Amount and the respective Principal and
Interest Components thereof shall be reduced automatically, without notice to
you, upon our receipt from you of a certificate in the form of Annex 6 attached
hereto appropriately completed and executed, each such reduction to be (a) in
the amounts necessary to reduce the Letter of Credit Amount and the Principal
and Interest Components thereof to the respective amounts specified by you in
such certificate and (b) effective on the Business Day on which we receive such
certificate from you.
 
7.           All documents presented to us in connection with any Drawing, and
all other communications and notices to us with respect to this Letter of
Credit, shall be in writing, dated the date of presentation, and delivered to us
at the address set forth on the letterhead of this Letter of Credit and shall
specifically refer to "PNC Bank, National Association Irrevocable Letter of
Credit No. 18109378-00-000."  Any such documents, communications and notices may
be made by delivery in person, first class United States mail or
nationally-recognized courier services (postage prepaid) at the office of PNC
Bank, National Association, Third Floor, Firstside Center, 500 First Avenue,
Pittsburgh, PA  15219, Attn: Trade Services Operations, or by facsimile
transmission to  (412) 705-0966 (with hard copy of any transmission to follow by
overnight courier).
 
8.           No person other than you as Trustee or a successor Trustee under
the Indenture may make any demand for payment under this Letter of Credit.  This
Letter of Credit is transferable in its entirety only to any transferee who has
succeeded you as Trustee under the Indenture and may be successively transferred
to any subsequent successor Trustee under the Indenture, in each case upon
presentation to us of the original of this Letter of Credit accompanied by a
certificate in the form of Annex 8 hereto.
 
9.           This Letter of Credit sets forth in full the terms of our
undertaking, and this undertaking shall not in any way be modified, amended,
amplified or limited by reference to any document, instrument or agreement
referred to herein or in which this Letter of Credit is referred to or to which
this Letter of Credit relates, except only the certificates referred to herein;
and any such reference shall not be deemed to incorporate herein by reference
any document, instrument or agreement, except such certificates.  All
certificates referred to herein that are presented to us from time to time shall
become an integral part of this Letter of Credit and shall be binding on any
transferee permitted by the terms of this Letter of Credit.
 
10.           Except as herein specifically otherwise provided, this Letter of
Credit shall be subject to the ISP.  "ISP" shall mean the International Standby
Practices, International Chamber of Commerce Publication No. 590, and any
subsequent official revision thereof.  This Letter of Credit shall be deemed to
be issued under the laws of the Commonwealth of Pennsylvania and shall, as to
matters not governed by the ISP, be governed by and construed in accordance with
the internal laws (as opposed to conflicts of law provisions) of said
Commonwealth.
 
Very truly yours,
 

  PNC BANK, NATIONAL ASSOCIATION          
 
By:
/s/Mary R. Balciar        Mary R. Balciar       Vice President          

 
 
 

--------------------------------------------------------------------------------

 

ANNEX 1 to PNC Bank, National Association
 
Irrevocable Letter of Credit No. 18109378-00-000
 
PNC Bank, National Association
 
3rd Floor, Firstside Center
 
500 Fifth Avenue
 
Pittsburgh, Pennsylvania 15219
 
Attention:  Trade Services Operation
 
 
Certificate for Interest Drawing of Accrued Interest on Exempt Facilities
Revenue Refunding Bonds, Series A of 2008 (The York Water Company Project)
Issued by the Pennsylvania Economic Development Financing Authority

 
The undersigned, a duly authorized officer of Manufacturers and Traders Trust
Company, as Trustee (the "Trustee") under the Indenture under which the Bonds
have been issued, hereby certifies, with reference to Irrevocable Letter of
Credit No. 18109378-00-000 (the "Letter of Credit") issued by PNC Bank, National
Association (the "Bank") in favor of the Trustee (the capitalized terms used
herein and not defined herein shall have the meanings ascribed to them in the
Letter of Credit), that:
 
1.           The Trustee is the Trustee under the Indenture securing the Bonds
and is entitled to present this certificate.
 
2.           Pursuant to Section 2C.2 of the Indenture, the Trustee is drawing
on you in the amount of $_______________.  Such amount represents
_______________ days accrued interest on the Bonds.  Such amount does not
include any amount accrued on Pledged Bonds (as defined in the Indenture) or
Bonds registered in the name of the Borrower, was computed in accordance with
the terms and conditions of the Indenture and does not exceed the amount
available to be drawn under the Letter of Credit in respect of interest on the
Bonds.
 
3.           The Trustee demands payment of the amount specified in Paragraph 2
above.
 
IN WITNESS WHEREOF, the Trustee has executed and delivered this Certificate as
of the _____ day of _______________, 200_____.
 
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
 

 
By                                                                
 
Name                                                                
 
Title                                                                
 

 
 
 

--------------------------------------------------------------------------------

 

ANNEX 2 to PNC Bank, National Association
 
Irrevocable Letter of Credit No. 18109378-00-000
 
PNC Bank, National Association
 
3rd Floor, Firstside Center
 
500 Fifth Avenue
 
Pittsburgh, Pennsylvania 15219
 
Attention:  Trade Services Operation
 
 
Certificate for Principal Drawing in Respect of Principal of Exempt Facilities
Revenue Refunding Bonds, Series A of 2008 (The York Water Company Project)
Issued by the Pennsylvania Economic Development Financing Authority

 
The undersigned, a duly authorized officer of Manufacturers and Traders Trust
Company, as Trustee (the "Trustee") under the Indenture under which the Bonds
have been issued, hereby certifies, with reference to Irrevocable Letter of
Credit No. 18109378-00-000 (the "Letter of Credit") issued by PNC Bank, National
Association (the "Bank") in favor of the Trustee (the capitalized terms used
herein and not defined herein shall have the meanings ascribed to them in the
Letter of Credit), that:
 
1.           The Trustee is the Trustee under the Indenture securing the Bonds
and is entitled to present this certificate.
 
2.           Pursuant to Section 2C.2 of the Indenture, the Trustee is drawing
on you in the amount of $_______________.  Such amount represents payments of
principal due with respect to the Bonds on _______________ under Section 2.2 of
the Indenture.  Such amount does not include any amount in respect of Pledged
Bonds (as defined in the Indenture) or any Bonds registered in the name of the
Borrower, is equal to the amount of principal due on the Bonds on such date in
accordance with the terms and conditions of the Indenture and does not exceed
the amount available to be drawn under the Letter of Credit in respect of
principal of the Bonds.
 
3.           The Trustee demands payment of the amount specified in Paragraph 2
above.
 
IN WITNESS WHEREOF, the Trustee has executed and delivered this certificate this
_____ day of _______________, 200_____.
 
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
 

 
By                                                             
 
Name                                                             
 
Title                                                             
 

 
 
 

--------------------------------------------------------------------------------

 

ANNEX 3 to PNC Bank, National Association
 
Irrevocable Letter of Credit No. 18109378-00-000
 
PNC Bank, National Association
 
3rd Floor, Firstside Center
 
500 Fifth Avenue
 
Pittsburgh, Pennsylvania 15219
 
Attention:  Trade Services Operation
 
 
Certificate for Liquidity Drawing in Respect of the Purchase Price of Exempt
Facilities Revenue Refunding Bonds, Series A of 2008 (The York Water Company
Project) Issued by the Pennsylvania Economic Development Financing Authority

 
The undersigned, a duly authorized officer of Manufacturers and Traders Trust
Company, as Trustee (the "Trustee") under the Indenture under which the Bonds
have been issued, hereby certifies, with reference to Irrevocable Letter of
Credit No. 18109378-00-000 (the "Letter of Credit") issued by PNC Bank, National
Association (the "Bank") in favor of the Trustee (the capitalized terms used
herein and not defined herein shall have the meanings ascribed to them in the
Letter of Credit), that:
 
1.           The Trustee is the Trustee under the Indenture securing the Bonds
and is entitled to present this certificate.
 
2.           Pursuant to Section 2B.5 of the Indenture, the Trustee is drawing
on you in the amount of $_______________.  Such amount represents the principal
portion in the amount of $_______________ and the accrued interest portion in
the amount of $_______________ of the purchase price of Bonds, tendered to the
Trustee and not successfully remarketed by the Remarketing Agent (as defined in
the Indenture) or remarketed but for which the purchase price has not been
received by the Trustee on the date hereof.  Such amount does not include any
amount in respect of Pledged Bonds (as defined in the Indenture) or any Bonds
registered in the name of the Borrower, was computed in accordance with the
terms and conditions of the Indenture and does not exceed the amount available
to be drawn under the Letter of Credit in respect of principal of, and interest
on, such Bonds.
 
3.           The Trustee is holding as agent for the Bank, Bonds in the
principal amount of $_______________, which amount represents the amount of the
principal portion of the Bonds in respect of which a draw is being made on the
Letter of Credit pursuant to this certificate.
 
4.           The Trustee demands payment of the amount specified in Paragraph 2
above.
 
IN WITNESS WHEREOF, the Trustee has executed and delivered this Certificate this
_____ day of _______________, 200_____.
 
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
 

 
By                                                             
 
Name                                                             
 
Title                                                             
 

 
 
 

--------------------------------------------------------------------------------

 

ANNEX 4 to PNC Bank, National Association
 
Irrevocable Letter of Credit No. 18109378-00-000
 
PNC Bank, National Association
 
3rd Floor, Firstside Center
 
500 Fifth Avenue
 
Pittsburgh, Pennsylvania 15219
 
Attention:  Trade Services Operation
 
 
Certificate for Final Payment Drawing in Respect of Principal and Accrued
Interest on Exempt Facilities Revenue Refunding Bonds, Series A of 2008 (The
York Water Company Project) Issued by the Pennsylvania Economic Development
Financing Authority

 
The undersigned, a duly authorized officer of Manufacturers and Traders Trust
Company, as Trustee (the "Trustee") under the Indenture under which the Bonds
have been issued, hereby certifies, with reference to Irrevocable Letter of
Credit No. 18109378-00-000 (the "Letter of Credit") issued by PNC Bank, National
Association (the "Bank") in favor of the Trustee (the capitalized terms used
herein and not defined herein shall have the meanings ascribed to them in the
Letter of Credit), that:
 
1.           The Trustee is the Trustee under the Indenture securing the Bonds
and is entitled to present this certificate.
 
2.           Pursuant to Section 2B.5 or 2C.2 of the Indenture, the Trustee is
drawing on you in the amount of $_______________.  Such amount represents an
unpaid principal amount of $_______________ and/or _______________ days' accrued
interest in the amount of $_______________ due upon purchase (pursuant to a
mandatory tender) or redemption or payment at maturity under Section 2B.5 of the
Indenture or upon acceleration of the Bonds under Section 7.2 of the
Indenture.  Such amount does not include any amount in respect of Pledged Bonds
(as defined in the Indenture) or any Bonds registered in the name of the
Borrower, was computed in accordance with the terms and conditions of the
Indenture and does not exceed the amount available to be drawn under the Letter
of Credit in respect of principal of, and interest on, the Bonds.
 
3.           The Trustee demands payment of the amount specified in Paragraph 2
above.
 
4.           Upon receipt of payment of the amount specified in Paragraph 2
above, the Letter of Credit will be promptly surrendered.
 
IN WITNESS WHEREOF, the Trustee has executed and delivered this Certificate this
_____ day of _______________, 200_.
 
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
 

 
By                                                             
 
Name                                                             
 
Title                                                             
 

 
 
 

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ANNEX 5 to PNC Bank, National Association
 
Irrevocable Letter of Credit No. 18109378-00-000
 
PNC Bank, National Association
 
3rd Floor, Firstside Center
 
500 Fifth Avenue
 
Pittsburgh, Pennsylvania 15219
 
Attention:  Trade Services Operation
 
 
Liquidity Drawing Reinstatement Certificate for PNC Bank, National Association
(the "Bank") Irrevocable Letter of Credit No. 18109378-00-000 (the "Letter of
Credit") Supporting Exempt Facilities Revenue Refunding Bonds, Series A of 2008
(The York Water Company Project) Issued by the Pennsylvania Economic Development
Financing Authority

 
The undersigned, a duly authorized officer of Manufacturers and Traders Trust
Company, as Trustee (the "Trustee") under the Indenture under which the Bonds
have been issued,  hereby certifies, with reference to the Letter of Credit
issued by the Bank in favor of the Trustee (the capitalized terms used herein
and not defined herein shall have the meanings ascribed to them in the Letter of
Credit), that:
 
1.           The Trustee is the Trustee under the Indenture securing the Bonds
and is entitled to present this Certificate.
 
2.           On the date of this Certificate $_______________ aggregate
principal amount of Bonds are being purchased upon a remarketing thereof by the
Remarketing Agent (as defined in the Indenture).  All of such Bonds were
heretofore purchased (or anticipated to be purchased) with the proceeds of one
or more Liquidity Drawings in the total drawing amount, with respect to such
Bonds, of $_______________, of which proceeds $_______________ was drawn in
respect of principal of such Bonds and $_______________ was drawn in respect of
accrued interest on such Bonds.  Prior to the date of this Certificate there has
been no reinstatement of the Letter of Credit Amount with respect to amounts
drawn by such Liquidity Drawings to purchase such Bonds.
 
3.           The Trustee has received for immediate payment (or repayment) to
the Bank in respect of the Bonds described in Paragraph 2 of this Certificate
the total amount of $_______________, consisting of $_______________ from the
Remarketing Agent, $_______________ from the Borrower and $_______________ from
the Bank.  Such total amount is being paid to the Bank with reference to this
Letter of Credit pursuant to Section 2B.1(g) or 2B.2(f) of the Indenture, as
reimbursement for amounts drawn under the Letter of Credit by the Liquidity
Drawings described in Paragraph 2 of this Certificate; provided that, unless
such reimbursement is being made on the same day that payment of such Liquidity
Drawings was received by the Trustee from the Bank, the Bonds described in
Paragraph 2 of this Certificate will be released for remarketing and such
payment to the Bank will be made only upon receipt of telephonic confirmation by
the Bank of the reinstatement described in Paragraph 6 below to the Trustee at
(_____) _____-__________, Attention:  _______________ (which confirmation shall
thereafter be sent in writing to the Trustee at its address on file with you).
 
4.           Of the total amount referred to in Paragraph 3 of this Certificate,
$_______________ represents the aggregate principal amount of Bonds described in
Paragraph 2 of this Certificate and $_______________ represents accrued interest
on such Bonds.
 
5.           Payment of the total amount referred to in Paragraph 3 of this
Certificate, together with other amounts heretofore paid to the Bank by or on
behalf of the Borrower, represents reimbursement for the entire outstanding
balance of all amounts drawn in respect of the Bonds described in Paragraph 2 of
this Certificate.  The foregoing certification is made in reliance upon
representations by the Borrower or the Bank to the Trustee that, upon payment of
such amounts, the Bank will be fully reimbursed for all Liquidity Drawings (or
allocable portions thereof) made to purchase such Bonds.  No certification is
made by the Trustee as to the payment of interest accrued pursuant to the
Reimbursement Agreement described in the Letter of Credit on the amounts drawn
by such Liquidity Drawings.
 
6.           Pursuant to Paragraph 5(b) of the Letter of Credit, the Letter of
Credit Amount shall be automatically reinstated by an amount equal to
$_______________ (which does not exceed the aggregate amount of the Liquidity
Drawings, or allocable portions thereof, paid by the Bank to purchase such
Bonds), of which $_______________ (which does not exceed the aggregate amount of
such Liquidity Drawings, or allocable portions thereof, drawn against the
Principal Component) shall be applied to the Principal Component and
$_______________ (which does not exceed the aggregate amount of such Liquidity
Drawings, or allocable portions thereof, drawn against the Interest Component)
shall be applied to the Interest Component.
 
IN WITNESS WHEREOF, the Trustee has executed and delivered this Certificate this
_____ day of _______________, 200_____.
 
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
 

 
By                                                             
 
Name                                                             
 
Title                                                             
 

 
 
 

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ANNEX 6 to PNC Bank, National Association
 
Irrevocable Letter of Credit No. 18109378-00-000
 
PNC Bank, National Association
 
3rd Floor, Firstside Center
 
500 Fifth Avenue
 
Pittsburgh, Pennsylvania 15219
 
Attention:  Trade Services Operation
 
 
Certificate for Reducing PNC Bank, National Association (the "Bank") Irrevocable
Letter of Credit No. 18109378-00-000 (the "Letter of Credit") Supporting Exempt
Facilities Revenue Refunding Bonds, Series A of 2008 (The York Water Company
Project) Issued by the Pennsylvania Economic Development Financing Authority

 
The undersigned, a duly authorized officer of Manufactures and Traders Trust
Company, as Trustee (the "Trustee") under the Indenture under which the Bonds
have been issued, hereby certifies (the capitalized terms used herein and not
defined herein shall have the meanings ascribed to them in the Letter of
Credit), that:
 
1.           The Trustee is the Trustee under the Indenture securing the Bonds
and is entitled to present this certificate.
 
2.           The Trustee hereby notifies you that on or prior to the date of
this certificate, $_______________ in principal amount of the Bonds have been
redeemed, defeased or otherwise are no longer outstanding pursuant to the
Indenture.
 
3.           Pursuant to the terms of the Letter of Credit, the Bank is hereby
directed to reduce the Letter of Credit Amount and the Principal and Interest
Components thereof, effective on the Business Day on which you receive this
certificate, so that after such reduction, the Letter of Credit Amount shall be
$_______________, of which $_______________ shall be the Principal Component and
$_______________ shall be the Interest Component, (calculated on the basis of 47
days' accrued interest at a rate of 12% per annum), less the amount, if any,
drawn with Liquidity Drawings to purchase Outstanding Bonds in respect of which
the Letter of Credit has not been reinstated.
 
4.           The foregoing amounts were computed in accordance with the terms
and conditions of the Indenture.
 
IN WITNESS WHEREOF, the Trustee has executed and delivered this Certificate this
_____ day of _______________, 200_____.
 
MANUFACTURES AND TRADERS TRUST COMPANY, as Trustee
 

 
By                                                             
 
Name                                                             
 
Title                                                             
 

 
 
 

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ANNEX 7 to PNC Bank, National Association
 
Irrevocable Letter of Credit No. 18109378-00-000
 
PNC Bank, National Association
 
3rd Floor, Firstside Center
 
500 Fifth Avenue
 
Pittsburgh, Pennsylvania 15219
 
Attention:  Trade Services Operation
 
 
Certificate for Terminating PNC Bank, National Association (the "Bank")
Irrevocable Letter of Credit No. 18109378-00-000 (the "Letter of Credit")
Supporting Exempt Facilities Revenue Refunding Bonds, Series A of 2008 (The York
Water Company Project) Issued by the Pennsylvania Economic Development Financing
Authority

 
The undersigned, a duly authorized officer of Manufacturers and Traders Trust
Company, as Trustee (the "Trustee") under the Indenture under which the Bonds
have been issued, hereby certifies (the capitalized terms used herein and not
defined herein shall have the meanings ascribed to them in the Letter of Credit)
that:
 
1.           The Trustee is the Trustee under the Indenture for the holders of
the Bonds.
 
2.           Pursuant to the Indenture and the Letter of Credit, the Letter of
Credit shall be terminated on the date the Bank receives this Certificate, and
the Trustee is herewith surrendering the Letter of Credit for cancellation,
because no Bonds remain outstanding other than Bonds secured by an Alternate
Credit Facility.
 
IN WITNESS WHEREOF, the Trustee has executed and delivered this Certificate this
_____ day of _______________, 200_____.
 
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
 

 
By                                                             
 
Name                                                             
 
Title                                                             
 

 
 
 

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ANNEX 8 to PNC Bank, National Association
 
Irrevocable Letter of Credit No. 18109378-00-000
 
PNC Bank, National Association
 
3rd Floor, Firstside Center
 
500 Fifth Avenue
 
Pittsburgh, Pennsylvania 15219
 
Attention:  Trade Services Operation
 
 
Re:
PNC Bank, National Association

 
 
Irrevocable Letter of Credit No. 18109378-00-000

 
Ladies and Gentlemen:
 
For value received, the undersigned beneficiary hereby irrevocably transfers to:
 
(Name of Transferee)
 
(Address)
 
all rights of the undersigned beneficiary to draw under the above Letter of
Credit in its entirety.  Said transferee has succeeded to the undersigned as
Trustee under the Indenture which incorporated the Indenture.  The capitalized
terms used herein and not defined herein shall have the meanings ascribed to
them in the Letter of Credit.
 
By this transfer, all rights of the undersigned beneficiary in such Letter of
Credit are transferred to the transferee and the transferee shall have the sole
rights as beneficiary thereof, including sole rights relating to any amendments
whether increases or extensions or other amendments and whether now existing or
hereafter made.  All amendments are to be advised direct to the transferee
without necessity of any consent of or notice to the undersigned beneficiary.
 
The original of such Letter of Credit is returned herewith, and in accordance
therewith we ask you to transfer the Letter of Credit to the transferee and
forward it directly to the transferee with your customary notice of transfer, or
that, at your option, you issue a new irrevocable letter of credit in favor of
the transferee with provisions consistent with the Letter of Credit.
 
Very truly yours,
 

 
SIGNATURE AUTHENTICATED MANUFACTURES AND TRADERS TRUST COMPANY, as Trustee
 

 
By:                                                             
 
Name                                                             
 
Title                                                             
 

 
 
 

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EXHIBIT B
 
REQUIREMENTS FOR OPINION OF BORROWER'S COUNSEL
 
1.  
The Company is a corporation, validly subsisting and authorized to transact
business under the laws of the Commonwealth of Pennsylvania, with full corporate
power to own its properties and conduct its business as described in the
Official Statement.

 
2.  
The Company has full corporate power and authority to enter into the
Reimbursement Agreement and the Loan Agreement, and the Reimbursement Agreement
and the Loan Agreement have been duly authorized, executed and delivered by the
Company and are valid and binding agreements of the Company, enforceable against
the Company in accordance with their terms.

 
3.  
The Company has obtained all requisite approvals, licenses and permits
(collectively, “Approvals”) to enter into and perform its obligations under the
Reimbursement Agreement and the Loan Agreement, including, but not limited to,
any Approvals required by the Pennsylvania Public Utility Commission, but
excluding any state Blue Sky or related state security clearances or approvals,
as to which no opinion is expressed.

 
4.  
To our knowledge, except as may be disclosed in the Official Statement, there is
no action, suit, proceeding or investigation at law or in equity before or by
any court, public board or body pending or threatened against or affecting the
Company or to which the Company is a party or to which property of the Company
is subject, wherein an unfavorable decision, ruling or finding would materially
and adversely affect the Company, or which would materially and adversely affect
the transactions contemplated by the Reimbursement Agreement or the Loan
Agreement, or affect in any way the validity of the Reimbursement Agreement or
the Loan Agreement.

 
5.  
The execution and delivery by the Company of the Reimbursement Agreement and the
Loan Agreement, and compliance by the Company with the provisions thereof, do
not and will not (i) result in a violation of the Articles of Incorporation or
Bylaws of the Company, or (ii) in any material respect conflict with or
constitute, on the part of the Company, a breach of or default under any
existing law or ordinance, or any material agreement or material instrument
known to us to which the Company is a party, or any administrative regulation,
court order or consent decree known to us to which the Company is subject.

 
The above opinions are subject standard qualifications, limitations, assumptions
and exceptions, including, without limitation, bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance and other laws affecting the
rights of creditors generally and general principles of equity.
 

 
 
 

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