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LOAN AGREEMENT

BETWEEN
PENNSYLVANIA ECONOMIC DEVELOPMENT FINANCING AUTHORITY
(THE “ISSUER”)
AND
THE YORK WATER COMPANY
(THE “COMPANY”)

DATED AS OF SEPTEMBER 1, 2019

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TABLE OF CONTENTS
ARTICLE I DEFINITIONS AND CERTAIN RULES OF INTERPRETATION
SECTION 1.1.  Definitions.
SECTION 1.2.  Certain Rules of Interpretation.
ARTICLE II REPRESENTATIONS
SECTION 2.1.  Representations and Findings of Issuer.
SECTION 2.2.  Representations by the Company.
ARTICLE III  THE REFUNDING PROJECT
SECTION 3.1.  Acquisition and Construction.
ARTICLE IV LOAN AND REPAYMENT; OPERATION OF PROJECT
SECTION 4.1.  Loan of Bond Proceeds.
SECTION 4.2.  Repayment of Loan.
SECTION 4.3.  Operation.
SECTION 4.4.  Insurance.
SECTION 4.5.  Maintenance and Repair.
SECTION 4.6.  Right to Discontinue Operation of Project.
SECTION 4.7.  Insurance and Condemnation Awards.
SECTION 4.8.  Workers’ Compensation Coverage.
SECTION 4.9.  Taxes, Claims for Labor and Materials, Compliance with Laws.
SECTION 4.10.  Issuer’s Limited Liability.
SECTION 4.11.  Right of Inspection.
ARTICLE V ISSUANCE OF BONDS; SECURITY; INVESTMENTS
SECTION 5.1.  Issuance of Bonds.
SECTION 5.2.  Security for the Bonds.
SECTION 5.3.  Redemption of the Refunded Bonds.
SECTION 5.4.  Investment of Funds.
ARTICLE VI COMPANY OBLIGATIONS; PROVISIONS FOR PAYMENT; COVENANTS
SECTION 6.1.  Company Approval of Issuance of Bonds.
SECTION 6.2.  Refunding of Bonds.
SECTION 6.3.  Redemption of Bonds.
SECTION 6.4.  Installment Loan Payments.
SECTION 6.5.  Administrative Expenses.
SECTION 6.6.  Payments to Issuer and Local IDA.
SECTION 6.7.  Obligations of the Company Absolute and Unconditional.
SECTION 6.8.  Option to Prepay Amounts Under Loan Agreement in Certain Events.
SECTION 6.9.  Company’s Performance Under Indenture.
SECTION 6.10.  Covenants Regarding Tax Exemption.
SECTION 6.11.  Bonds Purchased in Lieu of Redemption.
SECTION 6.12.  Nondiscrimination - Sexual Harassment.
SECTION 6.13.  Right to Know.
ARTICLE VII PARTICULAR AGREEMENTS
SECTION 7.1.  Indemnified Parties’ Release and Indemnification Provisions.
SECTION 7.2.  Maintenance of Corporate Existence.
SECTION 7.3.  Financial Information.
SECTION 7.4.  Agreement of Issuer Not to Assign or Pledge.
SECTION 7.5.  Reference to Bonds Ineffective after Bonds Paid.
SECTION 7.6.  Assignment, Sale or Lease of Project.
SECTION 7.7.  Amendment of Loan Agreement or Indenture.
SECTION 7.8.  Waiver of Vendor’s Lien.
SECTION 7.9.  Limitations on Certain Indebtedness.
SECTION 7.10.  Limitation on Liens.
SECTION 7.11.  Dividends, Stock Purchases.
SECTION 7.12.  [Reserved.]
ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES
SECTION 8.1.  Defaults and Remedies.
SECTION 8.2.  Annulment of Acceleration.
SECTION 8.3.  Agreement to Pay Attorneys’ Fees and Expenses.
SECTION 8.4.  General Enforcement Provisions.
SECTION 8.5.  Notice of Default.
SECTION 8.6.  Unassigned Issuer’s Rights.
SECTION 8.7.  Determination of Taxability Not an Event of Default.
ARTICLE IX MISCELLANEOUS
SECTION 9.1.  Term of Loan Agreement.
SECTION 9.2.  Notices.
SECTION 9.3.  Benefit of Parties.
SECTION 9.4.  Severability.
SECTION 9.5.  Counterparts.
SECTION 9.6.  Captions.
SECTION 9.7.  Law Governing Construction of Loan Agreement.
SECTION 9.8.  Payments on Non-Business Days.
SECTION 9.9.  Payments to be Sufficient to Meet DTC Requirements.
SECTION 9.10.  Reserved.
SECTION 9.11.  Limitation of Liability: No Personal Liability.
EXHIBIT A PROJECT DESCRIPTION
EXHIBIT B NONDISCRIMINATION/SEXUAL HARASSMENT CLAUSE
EXHIBIT C RIGHT-TO-KNOW LAW

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LOAN AGREEMENT
This Loan Agreement dated as of September 1, 2019, between the Pennsylvania
Economic Development Financing Authority (the “Issuer”), a public
instrumentality of the Commonwealth of Pennsylvania (the “Commonwealth”) and a
public body corporate and politic organized and existing under the Pennsylvania
Economic Development Financing Law, as amended (the “Act”) of the Commonwealth,
and The York Water Company, a Pennsylvania corporation (the “Company”).
WITNESSETH:
WHEREAS, the Act declares that there is a critical need for the production of
water suitable for public use and consumption, that in order to insure
continuing supplies of water resources at reasonable rates, it is necessary to
provide additional means of financing projects directed to such production, and
that to protect the health, safety and general welfare of the people of the
Commonwealth and to further encourage economic development and efficiency within
the Commonwealth by providing basic services and facilities, it is necessary to
provide additional or alternative means of financing facilities for the
furnishing of water; and
WHEREAS, the Issuer is authorized to enter into agreements providing for the
loan financing of “projects” within the meaning of the Act that promote any of
the public purposes set forth in the Act; and
WHEREAS, the York County Industrial Development Authority has issued its York
County Industrial Development Authority Exempt Facilities Revenue Bonds, Series
2006 (The York Water Company Project) (the “2006 Bonds”) currently outstanding
in the aggregate principal amount of $10,500,000 to provide funds to loan to the
Company for the financing of (i) a portion of the Company’s 2006 Capital Budget,
including, but not limited to the design, acquisition, construction,
improvement, renovation, equipping and installation of (a) various structures,
including distribution buildings, booster stations, pumping stations, and
various plant and ancillary buildings, (b) spillway upgrades, standpipes,
transmission and distribution mains, service lines, meters, fire hydrants, and
pumping, water treatment and purification equipment, and (c) various other
capital improvements, replacements and equipment for the Company’s water system
located throughout York County, Pennsylvania, and (ii) the payment of all or a
portion of the costs of issuance of the 2006 Bonds (the “2006 Bonds Project”);
and
WHEREAS, the Issuer has issued its Exempt Facilities Revenue Bonds, Series 2008B
(The York Water Company Project) (the “2008B Bonds”) to provide funds to loan to
the Company for the financing of (i) a portion of the Company's 2008 Capital
Budget, including, but not limited to the design, acquisition, construction,
improvement, extension, renovation, equipping and installation of (a) various
structures, including distribution buildings, booster stations, pumping
stations, and various plant and ancillary buildings, (b) spillway upgrades,
standpipes, transmission and distribution mains, service lines, meters, fire
hydrants, water treatment, pumping and purification equipment, and (c) various
other capital improvements, replacements and equipment for the Company’s water
system located throughout York County and Adams County, Pennsylvania, and (ii)
the payment of all or a portion of the costs of issuance of the 2008B Bonds (the
“2008B Bonds Project”); and
WHEREAS, the Issuer has issued its Exempt Facilities Revenue Refunding Bonds,
Series 2014 (The York Water Company Project) (the “2014 Bonds,” and together
with the 2006 Bonds, the “Refunded Bonds”) currently outstanding in the
aggregate principal amount of $14,870,000 to provide funds to loan to the
Company for the financing of the current refunding of the 2008B Bonds (the “2014
Bonds Project,” and together with the 2006 Bonds Project and 2008B Bonds
Project, the “Project”); and
WHEREAS, at the request of the Company, the Issuer has determined to issue
$10,500,000 aggregate principal amount of its Exempt Facilities Revenue
Refunding Bonds, Series A of 2019 (The York Water Company Project) (the “2019A
Bonds”), in order to refund the outstanding 2006 Bonds for debt service savings
(the “Series A Refunding Project”); and
WHEREAS, at the request of the Company, the Issuer has determined to issue
$14,870,000 aggregate principal amount of its Exempt Facilities Revenue
Refunding Bonds, Series B of 2019 (The York Water Company Project) (the “2019B
Bonds,” and together with the 2019A Bonds, the “Bonds”) in order to refund the
outstanding 2014 Bonds for debt service savings (the “Series B Refunding
Project,” and together with the Series A Refunding Project, the “Refunding
Project”); and
WHEREAS, the Issuer will enter into this Loan Agreement with the Company, under
the terms of which the Company will agree to repay the loan of the proceeds of
the Bonds by paying to the Issuer moneys sufficient to pay the principal of, and
premium (if any) and interest on the Bonds as the same become due and payable
and to pay certain administrative expenses in connection with the Bonds; and
WHEREAS, as security for the payment of said Bonds, the Issuer will assign and
pledge to Manufacturers and Traders Trust Company, as trustee (the “Trustee”)
under the terms of the Trust Indenture dated as of September 1, 2019 (the
“Indenture”) certain rights, title and interest of the Issuer in (i) this Loan
Agreement (except for the indemnification rights and expense reimbursement
rights contained herein), and (ii) all amounts on deposit from time to time in
the various funds created in, and subject to the conditions set forth in, the
Indenture;
NOW THEREFORE, in consideration of the covenants and agreements herein made, and
subject to the conditions herein set forth, the Issuer and the Company,
intending to be legally bound, covenant and agree as follows:
ARTICLE I
DEFINITIONS AND CERTAIN RULES OF INTERPRETATION
SECTION 1.1.  Definitions.
All words and terms as used in this Loan Agreement shall have the same meanings
given such words and terms in the Indenture, unless the context or use clearly
indicates another or different meaning or intent. In addition, the terms defined
in the recitals to this Loan Agreement shall have the meanings set forth therein
and the following words and terms as used in this Loan Agreement shall have the
following meanings, unless the context or use clearly indicates another or
different meaning or intent:
“Bond Resolution” means the resolution of the governing body of the Issuer
adopted on August 20, 2019 authorizing the issuance of the Bonds.
“Capitalized Lease” shall mean any lease, the obligation for Rentals with
respect to which is required to be capitalized on a balance sheet of the lessee
in accordance with generally accepted accounting principles.
“Capitalized Rentals” shall mean as of the date of any determination the amount
at which the aggregate Rentals due and to become due under all Capitalized
Leases under which the Company is a lessee would be reflected as a liability on
a balance sheet of the Company.
“Costs of Issuance” means all costs and expenses incurred by the Issuer, the
Local IDA or the Company in connection with the issuance and sale of the Bonds,
including without limitation (i) fees and expenses of accountants, attorneys,
engineers, credit enhancers and financial advisors, (ii) materials, supplies,
and printing and engraving costs, (iii) recording and filing fees, (iv) rating
agency fees, (v) the initial and first year’s annual fees and expenses
(including, without limitation, counsel fees and expenses) of the Trustee, (vi)
any underwriters’ discount or fee and expenses and (vii) the Issuer’s issuance
fee and administrative and overhead expenses as provided in Section 6.6 of this
Loan Agreement.
“Department” means the Department of Community and Economic Development of the
Commonwealth.
“Default” shall mean any event or condition, the occurrence of which would, with
the lapse of time or the giving of notice, or both, constitute an Event of
Default as defined in Section 8.1 hereof.
“Disqualified Contractor” means a Person which has been suspended or debarred by
the Commonwealth under its Contractor Responsibility Program, Management
Directive 215.9, as amended or replaced by a successive directive rule,
regulation or statute from time to time or has been convicted by a court of
competent jurisdiction of a crime for which a term of imprisonment of one year
or more could have been imposed, and any Person controlled by a Person which has
been so suspended, debarred or convicted.
“Environmental Legal Requirement” shall mean any applicable law relating to
public health, safety or the environment, including, without limitation,
relating to releases, discharges or emissions to air, water, land or
groundwater, to the withdrawal or use of groundwater, to the use and handling of
polychlorinated biphenyls or asbestos, to the disposal, treatment, storage or
management of solid or hazardous wastes or to exposure to toxic or hazardous
materials, to the handling, transportation, discharge or release of gaseous or
liquid substances and any regulation, order, notice or demand issued pursuant to
such statute or ordinance, in each case applicable to the Property of the
Company or the operation, construction or modification of any thereof, including
without limitation the following: the Clean Air Act, the Federal Water Pollution
Control Act, the Safe Drinking Water Act, the Toxic Substances Control Act, the
Comprehensive Environmental Response Compensation and Liability Act as amended
by the Superfund Amendments and Reauthorization Act of 1986, the Resource
Conservation and Recovery Act as amended by the Solid and Hazardous Waste
Amendments of 1984, the Occupational Safety and Health Act, the Emergency
Planning and Community Right-to-Know Act of 1986, the Solid Waste Disposal Act,
the Pennsylvania Safe Drinking Water Act and any other state statutes addressing
similar matters, and any state statute providing for financial responsibility
for cleanup or other actions with respect to the release or threatened release
of hazardous substances and any state nuisance statute.
“Excepted Encumbrances” shall mean any of the following:
(a)
liens for taxes, assessments or governmental charges not delinquent and liens
for workers’ compensation awards and similar obligations not delinquent and
undetermined liens or charges incidental to construction;

(b)
any liens securing Indebtedness neither assumed nor guaranteed by the Company on
which it customarily pays interest, existing in or relating to real estate
acquired by the Company for transmission, distribution or right-of-way purposes;

(c)
easements or reservations in any Property of the Company created for the purpose
of roads, railroads, railroad side tracks, water and gas transmission and
distribution mains, conduits, water power rights of the Commonwealth of
Pennsylvania or others, building and use restrictions and defects of title to,
or leases of, any parts of the Property of the Company which do not in the
opinion of the Company’s counsel materiality impair the use of the Property as
an entirety in the operation of the business of the Company;

(d)
undetermined liens and charges incidental to current construction, including
mechanics’, laborers’, materialmen’s and similar liens not delinquent;

(e)
any obligations or duties affecting the Property of the Company to any
municipality or public authority with respect to any franchise, grant, license,
permit or certificate;

(f)
rights reserved to or vested in any municipality or public authority to control
or regulate any Property of the Company or to use such Property in a manner
which does not materially impair the use of such Property for the purposes for
which it is held by the Company;

(g) judgments in course of appeal or otherwise in contest and secured by
sufficient bond or security; or
(h) any right of set-off or banker’s lien in favor of any bank lender or any
security interest in favor of any bank lender in deposits, moneys, securities or
other property in the possession of or on deposit with, or in transit to, such
bank lender or any of its affiliates.
“Favorable Opinion of Bond Counsel” means an opinion of Bond Counsel, or
opinions of Co-Bond Counsel, as appropriate, addressed to the Issuer, the
Company and the Trustee to the effect that the action proposed to be taken is
authorized or permitted by the laws of the Commonwealth and this Indenture and
will not, in and of itself, adversely affect any exclusion of interest on the
Bonds from gross income of the owners thereof for federal income tax purposes.
“Funded Debt” of any Person shall mean (a) all Indebtedness for borrowed money
or which has been incurred in connection with the acquisition of assets in each
case having a final maturity of one or more than one year from the date of
origin thereof (or which is renewable or extendible at the option of the obligor
for a period or periods more than one year from the date of origin), including
all payments in respect thereof that are required to be made within one year
from the date of any determination of Funded Debt, and (b) all Guaranties of
such Indebtedness described in clause (a).
“Guaranties” by any Person shall mean all obligations (other than endorsements
in the ordinary course of business of negotiable instruments for deposit or
collection) of such Person guaranteeing or in effect, guaranteeing any
Indebtedness, dividend or other obligation, of any other Person (the “primary
obligor”) in any manner, whether directly or indirectly, including, without
limitation, all obligations incurred through an agreement, contingent or
otherwise, by such Person: (a) to purchase such Indebtedness or obligation or
any Property or assets constituting security therefor, (b) to advance or supply
funds (1) for the purchase or payment of such Indebtedness or obligation, (2) to
maintain working capital or other balance sheet condition or, otherwise to
advance or make available funds for the purchase or payment of such Indebtedness
or obligation, or (c) to lease Property or to purchase Securities or other
Property or services primarily for the purpose of assuring the owner of such
Indebtedness or obligation of the ability of the primary obligor to make payment
of the Indebtedness or obligation, or (d) otherwise to assure the owner of the
Indebtedness or obligation of the primary obligor against loss in respect
thereof. In any computation of the Indebtedness or other liabilities of the
obligor under any Guaranty, the Indebtedness or other obligations that are the
subject of such Guaranty shall be assumed to be direct obligations of such
obligor.
“Indebtedness” of any Person shall mean and include, without duplication, all
(a) obligations of such Person for borrowed money or which has been incurred in
connection with the acquisition of Property or assets, (b) obligations secured
by any lien or other charge upon Property or assets owned by such Person, even
though such Person has not assumed or become liable for the payment of such
obligations, (c) obligations created or arising under any conditional sale or
other title retention agreement with respect to Property acquired by such
Person, notwithstanding the fact that the rights and remedies of the seller,
lender or lessor under such agreement in the event of default are limited to
repossession or sale of Property, and (d) Capitalized Rentals under any
Capitalized Lease. For the purpose of computing the “Indebtedness” of any
Person, there shall be excluded any particular Indebtedness to the extent that,
upon or prior to the maturity thereof, there shall have been deposited with the
proper depositary in trust the necessary funds (or evidences of such
Indebtedness, if permitted by the instrument creating such Indebtedness) for the
payment, redemption or satisfaction of such Indebtedness; and thereafter such
funds and evidences of Indebtedness so deposited shall not be included in any
computation of the assets of such Person.
“Indemnified Parties” means the Issuer, the Local IDA, the Trustee, the Paying
Agent and any of their respective officers, directors, members, commissioners,
employees, agents, servants and any other person acting for or on behalf of the
Issuer, the Trustee or the Paying Agent.
“Installment Loan Payment(s)” means payments required to be made by the Company
to pay the Debt Service on the Bonds, as provided for in Section 6.4(b), (c),
(d) and (f) of this Loan Agreement, including the principal of, premium, if any
(whether at stated maturity, upon redemption prior to stated maturity, or upon
acceleration of stated maturity), and interest on the Bonds when due.
“Loan Agreement” means this Loan Agreement, and all amendments and supplements
hereto.
“Local IDA” means the York County Industrial Development Authority, a
governmental entity of the Commonwealth in its capacity as an applicant sponsor
for the Refunding Project.
“Plant Account” shall mean the plant account under the Pennsylvania Public
Utilities Commission Uniform System of Accounts for Water Utilities dated
November 21, 1946, as the same may be amended from time to time.
“Person” means an individual, a corporation, a partnership, an association, a
joint stock company, a trust, any unincorporated organization, a governmental
body or a political subdivision, a municipal corporation, public corporation or
any other group or organization of individuals.
“Priority Debt” means Indebtedness of the Company secured by assets not
otherwise permitted by clauses (i) through (iii) of Section 7.10(a) or as an
Excepted Encumbrance.
“Project” means the facilities described in the recitals hereto and Exhibit A to
this Loan Agreement, as amended from time to time as provided herein, and which
are being refinanced with the proceeds of the Bonds.
 “Property” or “Properties” shall mean any interest in any kind of property or
asset, whether real, personal or mixed, or tangible or intangible.
“PUC” shall mean the Pennsylvania Public Utility Commission.
“Rentals” shall mean and include all fixed rents (including as such all payments
which the lessee is obligated to make to the lessor on termination of the lease
or surrender of the Property) payable by the Company, as lessee or sublessee
under a lease of real or personal property, but shall be exclusive of any
amounts required to be paid by the Company (whether or not designated as rents
or additional rents) on account of maintenance, repairs, insurance, taxes and
similar charges. Fixed rents under any so-called “percentage leases” shall be
computed solely on the basis of the minimum rents, if any, required to be paid
by the lessee regardless of sales volume or gross revenues.
“Seasonal Indebtedness” as of the date of any determination thereof shall mean
(a) all Indebtedness for money borrowed other than Funded Debt and (b)
Guaranties of Seasonal Indebtedness of others.
“Security” or “Securities” shall have the same meaning as in Section 2(1) of the
Securities Act of 1933, as amended.
“Unassigned Issuer’s Rights” means all of the rights of the Issuer to receive
insurance under Section 4.4 hereof, to inspect the Project under Section 4.11
hereof, to receive payments and to be reimbursed for attorney’s and other fees
and expenses under Sections 6.6 and 8.3 hereof, to be held harmless and
indemnified under Section 7.1 hereof, to receive information under Section 7.3,
and, to the extent provided in this Agreement, to give or withhold consent to or
approval of amendments, modifications, and terminations of this Agreement.
“Voting Stock” shall mean Securities of any class or classes, the holders of
which are ordinarily, in the absence of contingencies, entitled to elect a
majority of the corporate directors (or Persons performing similar functions).
SECTION 1.2.  Certain Rules of Interpretation.

(a) The definitions set forth in Article I and in the Indenture shall be equally
applicable to both the singular and plural forms of the terms therein defined
and shall cover all genders.
(b) “Herein,” “hereby,” “hereunder,” “hereof,” “hereinbefore,” “hereinafter” and
other equivalent words refer to this Loan Agreement and not solely to the
particular Article, Section or Subdivision hereof in which such word is used.
(c)
Reference herein to an article number (e.g., Article IV) or a section number
(e.g., Section 6.2) shall be construed to be a reference to the designated
article number or section number hereof unless the context or use clearly
indicates another or different meaning or intent.

(d)
Words of the masculine gender shall mean and include correlative words of the
feminine and neuter genders and words importing the singular number shall mean
and include the plural number and vice versa.

(e)
Words importing persons shall include firms, associations, partnerships
(including limited partnerships), trusts, corporations and other legal entities,
including public bodies, as well as natural persons.

(f)
Any headings preceding the text of the several Articles and Sections of this
Loan Agreement, and any table of contents appended to copies hereof, shall be
solely for convenience of reference and shall not constitute a part of this Loan
Agreement, nor shall they affect its meaning, construction or effect.

(g)
References to statutes or regulations are to be construed as including all
statutory or regulatory provisions consolidating, amending or replacing the
statute or regulation referred to; and references to agreements and other
contractual instruments shall be deemed to include any exhibits and appendices
attached thereto and all amendments, supplements and other modifications to such
instruments, but only to the extent such amendments, supplements and other
modifications are not prohibited by the terms of this Loan Agreement.

(h)
Whenever in this Loan Agreement, the Issuer, the Company or the Trustee is named
or referred to, it shall include, and shall be deemed to include, its respective
successors and assigns whether so expressed or not.  All of the covenants,
stipulations, obligations and agreements by or on behalf of, and other
provisions for the benefit of, the Issuer, the Company and the Trustee contained
in this Loan Agreement shall inure to the benefit of such respective successors
and assigns, bind and shall, inure to the benefit of any officer, board,
commission, authority, agency or instrumentality to whom or to which there shall
be transferred by or in accordance with law any right, power or duty of the
Issuer or of its successors or assigns, the possession of which is necessary or
appropriate in order to comply with any such covenants, stipulations,
obligations, agreements or other provisions of this Loan Agreement.

(i)
Every “request,” “order,” “demand,” “application,” “appointment,” “notice,”
“statement,” “certificate,” “consent,” “direction” or similar action hereunder
by persons referred to herein shall, unless the form thereof is specifically
provided, be in writing and signed by an Authorized Representative of the person
giving it.

ARTICLE II
REPRESENTATIONS

SECTION 2.1.  Representations and Findings of Issuer.

The Issuer hereby confirms its findings and represents that:
(a)
Organization.  The Issuer is a public body corporate and politic established in
the Commonwealth pursuant to the laws of the Commonwealth including the Act. 
Under the Act, the Issuer has the power to enter into the Indenture, this Loan
Agreement and the Bond Purchase Agreement and to carry out its obligations
thereunder and hereunder and to issue the Bonds to finance all or a portion of
the Project Costs.

(b)
Pending Litigation.  To the knowledge of the Issuer, there are no actions,
suits, proceedings, inquiries or investigations pending or threatened against or
affecting the Issuer in any court or before any governmental authority or
arbitration board or tribunal, which involve the possibility of materially and
adversely affecting the transactions contemplated by the Financing Documents or
which, in any way, would adversely affect the validity or enforceability of the
Financing Documents or the ability of the Issuer to perform its obligations
under the Financing Documents.

(c)
Economic Findings.  Based on representations and information furnished to the
Issuer by or on behalf of the Company and the Local IDA, the Issuer has found
that the Company is engaged in industrial, commercial and/or specialized
activities in the Commonwealth requiring substantial capital and creating or
maintaining substantial employment opportunities, that the Company’s operations
contribute to economic growth and the creation or maintenance of employment
opportunities in the Commonwealth, that the Company is financially responsible
to assume its obligations prescribed by this Loan Agreement and the Act and that
the Project and the facilities refinanced by the Refunding Project constitute
“facilities for the furnishing of water” within the meaning of Section 142(a)(4)
of the Code.

(d)
Public Purpose Findings.  Based on representations and information furnished to
the Issuer by or on behalf of the Company, the Issuer has found that (i) the
Project promoted the health, safety and general welfare of the people of the
Commonwealth and the public purposes of the Act by alleviating unemployment and
maintaining employment at a high level and creating and developing business
opportunities in the Commonwealth and aiding in the provision of water; (ii) the
interests in land and other property which is part of the Project and the
Refunding Project is located within the boundaries of the Commonwealth, which
organized the Issuer; and (iii) the Project and Refunding Project constitute a
“project” within the meaning of the Act.

(e)
Private Activity Bond Allocations.  The Issuer received an allocation of the
tax-exempt private activity bond volume cap of the Commonwealth in an aggregate
amount at least equal to the aggregate principal amount of the Refunded Bonds
from the Department as required by Section 146 of the Code.

(f)
Project Approvals.  The Refunding Project has been approved by (1) the Local
IDA, and (2) the Issuer by adoption of the Bond Resolution as required by the
Act.

(g)
No Other Pledges.  The Issuer has not and will not pledge the income and
Revenues derived from this Loan Agreement or its other interests in this Loan
Agreement or the Indenture other than pursuant to and as set forth in the
Indenture.

(h)
No Conflicts.  The execution, delivery and performance by the Issuer of this
Loan Agreement and the Indenture and the issuance of the Bonds will not conflict
with or create a breach of or default under the Act or other applicable law or
any agreement or instrument to which the Issuer is a party or by which it is
bound.

(i)
Agreements Are Legal and Authorized.  The adoption of the Bond Resolution, the
issuance and sale of the Bonds and the execution and delivery by the Issuer of
the Financing Documents, and the compliance by the Issuer with all of the
provisions of each thereof and of the Bonds, (i) are within the powers and
authority of the Issuer, (ii) have been done in full compliance with the
provisions of the Act, are legal and will not conflict with or constitute on the
part of the Issuer a violation of or a breach of or default under, or result in
the creation of any lien, charge or encumbrance upon any property of the Issuer
(other than as contemplated by this Loan Agreement and the Indenture) under the
provisions of, any by-law or other agreement or instrument to which the Issuer
is a party or by which the Issuer is bound, or any license, judgment, decree,
law, statute, order, rule or regulation of any court or governmental agency or
body having jurisdiction over the Issuer or any of its activities or properties
and (iii) have been duly authorized by all necessary action on the part of the
Issuer.

(j)
Governmental Consents.  Neither the nature of the Issuer nor any of its
activities or properties, nor any relationship between the Issuer and any other
Person, nor any circumstance in connection with the offer, issue, sale or
delivery of any of the Bonds is such as to require the consent, approval or
authorization of, or the filing, registration or qualification with, any
governmental authority on the part of the Issuer in connection with the
execution, delivery and performance of the Financing Documents or the offer,
issue, sale or delivery of the Bonds, other than those already obtained as of
the Issue Date; provided, however, no representation is made herein as to
compliance with the securities or “blue sky” laws of any jurisdiction.

(k) No Defaults.  No event has occurred and no condition exists with respect to
the Issuer which would constitute an “Event of Default” as defined in the
Indenture or which, with the lapse of time or with the giving of notice or both,
would become an “Event of Default” under the Indenture.
(l) Limited Obligations.  The Bonds shall be limited obligations of the Issuer
and shall be payable by the Issuer solely out of the Revenues.  The Bonds shall
never be payable out of any other funds of the Issuer except the Revenues. 
Neither the faith and credit nor the taxing power of the Commonwealth, the
Issuer, or any other political corporation, subdivision or agency thereof is
pledged to the payment of the principal of and premium, if any, or interest on
such Bonds.
(m) Requirements Satisfied.  All requirements and conditions specified in the
Act and all other laws and regulations applicable to the adoption of the Bond
Resolution, the execution and delivery of this Loan Agreement and the Indenture,
and the issuance and delivery of the Bonds will be fulfilled prior to the
initial delivery of the Bonds to the purchasers thereof.
SECTION 2.2.  Representations by the Company.
The Company makes the following representations as the basis for the
undertakings on its part herein contained:
(a) Corporate Organization and Power.  The Company (i) is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth, and (ii) has all requisite power and authority and all necessary
licenses and permits to own and operate its properties and to carry on its
business as now being conducted and as presently proposed to be conducted.
(b) Pending Litigation.  Except as set forth in Official Statement dated
September 5, 2019, there are no actions, suits, proceedings, inquiries or
investigations pending, or to the knowledge of the Company threatened, against
or affecting the Company in any court or before any governmental authority or
arbitration board or tribunal which could reasonably be expected to involve the
possibility of materially and adversely affecting the transactions contemplated
by the Financing Documents or which, in any way, would adversely affect the
validity or enforceability of the Bonds or the Financing Documents or the legal
ability of the Company to perform its obligations under this Loan Agreement.
(c) Agreements Are Valid and Authorized.  The execution and delivery by the
Company of this Loan Agreement and the compliance by the Company with all of the
provisions hereof (i) are within the corporate power of the Company, (ii) will
not conflict with or result in any breach of any of the provisions of, or
constitute a default under, any material agreement, charter document, by-law or
other material instrument to which the Company is a party or by which it may be
bound, or any license, judgment, decree, law, statute, order, rule or regulation
of any court or governmental agency or body having jurisdiction over the Company
or any of its activities or properties, and (iii) have been duly authorized by
all necessary action on the part of the Company.  This Loan Agreement, upon the
due execution and delivery thereof by the Company and the Issuer, will be a
valid and binding obligation of the Company enforceable in accordance with its
terms, except as limited by bankruptcy, insolvency, reorganization, moratorium
or other laws or equitable principles of general application relating to or
affecting the enforcement of creditors’ rights generally.
(d)
Governmental Consents.  No actions by the Company in connection with the
execution, delivery and performance by the Company of this Loan Agreement are
such as to require the consent, approval or authorization of, or the filing,
registration or qualification with, any governmental authority on the part of
the Company, other than those already obtained as of the Issue Date; provided,
however, no representation is made herein as to compliance with the securities
or “blue sky” laws of any jurisdiction.

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

(f)
Tax Documents.  The representations and statements made by the Company in the
Tax Documents are true and correct.

(g)
Project Benefits.  The acquisition, construction, development, design,
equipping, testing and installing of the Project helped to promote the
employment and the health, safety and general welfare of the residents of the
Commonwealth by promoting the continuation and expansion of gainful employment
opportunities for such residents, will aid in the provision of water, and did
not cause, directly or indirectly, the removal, either in whole or in part, of a
plant, facility or establishment from one area of the Commonwealth to another. 
The facilities and other fixed property which were part of the Project is
located within the boundaries of the Commonwealth and has a substantial
connection with the Commonwealth.  The Project consists of land or property of a
character subject to allowance for depreciation under Section 167 of the Code
and constitutes “facilities for the furnishing of water” within the meaning of
Section 142(a)(4) of the Code.

(h)
Operation of Project.  The Company has used and will continue to operate the
Project in a manner consistent with the Act for the provision and supply of
water until the date on which the Bonds have been fully paid and knows of no
reason why the Project will not continue to be so used or operated.

(i)
Tax Information.  The information furnished by the Company and used by the
Issuer in preparing the tax certificate and information return pursuant to the
Code is accurate and complete in all material respects as of the date of
original issuance and delivery of the Bonds.  The aggregate issue price of the
Bonds will not exceed the outstanding principal amount of the Refunded Bonds.
The Costs of Issuance will not be financed with proceeds of the Bonds.

(j)
Disqualified Contractors. The Company is not a Disqualified Contractor.

(k)
PUC Approval. The Company filed a securities certificate with respect to the
Bonds with the PUC, and the PUC voted to register the securities certificate on
August 8, 2019, all in accordance with Chapter 19 of the Pennsylvania Public
Utility Code.

ARTICLE III
THE REFUNDING PROJECT

SECTION 3.1.  Acquisition and Construction.
 Prior to construction of the Project the Company acquired all interests in land
required for construction.  The Project has been completed and placed in
service.

ARTICLE IV
LOAN AND REPAYMENT; OPERATION OF PROJECT

SECTION 4.1.  Loan of Bond Proceeds.

To provide funds for the financing of the Refunding Project, the Issuer will
issue the Bonds upon the terms and conditions contained in this Loan Agreement
and the Indenture and will loan the proceeds thereof to the Company by causing
the Bond proceeds to be applied as provided in Article V hereof.  The Company
shall pay all Costs of completing the Refunding Project to the extent that such
Costs exceed the loan proceeds, including interest earnings, available therefor.
SECTION 4.2.  Repayment of Loan.

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

SECTION 4.3.  Operation.

The Company shall continue to operate the Project in such manner as to comply in
all material respects with the Act and all applicable requirements of federal,
state and local laws and the regulations, rules and orders of any federal, state
or local agency, board commission or court having jurisdiction over the Project
or the operation thereof, including without limitation applicable zoning,
planning, building and environmental laws, regulations, rules and orders;
provided that the Company shall be deemed in compliance with this Section so
long as it is acting with due diligence to correct any violations of any of the
foregoing or contesting in good faith any such requirement by appropriate legal
proceedings.  The Company shall pay all costs and expenses of operation and
maintenance of the Project, including all applicable taxes.  During such period
as the Project is operated in accordance with the provisions of this Loan
Agreement, the Company will, within the design capabilities thereof, cause the
Project to be operated and maintained in accordance with all applicable, valid
and enforceable rules and regulations; provided, that the Company reserves the
right to contest in good faith any such rules or regulations or the application
thereof to the Project.  It is understood and agreed that the Issuer shall have
no duties or responsibilities whatsoever with respect to the operation or
maintenance of the Project, or the performance of the Project for its designed
purposes.
SECTION 4.4.  Insurance.

Subject to the provisions of Section 4.6 hereof, the Company agrees to maintain,
or cause to be maintained, all necessary insurance with respect to the Project
in accordance with its customary insurance practices and the practices of
Persons operating similar facilities, which may include self-insurance.  All
costs of maintaining insurance with respect to the Project shall be paid by the
Company, and the Issuer and the Trustee shall have no obligation or liability in
this regard.  All general liability insurance policies relating to the Project
site or facilities shall name the Issuer and the Trustee as additional insureds
as their interests may appear.
SECTION 4.5.  Maintenance and Repair.

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

Although the Company intends to operate, or cause to be operated, the Project
for its designed purposes until the date on which no Bonds are Outstanding,
subject to the provisions of Section 6.10 hereof, the Company is not required by
this Loan Agreement to operate, or cause to be operated, any portion of the
Project after the Company shall deem in its sole discretion that such continued
operation is not advisable and in such event it is not prohibited by this Loan
Agreement from selling, leasing or retiring all or any such portion of the
Project.  Subject to the provisions of Section 6.10 hereof, the net proceeds
from such sale, lease or other disposition, if any, shall belong to, and may be
used for any lawful purpose by, the Company.  Upon discontinuance of operation
of the Project in accordance with this Section 4.6, the Company shall be
discharged from its obligations to insure, maintain and repair the Project or to
cause the Project to be insured, maintained and repaired as set forth in
Sections 4.4 and 4.5 hereof.
SECTION 4.7.  Insurance and Condemnation Awards.

Subject to the provisions of Sections 4.4 and 6.10 hereof, the net proceeds of
any insurance or condemnation award as a result of the destruction or
condemnation of the Project or any portion thereof shall belong to, and may be
used for any lawful purpose by, the Company.
SECTION 4.8.  Workers’ Compensation Coverage.

Throughout the term of this Loan Agreement, the Company shall comply, or cause
compliance, with applicable workers’ compensation laws of the Commonwealth.
SECTION 4.9.  Taxes, Claims for Labor and Materials, Compliance with Laws.

(a) The Company will promptly pay and discharge all lawful taxes, assessments
and governmental charges or levies imposed upon the Company or upon or in
respect of all or any part of the Property or business of the Company, all trade
accounts payable in accordance with usual and customary business terms, and all
claims for work, labor or materials, which if unpaid might become a lien or
charge upon any Property of the Company including the Installment Loan Payments;
provided the Company shall not be required to pay any such tax, assessment,
charge, levy, account payable or claim if (1) the validity, applicability or
amount thereof is being contested in good faith by appropriate actions or
proceedings which will prevent the forfeiture or sale of any Property of the
Company or any material interference with the use thereof by the Company, and
(2) the Company shall set aside on its books, reserves deemed by it to be
adequate with respect thereto.
(b) The Company will promptly comply with all laws, ordinances or governmental
rules and regulations to which it is subject, including without limitation, the
Occupational Safety and Health Act of 1970, the Employees Retirement Income
Security Act of 1974, as amended, and all Environmental Legal Requirements, the
violation of which would materially and adversely affect the Properties,
business, prospects, profits or condition (financial or otherwise) of the
Company or would result in any lien or charge upon any material portion of the
Property of the Company, subject, however, to the Company’s right to contest in
good faith the application of any such laws, rules or regulations to the Company
or its operations so long as such contest does not result in a material threat
to the operation of the Company’s water system or its ability to make the
payments due hereunder.
SECTION 4.10.  Issuer’s Limited Liability.

It is recognized that the Issuer’s only source of funds with which to carry out
its commitments under the Bonds, the Indenture or this Loan Agreement will be
from the proceeds from the sale of the Bonds, the Installment Loan Payments, or
from any available income or earnings derived therefrom, or from any funds which
otherwise might be made available by the Company; and it is expressly agreed
that the Issuer shall have no liability, obligation, or responsibility with
respect to this Loan Agreement or the Refunding Project except to the extent of
funds available from such sources.  If, for any reason, the proceeds from the
sale of the Bonds are not sufficient to pay all the costs of completing the
Refunding Project, the Company shall complete the Refunding Project, and the
Company shall pay such costs from its own funds, but it shall not be entitled to
reimbursement therefor, or to any diminution in or postponement of any payments
required to be made by the Company hereunder.
SECTION 4.11.  Right of Inspection.

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

SECTION 5.1.  Issuance of Bonds.

In order to provide funds for the Refunding Project, the Issuer, concurrently
with the execution of this Loan Agreement, will sell, issue and deliver to the
initial purchasers thereof the Bonds, all in accordance with the Indenture.
SECTION 5.2.  Security for the Bonds.

The obligations of the Company under this Loan Agreement, including specifically
the obligation to pay Installment Loan Payments and Administrative Expenses and
its obligations under Article VI hereof shall be direct general obligations of
the Company.  Prior to or simultaneously with the issuance of the Bonds, the
Issuer will assign to the Trustee under the terms of the Indenture all of the
Issuer’s right, title, and interest in and to this Loan Agreement including
specifically the Installment Loan Payments but excepting all Unassigned Issuer’s
Rights.
SECTION 5.3.  Redemption of the Refunded Bonds.

The Issuer hereby approves the current refunding of the 2006 Bonds with the
proceeds of the 2019A Bonds, together with other available funds of the Company,
to pay interest accrued on the 2006 Bonds to their date of redemption. The 2006
Bonds will be redeemed on October 8, 2019.
The Issuer hereby approves the current refunding of the 2014 Bonds with the
proceeds of the 2019B Bonds, together with other available funds of the Company,
to pay interest accrued on the 2014 Bonds to their date of redemption. The 2014
Bonds will be redeemed on October 8, 2019.
SECTION 5.4.  Investment of Funds.

The Issuer hereby gives its express written authority to the Company as provided
in the Indenture to provide written direction regarding the investment of any
Fund held by the Trustee pursuant to the Indenture.
ARTICLE VI
COMPANY OBLIGATIONS; PROVISIONS FOR PAYMENT; COVENANTS

SECTION 6.1.  Company Approval of Issuance of Bonds.

The governing body of the Issuer has adopted the Bond Resolution authorizing the
execution of this Loan Agreement and the Indenture and the issuance of the
Bonds.  The Company hereby approves the Indenture.  It is hereby agreed that the
foregoing approval of the Indenture constitutes the acknowledgment and agreement
of the Company that the Bonds, when issued, sold and delivered as provided in
the Bond Resolution and the Indenture, will be issued in accordance with and in
compliance with this Loan Agreement, notwithstanding any other provisions of
this Loan Agreement or any other contract or agreement to the contrary.  Any
Registered Owner is entitled to rely fully and unconditionally on the foregoing
approval.  Notwithstanding any provisions of this Loan Agreement or any other
contract or agreement to the contrary, the Company’s approval of the Indenture
shall be the Company’s agreement that all covenants and provisions in this Loan
Agreement and the Indenture affecting the Company shall, upon the delivery of
the Bonds and the Indenture, become valid and binding covenants and obligations
of the Company so long as the Bonds, premium, if any, and the interest thereon
are outstanding and unpaid.  Particularly, the obligation of the Company to pay,
promptly when due, all Installment Loan Payments specified in this Loan
Agreement and the Indenture shall be absolute and unconditional, and said
obligation may be enforced as provided in this Loan Agreement and the Indenture.
SECTION 6.2.  Refunding of Bonds.

After the issuance of any Bonds, the Issuer shall not refund any of the Bonds or
change or modify the Bonds in any way, except as provided for in the Indenture,
without the prior written approval of an Authorized Company Representative; nor
shall the Issuer redeem any Bonds prior to the maturity date except upon the
written request of an Authorized Company Representative, unless such redemption
is required or permitted by the Indenture without such request.
SECTION 6.3.  Redemption of Bonds.

The Issuer, upon the written request of the Company (and provided that the
affected Bonds are subject to redemption prior to maturity at the option of the
Issuer or the Company, and provided that such request is received in sufficient
time prior to the date upon which such redemption is proposed), shall promptly
take or cause to be taken all action that may be necessary under the applicable
redemption provisions to effect such redemption prior to maturity, to the full
extent of funds either made available for such purpose by the Company or already
on deposit in the Debt Service Fund and available for such purpose.  The
redemption of any Outstanding Bonds prior to maturity at any time shall not
relieve the Company of its absolute and unconditional obligation to pay each
remaining Installment Loan Payment with respect to any Outstanding Bonds, as
specified in the Indenture.  If a redemption of Bonds is required pursuant to
the provisions of the Indenture, the Company agrees as provided herein to
promptly make Installment Loan Payments sufficient to pay the principal of,
premium, if any, and interest on the Bonds due on such redemption date.
SECTION 6.4.  Installment Loan Payments.

(a)
The Company hereby covenants and agrees to make the Installment Loan Payments,
as hereinafter provided in subsections (b), (c), (d) and (f) of this Section, to
the Trustee, on behalf of the Issuer, in accordance with this Loan Agreement.

(b)
The Company shall make Installment Loan Payments, subject to the limitations of
subsection (e) below of this Loan Agreement, in immediately available funds
directly to the Trustee for deposit in the Debt Service Fund at least one
Business Day before each day on which any payment of Debt Service shall become
due (whether at maturity or upon redemption or acceleration or otherwise) in an
amount which, together with other money held by the Trustee under the Indenture
and available therefor, will enable the Trustee to make such payment in full
when due.

(c)
In the event the Company should fail to make any of the payments required in
this Section, the item or installment so in default shall continue as an
obligation of the Company until the amount in default shall have been fully
paid, and the Company agrees to pay the same with interest thereon, to the
extent permitted by law, from the date when such payment was due as provided in
the Indenture.

(d)
If, subsequent to a date on which the Company is obligated to pay the
Installment Loan Payments (subject to the provisions of Article X of the
Indenture), losses (net of gains) shall be incurred in respect of any
investments, or any other event has occurred causing the money in the Debt
Service Fund, together with any other money then held by the Trustee and
available for the purpose, to be less than the amount sufficient at the time of
such occurrence or other event to pay, in accordance with the provisions of the
Indenture, all Debt Service due and payable or to become due and payable, the
Trustee shall notify the Company of such fact and thereafter the Company, as and
when required for purposes of such Debt Service Fund, shall pay in immediately
available funds to the Trustee for deposit in the Debt Service Fund the amount
of any such deficiency.

(e)
Notwithstanding the foregoing, it is the intention of the parties hereto to
conform strictly to the usury laws now in force in the Commonwealth, and any
provision for any payment contained herein and in the Bonds shall be held to be
subject to reduction to the amount allowed under said usury laws as now or
hereafter construed by the courts having jurisdiction.

(f)
The Company further agrees that in the event payment of the principal of and the
interest on the Bonds is accelerated upon the occurrence of an Event of Default
under the Indenture, all amounts payable under Section 6.4(b) for the remainder
of the term hereof (other than interest not yet due) shall be immediately due
and payable.

(g)
Any amount held in the Debt Service Fund on any payment date specified in
subsection (b) above and not previously credited against Installment Loan
Payments or designated for payments due on particular Bonds, shall be credited
against the Installment Loan Payments required to be made by the Company on such
date.

SECTION 6.5.  Administrative Expenses.

The Company shall pay, or cause to be paid, an amount equal to the reasonable
and documented fees and charges of the Trustee for services rendered as Trustee
or Paying Agent under the Indenture and its reasonable and documented expenses
incurred as Trustee under the Indenture, including reasonable and documented
fees and expenses of its counsel; the Company shall also reimburse the Trustee
for any reasonable and documented costs or expenses properly incurred in
discharging its duties under the Indenture.  The Trustee’s right to receive its
reasonable fees, charges and expenses hereunder shall be secured by a lien on
moneys held by it in the Debt Service Fund and, upon an Event of Default
hereunder, the Trustee shall have a right of payment prior to the payment of the
owners of the Bonds as provided in Section 8.11 of the Indenture. This Section
6.5 shall survive the payment of all Debt Service due relating to the Bonds and
termination of this Loan Agreement and the Indenture.
SECTION 6.6.  Payments to Issuer and Local IDA.

The Company shall pay or cause to be paid all of the Issuer’s and Local IDA’s
reasonable, actual out-of-pocket expenses and costs in connection with the
issuance of the Bonds, including, without limitation, all financing, legal,
printing, and other expenses and all Costs of Issuance incurred in issuing the
Bonds (including the fees and expenses of bond counsel and the Issuer’s
financial advisor) and the Issuer’s fee of 0.20% of the principal amount of the
Bonds for issuing the Bonds, less an application fee of $50,740.  Also, in the
future the Company shall pay to the Issuer upon receipt of statements therefor
from time to time, such amounts as are necessary to pay or reimburse the Issuer
for its reasonable and necessary expenses and costs attributable to the Bonds
and the Project, including, but not limited to, an annual audit/service fee and
any amounts incurred by the Issuer in connection with requests related to the
Bonds made by the Internal Revenue Service. This Section 6.6 shall survive the
payment of all Debt Service due relating to the Bonds and termination of this
Loan Agreement and the Indenture.
SECTION 6.7.  Obligations of the Company Absolute and Unconditional.

The obligations of the Company to make the payments required and to perform the
covenants contained in Sections 6.4, 6.5, 6.6, 6.9, 6.10, 7.1 and 8.3 and to
perform and observe the other agreements on its part contained herein shall be
absolute and unconditional and shall not be subject to diminution by set-off,
counterclaim, abatement or otherwise.  Until payment of all amounts relating to
the Bonds has been made, the Company (a) will not suspend or discontinue any
payments provided for in this Loan Agreement, except to the extent the same have
been prepaid, (b) will perform and observe all its other agreements contained
herein, and (c) except as provided in Section 9.1, will not terminate this Loan
Agreement for any cause, including, without limiting the generality of the
foregoing, any acts or circumstances that may constitute failure of
consideration, sale, loss, eviction or constructive eviction, destruction of or
damage to the Project, commercial frustration of purpose, any change in the tax
or other laws of the United States of America or of the Commonwealth or any
political subdivision of either, or any failure of the Issuer to perform and
observe any agreement, whether express or implied, or any duty, liability or
obligation arising out of or in connection herewith or with the Indenture. 
Nothing contained in this Section shall be construed to release the Issuer from
the performance of any of the agreements on its part herein contained and in the
event the Issuer shall fail to perform any such agreement on its part, the
Company may take such action as the Company may deem necessary to perform or
compel performance, provided that no such action shall violate the agreements on
the part of the Company contained in this Loan Agreement or postpone or diminish
the amounts required to be paid by the Company pursuant to this Loan Agreement. 
Upon the issuance and delivery of the Bonds to the initial purchasers thereof,
the Company shall have received, and the Issuer shall have given, full and
complete consideration for the Company’s obligation hereunder to make
Installment Loan Payments.
SECTION 6.8.  Option to Prepay Amounts Under Loan Agreement in Certain Events.

The Company shall have, and is hereby granted, the option to prepay the amounts
required to be paid by the Company under Section 6.4(b) in whole or in part and
to direct the Trustee to redeem the Bonds in whole or in part, as the case may
be, if the Company determines to exercise any optional redemption rights under
the terms of the Bonds or if any of the events described in Article V of the
Indenture requiring the redemption of Bonds shall have occurred.  The Company
may at any time deliver money, and/or Government Obligations, to the Trustee
with written instructions to the Trustee to hold such money, and/or Government
Obligations, pursuant to Article X of the Indenture in connection with a
discharge of the Indenture.  The Issuer agrees that, at the request at any time
of the Company, it will cooperate with the Company to cause the Bonds or any
portion thereof to be redeemed, or to cause the Indenture to be discharged, to
the extent permitted by the Indenture.
SECTION 6.9.  Company’s Performance Under Indenture.

The Company acknowledges receipt of the Indenture and agrees to do and perform
all acts and things contemplated in the Indenture to be done or performed by it
and to not interfere with the exercise of the power and authority granted to the
Trustee in the Indenture.  The Company further agrees to aid in furnishing any
documents, certificates or opinions that may be required under the Indenture.
SECTION 6.10.  Covenants Regarding Tax Exemption.

It is the intention of the Company and the Issuer that the interest on the Bonds
be excludable from the gross income of the holders thereof for federal income
tax purposes by reason of Section 103(a) of the Code, except for any Bond for
any period that such Bond is owned by a person who is a “substantial user” of
the Project or a “related person” within the meaning of Section 147(a) of the
Code, and that substantially all of the proceeds of the Bonds will be used to
refinance “facilities for the furnishing of water” within the meaning of Section
142(a)(4) of the Code and any Regulations promulgated with respect thereto.  To
that end, the Company and the Issuer (to the extent reasonably within the
control of the Issuer) covenant with each other to refrain from any action which
would adversely affect, or to take such action to assure, the treatment of the
Bonds as obligations described in Section 103(a) of the Code, the interest on
which is not includable in the gross income of the holders thereof (other than
the income of a “substantial user” of the Project or a “related person” within
the meaning of Section 147(a) of the Code) for purposes of federal income
taxation.  None of the covenants and agreements herein contained shall require
either the Company or the Issuer to enter an appearance or intervene in any
administrative, legislative or judicial proceeding in connection with any
changes in applicable laws, rules or regulations or in connection with any
decisions of any court or administrative agency or other governmental body
affecting the taxation of interest on the Bonds.
The Trustee shall not be responsible for any determination or calculation
concerning arbitrage rebate with respect to the Bonds, or for determining
whether the yield on any investments made in accordance with the Indenture would
cause, or whether any other facts exist which would cause, any of the Bonds to
become “arbitrage bonds” under Section 148 of the Code.
SECTION 6.11.  Bonds Purchased in Lieu of Redemption.

Pursuant to Section 5.6 of the Indenture, the Company is given the right to
purchase Bonds in lieu of redemption.  Provided that, prior to the date that any
such Bonds are sold by the Company, the Company shall receive a Favorable
Opinion of Bond Counsel.
SECTION 6.12.  Nondiscrimination - Sexual Harassment.

The Company hereby accepts and agrees to be bound by the Nondiscrimination -
Sexual Harassment clause set forth in Exhibit B attached hereto.
SECTION 6.13.  Right to Know.
The Company acknowledges that the Refunding Project is subject to the Right to
Know Law set forth in Exhibit C hereto.
ARTICLE VII
PARTICULAR AGREEMENTS

SECTION 7.1.  Indemnified Parties’ Release and Indemnification Provisions.

The Company agrees, whether or not the transactions contemplated by this Loan
Agreement and the Indenture shall be consummated:
(a) to pay, and save the Indemnified Parties harmless against liability for the
payment of, all reasonable out-of-pocket documented expenses arising in
connection with said contemplated transactions, including the reasonable fees
and documented expenses of counsel to the Indemnified Parties; and
(b) to defend, protect, indemnify and save the Indemnified Parties harmless from
and against all liability, losses, damages, costs, fines, suits, actions,
demands, penalties, reasonable documented expenses (including out-of-pocket
expenses, incidental expenses and reasonable counsel fees and expenses), taxes,
causes of action, suits, claims, demands and judgments of any nature or form, by
or on behalf of any Person arising in any manner from the transactions of which
this Loan Agreement or the Indenture is a part or arising in any manner in
connection with the Refunding Project or the financing or refinancing of the
Refunding Project, and, without limiting the generality of the foregoing,
arising from (i) the issuance, offering, sale, or delivery of the Bonds, the
Indenture, the Bond Purchase Agreement and this Loan Agreement and the
obligations imposed on the Issuer hereby and thereby and the Trustee’s
performance of its obligations under this Loan Agreement or the Indenture; or
the design, construction, installation, operation, use, occupancy, maintenance,
or ownership of the Project; (ii) any written directions, requests, statements
or representations made or given by the Company or any of its officers or
employees to the Indemnified Parties or any underwriters or purchasers of any of
the Bonds, with respect to the Issuer, the Company, the Project, the Bonds or
the Bond Purchase Agreement, including, but not limited to, statements or
representations of facts, financial information, or corporate affairs; (iii)
damage to property or any injury to or death of any person that may be
occasioned by any cause whatsoever pertaining to the Project; (iv) any breach or
default on the part of the Company in the performance of any of its obligations
under this Loan Agreement; (v) any violation of contract, agreement or
restriction by the Company relating to the Project; or (vi) any violation of
law, ordinance or regulation by or permitted by the Company affecting the
Project or any part thereof or the ownership or occupancy or use thereof.
In the event that any action or proceeding is brought against any Indemnified
Party by reason of any such claim, such action or proceeding shall be defended
against by counsel to the Company, unless the Indemnified Party shall determine,
upon advice of counsel to the Indemnified Party, that the Indemnified Party’s
interests conflict with the interests of Company, in which event the Indemnified
Party may select its own counsel.  In the event such defense is by counsel to
the Indemnified Party on behalf of the Indemnified Party, the Company shall
indemnify the Indemnified Party for reasonable costs of counsel to the
Indemnified Party allocated to such defense and charged to the Indemnified
Party.  The Company, upon notice from the Indemnified Party, shall resist and
defend such an action or proceeding on behalf of the Indemnified Party.  The
Indemnified Party shall provide the Company prompt written notice of any claim
or suit with respect to which it has a right of indemnity hereunder, but the
failure to provide such notice shall not limit or impair the rights of any
Indemnified Party hereunder except to the extent that such failure causes actual
damage or loss to the Company.  The Indemnified Party shall, at the Company’s
expense, provide all reasonable assistance requested by the Company in its
defense and/or settlement of any such claim or suit.  Neither party shall settle
or pay any such claim or suit without the prior written consent of the other
party, which shall not be unreasonably withheld.
The provisions of this Section shall not apply to any claim or liability to the
extent resulting from the Indemnified Party’s acts of negligence, bad faith,
fraud or deceit or for any claim or liability which the Company was not given
the opportunity to contest (except as set forth in the preceding paragraph), due
to the negligence of the Indemnified Party.
The Company also agrees to pay the documented expenses (including reasonable
attorneys’ fees) of any Indemnified Party in enforcing this Section 7.1.  The
provisions of this Section shall survive the payment of the Bonds, the
termination of this Loan Agreement, the termination of the Indenture, and, as to
the Trustee, the removal or resignation of the Trustee.
SECTION 7.2.  Maintenance of Corporate Existence.

The Company agrees that during the term of this Loan Agreement it will maintain
its corporate existence, will not dissolve or otherwise dispose of all or
substantially all of its assets and will not consolidate with or merge into
another corporation; provided, however, that the Company may, without violating
the agreement contained in this Section, consolidate with or merge into another
corporation, or sell or otherwise transfer to another corporation all or
substantially all of its assets as an entirety and thereafter dissolve, if (a)
the Issuer consents in writing, which consent shall not be unreasonably withheld
(b) the surviving, resulting or transferee corporation, as the case may be,
assumes in a writing delivered to the Trustee all of the obligations of the
Company herein and under the Tax Documents, and is duly qualified to do business
in the Commonwealth, (c) at the time of such consolidation or merger and after
giving effect thereto, no Default or Event of Default shall have occurred and be
continuing, (d) after giving effect to such consolidation or merger the
surviving corporation would be permitted to incur at least $1.00 of additional
Funded Debt under the provisions of Section 7.9 hereof, and (e) the provisions
of Section 7.6 are satisfied.
SECTION 7.3.  Financial Information.

The Company will keep proper books of record and account in which full and
correct entries will be made of all dealings or transactions of or in relation
to the business and affairs of the Company, in accordance with generally
accepted accounting principles consistently maintained (except for changes
disclosed in the financial statements furnished pursuant to this Section 7.3 and
concurred in by the independent public accountants referred to herein), and will
furnish to the Trustee and upon request, to the Issuer:
(a) Quarterly Statements.  As soon as available and in any event within 60 days
after the end of each quarterly fiscal period (except the last) of each fiscal
year, duplicate copies of:
(i) a consolidated balance sheet of the Company as of the close of such quarter
setting forth in comparative form the consolidated figures for the year end or
annual period of the preceding fiscal year,
(ii) consolidated statements of income and shareholders’ investment of the
Company for such quarterly period, setting forth in comparative form the
consolidated figures for the corresponding period of the preceding fiscal year,
and
(iii) consolidated statements of cash flows of the Company for the portion of
the fiscal year ending with such quarter, setting forth in comparative form the
consolidated figures for the corresponding period of the preceding fiscal year,
all in reasonable detail and certified as complete and correct, by an authorized
financial officer of the Company;
(b) Annual Statements.  As soon as available and in any event within 120 days
after the close of each fiscal year of the Company, duplicate copies of:
(i) a consolidated balance sheet of the Company as of the close of such fiscal
year,
(ii) consolidated statements of income and shareholders’ investment and cash
flows of the Company for such fiscal year,
in each case setting forth in comparative form the consolidated figures for the
preceding fiscal year, all in reasonable detail and accompanied by an opinion
thereon of a firm of independent public accountants of recognized national
standing selected by the Company to the effect that the consolidated financial
statements have been prepared in accordance with generally accepted accounting
principles consistently applied (except for changes in application in which such
accountants concur) and present fairly, in all material respects, the financial
condition of the Company and that the examination of such accountants in
connection with such financial statements has been made in accordance with
generally accepted auditing standards and accordingly, includes such tests of
the accounting records and such other auditing procedures as were considered
necessary in the circumstances;
(c) Audit Reports.  Promptly upon receipt thereof, one copy of each interim or
special audit made by independent accountants of the books of the Company;
(d) SEC and Other Reports.  Promptly upon their becoming available, one copy of
each financial statement, report, notice or proxy statement sent by the Company
to stockholders generally and of each regular or periodic report, and any
registration statement or prospectus filed by the Company with any securities
exchange or the Securities and Exchange Commission or any successor agency, and
copies of any orders in any proceedings substantially affecting the financial
condition of the Company to which the Company is a party, issued by any
governmental agency, Federal or state, having jurisdiction over the Company; and
(e) Officers’ Certificates.  Within the periods provided in paragraphs (a) and
(b) above, a certificate of an authorized financial officer of the Company
stating that he has reviewed the provisions of this Agreement and setting forth:
(1) the information and computations (in sufficient detail) required in order to
establish whether the Company was in compliance with the requirements of
Sections 7.9 through 7.11, inclusive, at the end of the period covered by the
financial statements then being furnished, and (2) whether there existed as of
the date of such financial statements and whether, to the best of his knowledge,
there exists on the date of the certificate or existed at any time during the
period covered by such financial statements any Default or Event of Default and,
if any such condition or event exists on the date of the certificate, specifying
the nature and period of existence thereof and the action the Company is taking
and proposes to take with respect thereto.
To the extent not furnished pursuant to the foregoing provisions of this Section
7.3, the Company agrees to furnish to the Issuer and Trustee, copies of the
annual financial statements and other information filed with MSRB pursuant to
the Company’s continuing disclosure undertaking referred to in the Bond Purchase
Agreement.  Such statements and other information shall be filed with the Issuer
and the Trustee within ten (10) days of the filings made pursuant to such
continuing disclosure undertaking.
Delivery of reports to the Trustee under this Section 7.4 is for informational
purposes only and the Trustee’s receipt of the foregoing shall not imply a duty
to review and shall not constitute constructive notice of any information
contained therein or determinable from information contained therein, including
the Company’s compliance with any of their covenants hereunder.
SECTION 7.4.  Agreement of Issuer Not to Assign or Pledge.

Except for the assignment and pledge described in the Indenture, the Issuer
agrees that it will not attempt to further assign, pledge, transfer or convey
its interest in or create any assignment, pledge, lien, charge or encumbrance of
any form or nature with respect to the rights and interests herein described.
SECTION 7.5.  Reference to Bonds Ineffective after Bonds Paid.

Upon payment of all Debt Service due relating to the Bonds, and payment of all
fees and charges of the Issuer and the Trustee, all as provided in Article X of
the Indenture, all references herein to the Bonds and the Trustee shall be
ineffective and neither the Issuer, the Local IDA, the Trustee, the Paying Agent
nor the holders of any of the Bonds shall thereafter have any rights hereunder
and the Company shall have no further obligation hereunder, saving and excepting
those that shall have theretofore vested and remain unsatisfied and any right of
the Issuer, the Local IDA, the Trustee or the Paying Agent to indemnification
under Section 7.1 and payment of fees and costs under Section 6.5, Section 6.6,
and Section 8.3, which rights shall survive the payment of all Debt Service due
relating to the Bonds and the termination of this Loan Agreement and the
Indenture.
SECTION 7.6.  Assignment, Sale or Lease of Project.

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

(ii)
The assignee provides the Trustee with an opinion of counsel satisfactory to the
Trustee to the effect that neither the validity nor the enforceability of this
Loan Agreement shall be adversely affected by such assignment;

(iii)
The Project shall continue in the written opinion of Bond Counsel provided to
the Trustee to be a “project” as such term is defined in the Act after such
assignment;

(iv)
Such assignment shall not, in the written opinion of Bond Counsel provided to
the Trustee, have an adverse effect on the exclusion from gross income for
federal income tax purposes of interest on the Bonds; and

(v)
The assignee shall not be a Disqualified Contractor; and

(vi)
Consent by the Issuer, which consent shall not be unreasonably withheld.

(b) The Company may, subject to the provisions of Section 6.10, lease the
Project, in whole or in part, to one or more other Persons, provided that:
(i)
No such lease shall relieve the Company from its obligations under this Loan
Agreement;

(ii)
In connection with any such lease the Company shall retain such rights of
interests as will permit it to comply with its obligations under this Loan
Agreement;

(iii)
No such lease shall impair materially the accomplishment of the purposes of the
Act to be accomplished by operation of the Project as herein provided;

(iv)
Any such lease shall require the lessee to operate the Project as a “project”
under the Act as long as the Bonds are outstanding;

(v)
In the case of a lease to a new lessee or an assignment of an existing lease to
a new lessee of substantially all of the Project, such new lessee shall have
been approved by the Issuer (such approval not to be unreasonably withheld); and

(vi)
The lessees under any such leases shall be subject to the applicable terms and
conditions of Section 6.10.

(c) The Company shall not sell, assign or otherwise dispose of (whether in one
transaction or in a series of transactions) its interest in the Project or any
material portion thereof, other than is permitted by Section 7.6(a) and other
than leases permitted under Section 7.6(b) or undertake or permit the demolition
or removal of the Project or any material portion thereof without the prior
written consent of the Issuer; provided that the Company shall be permitted to
sell, transfer, assign or otherwise dispose of or remove any portion of the
Project which is retired or replaced in the ordinary course of business.
SECTION 7.7.  Amendment of Loan Agreement or Indenture.

No amendment, change, addition to, or waiver of any of the provisions of this
Loan Agreement or the Indenture shall be made except pursuant to Article IX and
Article XI of the Indenture.
SECTION 7.8.  Waiver of Vendor’s Lien.

Notwithstanding anything in this Loan Agreement to the contrary, it is the
intention of the parties hereto that no vendor’s lien and/or privilege,
mortgage, right of rescission or stipulation for the benefit of a third party
shall be created by execution of this Loan Agreement, and if any such lien,
privilege, condition, or benefit should be deemed to have been created by
execution of this Loan Agreement, they are expressly released, renounced, waived
and abandoned by the parties hereto.
SECTION 7.9.  Limitations on Certain Indebtedness.

(a) The Company will not have outstanding, or in any manner be liable in respect
of, any Funded Debt or Seasonal Indebtedness, except the following:
(i) current operating liabilities and current or other obligations (other than
for borrowed money) incurred in the ordinary course of business;
(ii) Seasonal Indebtedness, provided that (A) such Seasonal Indebtedness has not
existed for a period of at least 30 consecutive days in the twelve preceding
months or (B) the amount of such Seasonal Indebtedness, when added to the
outstanding amount of Funded Debt, does not exceed 60% of the Plant Account on
the books of the Company at any one time outstanding; and
(iii) Funded Debt (including the Bonds) in an amount not in excess of 60% of the
Plant Account on the books of the Company at any one time outstanding.
(b) The renewal, extension or refunding of any Funded Debt issued or incurred in
accordance with the limitations of this Section 7.9 shall constitute the
issuance of additional Funded Debt, which is, in turn, subject to the
limitations of the applicable provisions of this Section 7.9, but any
Indebtedness paid or defeased from the proceeds of additional Funded Debt may be
excluded from outstanding Indebtedness for purposes of this Section 7.9.
(c) Subject to compliance with this Section 7.9, nothing contained in this
Agreement shall prohibit the Company from incurring, issuing or permitting to
exist any Indebtedness.
SECTION 7.10.  Limitation on Liens.

(a) The Company will not create or incur, or suffer to be incurred or to exist,
any mortgage, pledge, security interest, encumbrance, lien or charge of any kind
on its Property or assets, whether now owned or hereafter acquired, or upon any
income or profits therefrom, or transfer any Property for the purpose of
subjecting the same to the payment of obligations in priority to the payment of
its or their general creditors, or acquire or agree to acquire any Property or
assets upon conditional sales agreements or other title retention devices,
except Excepted Encumbrances; provided, however, that this requirement shall not
be applicable to, nor prevent:
(i)
the pledging by the Company of its assets as security for the payment of any
tax, assessment or other similar charge demanded of the Company by any
governmental authority or public body as long as the Company in good faith
contests its liability to pay the same, or as security to be deposited with any
governmental authority or public body for any purpose at any time required by
law or, governmental regulation as a condition to the transaction of any
business or the exercise of any privilege, license or right; or

(ii)
the pledging by the Company of any assets for the purpose of securing a stay or
discharge or for any other purpose in the course of any legal proceeding in
which the Company is a party; or

(iii)
making good faith deposits in connection with tenders, contracts or leases to
which the Company is a party; or

(iv)
the pledging by the Company of any assets for the purpose of securing
Indebtedness of the Company not otherwise permitted by clauses (i) through (iii)
or permitted as an Excepted Encumbrance, provided that Priority Debt at any one
time outstanding shall not at any time exceed 10% of the Plant Account of the
Company (determined as of the end of the then most recently ended quarterly
fiscal period).

(b) In the event any Property or assets of the Company are subject to a lien or
charge not otherwise permitted by Section 7.10(a) above to secure any
Indebtedness of the Company (for purposes of this Section 7.10, the “Liened
Property”), such lien or charge shall nevertheless be deemed permitted if the
Company makes effective provision whereby the Bonds shall (so long as any other
Indebtedness shall be so secured) be secured (along with any other Indebtedness
similarly entitled to be equally and ratably secured) by a direct lien on the
Liened Property on parity to the lien or liens securing any and all such other
Indebtedness.
SECTION 7.11.  Dividends, Stock Purchases.

The Company will not, except as hereinafter provided:
(a)
Declare or pay any dividends, either in cash or Property, on any shares of its
capital stock of any class (except dividends or other distributions payable
solely in shares of capital stock of the Company, including the portion of
dividends reinvested in shares of the Company’s common capital stock under the
Company’s Optional Dividend Reinvestment Plan); or

(b)
Directly or indirectly, purchase, redeem or retire any shares of its capital
stock of any class or any warrants, rights or options to purchase or acquire any
shares of its capital stock (other than in exchange for or out of the net
proceeds to the Company from the substantially concurrent issue or sale of other
shares of capital stock of the Company or warrants, rights or options to
purchase or acquire any shares of its capital stock); or

(c)
Make any other payment or distribution, either directly or indirectly, in
respect of its capital stock; or

(d)
Make any payment, distribution, conveyance or transfer of any Property to any
subsidiary or affiliate;

(such declarations or payments of dividends, purchases, redemptions or
retirements of capital stock and warrants, rights or options, and all such other
distributions, conveyances and transfers being herein collectively called
“Restricted Payments”), if after giving effect thereto the aggregate amount of
Restricted Payments made during the period from and after December 31, 1982 to
and including the date of the making of the Restricted Payment in question,
would exceed the sum of (1) $1,500,000 plus (2) earned surplus of the Company,
on a non-consolidated basis, accumulated after December 31, 1982, determined
without any deduction on account of such Restricted Payments, provided, however,
that notwithstanding the foregoing, in no event shall the Company make any
distribution, conveyance or transfer to any subsidiary or affiliate of any
Property constituting the Plant Account.
The Company will not declare any dividend which constitutes a Restricted Payment
payable more than 60 days after the date of declaration thereof.
For the purposes of this Section 7.11, the amount of any Restricted Payment
declared, paid or distributed in Property of the Company shall be deemed to be
the greater of the book value or fair market value (as determined in good faith
by the Board of Directors of the Company) of such Property at the time of the
making of the Restricted Payment in question.
SECTION 7.12.  [Reserved.]
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES

SECTION 8.1.  Defaults and Remedies.

(a) The Company is advised and recognizes that the Issuer will assign all of its
right, title, and interest in and to all of the Installment Loan Payments
required to be made pursuant to this Loan Agreement, and the right to receive
and collect same, to the Trustee under the Indenture.  All rights of the Issuer
(other than Unassigned Issuer’s Rights) against the Company arising under this
Loan Agreement or the Indenture may be enforced by the Trustee, or the
Registered Owners of the Bonds, to the extent provided in the Indenture, without
making the Issuer a party.
(b) The following shall constitute an “Event of Default” hereunder:
(i) Payment of any Installment Loan Payment is not made when due and payable and
such failure shall continue for one Business Day; or
(ii) Payment of any amount due under this Loan Agreement other than Installment
Loan Payments is not made when due and payable and such failure shall continue
for fifteen (15) Business Days after the Trustee shall have given written notice
to the Company specifying such default; or
(iii)
Failure to pay the principal of or interest on any Indebtedness of the Company
for borrowed money that is outstanding in an aggregate principal amount of at
least $5,000,000, as and when the same shall become due and payable by the lapse
of time, by declaration, by call for redemption or otherwise, and such default
shall continue beyond the period of grace, if any, allowed with respect thereto;
or

(iv)
Default or the happening of any event shall occur under any indenture,
agreement, or other instrument under which any Indebtedness of the Company for
borrowed money that is outstanding in an aggregate principal amount of at least
$5,000,000 and such default or event shall continue for a period of time
sufficient to permit the acceleration of the maturity of any Indebtedness of the
Company outstanding thereunder; or

(v)
Default shall occur in the observance or performance of any covenant or
agreement contained in Sections 7.9 through 7.11 hereof;

(vi)
Subject to Section 7.1(c) of the Indenture relating to force majeure, failure by
the Company to observe or perform any other covenant, condition or agreement on
its part to be observed or performed under the Indenture or the Loan Agreement,
other than as referred to in subsections (i) through (v) inclusive above, for a
period of 60 days after written notice, specifying such failure and requesting
that it be remedied, is given to the Company by the Issuer or the Trustee;
provided, however, that if the failure stated in the notice is such that can be
remedied but not within such 60-day period, it shall not constitute an Event of
Default if the default, in the judgment of the Trustee in reliance upon advice
of counsel, is correctable without material adverse effect on the Bondholders
and if corrective action is instituted by the Company, within such period and is
diligently pursued until the default is remedied; or

(vii)
Final judgment or judgments for the payment of money aggregating in excess of
$5,000,000 is or are outstanding against the Company and which judgments have
remained unpaid, unvacated, unbonded or unstayed by appeal or otherwise for a
period of 60 days from the date of entry; or

(viii)
The occurrence of an Event of Default under the Indenture.

(c) Upon the occurrence of an Event of Default of which the Trustee has actual
knowledge, the Trustee (or in the case of an Event of Default arising out of
Unassigned Issuer’s Rights, the Issuer) shall have the power to proceed with any
right or remedy granted by the Constitution and laws of the Commonwealth, as it
may deem best, including without limitation any suit, action or special
proceeding in equity or at law, including mandamus proceedings, for the specific
performance of any agreement, obligation or covenant contained herein or for the
enforcement of any proper legal or equitable remedy as the Trustee shall deem
most effectual to protect the rights of the Registered Owners, including without
limitation, acceleration of all amounts payable hereunder; provided, however,
any such proceedings shall be subject to the provisions of Section 7.1(c) of the
Indenture relating to force majeure.  Upon the occurrence of an Event of Default
under Section 7.1(a)(ii) of the Indenture and upon the occurrence of any other
Event of Default under the Indenture pursuant to the terms of which the Trustee
shall have declared the Bonds immediately due and payable, then all payments
required to be made by the Company under Section 6.4(b) (other than interest not
yet accrued) shall become immediately due and payable.
(d) Any amounts collected for non-payment of amounts described in Section 6.4
hereof pursuant to actions taken under this Section shall be paid into the Debt
Service Fund and applied in accordance with the provisions of the Indenture.
SECTION 8.2.  Annulment of Acceleration.

If, in compliance with the requirements of Section 7.2 of the Indenture, the
Trustee shall annul an acceleration declared due to any Event of Default under
the Indenture, such annulment shall be deemed to also rescind any acceleration
of all payments required under Section 6.4.  In case of any such annulment, or
in case any proceeding taken by the Trustee on account of any such Event of
Default shall have been discontinued or abandoned or determined adversely, then
and in every such case the Issuer, the Company, the Trustee and the Registered
Owners shall be restored to their former positions and rights hereunder, but no
such annulment shall extend to any subsequent or other Event of Default or
impair any right consequent thereon.
SECTION 8.3.  Agreement to Pay Attorneys’ Fees and Expenses.

In the event the Company should default under any of the provisions of this Loan
Agreement and the Issuer or the Trustee should employ attorneys or incur other
expenses for the collection of payments required hereunder or the enforcement of
performance or observance of any obligation or agreement on the part of the
Company herein contained, the Company agrees that it will upon demand therefore
pay to the Issuer or the Trustee the reasonable fees and expenses of such
attorneys and such other expenses so incurred by the Issuer or the Trustee. This
Section 8.3 shall survive the payment of all Debt Service due relating to the
Bonds and the termination of this Loan Agreement and the Indenture.
SECTION 8.4.  General Enforcement Provisions.

(a) The terms of this Loan Agreement may be enforced as to one or more breaches
either separately or cumulatively.
(b) No remedy conferred upon or reserved to the Issuer, the Trustee, or the
Registered Owners of the Bonds in this Loan Agreement is intended to be
exclusive of any other available remedy or remedies, but each and every such
remedy shall be cumulative and shall be in addition to every other remedy now or
hereafter existing at law or in equity or by statute.  No delay or omission to
exercise any right or power accruing upon any default, omission, or failure of
performance hereunder shall impair any such right or power or shall be construed
to be a waiver thereof, but any such right and power may be exercised from time
to time and as often as may be deemed expedient.  In the event any provision
contained in this Loan Agreement should be breached by the Company and
thereafter duly waived, such waiver shall be limited to the particular breach so
waived and shall not be deemed to waive any other breach of this Loan
Agreement.  No waiver by any party of any breach by any other party of any of
the provisions of this Loan Agreement shall be construed as a waiver of any
subsequent breach, whether of the same or of a different provision of this Loan
Agreement.
SECTION 8.5.  Notice of Default.

The Company shall notify the Trustee and the Issuer in writing immediately if it
becomes aware of the occurrence of any Event of Default hereunder or of any
fact, condition or event which, with the giving of notice or passage of time or
both, would become an Event of Default.
SECTION 8.6.  Unassigned Issuer’s Rights.

Notwithstanding any other provision hereof, upon the occurrence of an Event of
Default arising out of Unassigned Issuer’s Rights, the Issuer reserves the right
to exercise or refrain from exercising remedies under the Loan Agreement with
respect to such Event of Default and such Event of Default may not be waived or
annulled without the prior written consent of the Issuer.
SECTION 8.7.  Determination of Taxability Not an Event of Default.

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

SECTION 9.1.  Term of Loan Agreement.

Subject to all provisions hereof which expressly state that the same shall
survive termination hereof, this Loan Agreement shall terminate when payment of
all Debt Service relating to the Bonds shall have been made and all fees,
indemnities, expenses and charges of the Issuer and the Trustee have been fully
paid or provision satisfactory to such parties made for such payment.
SECTION 9.2.  Notices.

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

The York Water Company
130 East Market Street
York, PA 17401
Attention: CFO
Telecopy No.: (717) 852-0058
(b)
to the Issuer, to:

Department of Community and Economic Development
Pennsylvania Economic Development Financing Authority
Center for Private Financing
Commonwealth Keystone Building
400 North Street, 4th Floor
Harrisburg, PA 17120
Attention: Executive Director
Telecopy No.: (717) 787-0879
(c)
to the Trustee, to:

Manufacturers and Traders Trust Company
213 Market Street
Harrisburg, PA 17101
Attn: Corporate Trust Department
Telecopy No.: (717) 231-2615
A duplicate copy of each notice, approval, consent, request or other
communication given hereunder by the Issuer, the Company or the Trustee to any
one of the others shall also be given to all of the others at the address
furnished from time to time.  The Issuer, the Company and the Trustee may, by
notice given hereunder, designate any further or different addresses to which
subsequent notices, approvals, consents, requests or other communications shall
be sent or persons to whose attention the same shall be directed.
SECTION 9.3.  Benefit of Parties.

This Loan Agreement is made for the exclusive benefit of the Issuer, the
Trustee, the Paying Agent, the Registered Owners, the Beneficial Owners, the
Company, and their respective successors and assigns herein permitted, and not
for any other third party or parties; and nothing in this Loan Agreement,
expressed or implied, is intended to confer upon any party or parties other than
the Issuer, the Trustee, the Paying Agent, the Registered Owners, the Beneficial
Owners, the Company, and their respective successors and assigns herein
permitted, any rights or remedies under or by reason of this Loan Agreement.
SECTION 9.4.  Severability.

If any provision hereof shall be held invalid or unenforceable by any court of
competent jurisdiction, such holding shall not invalidate or render
unenforceable any other provision hereof.
SECTION 9.5.  Counterparts.

This Loan Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original, but all of which together shall constitute
one and the same instrument.
SECTION 9.6.  Captions.

The captions and headings herein are for convenience only and in no way define,
limit or describe the scope or intent of any provisions hereof.
SECTION 9.7.  Law Governing Construction of Loan Agreement.

This Loan Agreement shall be governed by, and construed in accordance with, the
laws of the Commonwealth.
SECTION 9.8.  Payments on Non-Business Days.

If any payment required hereunder is due on a date that is not a Business Day,
payment shall be made on the next succeeding Business Day with the same force
and effect as if made on the date fixed for such payment, and no interest shall
accrue on such amount for the period after such date.
SECTION 9.9.  Payments to be Sufficient to Meet DTC Requirements.

The Company hereby acknowledges that the Bonds are intended to be issued in
book-entry form through DTC and that DTC has certain timing requirements and
notice requirements.  The Company hereby agrees to make payments and give
notices in a manner sufficient to comply from time to time with the DTC
requirements, for so long as the Bonds are in book-entry form at DTC and so long
as the Company is informed of such requirements.  If, in the judgment of the
Company, there are any changes in such DTC requirements that will require the
Company to make payments and give notices in a manner materially different than
otherwise required under this Agreement, then the Issuer and the Trustee agree
to cooperate with any request by the Company to utilize another securities
depository for the Bonds or terminate the book-entry only system for the Bonds.
SECTION 9.10.  Reserved.

SECTION 9.11.  Limitation of Liability: No Personal Liability.

(a) In the exercise of the powers of the Issuer or the Trustee hereunder or
under the Indenture, including without limitation the application of moneys and
the investment of funds, neither the Issuer or the Trustee nor their members,
directors, officers, employees, attorneys or agents shall be accountable to the
Company for any action taken or omitted by any of them in good faith and without
negligence and with the belief that it is authorized or within the discretion or
rights or powers conferred.  The Issuer and the Trustee and their members,
directors, officers, employees, attorneys and agents shall be protected in
acting upon any paper or document believed to be genuine, and any of them may
conclusively rely upon the advice of counsel and may (but need not) require
further evidence of any fact or matter before taking any action.  In the event
of any default by the Issuer hereunder, the liability of the Issuer to the
Company shall be enforceable only out of the Issuer’s interest under this Loan
Agreement and there shall be no other recourse for damages by the Company
against the Issuer, its members, directors, officers, employees, attorneys and
agents, or any of the property now or hereafter owned by it or them.  All
covenants, obligations and agreements of the Issuer contained in this Loan
Agreement or the Indenture shall be effective to the extent authorized and
permitted by applicable law.  No such covenant, obligation or agreement shall be
deemed to be a covenant, obligation or agreement of any present or future
member, director, officer, employee, attorney or agent of the Issuer, and no
official executing the Bonds shall be liable personally on the Bonds or be
subject to any personal liability or accountability by reason of the issuance
thereof or by reason of the covenants, obligations or agreements of the Issuer
contained in this Loan Agreement or the Indenture.
(b) No claim shall be made by the Company or any of the Company’s affiliates
against the Issuer or the Trustee or any of their affiliates, directors,
employees, attorneys or agents for any special, indirect, consequential or
punitive damages in respect of any breach or wrongful conduct (whether or not
the claim therefore is based on contract, tort or duty imposed by law), in
connection with, arising out of or in any way related to the transactions
contemplated by this Loan Agreement, the Indenture or the other financing
arrangements entered into in connection with the Project, or any act or omission
or event occurring in connection therewith; and the Company hereby waives,
releases and agrees not to sue upon any such claim for any such damages, whether
or not accrued and whether or not known or suspected to exist in its favor.

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

By: /s/Stephen M. Drizos
Executive Director
[Seal]
Attest:

By: /s/ Craig S. Petrasic
(Assistant) Secretary
THE YORK WATER COMPANY

By: /s/ Jeffrey R. Hines
President and Chief Executive Officer
[Seal]
Attest:

By: /s/ Matthew E. Poff
        Chief Financial Officer and Treasurer

[Signature Page to Loan Agreement]

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

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

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

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EXHIBIT B
NONDISCRIMINATION/SEXUAL HARASSMENT CLAUSE (Contracts)

The Contractor agrees:

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

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

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

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

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

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

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

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

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

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EXHIBIT C
RIGHT-TO-KNOW LAW
a.
The Pennsylvania Right-to-Know Law, 65 P.S. §§ 67.101-3104, (“RTKL”) applies to
this Contract. For the purpose of these provisions, the term “the Commonwealth”
shall refer to the contracting Commonwealth agency.

b.
If the Commonwealth needs the Contractor's assistance in any matter arising out
of the RTKL related to this Contract, it shall notify the Contractor using the
legal contact information provided in this Contract. The Contractor, at any
time, may designate a different contact for such purpose upon reasonable prior
notice to the Commonwealth.

c.
Upon written notification from the Commonwealth that it requires the
Contractor's assistance in responding to a request under the RTKL for
information related to this Contract that may be in the Contractor's possession,
constituting, or alleged to constitute, a public record in accordance with the
RTKL (“Requested Information”), the Contractor shall:

1.
Provide the Commonwealth, within ten (10) calendar days after receipt of written
notification, access to, and copies of, any document or information in the
Contractor's possession arising out of this Contract that the Commonwealth
reasonably believes is Requested Information and may be a public record under
the RTKL; and

2.
Provide such other assistance as the Commonwealth may reasonably request, in
order to comply with the RTKL with respect to this Contract.

d.
If the Contractor considers the Requested Information to include a request for a
Trade Secret or Confidential Proprietary Information, as those terms are defined
by the RTKL, or other information that the Contractor considers exempt from
production under the RTKL, the Contractor must notify the Commonwealth and
provide, within seven (7) calendar days of receiving the written notification, a
written statement signed by a representative of the Contractor explaining why
the requested material is exempt from public disclosure under the RTKL.

e.
The Commonwealth will rely upon the written statement from the Contractor in
denying a RTKL request for the Requested Information unless the Commonwealth
determines that the Requested Information is clearly not protected from
disclosure under the RTKL. Should the Commonwealth determine that the Requested
Information is clearly not exempt from disclosure, the Contractor shall provide
the Requested Information within five (5) business days of receipt of written
notification of the Commonwealth's determination.

f.
If the Contractor fails to provide the Requested Information within the time
period required by these provisions, the Contractor shall indemnify and hold the
Commonwealth harmless for any damages, penalties, costs, detriment or harm that
the Commonwealth may incur as a result of the Contractor's failure, including
any statutory damages assessed against the Commonwealth.

g.
The Commonwealth will reimburse the Contractor for any costs associated with
complying with these provisions only to the extent allowed under the fee
schedule established by the Office of Open Records or as otherwise provided by
the RTKL if the fee schedule is inapplicable.

h.
The Contractor may file a legal challenge to any Commonwealth decision to
release a record to the public with the Office of Open Records, or in the
Pennsylvania Courts, however, the Contractor shall indemnify the Commonwealth
for any legal expenses incurred by the Commonwealth as a result of such a
challenge and shall hold the Commonwealth harmless for any damages, penalties,
costs, detriment or harm that the Commonwealth may incur as a result of the
Contractor's failure, including any statutory damages assessed against the
Commonwealth, regardless of the outcome of such legal challenge. As between the
parties, the Contractor agrees to waive all rights or remedies that may be
available to it as a result of the Commonwealth's disclosure of Requested
Information pursuant to the RTKL.

i.
The Contractor's duties relating to the RTKL are continuing duties that survive
the expiration of this Contract and shall continue as long as the Contractor has
Requested Information in its possession.

[Exhibit C: Right-to-Know Law]